Where Do Appraisers Come Up With Stuff Like This?

[J Grant]

If it's not fee, is the appraiser a value hitter? Is that why this client is using them? Or is client just clueless about how to choose an appraiser?

 

[Eli]

This appraiser in this case was getting paid $450 (invoice was attached to the appraisal and the appraiser's fee was disclosed in the addendum) to appraise what should have been an easy cookie cutter in a subdivision with 22 recent similar sales and a couple of other sales of similar properties in a nearby competing subdivision. The lender is a regional lender with its own AMC, but with that type of fee, the fee likely had nothing to do with selecting someone without a clue.

Now, what are you going to do about it is the million dollar question?

 

[timd354]

Does all the heat come down on the appraiser for being an idiot, or for the client lack of due diligence for choosing them?

I believe the low fee business model leads to this kind of selection.

The lender may certainly share some of the blame, but this really should have been a very simple appraisal that did not require the services of a genius. Just about any appraiser who is not completely clueless could have done a decent job appraising this property. The low fee business model has nothing to do with this particular situation as a good fee was being paid on this one ($450 for a cookie cutter that was 95% complete at the time of the appraisal inspection) with an additional easy money inspection fee when the few uncompleted items are complete and a final inspection is ordered.

 

[Meandering]

If the subject property is located in a new (or recently converted) condo, subdivision, or PUD, then it must be compared to other properties in the neighborhood as well as to properties within the subject subdivision or project. This comparison should help demonstrate market acceptance of new developments and the properties within them. The appraiser must select one comparable sale from the subject subdivision or project and one comparable sale from outside the subject subdivision or project. The third comparable sale can be from inside or outside of the subject subdivision or project, provided it is a good indicator of value for the subject property. Two of the sales must be verifiable from reliable data sources, other than the builder. Sales or resales from within the subject subdivision or project are preferable to sales from outside the subdivision or project provided the developer or builder of the subject property is not involved in the transactions.

To meet the requirement that the appraiser utilize one comparable sale from inside the subject subdivision or project, the appraiser may need to rely solely on the builder of the property he or she is appraising, as this data may not yet be available through typical data sources (for example, public records or multiple listing services). In this scenario, it is acceptable for the appraiser to verify the transaction of the comparable sale by viewing a copy of the settlement statement from the builder’s file.

When providing builder sales from competing projects that are not presently available through traditional data sources, the appraiser must verify the sale from the applicable settlement statement and indicate on the appraisal report that the settlement statement was the document utilized for verification. Additionally, the appraisal must include discussion and analysis of sales concessions and upgrades for the subject property relative to concessions and upgrades for each builder sale. (For special appraisal considerations regarding condo projects, see B4-1.4-03, Condo Appraisal Requirements, and B4-2, Project Standards.)

https://www.fanniemae.com/content/guide/selling/b4/1.3/08.html

 

[J Grant]

So recoment the lender not use the appraiser, how do they stay in business year after year ...

 

[timd354]

Now, what are you going to do about it is the million dollar question?

I pended the file with some stips even though I believe that the contract price is supported....I am using this as an opportunity to try to educate this guy. Since we are only the insurer and not the loan originator, I do not not have direct contact with the appraiser and cannot called him to have a discussion, which is what I would do if I were the chief appraiser at the lender.

I am not going to turn this guy into the state board if that is what you are asking. I will not turn in someone for making a mistake that does not involve dishonesty or a likely inflated value without first giving him or her a chance to correct that mistake. In this case, the 22 sales in the subdivision that this guy did not use most likely would have supported the appraised had any of them been included in the appraisal.

 

[Eli]

I pended the file with some stips even though I believe that the contract price is supported....I am using this as an opportunity to try to educate this guy. Since we are only the insurer and not the loan originator, I do not not have direct contact with the appraiser and cannot called him to have a discussion, which is what I would do if I were the chief appraiser at the lender.

I am not going to turn this guy into the state board if that is what you are asking. I will not turn in someone for making a mistake that does not involve dishonesty or a likely inflated value without first giving him or her a chance to correct that mistake. In this case, the 22 sales in the subdivision that this guy did not use most likely would have supported the appraised had any of them been included in the appraisal.

Good answer since ethics do not appear to be involved, but my next question is how did it get by an AMC or chief appraiser. I understand that in either case someone could have reviewed the appraisal and not had a license or really had a grasp on the principles of appraisal practice or secondary marketing guidelines like FNMA guidelines.

So, once again management is a problem in the appraisal assignment and review process.

 

[timd354]

So recoment the lender not use the appraiser, how do they stay in business year after year ...

We don't recommend to lenders what appraisers to use or not to use as that opens up a whole bunch of legal issues that we don't want to deal with. However, what we will do on egregious appraisals is have a conversation with the lender about the issues of concern and most lenders are smart enough to figure out that they ought to have a discussion with that particular appraiser or add him or her to their watch list/exclusionary list.(especially when we have a discussion about multiple appraisals that just happen to be from one appraiser).

By the way, a guy like this probably can be saved as he did not do anything dishonest, he likely just had a really bad mentor.

 

[J Grant]

]I pended the file with some stips even though I believe that the contract price is supported....

The purpose of an appraisal is not to support a SC price...how do you know this appraiser is not a number hitter who ignored sales in the subject division because they did not "support the contract price, and went outside to cherry pick higher price sales? " If I were in your position I'd be ordering a field review.


I am using this as an opportunity to try to educate this guy. Since we are only the insurer and not the loan originator, I do not not have direct contact with the appraiser and cannot called him to have a discussion, which is what I would do if I were the chief appraiser at the lender.

Can you call the lender and have a discussion with them? Does this appraiser really need educating charging a fee of $450 and getting it, or are they a number hitter, who lender is happy to pay a good fee to because of that?

I am not going to turn this guy into the state board if that is what you are asking. I will not turn in someone for making a mistake that does not involve dishonesty or a likely inflated value without first giving him or her a chance to correct that mistake. In this case, the 22 sales in the subdivision that this guy did not use most likely would have supported the appraised had any of them been included in the appraisal.

How do you know if any of the 22 sales would have supported the appraised value since the appraiser did not use any of them? I'd ask the appraiser to list the 22 sales and their prices to see if that is the case.

 

[Eli]

I wouldn't bet my life that ethics are not involved. I am basing my opinion solely on your opinion of value being supported by sales in the subject neighborhood.