Are you charging for additional comp requests?

[Tim Pritchard]

I personally think that practice is at its best negligent. Why, if you have other comps that are good, albeit not "best" indicators, would you not go ahead and include them in your report to start with.

Contrary to popular belief, lenders do not always ask for unnecessary info. It could be that had you included your sandbagged comps in the first place, the report would have sailed right through underwriting.

Who knows, that company may keep track of such things as who they must constantly ask for additional comps from.

Maybe on their forum the topic is:

Are appraisers sandbagging comps?

IMCO, this is not a "best practice" to be emulated.

Why would you say that this practice is "negligent"? I plainly state that the 3 comps used are the best in my opinion. What's the difference in holding addl. comps or putting them in the report to begin with? And I didn't say that all of them ask for addl. comps just get the request every so often. Only 3 comps are required & I use what is in my opinion the most comparable ones. If an underwriter wants addl. comps then I give can give them one quickly. It also puts more data in my file to support my final value estimate. I think your "sandbagging" term is a little too much! I don't just pick 3 comps & go do the inspection........I pick 5-6, or more if available, that I think are best suited & work them up which gives me a better indication of value. I send 3 which is required! If they need more then I have them! m2:

 

[ccooper]

In the early 90s when our business started to get more M-broker work, we started getting requests for 2 or 3 more comps. Our market is atypical and it is very common to go 10 miles away for a comp or have over 30% adjustments.

Solution: give 5 comps on every report.

Result: "We need a 6th and 7th".

I actually did 9 comps one time on a condo for this one guy since there were no other 3 bedroom sales at subject project within 24 months.

So, around 1995, we started charging $50 for each additional comp. "Company policy". Yes, we did get some whining. Bottom line is, at this point in the loan process, the slimey mortgage broker can just about taste his commission check. He's not going to want to start all over with a new appraisal (and possibly bust the value). 90% of the time it was never a problem. "Whatever it takes to get the deal done". Besides, mortgage broker isn't paying for it anyways. They just throw it on to the clients proceeds with all the other stuff.

We did have some problems back when we were billing these guys though. Quite often, the 2nd revised invoice sent with the new comps got lost in the shuffle and we had a few of these go unpaid. Once we went to COD in 2003 we never had that problem again. In retrospect, going COD caused more whining than the charging for extra comps.

 

[Lawrence R.]

Why would you say that this practice is "negligent"? I plainly state that the 3 comps used are the best in my opinion. What's the difference in holding addl. comps or putting them in the report to begin with? And I didn't say that all of them ask for addl. comps just get the request every so often. Only 3 comps are required & I use what is in my opinion the most comparable ones. If an underwriter wants addl. comps then I give can give them one quickly. It also puts more data in my file to support my final value estimate. I think your "sandbagging" term is a little too much! I don't just pick 3 comps & go do the inspection........I pick 5-6, or more if available, that I think are best suited & work them up which gives me a better indication of value. I send 3 which is required! If they need more then I have them! m2:

I am not trying to be overly critical. I didn't even say that you shouldn't do it. I just don't understand why if you have comps that are suitable to be used in a report if a lender asks for more information---you souldn't just go ahead and put them in.

Now that you have put your defense to light, it seems worse than the original statement.

First, 3 comps aren't "required" they are the minimum allowed(actually 2 in some cases)

What is "required" is sufficient evidence to support your opinion.

If you so regularly get asked to provide further support for your opinion, perhaps after reading my criticism you may stop to ask yourself if only providing the bare minimum number set forth equates with fully supporting your opinion.

I am stating that IMO, there is not some blanket edict telling all underwriters to unnecessarily ask for additional comps.

It is this line of thinking that equates MINIMUM with REQUIRED that chaps my hide.

What is REQUIRED is a well supported appraisal. It may take 46 comps to achieve that. I wouldn't send in 3 and hold back 43. I would send all 46 and put the burden on them to prove there are more/better comps out there.

I was not trying to dig at you, I just personally think this is not a practice to be emulated.

 

[Lawrence R.]

removed duplicate post

 

[Tim Pritchard]

I am not trying to be overly critical. I didn't even say that you shouldn't do it. I just don't understand why if you have comps that are suitable to be used in a report if a lender asks for more information.

Now that you have put your defense to light, it seems worse than the original statement.

First, 3 comps aren't "required" they are the minimum allowed(actually 2 in some cases)

What is "required" is sufficient evidence to support your opinion.

