Blacklisting

[rimrock]

I'm an real estate agent and an appraiser. One of the local Brokers is having me excluded from doing appraisals for her company's listings. She did this after one of my reports came in below her sales price. She claims it's a conflict of interest. Now a second agent in town may be doing the same thing. They just happen to be good friends. I see this as a serious threat to my business. Apparently they would rather have out of town appraisers who are more realtor friendly come to town to do their property appraisals. Is this legal?

 

[Doug Wegener]

It used to be that some lenders would require that you sign a paper that you were not actively selling real estate if you had a brokers or real estate license and wanted to do work for them.

 

[timd354]

I'm an real estate agent and an appraiser. One of the local Brokers is having me excluded from doing appraisals for her company's listings. She did this after one of my reports came in below her sales price. She claims it's a conflict of interest. Now a second agent in town may be doing the same thing. They just happen to be good friends. I see this as a serious threat to my business. Apparently they would rather have out of town appraisers who are more realtor friendly come to town to do their property appraisals. Is this legal?

You have a couple of real great friends their. In my opinion, the mortgage lender is ultimately responsible for selecting the appraiser and allowing the the brokers to influence that selection would be a violation of AIR and Dodd-Frank. The lender should take the position that they will not do the loan unless the appraiser we select is allowed to do the appraisal.

I will say that since you are also real estate agent who presumably does or could compete with these brokers their assertion that you have a conflict of interest could be seen as some as being legitimate. That is why several lenders that I know of in my area would not add any appraisers to their approved list who had active real estate agent/broker licenses.

 

[Randolph Kinney]

I'm an real estate agent and an appraiser. One of the local Brokers is having me excluded from doing appraisals for her company's listings. She did this after one of my reports came in below her sales price. She claims it's a conflict of interest. Now a second agent in town may be doing the same thing. They just happen to be good friends. I see this as a serious threat to my business. Apparently they would rather have out of town appraisers who are more realtor friendly come to town to do their property appraisals. Is this legal?

So, would you appraise a home after it sold that you were involved with the selling of it? Would you disclose that to your client before accepting the assignment? Does it matter?

I always thought how strange it is for an appraiser to be an active Realtor at the same time in the same neighborhoods they have appraised in and involved with the sale of some of the properties.

I would think your Realtor buddies are trying to tell you something: they don't trust you to appraise their properties.

 

[J Grant]

I'm an real estate agent and an appraiser. One of the local Brokers is having me excluded from doing appraisals for her company's listings. She did this after one of my reports came in below her sales price. She claims it's a conflict of interest. Now a second agent in town may be doing the same thing. They just happen to be good friends. I see this as a serious threat to my business. Apparently they would rather have out of town appraisers who are more realtor friendly come to town to do their property appraisals. Is this legal?

It's problematic on many levels. Most likely, this is not legal, either they are violating a realtor code of ethics by assuming a conflict where there may be none, or retaliating for coming in "low" on a sale . The other issue is to ask if what the lender is doing is legal, it could be a violation of Dodd Frank to allow realtors with vested interests in the outcome of appraisals to be excluding appraisers .

The question regarding the conflict of interest is this, if you had met or exceeded the sales price, would these agents still try to blacklist you, claiming a conflict of interest? Because if their claim of a conflict of interest has any merit, then it would be just as much of a conflict to assume you might come in high on appraisals for your realtor friends...apparently they would have no problem with that, and are only claiming a conflict because you came in "low".

How much to pursue it, this is your reputation, business and livliehood. Could be a lawsuit for slander, or a board complaint issue. Depends how much you want to fight back. and is it worth it to you. Also, make lender aware that this is a violation of Dodd Frank etc. If though, your main business is selling RE and you do ocassional appraisals, it may not be worth pursuing, even though you did nothing wrong. It's your call. (but I hope your pursue it, realtors are acting like bullies now and thinking they have the right to blacklist an appraiser. You might win a civil judgement for $ as this could impact your liveliehood)

If these are your friends, that is scary. If nothing else, you have learned that these "friends" are back stabbers. If they felt there was a conflict, they could have spoken to your about it.

That said, there could be at least the appearance of possible conflicts when appraisers appraise homes for purchase in areas they list or sell, though it is legal to do so.

 

[Terrel L. Shields]

File a complaint with the state Realtor board

 

[J Grant]

So, would you appraise a home after it sold that you were involved with the selling of it? Would you disclose that to your client before accepting the assignment? Does it matter?

I always thought how strange it is for an appraiser to be an active Realtor at the same time in the same neighborhoods they have appraised in and involved with the sale of some of the properties.

I would think your Realtor buddies are trying to tell you something: they don't trust you to appraise their properties.

