Engagement Letter Suggestions

[Michael Regan]

Anger issues!!!! just what till the boys from your homestate get ahold of this.

 

[Anthem]

Mr. Chase,

You need a lot more on this than you are thinking I beleive and also more than anyone so far is bothering to try and suggest.

If there is any appraisal that is a goodie to get sued over it's bare land. Which is because chronically we are asked to appraise bare land (especially acreage sites) without benefit of surveys, applications to J.A. for building, soil testing for septic systems and wells, on and on. Many times the appraiser gets told the site is buildable, but the moment any of this stuff is asked for it's "we don't have any of that yet and have to have an appraisal first."

So you need agreement, in writing, about HC's and EA's to be used, the definition of M.V. to be used... on and on... Intended Use, Intended Users, who's the client, it all needs to be in the engagement. In your case, due to client is a potential buyer... a clause that the appraisal is not a recommendation to act nor is it a warrenty the land can be sold for your opinion of value.

This would be a good one to finally break down and get some legal advise on engagement contracts, before you finally hit one that you end up wishing you had of.

Barry Dayton

I am aware of the dangers and have ended up not completing many land appraisals as a result. I never thought of having them sign an acknowlegement of the HC and EA ahead of time, of course I put them in the report.

Thanks for the input

 

[Anthem]

Anger issues!!!! just what till the boys from your homestate get ahold of this.

You only think that you know what my home states is
:new_newbie:

 

[Michael Regan]

It does'nt matter what your home state is.

I'm still calling you out

And Yoda died

But Hans lived and married Carrie

 

[Workbox]

Its a fair question. Many only know what they are taught and reason to be here. Instead of pointing fingers, lets correct this so it can be done correctly. I might even learn something.

 

[T.E. Faravelli]

It also speaks to the client's expectations/experiences. Many users of appraisal services are unaware or the concept of an engagement letter is alien to them. Naturally, I'm referring to residential mortgage appraising. I am currently witnessing a case where there was only a "verbal" engagement agreement. It has turned into a nightmare of biblical proportions for those whom are involved and in the end the appraiser will, in all likelihood, lose the client. In all fairness to the appraiser however, he asked several times for the client to acknowledge, sign and return the engagement letter. The client ignored the requests and maintains that an engagement is always "open-ended" and the appraisal report is like a "living document" and must constantly change and evolve to satisfy and meet the client's or any third party's needs as they see fit for all eternity.

 

[CANative]

and in the end the appraiser will, in all likelihood, lose the client.

Lose a client? Lose a fee? Maybe. Go to appraiser jail? Probably not.

Mr. Regan... You're being kind of hysterical. If you're trying to protect a $10,000 commercial appraisal fee, then an engagement letter is a big deal. If the assignment is a run of the mill, residential type assignment, a one off client and there's not much time and money on the table, I would think a formal LoE is not crucial. If it was required by USPAP, then hundreds of thousands of appraisals are being done out of compliance every year.

 

[xm39hnu]

Mr. Reed Its called Standard 1

In developing a real property appraisal, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses to produce a creadible appraisal.

Um its on page 17 of the July 1, 2006 USPAP Edition.

Honestly it really a good read

Where do you see "in writing" or anything similar in that quote? You can make the required identifications and determinations without written documents in advance. It's risky to do so, especially with non-lender clients who don't understand the appraisal process or its reporting requirements. But written evidence of requirements isn't required to be signed by the client, just noted in your work file (and the report, of course.)

Now, having written that, I'll go on to state that Appraisal Institute has some example short-form and long-form engagement contracts available for download to its members. If you're a member of AI, log in and grab'em. Tailor them to your needs (they're in .doc format and .pdf).

 

[T.E. Faravelli]

Greg,

the appraiser I referenced had an "ongoing" business relationship with the client for the past several years. The client's request, that has resulted in all the drama, was an atypical one that required a summary report in a narrative format - 50-60 page report. So the argument can be made that although the client had an established and ongoing relationship with the appraiser (the client) believes it was not necessary for an engagement letter. However, I believe that any requests that are not within their normal course of business, i.e., form reports, should probably have an engagement letter agreed to by both parties.

 

[Elliott]

When I took my on-line 2006 USPAP update class, I
remember a multiple choice quiz question that went:

All of the following are requirements in developing an appraisal except:

1. Determine the Scope of Work
2. Identify the Client
3. Prepare an Engagement Letter
4. Identify any Extraordinary Assumptions

I'd hate to think I paid all that money and got
the question wrong.

Elliott