Revision Request

[residentialguy]

@timd354

It does not matter why, but a contingent fee structure whereby your compensation is contingent in whole or part on the results of your analysis violates the Management section of the ethics rule (IMO). Additionally, maybe you are not biased, but such an arrangement certainly opens you up to a claim of bias

I disagree with this Tim. The intent of that was to keep the appraiser from boosting/exceeding market value in order to get a higher fee... e.g. Fee for a MV up to $350k is $400. Fee for a home with a MV of $351k to 500k is $550. Fee for a home with a MV over $500k is $700, and so on. The MV of the property has NOTHING to do with the complexity of the assignment. It's completely bogus fee setting that encouraged inflated values.

Charging for ROVs are simply a fee charged for additional work requested by the client that is added from the original SOW. If the appraiser finds that they made a mistake, then obviously that should have been included in the original report, thus no fee would be warranted. This is nowhere near the intent of the management section of the ethics rule.

However, as a side note, it is very pertinent the lender's choice to pressure the appraiser for value...a violation I highly doubt they want to face. just sayin...

 

[jturner01]

Excellent point Denis. It's been some time since a lender asked me to review comps KNOCK WOOD (probably since I don't work for Streetlinks and some of the others) but those of you that deal with this on a regular basis, do you ask for the source of the suggested properties for review to verify that said sales are not attempts at impacting value? I'm not being a snark either (although I love that word), but am curious who in actuality, is qualified to propose properties (not necessarily comparables) for us to review? I would think the only one even remotely qualified would be a certified appraiser with competency in our market area. Not a machine, QC clerk, offshore entity, real estate broker or the like.

I get them all the time here in Florida. Our market is flooded with new Realtors and we have a problem with the supply of homes being super low and they are pricing the homes in line with the listing and closed sales are not keeping up with the active prices. Even after time adjustments I am not coming in anywhere near a lot of the contracts. Unfortunately they are not taking into consideration a lot of things that matter and almost none of them know how appraisals work...So I get these requests a lot. I typically will just answer why I did not use them (if they were not already addressed, which I try to do before hand). A lot of time, I will explain also that they are obviously not qualified to complete an appraisal review and could potentially be brought before the board, as a lot of them will also question individual adjustments. It is funny, typically I find it is the investors who are pushing the most. It is a mess right now.

 

[TRESinc]

I disagree with this Tim. The intent of that was to keep the appraiser from boosting/exceeding market value in order to get a higher fee... e.g. Fee for a MV up to $350k is $400. Fee for a home with a MV of $351k to 500k is $550. Fee for a home with a MV over $500k is $700, and so on. The MV of the property has NOTHING to do with the complexity of the assignment. It's completely bogus fee setting that encouraged inflated values.

i agree with you but many here do not. people have posted, many times, on this board that they automatically charge more of the contract price or perceived value is over $X. i guess i was absent the day in appraisal 101 class when the taught everyone that if a house is worth more the appraiser has to charge more.

 

[The Bob]

So, am I violating the Management section when I agree to a "rush" fee that is contingent on me turning in a report at a certain date? What if I miss the due date and tell the lender they don't have to pay me the rush fee?

 

[residentialguy]

i agree with you but many here do not. people have posted, many times, on this board that they automatically charge more of the contract price or perceived value is over $X. i guess i was absent the day in appraisal 101 class when the taught everyone that if a house is worth more the appraiser has to charge more.

That's how RE Agents work.

 

[TRESinc]

What if I miss the due date and tell the lender they don't have to pay me the rush fee?

the person on the other side of the phone will most likely die from choking on their coffee and/or food as no appraiser has ever done that in the history of man

That's how RE Agents work.

and some appraisers apparently.

 

[Meandering]

So, am I violating the Management section when I agree to a "rush" fee that is contingent on me turning in a report at a certain date? What if I miss the due date and tell the lender they don't have to pay me the rush fee?

The better question is
what part of recognized appraisal methodology states that after an appraisal is complete,
the appraiser researches additional sales provided by an interested party?

Sounds like that's an entirely new assignment, requesting an entirely new opinion of value.

Hopefully those creating these second, more exciting reports, are commenting to their prior service of opining a value for the same property and clients within the past 3 years, and utilized the revised market value definition.

The most probable price that a property should sell for, when all agents, borrowers and brokers are happy.

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[residentialguy]

So, am I violating the Management section when I agree to a "rush" fee that is contingent on me turning in a report at a certain date? What if I miss the due date and tell the lender they don't have to pay me the rush fee?

Exactly. You can say the same with doing a Review. If you find that that there is a flaw in the value, then you have to expand your SOW and do your own appraisal, which you'd need to charge them way more for that. This whole "you're violating the USPAP because the results are contingent" is bull.

 

[BRCJR]

Lines 228 and 229 together with line 233 (and an argument can be made for line line 231 in lieu of or in addition to line 233)

Such an arrangement also opens one up to an accusation of a violation of line 191 (i.e., a claim that the appraiser was biased to the additional sales because otherwise he or she would have to refund part of the agreed upon fee)

First and foremost, an accusation is not a violation. I am not arguing "would I want to risk" this issue. I am stating what the USPAP says and my interpretation of such.

Line 228-229 and 233 are not relevant to this specific issue, in my opinion. The assignment had already been accepted without any contingency.
As to line 233, again the assignment had already been accepted, but for the sake of argument, the results of the ROV could be adverse to the clients desired outcome.

Not sue how we jump to bias (line 191). Appraisers determine good comps bad comps all the time.

I think I would be pretty clear in what I have done when I certify (USPAP) lines 741-750.

Isn't everything you are pointing out related to the acceptance of an assignment?

 

[residentialguy]

and some appraisers apparently.

My first appraisal company worked that way. It was definitely a push for value. They need 510K to make it work..come on, I'll pay you more! ...unless the sale price was $498k. Don't you dare say it's worth more, or the client will accuse you of trying to get extra money from them.