Appraiser ethics

[Michigan CG]

There are many posts about Realtor ethics, what about appraiser ethics?

A Realtor friend just sent me this e-mail she got from an appraiser here in desperate Michigan. She asked me if this was allowed.

I told her it is not illegal, but that the appraiser would have to fully disclose this in the report. I doubt an appraiser would disclose this in a report BUT, if he did, I doubt an underwriter would allow it to stay in the report.

If a guy is going to pay to get appraisals wouldn't he most likely also conveniently hit the magic number too?

Anybody have a thought on this one?

I will pay a referral fee on all appraisals –remember me on your next deal!!!



Warmest Regards

Fred Appraiser
ABC Appraisal

 

[timd354]

There are many posts about Realtor ethics, what about appraiser ethics?

A Realtor friend just sent me this e-mail she got from an appraiser here in desperate Michigan. She asked me if this was allowed.

I told her it is not illegal, but that the appraiser would have to fully disclose this in the report. I doubt an appraiser would disclose this in a report BUT, if he did, I doubt an underwriter would allow it to stay in the report.

If a guy is going to pay to get appraisals wouldn't he most likely also conveniently hit the magic number too?

Anybody have a thought on this one?

I don't like the idea of paying for business, but it is legal to do so as long as it is properly disclosed in the appraisal report. It does not follow that someone who pays to obtain busniess would also "conveniently hit the magic number". If fact, I would think that an appraiser who is a numbers hitter and ignores defective property conditions is likely have no need to pay to get business...in fact, if he were really out of control, he could probably charge a premium over what an honest appraiser would charge.

 

[woodyva]

I am not one for this type of business, but it is legal. It really is no different than taking a client to lunch. I have a competitor that does every 7th report free. It works for them, and it is legal. I am sure that it should be disclosed in the report.

 

[stefan olafson]

Entirely legal if disclosed. I'd disclose it in more than one place in the report and in ALL CAPS or something so it couldn't be missed.

What do you think Skippy's are doing? Hitting numbers to get the next job, isn't that the same as paying a referral?

You hit a number, get paid the ridiculous fees some AMC's are paying to get the next job.

Same thing in my mind, however Skippy is not disclosing the facts properly so they are in violation of the ethics rule in USPAP.

 

[Elliott]

Sounds like an appraiser who makes 'business decisions.' The ethics of
the typical appraiser has changed. Most of the newbies are running around
trying to increase 'market share.' The "Confessions of a Subprime MB" guy
talked about how the 'book of business' worked, you had to make the
deal work, make the high volume realtors happy and if they said, don't
use so-and-so appraiser, you didn't.

 

[mp2277]

it is covered if USPAP FAQ's.

Disclose, disclose, disclose

 

[TN Pro]

I don't do gimmicks, and i don't pander to Realtors. But, why question ethics when someone is trying to increase business?
In their mind, they may feel this is their optimal approach to more business.
If more people thought outside the box, they would have more work.
You cant fault someone for trying.

Dean

 

[Restrain]

Legal is dependent on state law. It is illegal in Texas, and may be in other states.

 

[Randolph Kinney]

Paying a fee for referrals is sort of vague. It does not define the business relationship necessary to say the fee qualifies for disclosure along with the business relationship and how it works.

For example, suppose I say to a Realtor that I will pay $25 for any appraisal order that I get as the result of their referral. Since the Realtor cannot order the appraisal directly from me, it must come from the lender or its agent (MB, AMC, etc.), then am I really getting the order as a result of a referral? I might choose to pay the Realtor $25 but it may not be because they steered the order to me. I could have been on the lender's approved appraiser list or the AMC list.

Another example, suppose I am in San Diego county and another appraiser is in Orange county. I agree to a fee split with him for all appraisal orders that come to me as a result of his receiving the order but he turns around and gives me the appraisal assignment to perform.

I suppose there are many tangential areas that can be explored but the answer is not that clear.

 

[Elliott]

Dean said, If more people thought outside the box, they would have more work. You cant fault someone for trying.

I think it means more business for one appraiser, less business for the other
appraiser (who perhaps is the more 'ethical' appraiser, who just does his job
right, but doesn't include the 'wink.') I wonder how the conversation goes
when Mr. Referral Fee comes in low on a deal, or does that not happen in
an optimal business plan?

I think its fine for an appraiser to introduce himself to every bank and MB in
town, if he wants to say his fees are x and his turn time is y, I have no
problem. Anything beyond that and my skin starts to itch.