Double Trouble - How Risky Are Hybrid Appraisals, And Where Do The Hazards Lurk

[Terrel L. Shields]

The disclosure that you never inspected the property will protect you (hopefully).

or hang you...
USPAP compliance is not the issue. Judges can and do ignore such epistles. But they do have a notion of "due diligence"...what SHOULD you do not what the Good Book says you ought to do. What happens if the judge says you should have inspected it?

 

[Tom4value]

or hang you...
USPAP compliance is not the issue. Judges can and do ignore such epistles. But they do have a notion of "due diligence"...what SHOULD you do not what the Good Book says you ought to do. What happens if the judge says you should have inspected it?

That’s why I added, “hopefully”.

Fans of hybrids say the disclosures will hold up. My “yeah, but” to that is as an appraiser, it is our responsibility to determine if we have enough information to produce credible results. The photos of the subject you get from the broker is just of the front. I have no way of knowing if a side of the house has no siding or visible damage, something I can see even on a drive by. If that is the case, I can say in court that my disclosure says that I didn’t inspect the property but the bottom line is my appraisal is useless.

 

[J Grant]

Whether disclosures hold up or not, apprqaisers are taking the same level of responsiblity and development as if they inspected. so our "disclunt", if any, for having a third party inspecting should be minimal

 

[Eli]

Lack of external factors to property lines are as dangerous as factors internal to property boundary lines.

 

[mike32716]

If the 1004p is tiered upgrade Fannies PIW update states that in states where property “inspection” is licensed and regulated by the state, so must the inspector be who submits a report. That would be about 25 states.

I believe they are not referring to data gathering. The update also addresses properties after a natural disaster. FNMA permits inspection by someone other than an appraiser (home inspector), and defers to licensing if applicable.

 

[George Hatch]

The solution is to be assertive


Did the appraiser physically inspect the subject ? Y/N

Did the appraiser physically inspect from the street any of the comparables? Y/N

Did the appraiser use information from public records and other 3rd party data sources believed to be sufficiently reliable for use in this assignment? Y/N

Does the appraiser have reason to consider the information provided by the 3rd party inspection report to be significantly inaccurate or otherwise inadequate for use in this assignment? Y/N

Did the appraiser review the information and imagery contained in the inspection report? Y/N

Did the appraiser form their own opinions about the quality and condition of the site improvements from the descriptions and imagery contained in the inspection report? Y/N

Does the appraiser intend for this appraisal to be used for any parties other than ____________ ?

Was this appraisal prepared by the appraiser with the intention of meeting the known expectations of the above intended user?

Does the appraiser intend for this appraisal to have any other use besides ____________?

Does the appraiser recommend that ANY other parties which might have use or need for an appraisal on this property seek a separate appraisal from a duly licensed/certified appraiser who is to be engaged specifically for that use and those users? Y/N



Any off-label reader who proceeded to use an appraisal report with such a disclosure would have a tough time saying they didn't understand these disclosures. In my experience, even judges know how to read.

 

[TRESinc]

sure the appraiser is getting sued for a third party inspection report. duh.

If the so called inspector tells me the house is 1,500 sq ft, when in reality it is 2,000 sq ft, that is misleading and a significant error. keep trying to scope it away.

every profession needs ambulance chasers.

one would expect the appraiser to do their job and actually verify the data before placing it into a report, but then again it is you i am replying to so that may (probably) not happen.

It appears George is the only poster who actually read the article.

nothing new there

 

[djd09]

yawn yawn yawn. you sign them.

 

[Terrel L. Shields]

Talked to ex appraiser who hung up her shingle here in AR in June of last year. A month later gets a notice of a complaint from a 2017 appraisal and the board requested her to come to their office. She replied no way... I am out of business, what does it matter? Anyway, the issue ended up investigated and the worst error found was an 82 SF difference in size from her measurement and the homeowners. The board basically dismissed the issue except that since she didn't appear for the hearing, now has suspended her license for 2 years for not sending the work file...and wants her to sign a consent agreement??? Why? She retired a year ago. When you are retired, the workfiles are ground into paper sausage. But there is no fine. They basically said that if you were to ask to be reinstated, this was necessary. I say it is rather stupid...

But the point is this. When a "error" of 82 SF on a 4000 SF new construction exists, who is the homeowner going to blame? Who are they going to file a complaint against? Who are they going to sue? ...82 SF??? Do they sue the assessor for the measurement? The inspector? Nope...you can bet it is the appraiser if it is an origination loan regardless 40 pages of caveats and disclaimers.

 

[George Hatch]

You know, you're the only appraiser who comes up with these "retarded state board" stories. Why is that? What is it about your state's board that makes them so hyperactive that they'd even consider a complaint relating to an 82ft GLA variation?

No wonder you're so afraid of your board - they're apparently incompetent at appraisal review.