Appraisal: Incompetence/Recourse

[Austin]

Dee Dee: The problem with the story is that this person is not handling the problem the right way. You can’t just decide on your own volition after the fact that something didn’t meet your standards and take the law into your owns hands to solve the problem. The first gap in this story is that there are two contractual arrangements, one between the lender and the appraiser, and one between the lender and borrower. The appraisal policy of the lender or the agreement or the understanding that the lender has with the appraiser should have set the appraisal standard under the first contract. When this borrower went to that particular lender and asked for an appraisal, by implication they fell under the terms of a contractual agreement with the lender to pay an appraisal fee. This borrower did not contract with the appraiser; their contract is with the bank to pay the appraisal fee. That was the arrangement. Then too, my gut interpretation of this post is just to get some moral, or in this case immoral support, for not fulfilling their contractual arrangement with the lender.
Then, if the appraisal is not up to USPAP, the alleged justification for all of this hullabaloo, the proper procedure would be to report the case to the state appraisal board. This whole story stinks in my book.

 

[Ray Ohler]

How do you know "atc" is a she? I read and re-read the posts here and then went and read the six posts by "atc" and couldn't come to that "conclusion". Not that it really matters, but curious. I have to stop drinking coffee, OR I have to get busy.

 

[Dee Dee]

Austin,
What bothers me is that the lender agreed that the first appraisal (mobile home comps) was not acceptable, and the appraiser agreed to do it over again, except he charged for both appraisals.
If I were the homeowner I would have raised a fit for being charged twice, even though one of the appraisals was obviously negligent to all parties involved. At the very least the homeowner should have been told that they would get charged for both appraisals before the second one was done. That would have been a clear indication that something wasn't right and the homeowner could have opted out then and there. I certainly would have, then I'd have turned in the appraiser! If you had made such a gross error would you have charged for it? I'd have been so ashamed of myself that I probably would have done the second one for nothing and been praying that nobody turned me in for being such a bone head! 8O
I've also never heard of the homeowner being charged for a field review, this (at least in my area) is the lenders responsibility. Regardless of local customs, the homeowner should have been informed in advance that such a review would also be charged to them.
Added to that was the lender shoving additional costs into the closing fees that the homeowner had apparently not anticipated or been forewarned of and the whole thing stinks to me.
Had the homeowner been informed through the entire process just exactly what would be charged to them, I would recant my opinion entirely. If they knew that they might be charged so much for the appraisals and decided to commit to it anyway, then they would have known that there was a possibility that they would be comitting to a tidy sum and still not be able to get the loan that they wanted. It would be their gamble.
I agree wholeheartedly that the appraiser should always be paid regardless of the value outcome or if the loan will fly. My problem lies in what appears to be a lack of competence on the part of both the lender and the appraiser, and their apparent belief that the homeowner should pay for THEIR lack of professionalism.
It didn't sound to me as if this particular homeowner was as upset about not getting their loan as much as how they were expected to pay for negligence.
In hindsight, the best thing this person could have done was pay for one appraisal, then offer to negotiate the balance in court.

 

[Terry Russell]

Wow, I guess I got some things stirred up. Let's clarify.
1. I am a student pursuing certification in the State of Montana.
2. The only license I currently have is a driver's.
3. I did not just fall off the potato truck.
4. I was drafted into the U.S. R.A. in 1972.
5. An invoice from the underwriter stated the fees incurred had been paid by same.
6. I did not reimburse the underwriter.
7. I guess I will go to hell for that.
8. If I thought my actions at that time were totally wrong, why on earth would I post such a question on this forum.
9. The lender was Greenwood, if they would not accept the appraisal (and the nonacceptance was not d/t the LTV ratio) why should I?
10. If I could post the report on this forum, I wouldn't.