If they were buddies , they should have spoken to the OP and voiced their concerns, not tried to blacklist . Also, they seemed to trust the OP fine, till the OP came in "low" on a purchase appraisal. They would have had no problem, it seems, with the potential of a conflict of interest as long as the OP kept meeting or exceeding sale prices?

I agree that there can be the appearance or potential for a conflict of interest with an appraiser who actively lists or sells where they appraise.

However, it is legal to do so, and Realtors acting like bullies and taking it upon themselves to blacklist appraisers who don't "play ball" on SC prices is worthy of action on the OP's part.

 

[Randolph Kinney]

I agree that there can be the appearance or potential for a conflict of interest with an appraiser who actively lists or sells where they appraise.

However, it is legal to do so ...

Many things are lawful; but not beneficial. Many things are lawful; but not trustworthy. It is why USPAP has the ethics rule: The ETHICS RULE sets forth the requirements for integrity, impartiality, objectivity, independent judgment, and ethical conduct.

An individual appraiser employed by a group or organization that conducts itself in a manner that does not conform to USPAP should take steps that are appropriate under the circumstances to ensure compliance with USPAP.

Disclosure is the way to handle the inherent conflict of being a Realtor and an appraiser, not only to the client at the time before accepting the assignment, but in the body of the appraisal report. In addition, if you know the Realtor handling the sale and have or had a past business relationship with that person, it needs to be disclosed.

Personally, if I were a buyer, I would not trust the appraisal report by an appraiser who also is a Realtor to perform ethically.

The OP is bringing out the consequences of what can happen and it is making a difference in trust.

 

[TxArmadillo]

Personally, if I were a buyer, I would not trust the appraisal report by an appraiser who also is a Realtor to perform ethically.

An interesting comment that is, perhaps, the heart of the issue -- Can a real estate agent also act as an appraiser within the same market area?

Clearly, if the OP is an interested party in the sales transaction associated with this property, he should not be appraising the property. But, it's likely that other RE agents may perceive an issue with his appraisal activities, even if no conflict of interest actually exists.

 

[J Grant]

Many things are lawful; but not beneficial. Many things are lawful; but not trustworthy. It is why USPAP has the ethics rule: The ETHICS RULE sets forth the requirements for integrity, impartiality, objectivity, independent judgment, and ethical conduct.

An individual appraiser employed by a group or organization that conducts itself in a manner that does not conform to USPAP should take steps that are appropriate under the circumstances to ensure compliance with USPAP.

Disclosure is the way to handle the inherent conflict of being a Realtor and an appraiser, not only to the client at the time before accepting the assignment, but in the body of the appraisal report. In addition, if you know the Realtor handling the sale and have or had a past business relationship with that person, it needs to be disclosed.

Personally, if I were a buyer, I would not trust the appraisal report by an appraiser who also is a Realtor to perform ethically.

As a buyer, I might feel the same. However, some appraisers can perform ethically with a dual license, some unethically without the conflict. I personally would have an issue with appraisers trying to solicit referrels from realtors whose property they are doing a purchase appraisal on.

However, this is not a complaint stemming from a borrower. If the property were overpriced in contract, the borrower was not put in any conflict by the appraisal ( I wonder what the outcome was, did the price get negotiated to MVO and did the deal close?)

If a borrower had a complaint regarding a possible conflict of interest, that would be different, whether warranted or not. But this complaint is coming from a realtor, perhaps to retaliate for a MVO coming in "low." Since hey are buddies, the realtor must have known for months or years about the OP dual license...why was it not a cause for concern until a SC price did not come in?

I bet if the SC price was met or exceeded, this realtor would never have complained about a conflict of interest. That is something the OP might be able to clarify more.

The OP is bringing out the consequences of what can happen and it is making a difference in trust.

Why blame the OP for a realtor assuming, perhaps wrongly, that there was a conflict of interest and blacklisting the appraiser? How would you feel if a local realtor tries to blacklist you? Remember, if this kind of thing goes unchecked, you are next...any one of us are next. In this case, a realtor is blacklisting claiming conflict of interest, but a realtor can claim incompetence, lack of geograhpic familiarity, the appraiser lives too far away....anything an agent wants to say can be the basis for blacklisting an appraiser, once it becomes acceptable practice.

I am not a big fan of dual license, because it can cause the appearance of conflicts, if not actual conflicts. However, it is legal, and if a person can conduct themselves professionally and ethically as a dual license, why should a disgruntled realtor be able to ruin that person's reputation and livliehood? What proof is the agent offering that there was a conflict that impacted the appraisal result? If the subject were listed by the appraiser in their realtor capacity, yes, but if it is just another home listed in a market area, where is the conflict?