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? A Legal Way To Do Cmas For $$ ?

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John Niumata

Freshman Member
Joined
Aug 27, 2003
My first post - be gentle.

I recently saw an appraiser offer a service on their website that I thought could not legally be done.

The service was basically a CMA search and the fee was $25. (The appraiser took this amount off the price of the full appraisal if the order for that address was recieved.)
Although I am not sure what the buyer recieves, I would think that the product would have to be a price range.

I would love to offer this service and if I was not an appraiser I would have already done it.

one of the reasons I want to offer this product is that it seems that many order requests I get these days have a clause stating that if the value is going to be a problem then they want a call back before the appraisal has been started. That means I have to do a preliminary search before I can really accept the order anyway.

Is there a way for me as an appraiser to legally offer this service and charge for it?
would it be an appraisal?
any thoughts?

I am thinking that if the scope and intention is carefully predefined then it could be done (but I have been wrong plenty!).
Of course if it is going to take too much work to do this legally I would reconsider price or whether I would do it.

I have also recently seen a product from a prominant company in Greensboro NC that has limited scope, I am sketchy on the details tho, but I think it is a good idea too.

thanks all
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
OK, I will play nice. :mrgreen:

Comp searches or what ever name you want to call it are not illegal. A waste of your time, but thats your choice.

With that said. As an appraiser if you were to give the Lender a list of sales and what they sold for and you give NO VALUE INDICATION WHAT SO EVERthen it is not a problem, you have not done an appraisal.

If you give a value of ANY KIND, be a point estimate, a range or a wild butt guess by USPAP (as I understand it) you have now done an appraisal. That is not illegal either. You can do this all day long and for free if so you choose. The catch is you have to have a work file showing how you analyzed those comps and how you arrived at your value. That is to much work for me to do for $25. And I am not covered up with work either, I could actually use more.

I see comp searches as a waste of my time because what will happen is the lender will try to get you to give them a value. The sales data will mean nothing to most of them. They are going to call and tie up your time trying to pick your and brain and get a value of some kind out of you.

Or they will come to a value conclusion using the sales you gave them (using the highest sales most likely) and expect you to appraise it around that.

Considering in most cases you have not seen the house what makes you think you can pull sales that will work? To be fair to your client your going to need sales above and below average just in case. Then the sales price ranges will be so great that it will most likely be useless to them.

Now you client has paid you $25 for nothing. They will use you a couple of times if your lucky and move the next guy. Also I have doubts they will pay you when they can get it for free from the number hitter across town. But if they do, what happens the first time they decide the house will go 100K and you come in at 90K and kill their deal? They will go somewhere else.

Now my advice is read USPAP AO-19, its online. Follow it and write you up a standard letter and save it as a template based on AO-19. When you get those requests with the values on them send your letter to them saying you can't be bound to their terms. 19 out of 20 will accept it. If they don't you don't want to play ball with them anyway.
 

John Niumata

Freshman Member
Joined
Aug 27, 2003
Thanks Jeff

going by prior experience you are right about the way clients will deal with the data once they recieve it. You are bringing back memories of hard learned lessons.
I remember the last time someone in the office gave a price range, it was and understatement to say he regretted it.

Thanks for the info
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Your welcome and I have to admit that before I found this forum I would have been tempted to do those too. Being here has changed my attitude dramatically. Hang around and you can be a tough old appraiser too. :mrgreen:
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Originally posted by Jeff Horton@Aug 28 2003, 01:13 PM
OK, I will play nice. :mrgreen:

Now my advice is read USPAP AO-19, its online. Follow it and write you up a standard letter and save it as a template based on AO-19. When you get those requests with the values on them send your letter to them saying you can't be bound to their terms.
And if that doesn't do the trick you can then quote them Florida Statute 475.624 (17)
" The Board may deny an application for registration, licensure or certification; may investigate the actions of any appraiser registered, licensed or certified under this part; may reprimand or impose an administrative fine not to exceed $5,000 for each count or seperate offense against any such appraiser; and may revoke or suspend, for the period not to exceed 10 years, the registration, license or certification of any such appraiser, or place any such appraiser on probation, if it finds that the registered trainee, licensee or certificate holder:
Has accepted an appraisal assignment if the employment itself is contingent upon the appraiser reporting a pre-determined result, analysis or opinion, or if the fee to be paid for the performance of the appraisal assignment is contingent upon the opinion, conclusion or valuation reached upon the consequences resulting from the appraisal assignment." Note: the bold type is mine for emphasis.

