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After the rains

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Esox

Member
Joined
Apr 13, 2008
Professional Status
Certified Residential Appraiser
State
Wisconsin
I received calls today from two mortgage brokers with which we do business. This morning they were told by their lenders that due to the heavy rains and flooding here in some parts of WI they will require appraisers to return to properties appraised before 6/10/08 to certify that the property did not sustain flood damage.

I did an appraisal for one of the MBs with an effective date of 6/6/08. Since completing this appraisal, apparently the home did end up with about 1" of water in the basement, which is not uncommon here in Milwaukee and its suburbs. The appraisal was not completed until 6/12 as we were told to wait for an amendment to the offer to purchase dated 6/11/08. The amendment included a number the seller would pay for "buyer's closing costs and pre-paid items, including buyer's homeowner's insurance."

Now the MB is telling us that this amendment was actually written due to the water in the basement that resulted in the need for carpet removal. Nice that they worded it so honestly. His lender is asking us to go back to the property and state "the property was not damaged by the flood", which in this case sounds to be seepage or sewer back up as this area of Milwaukee County did not truly flood. Apparently, this is not the only lender he deals with who will be asking for this type of statement. They will accept this statement in a revised version of the appraisal, in a letter on my company's letterhead, or on a 1004D.

The lenders have changed what they want stated since this morning when they initially wanted a comment stating, "the subject property was not affected by the natural disaster nor was its value affected due to damage to surrounding areas".

I'm more than a little uncomfortable with this request. I can easily go back to the property. If it is cleaned up and wet carpeting removed, I can state that, but how do I know that there is no damage that is not visible, or that water got somewhere unseen and somewhere down the line mold begins to grow, etc.?

The other MB I talked to has a deal where he had no appraisal done, and the same lender is telling him to hire an appraiser (in this case, me) to inspect the property and make the same comment about there being no damage. This request makes me even more uncomfortable.

Of course the MBs think it's no big deal to go back and say everything is fine. These two guys are stand up, but were kind of shocked when I suggested I could be opening myself up to some pretty serious liability. They, of course, want their loans to close.

My wife found an article titled "Valuation Insights & Perspectives: Appraising after a natural disaster" authored by a Robert C. Wiley. He works for my E & O company. This article deals with similar requests appraisers in FL apparently receive after hurricanes. It has some additional language suggestions that are helpful, but again, it is somewhat specific to hurricanes, and what I am dealing with is sewer back up or seepage.

I am posting this prior to speaking with my E & O provider as I am in the office just briefly this afternoon, and wanted to find out if others here have dealt with the same thing. Rest assured, my wife will be calling our E & O provider to get their input, but I would sure love some from the experts here, as this is a new one on me.

It smacks of "put the liability on the appraiser, they thrive on more liability."

Thanks,

Kevin
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
All you can be is honest. I've done the hurricane inspections here in Florida and went back out while most looked from the street I wanted to get inside the houses again. You did go in and there was water in the basement. They say it is from something other than the "natural disaster". That's possible, but it is still there when it wasn't there on the 6th. I'd put in the letter that "Upon reinspection of the property after a natural disaster involving flood waters, the subject was found to have approximately 1" of water in the basement and an inspection by a qualified professional to determine the cause and extent of the damage is necessary."
 

Esox

Member
Joined
Apr 13, 2008
Professional Status
Certified Residential Appraiser
State
Wisconsin
Jim, my post probably wasn't very clear as I was trying to bang it out before I had to leave the office. I have not been back to the property yet. The MB is telling me there was water, but it has been cleaned up. I'm waiting for a call back from E & O. My wife talked to a couple people there, but they wanted her to talk to someone in claims. I may be overreacting, but this is new to me.

Everything is a problem these days it seems. That was about the only strightforward sale I've appraised in weeks, and now this.

Kevin
 

Mztk1

Senior Member
Joined
Dec 3, 2006
Professional Status
Certified Residential Appraiser
State
Florida
I know the feeling. Brokers are desparate and expecting us to go along with everything so they can make ends meete. These are difficult times for sure.

Any appraiser can go look at a house for damage, it doesn't have to be the appraiser who did the original appraisal. I'd pass on the inspection. Chances are there is going to be some moisture in the basement and you will feel pressed to overlook it. It just insn't worth it. The buyer knows about the damage. If you go out and say there is none and the damage is more severe, that can run into a problem for you down the road. At the very least you are telling the buyer appraisers can be manipulated and that doesn't instill the public trust in our profession. You are in a lose/lose situation.

Call the LO and tell him you know too much and that he needs to get another appraiser who can remain objective while doing the inspection.
 

Ray Miller

Elite Member
Joined
Feb 20, 2002
Professional Status
Licensed Appraiser
State
Wisconsin
Wow, I would go back out, then mark the report that a certified inspector needs to inspect the property. I would note that clean up has been done, but I don’t know the extent of the damage.

We had our insurance adjuster out yesterday for the water that we had in the basement. He called for an inspection by a mold and fungus person, before they will settle our claim. Even one or two inches will do a lot of unseen damage. What about the water pressure from the outside of the basement walls. Any damage there, I know of two basements that were pump out and the pressure from the wet earth on the outside caved in the basement walls.

Regardless if they had water in the basement and it was a finished basement with wallboard or drywall and trim. No way would I say it was ok.


Just my thinking.
 

RSW

Elite Member
Joined
Feb 18, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
I used to be a disaster housing inspector with FEMA and I know that sewer backup and seepage are caused from the disaster. I would be concerned with making any statement that the subject property was not affected by the natural disaster nor was its value affected due to damage to surrounding areas. How could it not be effected by the damage to the surrounding areas. The area is economicly effected and the area my have a temporary stigma to it since it was flooded.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
easy....state that the appraiser could not determine if the property was damaged and recommend a structural and foundation inspection by a competent engineer and a certification by a Home Inspector.....throw the liability right back in their face....

Otherwise, for free to $100 you can assume the liability for the damage that may be hidden...its a choice. I know what choice i would make.
 

Esox

Member
Joined
Apr 13, 2008
Professional Status
Certified Residential Appraiser
State
Wisconsin
We talked to our E & O, and they say these requests are pretty common after natural disasters. I would hardly classify this property in an area that was hit by a natural disaster. There were not cars or houses floating down the street. They have a bunch of language they suggest we utilize if we do this. Take pictures and report what I see. They suggest we say I was here at this time, here is a what I saw. I am not a foundation expert, electrical expert, etc. They do not suggest saying anything about value, or revising the original report. Rather use the 1004D or a letter. If I do it, it will be a letter.

Apparently there are appraisers that do this for free. The E & O company says that is very ill advised. No freebies from me. They feel going through and making statements about the property that I did not appraise is a bad idea, as there is no basis as to what was there before.

I'm going to talk to my client once more tomorrow before I decide. Thanks for the responses.

Kevin
 
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