If you so regularly get asked to provide further support for your opinion, perhaps after reading my criticism you may stop to ask yourself if only providing the bare minimum number set forth equates with fully supporting your opinion.

I am stating that IMO, there is not some blanket edict telling all underwriters to unnecessarily ask for additional comps.

It is this line of thinking that equates MINIMUM with REQUIRED that chaps my hide.

What is REQUIRED is a well supported appraisal. It may take 46 comps to achieve that. I wouldn't send in 3 and hold back 43. I would send all 46 and put the burden on them to prove there are more/better comps out there.

I was not trying to dig at you, I just personally think this is not a practice to be emulated.

Well stating that I was "negligent" was critical. The "3" comp requirement is what underwriters "require" from my 14yrs experience. We can agree to disagree! I'm just saying that it seems to be a generic response from some underwriters to automatically require addl. comps when there is adequate data to support the final value estimate in the report. Regardless of how accurate or detailed your report is these underwriters seem to have an automatic requirement for addl. comps in some cases. It has nothing to do with the quality of the report they seem conditioned, with the current market, to ask for addl. comps. Most of my clients don't ask me for them as they trust my opinion & leave it at that. It's no different than you providing a report with 5, 6, or 46 comps & the underwriter asking you for an addl. comp. If so, do you provide them with 1? Again, if so why didn't you use that addl. comp in your original report? When doing a market analysis do you provide the lender with all of your data in your file or what's pertinent to the subject at hand. My files have all the comps that I used & didn't use with all the data collected to justify my final value estimate. If some undertrained underwriter 1000 miles away wants to be anal then I've got more info for them. Simple really! I don't get the request to provide addl. comps much but when/if I do then I'm prepared. It is my duty to provide the lender with enough information to base a lending decision on the property if that's what the purpose of the report is. I do that! But if, for some reason, they need addl. info then I've got that for them. I try to put enough info in the report but sometimes no matter what you do that isn't enough.

 

[Lawrence R.]

I agree. That we disagree, that is. I can honestly tell you, all year so far I have had zero requests for an additional comp. Zero.

I had one underwriter question my INCLUSION of a comp, as stated above.

I also cannot remember the last time I had a report with only 3 comps in it either.

If I were in court, and my lawyer had 7 legal bases on which to prove my innocence, do you think he would only use one, since that is all that is required?

I am just gonna stick to my guns on this one. Sandbagging comps is a bad idea.

If I put in 6 or 8 comps and an underwriter asked me for more, I could tell him that yes, while there are other properties in the county/subdivision/area that have SOLD, that does not make them COMPARABLE to the subject. We don't need to compare apples to oranges when I have given you plenty of apples to base your decision on .

I then tell them that if they are aware of a sale that they would like me to compare to the subject, I will be happy to do so--but for me to just throw in some poorly chosen sale to the grid and claim it gives a good indication of the subject value is misleading--therefore I cannot comply.

but, that argument only holds water when an exhaustive sales comparison is clearly shown in your work.

If I only have 3 comps up there, I wouldn't have a leg to stand on.

 

[starmansf]

Appraisers can be so verbose! In truth, we all base out opinions on about 2 comps, and the 3rd is window dressing. We use 3 comps because we have to use 3 comps. I'm not sure what listings are for, and I've been doing this for 10 years. And I usually put a listing on my appraisal; I was taught to do that.

3 comps are ok. I've started doing more reports with 3 comps only. Lenders always come back with a request for more sales; if I can accomodate them, I will. Fees vary according to the quality of the request. My fees have been on the rise.

 

[Rufus]

I couldn't participate in the poll because I very rarely get a request for additional comps. The last one was two-three years ago.

<snip>...In truth, we all base out opinions on about 2 comps, and the 3rd is window dressing.

I think that is a rather broad statement. I'd like some references to your source information that supports that conclusion.

Most of the work I do is difficult/complex and I use anywhere from 4 to about 9 comps.

 

[starmansf]

Rural properties are different. Street after street of row houses don't require 9 comps to substantiate value. City properties are pretty much cookie-cutter assignments; I like these. If brokers and LO's don't want to pay for complex assignments, I don't want to do them. Don't tell me that cost is not that important when the first words out of your client's mouth is "how much is this going to cost us?"

 

[Rufus]

<snip> ...the first words out of your client's mouth is "how much is this going to cost us?"

That may be true for many, but the first word's I usually hear are along the lines of "Six other appraiser's have turned down this assignment, can you do it?" Fee is then the next part of the negotiation, but at that point I am in control.