11. And for Austin, labeling me a person of low moral character is a bit presumptious at this point. I think that all individuals should never question a property valuation. Go blindly into the closing. Feel thankful that you are throwing money away.
I have walked out of three closings (bad, bad) why, the costs changed, an added fee somewhere, different APR. And I will do it again, if I choose to.
And Austin, you're right, ever since your reply this story does stink. Terry

 

[jtrotta]

atc services;
yep when you come here you will stir things up
1) Am glad to see you do have a "drivers license" in case you wanna leave town

2)I'm going to assume you mean Appraisal "certification" is what your pursuing :?:

3) Fees were paid by the Lender :?: I'm surprised-with all the questions here

4) #6 & #7 yep that may be true :!: #9-No one here said you had to

10) Why not, are you trying to hide something :?: :?: (typical attorney talk)

11) Nough said / with regards to all individuals never questioning a property valuation - they go on line everyday to see what their house is worth; they question their local assessors evaluation, so I believe many questions are presented. As far as being thankful you get to throw away money everyday - take that up with your political party, as you are-(taxes) wether you like it or not; really you don't have a choice there :roll:

Finally, you should walk away from closings IF - they told you one thing and then changed it all; it's called "bait & switch" under the premise that once they have you there, you'll just go along & sign. That would really be throwing more of your money away.

Conclusion; having not seen any of the reports, I stand by my original post with regards to "competency" - wether your property meets the LTV - is not the problem, if I read your original inquiry correctly.

As for Dee Dee & the mobile home/trailer quiz - from some of the inquires here, it could be a "TROUSE" for all I know; Dee Dee - have you seen any of the comps?? Because yall have some strange dwellings out there - I simply can't commit, based on heresay.

Hope you have learned something 8O -as we do support continuing ed here and at home 8)

 

[Jo Ann Meyer Stratton]

One comment in the original posting I would like to comment on. Everyone has automatically assumed that the appraiser that used "mobile" homes as comparables for the site built home was wrong. There might be more to the story. The original poster mentioned twenty acres and it sounds if he/she is out in the boondocks. Sometimes out there in the boondocks (And I do appraisals in the boondocks) there isn't much choice for comparables. After the appraiser has researched a fifty mile radius for the past three years for sales (any sale or active or pending or expired listings--at least something), that might be all that there is available for comparables. For example I did an appraisal of a one and one half story log cabin on five acres out in the middle of the desert, over one hundred miles from the next log cabin. The subject was located in an isolated area near a nuclear power plant, which was the main marketing factor. So for comparables I used a site built home three times larger within two miles, a manufactured home that was only few years old across the street, and a thirty year old mobile home with many site built additions within five miles. But they were the only residential sales within ten mile radius of the subject in the prior 18 months and all had close proximity to the power plant. There were not any listings, expired, pending or withdrawn. If I had gone twenty five miles away, there was a small town with houses on 5,000 to 10,000 square foot lots which would not have had the same marketing appeal. About thirty five miles away were acreages similar in size to the subject but in a completely different marketing area with a different economic influence. So what were the location factors, etc with the original subject property? If within a few miles were other site built comparables that either sold (dated or recent), pending or listed than the appraiser should have included those, even if in their opinion the manufactured homes (constructed after June 15, 1976) were most representative of the subject's market. It does sound like the very first appraisal should have had many explanations and maybe all the questions might not have arisen. Without any explanations by the appraiser in the original appraisal report and whether site built homes were available or not--those questions need to be answered before any action is taken. So it sounds like a complaint needs to be filed with the state and let them sort it out. If the original appraiser was totally incompetant, then I agree with the poster not paying the fee. If, however a competent, honest, informative appraisal report was prepared, then the protester definitely owes all fees the lender is charging. After all, that is the costs of applying for a loan and payment of fees does not guarantee that the loan will be granted. The appraisal is done for the lender's benefit to assist them in determing whether or not they want to invest their money in somebody's property. And they want to be able to get their money back either in monthly payments or selling the property if the loan goes into default.

