Appraisal for the purchase without the purchase contract.

[Jeffery Hall]

I don’t want to make the client to pay for another appraisal if they don’t have to but I want to know how others do in similar situation. I don’t think this is a difficult case but I think there is a fine line there but I am not sure about it.

Something that needs to be said, We do not get paid for appraisals. WE GET PAID FOR SOLVING PROBLEMS.

This series of assignments are problems. You (we) should be paid for the time and expertise needed to solve the problems.

Please note I wrote "problemS", plural. There are at least two SOW problems to be solved. Get paid for them.

You do not own their problems. You should be paid commensurate with your ability to solve PROBLEMS. You should not be expected to discount your fees.

You: "Doc, I broke my right leg. Can you set it for me?"

Doc: "Sure, hop on over to my office on your left leg, and I'll set your right one while you wait for the bus to take you back home. In fact, I'll even put a cast on your right leg if it needs one."

You: "Doc, but I broke my other leg too. Do you think that since they are almost identical you can set the other one for free? And since you will be putting a cast on my right leg go ahead and make another one just like it. So what that it won't fit perfectly (it will be for the right leg, and not the left one, but used on the left leg, after all)."

Doc: "Of course I can. As a professional I see no reason why you, a lay person with medical needs, should not dictate treatment."

 

[Webbed Feet]

Ed,
Your point is about the purchase price as of the date of appraisal and the new purchase price after the delivery of the appraisal. In my situation, there hasn't been a purchase price or purchase contract as of the date of appraisal. The purchase price is to be determined after the delivery of the appraisal but the assignment is for the purchase and the sales price is only tentative but not decided yet as there is no contract nor the meeting of the minds yet.

Mr. Malekpour,

Holy Cow!!!! I am the only one here with alarm bells going off about all this? First, I am having a horrible time even concluding who the "Client" is. Next, it's one thing to have people telling you a contract exists, but they just refuse to provide it with a MB your client, and entirely another when they are openly disclosing there has not even been an accepted offer yet. So they are saying not only does no sale yet even exist, but the parties involved intend to all rely on the appraiser, both the seller and the buyer, to settle a possible future sale price for them. Let us now all complicate this with attempting to figure out how to do this and end up having a lender use the same work for a mortgage loan to!!!!

Has anyone here ever heard of serving too many masters? So later on one ends up getting sued by all of them? I don't feel who the client is here is identified, I don't feel what the intended use is has been identified, and I don't believe the liability being generated by all this has been thought out. Perhaps if more here had real estate brokers licenses and understood what is called "Dual Agency" more of you would understand why no appraiser should be placing themselves in a position of advising both a buyer and a seller at the same time on a undecided sale price of real estate. You're in a no win situation if you do. Tick anyone off on any side .. if one thinks you are low, the seller sues you.. if the other thinks you were high.. the buyer later sues you. If that report gets used for lending, and later it is brought out either the seller or buyer could have been considered your "clients" the lender probably is going to sue you and you could go a nasty USPAP violation route for failing to inform your buyer "client" the appraisal should be rejected by the lender.

I recommend only two things be considered. A) A private party appraisal with ONLY the seller or buyer the client, not both. Reported on a non-Fannie Mae form. Intended use to negociate a sale price, with the understanding that Market Value and Sale Price are not the same thing. Engagement contract in writing ahead of time big time!

B) Money source hires appraiser for a intended use of a financing transaction. Buyer and seller are not intended users, negociating a contract price is not an intended use.

Same appraiser does NOT accept both "A" and "B" assignments because if you do you now have yourself trapped into a prior value opinion that if different later is going to be one ***** of a time dealing with even if USPAP allows it to be done. I don't see how anyone could take assignment "B" after doing assignment "A" and remain unbiased. The liability of a contract noegociation and then the loan transaction with all the same parties involved alone would bias a person.

Barry Dayton

 

[moh malekpour]

I guess some of you guys read only one post and jump into the conclusion. I said that the assignment was from the loan agent for the loan of a purchase just like a typical appraisal order. The rest was my speculation like having two sow or intended user and at the end I said that it was not the correct way to go. Usually when I get orders like that, I call the loan agent and ask for the purchase contract. The loan agent told me that the buyer and seller are members of his family and haven’t decided on the purchase price and there is no purchase contract. They want to know what would be the appraised value and based on that they make the transaction. I clarified with the loan agent that the appraisal would be for the lender and not the buyer or the seller and if they wanted to find out a market value for the house prior to purchasing it, they should order a separate appraisal. I asked the forum what else they would do in similar situations and some of them suggested that the best solution is to do the appraisal for the lender with some extra emphasis in the report that the intended use is for mortgage loan and intended user is the lender not the buyer or the seller and mention in the report that the purchase contract was not available and the purchase price was not decided. I cannot control the loan agent not tell his brother or father what the appraised value would be if I send him the appraisal and I don’t see any problem to develop the appraisal for the lender with not having purchase price and purchase contract.
Now, you guys who think this is a very complicated case and is going to violate the USPAP please tell me what is wrong if you disclose in your report that the purchase contract was not presented to you for review and the purchase price was not decided as of the effective date of your appraisal and clarify that the intended user is going to be the lender not the buyer or seller and intended use would be the mortgage loan transaction not deciding the purchase price. Are you going to turn down the assignment or are you going to force them to get another appraisal?

