Appraiser ethics

[Elliott]

Woody said, I have a competitor that does every 7th report free. It works for them, and it is legal.

So how does the lender treat the 7th report for free? Does he put it on the
closing statement and put the money in his pocket? Or does the borrower says,
"Why isn't there an appraisal fee on the closing staement?" "Oh you got lucky,
the appraiser does every 7th report for free!" I don't know if that instills
confidence in the appraisal profession. Wobbles the mind.

 

[Tom Woolford]

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.

All he has to do is charge $50 more for every appraisal, and he has his "free" one covered. Nice little scam.

 

[Tom Woolford]

Woody said, I have a competitor that does every 7th report free. It works for them, and it is legal.

So how does the lender treat the 7th report for free? Does he put it on the
closing statement and put the money in his pocket? Or does the borrower says,
"Why isn't there an appraisal fee on the closing staement?" "Oh you got lucky,
the appraiser does every 7th report for free!" I don't know if that instills
confidence in the appraisal profession. Wobbles the mind.

They probably save the seventh one for something really iffy to begin with.

 

[Lawrence R.]

Woody said, I have a competitor that does every 7th report free. It works for them, and it is legal.

So how does the lender treat the 7th report for free? Does he put it on the
closing statement and put the money in his pocket? Or does the borrower says,
"Why isn't there an appraisal fee on the closing staement?" "Oh you got lucky,
the appraiser does every 7th report for free!" I don't know if that instills
confidence in the appraisal profession. Wobbles the mind.

Furthermore, how would that increase business? Doing the appraisal for free, (as well stated above) benefits the borrower.

Unless, the MB is still charging the borrower for it and not letting them know they were lucky number 7. In which case, the MB is certainly breaking the law, no?

I could see a convoluted situation where the appraiser would have to endorse the check back to the lender. Would that be Kosher?

I do suppose if you worked for a non MB entity that it could have its benefits.

 

[Lost Cause]

Maybe a Zaio zone owner has something to say on this issue. What kind of disclosure is included in a standard Zaio report concerning the fee paid to obtain the work? Or should I say will be included in a standard Zaio report (if there ever is one).

As long as it is disclosed, it seems permitted. The wisdom of it escapes me. Not only do I not like the idea of paying to get work, but I have to think lenders wouldn't care much for that kind of statement in an appraisal report.

 

[Michigan CG]

As long as it is disclosed, it seems permitted. The wisdom of it escapes me. Not only do I not like the idea of paying to get work, but I have to think lenders wouldn't care much for that kind of statement in an appraisal report.

That is my point. It is not illegal to pay for procurement of work, but it has to be disclosed. What lender would allow that? What mortgage broker would want that in a report?

Rumor has it that some professional organizations do not allow this activity by their members.

 

[Mike Phillips]

That is my point. It is not illegal to pay for procurement of work, but it has to be disclosed. What lender would allow that? What mortgage broker would want that in a report?

Rumor has it that some professional organizations do not allow this activity by their members.

I side with Elliot on this, in general.

There is much that should be disclosed that isn't disclosed. One of my big gripes has always been the appraiser who is an employee of, or is dominated business-wise by the builder-owned mortgage company. No pressure there to hit numbers, right? Yet that situation has gone on for decades. The relationship is hidden from users.

Just like the current situation where someone can apply the digital signature of another appraiser to an appraisal report, with the actual appraiser's permission (of course), yet there is apparently no requirement (yes/no?) to disclose the act to the client, just in case the client or maybe the investor down the line might want to know. Previous Q&A said, "as long as it is clear" (what happened, that is) and they gave an example, but my guess is that requirement has been trashed, forgotten, or swept under a rug somewhere.

Full-disclosure about many situations does not result in the lubrication of the wheels of business and commerce.

 

[Elliott]

JH said, "Or should I say will be included in a standard Zaio report (if there ever is one)."

This is the light at the end of the tunnel that Zaio sees....

 

[Mike Kennedy]

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?

Only if he was given the $$$ Bullseye in advance, required to Comp check it 3-10 times till it looked "good", then made to swallow it "hook, line, and sinker" in advance of, during the assignment, or immediately after completing and delivering a report which didnt hit the MN and his new "best buddy" client asked nicely for a revision.

 

[Elliott]

Full disclosure--My client, Jim Mortgage Broker, is also my sister's husband.
Jim gives me all his business and I always do a good job for him, in fact,
I've never once come in under estimated value or sales price in the last
10 years I've done work for him. He also asks for 'comp checks' and I
do them for free, as a business decision. Also as a business incentive,
every 7th appraisal that he orders I give him 'free' and my understanding
is he charges the borrower, but takes the money out of petty cash and
puts it in his own pocket. I am also god-father to my sisters two children.