 

[Austin]

Dee Dee: You are missing my point. The lender is the appraiser’s client, not the borrower. The appraiser contracted to do the appraisal based on the appraisal policy of the lender. Now, what the borrower thinks about that policy or what the borrower thinks about the quality of the work is irrelevant as is all that stuff about the fees on the closing statement. The borrower is entitled to a copy of the appraisal if they paid for it, but the content is none of his/her business. In this case, the borrower stated that “he ordered” the appraisal be redone. Who is he to be ordering an appraisal be redone, and if he did, then now he is the client and it is his responsibility to pay the fee? This business is bad enough now, but if appraisers do appraisals based on the lenders appraisal policies, the borrower doesn’t like the content of the report and orders it be redone based on his standards, then where does that leave the appraiser. That could go on forever. Every time the appraiser comes up short, just order it be redone at the same price until the appraiser gets the message; get the right number Mr. Appraiser and we will leave you alone. And further, not paying an appraiser when the appraiser doesn’t come up with the number for whatever reason smacks of suborning fraud! And that stinks to high heaven.
I use to do work for a bank and if I hit the right number, I got a check within one week. If I missed the number, the bank would give the bill and appraisal to the client and say; so long. You and the appraiser can work out the details. I will not do work for that bank. That policy is suborning fraud. Same principle. One of the reasons I got out of the brokerage business was that some people would sign a contract to pay a commission at 6%. When the agent came back with a contract, the seller would say: “I will accept the offer if you will cut the commission to 3%.” You might say so what, that is just part of the negotiating process. No it is not! That is blackmail. The seller signed a contract to pay 6% of the agreed upon price. That ended the negotiation of the commission. The seller is now attempting to breach the contract with blackmail. If you don’t go by the rules, you are going to get into trouble, and the law is a good rule to follow.
And in closing, let me say this: In this post we have two appraisals, even using mobile homes sales (even though none of us have seen the subject property and are really drawing some conclusions), one field review, and the borrower's implied acknowledgement, the appraiser appears based on the gravity of evidence to have come up with the correct number. That in my opinion is the test of the quality of the work product.

 

[Ray Ohler]

many errors as reported, it is junk. EVERYBODY, incuding Jo Ann and Austin had good comments. Yes, it is a contractural agreement, YES, sometimes if the property is way out in the middle of nowhere you have to use what you have to use. A "mistake" in comp selection (possible mistake) should not negate the whole report. NO, the owner WAS NOT (assuming lender was "client") a party to the original "contract". BUT, if the mistakes, considered in the aggregate, are sustainable, then the report IS garbage and doesn't matter how the owner got a copy. That is precisely the problem, everybody reads into the original statement and it becomes distorted. NO one except the lender, the appraiser and the owner saw the report. If the owner knows that the misrepresentations (again, "possible" and considered in aggregate) are false (100% false), I personally would not pay for the report and I would definitely send the report to the state. Let the state chew on it for two or three years.

 

[Austin]

Ray: If you refused to pay, then you are in breach of contract. You are not a judge and cannot decide on the merits of the quality of work product done by one party to a contract according to some other party’s specifications. The quality (garbage) of the appraisal is none of the borrower’s business. The only evidence you have that the appraisal was garbage is the testimony of the borrower who by his own admission is in breach of contract. Where is the corroboration that the appraisal is garbage? You are really making a leap here. The only evidence is the evidence of an admitted contract breacher and appraiser wantabee. Are you going to take the word of a wantabee appraiser over that of a licensed appraiser as to the adequacy of the work product? Remember the appraiser apparently hit the correct number by the borrower’s own admission. Couldn’t have been but so much garbage.

 

[sbb04]

Ditto Austin:

First description is of a custom built implying one thing. The close descibes 'a little house on 20 acres'. For one thing, possibly the lender had a problem with land to value. Second, maybe the only thing approximaing his 'little house' on twenty acres was mobile homes. Was there a quality adjustment? I don't know, they didn't say.

I've paid good money to watch the Washington redskins over the years. Not once has Mr Snyder given me a refund when they stunk up the field. Truthfully, if the appraisal really was that bad then I would suggest a complaint to the state board.

But then, there's the field review that supported the original value. Does he file a complaint on that one as well? Why not? My, my - there must only be incompetent appraisers in his state. Anything to save a buck.