Bribe or Business expense?

[George Hatch]

Devil's Advocate.

Did you say 40 pizzas? That lunch must have cost over $400 by the time you were through. That must be one heck of an account. They must already be giving your fee shop a lot of business. Too bad that only the big players in your market are getting this kind of treatment. I wonder how your smaller clients would feel about this.

I may have read your post wrong. But in my opinion, there's a big difference between a mass lunch, the cost of which would exceed the average appraisal fee, and dropping off a box of chocolates and a 'Thank You' card during the holidays. I mean, one could take the lunch as meaning 'please give me more of your business', while the 'Thank You' would be interpreted my most folks as "Thank You'.

As appraisers, we provide a very necessary service, hopefully in a professional manner. Our services, which includes the work product iteslf as well as the manner in which we conduct ourselves, either have sufficient utility in relation to our fees or they don't. If they do, that should be sufficient justification for the continued professional relationship. If they don't, the relationship should end, regardless of any other inducements.

Maybe my E&O carrier or my subscription data services should start sending me some coupons for lunch. Matter of fact, I think my Doctor, my CPA, and my Lawyer (if I had one) and my mechanic all owe me a little something in exchange for my use of their services. After all, they can write it off...


Maybe my problem here is that I'm thinking too small. An appraiser once told me that 'Greater rewards require greater risks'.


George Hatch

 

[MARKETVALUE]

George,

You bring up a great point that i get irritated over often. Where the hell is my free lunch? Sure we need the business, but can't the same be said for the LO needing quality work done in superior time?

I've discounted more appraisals for family, loan officers, and friends than i can count, but have had far less steak dinners on someone else....

MRM

 

[Dale Smalley]

Legal -Yes
Ethical - No
USPAP - Who knows

Giving a gift is ok. But when your customer has a hand in your pocket it sounds like a bad idea. Why not spend the money on making your business provide better service to your entire customer base. They will get better service or a better product and you get your entire fee and probally a good nights sleep.

 

[Larry Lyke]

My own experiences have led me to my present path:

I do not give anything to my clients EXCEPT the assurance that they can't find a better product. If they do, they are FREE to use that Appraiser.

Works well. When I used to have to solicit business years ago, I would offer to give the LO the appraisal free if they didn't like it. You have be a little careful here, because not liking the appraisal and using it to close a loan are two sides of the same coin!

It's a great technique for getting in the door. It's sweet, savvy and very low cost. ALL THE WHILE you are in fact WORKING for this client. You learn a lot and quickly. Allows you to see the client upfront in a hurry without actually being on probation, so you can screen and delete the clients you don't want to service QUICKLY.

All clients are NOT born equal!

 

[George Hatch]

Actually, I doubt the restrictions in USPAP were developed with free lunches or an occassional round of golf in mind. I'm sure the ASB was more concerned with actual monetary kickbacks or gift giving on a larger scale.

How about this one? I used to work with an appraiser (some 10+ years ago) who would hang out at the local bars where the loan processors would go after work. Our guy would buy them drinks, get them drunk and 'date' them, if you know what I mean. That was his primary marketing plan. He figured that they were the ones who ordered the appraisals, so they were the one who should get the attention. He was very successful with that one. Now to me, THAT'S unethical. He didn't make the grade when licensing came around, so he's been out of the business for a long time. I heard of another appraiser who had a medium sized fee shop. She would go out for long lunches, and occasionally call back to the office to have her secretary draw up a contract for services. Obviously, the speculation was that she was making 'payment of undisclosed fees, commissions, or things of value for the procurement of an assignment'. Who knows what the real story was.

Getting back to your lunch date, there is the economy of scale to consider. What would totally inappropriate for a client that does $2,000/month in billing may be totally defendable for a client who does $20,000/month in billing.

I think a good way to look at it is to apply the acid test. If you were sitting on the stand in a trial and the opposing attorney were to grill you over this, would you feel comfortable defending your position? The burden of proof on this would lie on your shoulders. Remember, what goes on in a trial often has no relationship to justice; it's who puts on the best show.

George Hatch

 

[Blue1]

Marketvalue,

You should be careful to have a varied client base. If you are favoring one client, and it could be proved (by some sleazy lawyer) that you were offering rewards, you could be in a sticky situation in the event of a lawsuit.

That being said, good clients do deserve rewards, faster turnaround, comp searches, etc. Shower them with gifts on appropriate holidays. I'd shy away from rewards contracts if I were you.

Just my opinion

 

[Mike Garrett RAA]

Sniff....Sniff....Sniff

Something smells. If it looks like a fish, and smells like a fish, it mostly is a fish!

What is the difference between what you want to do and those who "discount" fees for volume? If you want to BUY your business that is a business decision on your part.

Small gifts are one thing, like a bottle of wine at Christmas, or taking a loan office out to lunch. When you put a monitary value on each assignment you have left yourself open to sanctions. Then what happens when the next guy says, "ok, good ole Marketvalue will give you $25 per assignment, I will give you $50"?

Would you believe there are appraisers here who will do a full blown FHA appraisal for $200 now? It never ends.

 

[Larry Lyke]

I kind of like George's idea of hanging out at the bar looking for "business."

If I only had the time away from work, and was young enough and good looking enough without all the terribly high beatuy enhancement expenses, I WOULD CERTAINLY consider it.

Treading on my looks and charm has been history for a couple of years now.

Like Blue1's approach (now), it's easier to buy what you want now! [He kinda said that, n'est-CE pas?]

 

[MARKETVALUE]

Bad idea but good discussion.

As i said in the previous post and as many have alluded to, whats next $10, $25, $50, $100 and so on----it only gets easier and more desperate if you cross the line to begin with.

Of course could use the ole jedi mind trick on new clients and bump my fee to $350 but 'for you its only $300'.......he he he

thanks for the response

MRM

 

[Leon Stewart]

It has always been a part of this business. I don't do it, but I don't get as much work as the ones who do. This practice is the reason 90% of the Work is being done by 10% of the Appraisers, and it has very little to do with the quality of ones work. A borrower told me today he had to wait 3 weeks for an Appraisal Report, but there are many Appraisers who are not working.

leon