A WaMu Newsflash---that old conflict of interest

[larryhaskell]

Your right Blue. I make my decision before I even schedule an appointment. Anything other than a tract house I upgrade to interior. If they are tract homes but have basements, I upgrade. If it is a tract home but the sale price is at the high end of the range for the model, I upgrade. If I complete a drive by and I notice anything that causes a concern, I upgrade. And yes I do charge for the additional time. WaMu has never denied any fee request I have ask for. This policy isn't just for WaMu, its for all of my clients. The main difference is that WaMu never whines about the upgrade or increase in fee.

Blue, if your policy is to never do a drive by, then I accept your position because that's a business decision you have to make. But, if you will do a drive by under certain conditions then WaMu makes it easy. If WaMu were to ever deny my request to upgrade to an interior inspection I would then decline the assignment but it hasn't happened yet.

In your post, you mentioned that you would upgrade to an interior inspection 100% of the time because you want to see the interior because you represent the buyer. I would think you would be representing the lender, aren't they your client. I admit that a side benefit of our appraisal is that it provides information to the buyer that may confirm that the sale price is reasonable or tell them that they have made a big mistake.

As Frederick, Tim(Texas) and Randy and I have mentioned, WaMu is a good client for us. We have merely pointed out that the Newsflash from WaMu that started this thread may not be exactly the same as reality based on our experiences. As we discuss various clients on this forum, we are usually cautioned to stay away from certain lenders and AMCs. As far as WaMu is concerned, there have been at least four appraisers that participate in this forum on a somewhat regular basis that have clearly stated that WaMu may not be the ideal client but they have been good for us. While I don't personally know Frederick, Tim or Randy, I can't vouch for their business integrity. I have however read many of their posts and believe them to be credible individuals. However, I can vouch for myself. I follow the rules to the extent that they can be understood. I participate in this forum, take more continuing education classes than is required by my state and read all of the written information about appraising I can find to stay informed. I might suggest Blue that you might consider doing some work for WaMu and then make up your own mind. That way, you can speak from experience and not just speculate.

 

[Jo Ann Meyer Stratton]

I occasionaly complete assignments for WaMu also and do not have a problem with the memo. I also have other clients that order a lot of 2055s with a similar policy and I don't have a problem with them either. My policy is very similar to those clients. It really is quite simple. If the appraiser feels comfortable doing a 2055 exterior only due to having information in some manner that provides that comfort level, go right ahead with the order. If there is some hesitation by the appraiser because sufficient information is not available, call the client, discuss the problem with the client. Then the appraiser makes the final decision, upgrade to an interior 2055 or 1004 with the clients agreement or refuses the assingment if the client will not upgrade. Occasionaly there will be an exterior 2055 order for pre-foreclosure where it is clearly understandable that the owner is not to be contacted and interior is not physically accessible because the owner is standing in the driveway with a shotgun. So then the appraiser needs to make a decision--go ahead with the exterior 2055 (long angle lens), disclose everything (including a photo of the shotgun with the long angle lens), lots of extraordinary assumpitions based on what can be observed from the street and bill the client. If the appraiser decides they still won't do it--decline the assignment and go on to the next problem. But at times a 2055 exterior is very doable--you saw the home last month during a realtor's tour, you appraised the house next door several weeks ago and could see the rear of the new subject, the house is bordered on three sides by streets and alleys, etc, etc so you can see every inch of the exterior and yard. It is in a cookie cutter subdivision with many sales, listings (active, withdrawn, cancled, pending) of the same model, all in a tight range, from the exterior it doesn't look any different than any other home in the subdivision. And because of the extraordinary assumption that the interior is average condition for the neighborhood and it turns out to be trashed, the value is not valid, which you do state in your report.

But everything is each appraisers personal decision-to do or not do.

 

[Pat Butler]

The main issue here is whether or not an appraiser would be more inclined to underappraise a property in anticipation of getting more money from the upgraded 'full' appraisal. The fact is, an appraiser- under these conditions, will make more money if the property under-appraises.

There are issues regarding 'compensation conditioned on the reporting of a predetermined value". See Ethics and AO-19. Specifically, lines 107-130 of AO-19. In part, "...unethical to accept compensation when it is contingent upon.... the occurence of a subsequent event directly related to the appraiser's opinions...." Whether or not you receive the order for the full appraisal is indeed contingent upon the results of your drive-by appraisal. Very clearly a USPAP violation in my opinion.

Pat

 

[Frederick R. Ruffell]

Pat you are wrong, "The main issue here" is WAMU's news flash and them asking for appraisers to do a certain thing NOT weather there are unscrupulous appraisers that cannot resist temptation.
Again I say if the assignment calls for an exterior only the Appraiser must always make the extraordinary assumption that the subject is in average condition, NOT above average, NOT below average. If the final opinion of value does not meet with the clients expectation then it is up to them to request that you broaden the scope to include the interior inspection. That is there decision to make at that time. I am sure we will all see more of this strategy with the new changes that are coming to USPAP in 2003

 

[Pat Butler]

The original post said, "Value Below Sales Price: If your initial opinion of value is below the negoitiated purchase price for the transaction, notify the DSM promptly. If your original assignment does not include an interior inspection, you will be asked to upgrade the assignment to include an interior inspection."

If that isn't a contingency, then what is? It's a classic if/then argument in its purest form which is practically a definition of 'contingency.'

The fact is, the second appraisal order is contingent upon what happens with the first appraisal order. Do you disagree with that? Again, clearly a USPAP violation.

I would agree that any drive by appraisal requires assumptions. However, whether or not the appraiser assumes the the condition is "Average" depends on the client's instructions- not necessarily the appraiser's own autonomous decision.