I don't know about you, but I don't want to face a $5,000 fine or suspension for 10 years, so I just don't do Pre-comps, pencil searchs or any assignment that instructs me to STOP working if the estimated value isn't going to make it. I very politely ask the client to remove that instruction from the appraisal order and I will be more than happy to accept the assignment.
 

Will43

Senior Member
Joined
Aug 13, 2003
Professional Status
Licensed Appraiser
State
Ohio
What do you do when you receive an order with an estimated value that's ridiculous and they have this statement " Do not complete the appraisal if value is not there. Stop and call Loan Oficer imediately!" , value must be within $5000 or stop and call loan officer, If the value is not obtainable, stop and call loan officer. I always put this in my ads " No Precomps" I often get this response " I realize you do not do precomps, but just make sure the value is ok." The way I look at it ,if they want to find out, order the appraisal. Also, they want you to stop after inspection if the value is not ok. I once had a loan officer ask me if I would go out to the property for free to make sure the estimated value was ok. I think in the future I am going to tell them that I do my sales research after inspecting the property and have no idea about the value until the report is completed. When I tell them that I do not know what the estimated value will be until I inspect the subject and complete the report, their response is " Don't you know the area?" " I have a previous appraisal for zzz, so it will definitely appraise for a minimum of zzz". "The homeowner told me it's worth zzz, so this has to be true. " "I do not want to waste the homeowner's money if you can not get the value." " I want you to complete the appraisal only if you can get the value" It's like they all have a book telling them what to say based on the appraiser's response.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Will,

I'm finally at a point that I just laugh at them most of the time. NO... I will not give you the value until the completed appraisal is being sent. I work on COD so are you planning on sending the check to me over night deliver or have you made arrangements for the borrower to pay me?

"You'll know the value as soon as you receive the finished appraisal. That's real close to when I'll know the value."

Truly... I do turn down any orders like that or as Chris Colston said, they can change the order so that I can legally accept it. I have sent them AO-19 from USPAP.

Clients like that will use and abuse you. Get rid of them!!!! I almost starved for over 5 years while keeping my ethics intact because I wouldn't play by their rules. Now, I'm still busy even though many here have slowed down. You will gain a reputation and if you want it to be a good one, get rid of clients that ask this of you no matter how difficult it is. And I really do know how difficult it is.
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Originally posted by will miller@Aug 28 2003, 08:11 PM
What do you do when you receive an order with an estimated value that's ridiculous and they have this statement " Do not complete the appraisal if value is not there. Stop and call Loan Officer imediately!" , value must be within $5000 or stop and call loan officer, .....
Real simple. I fax them back something like this:

We are in receipt of your request for an in-house pre-inspection report prior to the field inspection request.

As a mortgage professional you have rules that govern your profession that you must abide by. The same is true with Appraisers. We have the Uniform Standard or Appraisal Practice (USPAP) that we are bound to follow.

While your request is not disallowed by USPAP there are certain rules we must follow. To paraphrase the rule that applies to in-house pre-inspection report prior to the field inspection it simply states that if an Appraiser gives any indication of value of any type he has performed an Appraisal. It also states that all appraisals must have a work file with documentation showing how the Appraiser arrived at the value conclusion. In order to perform an in-house pre-inspection report prior to the field inspection I must do an in-house pre-inspection appraisal prior to the field inspection appraisal.