 

[moh malekpour]

Jeffery,
I agree with what you say but the discount that I was suggesting sounded a discount to them but it was not a real discount to me. Lets say you do an appraisal for lender A and get paid accordingly. If your client called you two weeks after you completed the appraisal and wanted to take the loan to lender B, you would ask them to get a new appraisal but are going to charge them the same fee? Lets face it, you don’t need to do all the work that you did two weeks earlier to produce the new appraisal report so, you would charge them for the time you spend on your work, not more, not less and if the time is less and I am sure it would be less the second time around, it is fair to charge them less and if you tell them that you are giving them a discount from your full fee, they would be delighted.

 

[Smokehouse]

I got an idea, tell them to come up with a purchase price that is way too high,put it in writing, sign and deliver it.....you do your appraisal and then they adjust their sales price to your appraised value

 

[Marcia Langley]

The property being appraised is known to be the subject of a pending Purchase and Sale Agreement, but the appraiser was not provided with the agreement for analysis. Therefore, the appraiser can not verify that the sales price reported by the client is accurate, or that the current property owner is the seller. The appraiser also has no method with which to identify any sales concessions which may be included in the pending agreement, and is unable to provide comment in the appropriate portion of the attached appraisal report form.

(my red)

Beth,

You remind us of some other items that would not be the 'norm' without the contract.

Moh,

If you have that talk with the lender, don't forget the other items besides price that may not fit the lender's guidelines.

 

[Webbed Feet]

Mr. Malekpour,


I appreciate your clearing up who your client is.. But before you believe anyone jumped to any conclusion.. reread some of what you posted and you try and figure out who the client is you were talking about.


First post:

I got an appraisal order for the purchase from a client and when I asked about the purchase contract, I was told there was none. I could do the appraisal and say in the report that the purchase contract was not available but I found out that it was a family transaction and they wanted to get the appraisal value first and based on that appraisal value, they wanted to make their minds about the purchase price. I said I can appraise it for the buyer or the seller if they want to know what is the market value of that property but if it is for the lender, and they haven’t decided what is going to be the purchase price, then I cannot call it an appraisal for loan transaction purpose while they haven’t decided on their purchase price. It is like putting the cart before the horse. By the way the loan agent is also a family member of the buyer and the seller.

Second post:

I don’t want to make the client to pay for another appraisal if they don’t have to but I want to know how others do in similar situation.

Third post:

I agree with you guys. I guess, I need to contact my client and clear things out. I think they have already decided to purchase but undecided about the price. It is hard to read poepl's intention. I just don't want them to pay extra for something that they don't need.

Honestly, how was anyone supposed to know your client was the loan officer? All we knew was there was a loan agent also involved who is a family member. Not who the client was. Your third post appears to be referring to the people undecided about the price as being your client and you didn't want them to pay extra.


Now that you've cleared that matter up, we agree very well on option “B” ... ... I don't see a lot of potential USPAP violations... I just could see one heck of a lot of liability most of us could live without.


Barry Dayton

 

[moh malekpour]

Mr. Malekpour,


I appreciate your clearing up who your client is.. But before you believe anyone jumped to any conclusion.. reread some of what you posted and you try and figure out who the client is you were talking about.


First post:





Second post:





Third post:





Honestly, how was anyone supposed to know your client was the loan officer? All we knew was there was a loan agent also involved who is a family member. Not who the client was. Your third post appears to be referring to the people undecided about the price as being your client and you didn't want them to pay extra.


Now that you've cleared that matter up, we agree very well on option “B” ... ... I don't see a lot of potential USPAP violations... I just could see one heck of a lot of liability most of us could live without.


Barry Dayton

Barry,
You are right. I mixed up client and the buyer/seller. The one that I am dealing with is the loan agent who is the lener/client. The buyer is his brother and the seller is his father or his father trust and that is why I mixed them up. when I say my client, I mean the lender. When I say, I don't like to charge my client extra, I mean the lender but the extra comes from the buyer pocket.
Now, can you tell me what is the extra liability for that appraisal that is not for any other purchase appraisals.

 

[T.E. Faravelli]

I got an appraisal order for the purchase from a client and when I asked about the purchase contract, I was told there was none.

The "statute of frauds" - also commonly abbreviated as "SOF" - is a rule of law that requires certain kinds of contracts to be in writing (not oral or "verbal") and that they be signed by all the parties to the deal in order to be binding. Real estate sales is one that requires the contract to be in writing. I would be concerned about the intent and motivation of the parties with respect to you the appraiser.

 

[moh malekpour]

The "statute of frauds" - also commonly abbreviated as "SOF" - is a rule of law that requires certain kinds of contracts to be in writing (not oral or "verbal") and that they be signed by all the parties to the deal in order to be binding. Real estate sales is one that requires the contract to be in writing. I would be concerned about the intent and motivation of the parties in respect to you the appraiser.

I wonder how an appraiser can review a verbal contract. listening to the tape of their negotiation?