Can a Appraiser buy a property he has previously appraised?

[qknic]

Simple question complex answers Id imagine

I appraised a property around 6 months ago and just did another appraisal in the area and saw this house was still for sale, reducing the price monthly (REO)
now its a screaming good deal and Id like to make a offer

BUT our cert page says
"any current or prospective Interest"

am I forbidden from buying this house?

 

[Terrel L. Shields]

Nope. You didn't have a prospective interest in the property at the time you did the report. But you might wish to discuss it with the client first. However, you might raise an eyebrow if you flipped it quickly. But if you bought it for LESS than the appraised value...they might ask you "Why were you so high in the first place?" oh, the tangled webs we weave for ourselves.

 

[qknic]

thank you for the quick reply Terrel.
True I didnt know Id be interested in the property when I appraised it.

My comps were rock solid, 1 block away or same street, similar quality/condition so I know the value is well supported but its just not selling.

In fact their original list price was below my opinion of value.

crazy banks!

 

[J Grant]

Far as I know, no prohibition...but, the bank may decline your offer if they realized you appraised it six months ago (or they may not, they may not care , I am not on that end of the biz)

I have no idea when you purchase if you should disclose that you appraised it prior.

Often when banks get a contract offer, they get another appraisal done or BPO. If values have changed, they will sometimes review the old appraisal (which would be yours in this case)

Did you put declining values in market conditions, as prices have declined? Their original list price was below your opinion of value on eff report date...

Honestly, I would hate to advise you one way or another on this one. Though there is no rule that I am aware of against appraisers buying a property they previously, appraised, you might want to run it by your E and O provider to see if they have any experience with this.

 

[Walter Kirk]

Go for it.

 

[qknic]

J Grant
I was actually thinking of adding a addenda to a purchase agreement disclosing "I am a appraiser and have previously appraised this property" etc
but I just want to check everything out with my peers first

Id rather walk away from a good deal then get tangled in some grey area of our certifications

 

[residentialguy]

Did you put declining values in market conditions, as prices have declined?

Couple things.
1. Market could have dropped in the last 6 months.
2. This is a REO. They typically sell below market value.

J Grant
I was actually thinking of adding a addenda to a purchase agreement disclosing "I am a appraiser and have previously appraised this property" etc

I doubt that is necessary, but check with an attorney.

 

[The Warrior Monk]

If you had no prospective interest at the time of appraisal you could purchase it. It's just important to keep in mind that if some question arise in the future regarding the transaction, you will not appear to be a disinterested party.

 

[qknic]

No I didnt mark declining, it was a very stable market when I ran YOY analysis.
--
this is a manufactured home and I know alot of banks arent lending to these older double wides anymore (the subject does own the land)
maybe they are waiting for a cash offer or something....

 

[J Grant]

Perhaps speak to the bank before making an offer, feel them out about it? Are there not other good deals in the area, does it have to be this house?

There is not anything technically wrong in this and chances are you will be fine. It's just that a lot of files are being audited a year or two later and some of these bad loans end up in review down the road...if it shows up that you did the prior appraisal, and then purchased it a mere six months later, could be a potential future problem (or not), then again, you'll probably earn more on the spread of this property then es appraisal pays these days, so it might be worth it. I am a lot more cautious than I used to be, perhaps overly cautious, in advising others.