While I am perfectly willing to perform an in-house pre-inspection appraisal prior to the field inspection appraisal. I think it is only fair to your client to point out that if the we perform the in-house pre-inspection appraisal prior to the field inspection appraisal and this looks favorable then there is a second fee for a field inspection appraisal.

As one professional to another the reason you and I work is it to make money. Because of high default rates I require payment up front for in-house pre-inspection appraisal prior to the field inspection appraisals. The fee is $150. Please note that this fee is not applied to the field inspection appraisal fee.

May I suggest that it would be simpler, cheaper and faster to do things the old fashioned way and dispense with the in-house pre-inspection appraisal prior to the field inspection appraisal and just perform the old fashioned appraisal and determine the estimated markets opinion of value. This is faster, cheaper and much more accurate all be it a bit old fashioned. Please let me know which way your client prefers and then we will be most happy to proceed accordingly


And yes I really sent this. He faxed back an OK and the got really testy when it didn't come in. Claimed he didn't get the FAX. He shut up when I asked him if he wanted me to fax him a copy of his fax telling to go ahead.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Here's a response I sent for one like that just last month:


Per USPAP Advisory Opinion 19 (AO-19):

Illustrations of unacceptable appraisal orders #6 & #7:

If the appraisal order states something similar to:

#6: If this property will not appraise for at least $_________, stop and call us immediately.

#7: Please call and notify if it is not possible to support a value at or above $_________ before you proceed.

USPAP AO-19: Suggested answer that an appraiser would used in the circumstance of receiving an order with this type of wording is:

"Your request is acknowledged, but is it important for you to be aware tht I must develop an appraisal before I can tell you whether the property will support the value indicated. It is also important for you to be aware that your statement of that amount with this request for service does not, in my view, establish a 'condition' for my performing the appraisal. If you intend it to ba a condition for performing the assignment, I cannot accept the assignment because it violates professional ethics."

******************************************

Your appraisal order contains the following comments:

"IF VALUE BECOMES AN ISSUE, PLEASE STOP AND ADVISE **********"

and in the General Appraiser Instructions:

" - IF THERE ARE ANY ISSUES (ZONING, PROPERTY TYPE, VALUE ETC.) - DO NOT PROCEED - CONTACT ********** IMMEDIATELY"

also in the General Appraiser Instructions:

"Use ***********'s address for appraiser address in the report."

******************************************

PLEASE NOTE: My answer is that if this statement is a condition for my completing and delivering the appraisal for the subject property, I must decline this order as it would be illegal for me to accept it. In order for me to accept this appraisal order, please respond with either:

1) an email stating that the value conclusion is not a condition of my completing, delivering and being paid for this appraisal
or
2) resend this order with those particular value conditions removed.

Otherwise, I must decline this order. I will schedule the appointment after I receive your revised order or an email rescinding those items.

Regarding: "Use *********'s address for appraiser address in the report.":
The State of Florida Real Estate Appraisal Board has stated that it would be illegal for any Florida appraiser to state any address other than what is listed with the State License on any appraisal report as it would be misleading. Therefore, I will be using my own address on the appraisal report.

Thank you and I'm looking forward to working with your again.

Pamela E. Crowley
 

Chris Colston

Elite Member
Joined
Jul 24, 2003
Professional Status
Certified Residential Appraiser
State
Florida
This is what I send, both as a fax or e-mail:

To whom it may concern:
The Florida Real Estate Appraisal Board is enforcing Statute 475.624 (17) "Accepting an appraisal assignment contigent upon the certificate holder reportng a predetermined result, analysis or opinion". The penalty for performing this illegal act is revocation, suspension or a $5,000 fine.

Therefore, although we want your future appraisal business, we will not perform or accept any appraisal assignments where there is a predetermined value necessary to complete the assignment. Only after an appraisal is completed will a value opinion be released.


What I would really like to do is include a PS asking then to provide me with the last three appraiser's names and license numbers who did accept such assignments. :D That would surely clean out a few folks.
 
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