Evaluation Liability

[Terrel L. Shields]

Phil on liability with these Evaluations!!

 

[Deleted member 134708]

Regarding Evals.

I like this scenario:

You are sued by lender for something with your Eval. The EO lawyer is NOT siding with you as you were not engaged as an appraiser, so is arguing against you.

You then have to side with the enemy and have their lawyer explain you were engaged as an appraiser.

So EO can pick up the $400k tab and not you.

Appraiser is the coin that comes up tails every time.

2 teams arguing why you are liable.

 

[Terrel L. Shields]

2 teams arguing why you are liable.

Yes, and not "if" you are liable

 

[DWiley]

Regarding Evals.

I like this scenario:

You are sued by lender for something with your Eval. The EO lawyer is NOT siding with you as you were not engaged as an appraiser, so is arguing against you.

You then have to side with the enemy and have their lawyer explain you were engaged as an appraiser.

So EO can pick up the $400k tab and not you.

Appraiser is the coin that comes up tails every time.

2 teams arguing why you are liable.

In most (all but two) states, an evaluation done by an appraiser has to meet the requirements for an appraisal. Hence, it would be covered under the appraisal E&O, because it would have to be an appraisal report.

 

[Deleted member 134708]

Talk to Landy EO.

Guy said may not be covered if you were not engaged as an appraiser but an expert evaluator (or any term the client engages you as except appraiser)

I was just listening to the podcast and that scenario ran thru my mind.

 

[DWiley]

Talk to Landy EO.

Guy said may not be covered if you were not engaged as an appraiser but an expert evaluator (or any term the client engages you as except appraiser)

My state has a specific exception in the appraisal law so that an appraiser can perform an evaluation and is exempt from the appraisal law. That is very rare. In most states, if you opine market value and you are an appraiser, then the result is considered an appraisal report. In such states one would not have the option of acting as an "evaluator" rather than as an appraiser. Hence the "evaluation" would simply be an appraisal.

I have done many "evaluations" over the years that were delivered as restricted appraisal reports. Note - if such an option is used one must exceed the minimum requirements that USPAP puts forth for a restricted report. One must expand the content to meet all the evaluation requirements set forth in the IAG.

 

[Deleted member 134708]

Again.

Talk to Landy. They may not cover it. From guys mouth. Not mine.

 

[DWiley]

Again.

Talk to Landy. They may not cover it. From guys mouth. Not mine.

I don't doubt that. It is the answer would expect if one simply asked an E&O company if they covered evaluations. E&O typically covers appraisals, not evaluations. However, I seriously doubt if most E&O reps are aware that an appraiser providing an "evaluation" would be required, by law, to provide an appraisal report in most cases.

 

[Terrel L. Shields]

I have done many "evaluations" over the years that were delivered as restricted appraisal reports.

An appraiser cannot compete with an evaluator and every eval or short appraisal (restricted or not) subtracts from available full fee work

 

[DWiley]

An appraiser cannot compete with an evaluator and every eval or short appraisal (restricted or not) subtracts from available full fee work

When an "evaluation" is ordered the decision to use something other than a "full" appraisal has already been made. As appraisers, the choice is to diversify and do that type of work, or leave it to others.

I had no issue doing them at competitive fees. The hourly rate actually exceeded the hourly rate for "full appraisals." It is just a business decision. For us it was great filler work.