Client Asking For Response To Rebuttal To Be Placed In Original Report

[hastalavista]

@Denis DeSaix
Sorry, my friend....but requesting the appraiser to look at comps that are 45% larger in higher end neighborhoods goes well past those "limits". This is way above the high road; this is so high that you'll need a parachute and 2 year supply of Oxygen to get down to Heaven. If the lender wants us to do that, then the lender is "OBLIGATED" to pay us for that additional work order, which is way beyond the original SOW order. This is nothing short of the lender trying to pressure the appraiser for higher value. Highly inappropriate and should be reported. Frank-Dodd isn't dead yet.

No problem with your disagreement.
If you read my post #6 carefully, you'll see these are the points (which i'll net out because you can refer to the post for a more comprehensive explanation) (bolded for emphasis):
1. We are obligated to take a look at data; that obligation is not without limits (or, has limits).
2. "Obligation" means to consider the data that was presented. And determine if any action is warranted.
3. Once we make that determination we need to communicate that response back to the client.
4. How we communicate that response is a business decision (excepting if we determine to change something in the report).

The 45% larger-size sale is something that is easy to consider and address:
"This sale is not comparable due to its 45% larger size; no further action is necessary".
You want to charge a client $75 for this? Be my guest. I wouldn't. I wouldn't because as I posted in #40 I've already built into my fee the 1-minute sentence response in an email or the 10-minute process-time to put in an addendum and send it to the client.

Note in post #40 I've also discussed what I would do if these kinds of requests became too routine vs. what I would do if they were a one-off/once-in-a-blue-moon.

I wouldn't blow off the client and didn't advise that.
I advised that new data needs to be considered, but that consideration process is not limitless.
That once considered, that communication has to be made to the client.

I've never agreed with the "up charge" language in the report (and you know this because I've posted it); I don't think it is binding nor wise. I understand that part of the reason you do it is as a preemptive strike. . However, this discussion has caused me to modify that position somewhat (and, I wouldn't advise it for clients I have a relationship with and want to continue that relationship; obviously, the clients I have an on-going relationship meet my client-profile requirements and I want to continue that relationship).
Here is where your strategy and my reconsideration of this issue merge:

The 45% larger-size sale is something that is easy to consider and address:
"This sale is not comparable due to its 45% larger size; no further action is necessary".
If the client comes back and wants more, then charge the client for a more detailed discussion of why a 45% larger-sized sale is not a comparable.​

I'm all about finding clients who want to work with me and I want to work with them.
I'm never about engaging in a battle with my clients. I'll drop them or, I presume, they will drop me (I prefer to beat them to the punch).
When I say "battle", that doesn't mean not standing my ground. It means not working with a client whose process or expectations vs. the fee paid are such that I will not entertain any of their requests unless I totally screwed up.

I have an assignment that was due yesterday. My turn time on this was 3-weeks and I appraised the property just over a year ago. It is a 2,200sf ranch house in a well-established neighborhood. My fee is higher than typical. My turn-time for this assignment is much longer than most in this market (at this time) for this kind of property. I bid 3-weeks because I'm extremely busy but that was fine with the client.
I had started to finish the report yesterday but things kept on getting in the way. We had to email the client and apologize that the report would not be delivered on the Friday due date but they'd have it first thing Monday.
The client emailed back and said no problem, they appreciated the heads-up, and Monday would be fine.
That's the kind of client-relationship I want to maintain and cultivate. You can bet that if they requested something (even a reconsideration based on a sale that was 45% larger than the subject), I would respond with more than a one-sentence line and be happy to put that response in the report if they so requested. And I wouldn't charge them an extra dime.
The above story is consistent with what I posted in #40.

That's what works for me.

So, yes, I do believe the appraiser has an obligation to consider new data (with limits) and an obligation to communicate the results of that reconsideration back to the client. I doubt that my position on this will ever change (notwithstanding the modification of the fee-charge I mentioned under certain circumstances).

 

[residentialguy]

I already considered all the market data. FNMA was correct that the lender is required to analyze any additional data to make sure it is appropriate...otherwise it's a blatant value pressure....and I know, you know it and most importantly, THEY know it. They are under regulation to make sure that does NOT happen. Sometimes they need to be reminded (for their own good) that any pressure to use or review sales that are chosen simply for their sale price in a "Reconsideration of Value" request and are not found to be appropriate comparable sales will be considered a violation of Appraiser Independence protected in the Dodd-Frank Act by unlawfully influencing an appraiser and encouraging a targeted value. Maybe they will have a change of heart when they have to pay and when this violation is reported to the Consumer Financial Protection Bureau, the ASC, the State Attorney General and all other applicable State and Federal authorities as well as any related Government Sponsored Enterprises, which consider it an unacceptable practice to select inappropriate comparable sales.

 

[residentialguy]

I also disagree with your glance and respond tactic for reviewing the comps. Considerable time and effort is put into qualifying comparable sales as they must be researched, analyzed, inspected, and verified with the parties of that transaction, etc. Reconsideration of other sales as a comparable must have the same due diligence.

This kind of value pressure needs to stop. The lender needs to explain why these sales are superior to the ones chosen for the report; This review may be subject to a fee if that is not the case.

 

[hastalavista]

I already considered all the market data. FNMA was correct that the lender is required to analyze any additional data to make sure it is appropriate...otherwise it's a blatant value pressure....and I know, you know it and most importantly, THEY know it.

I disagree; it isn't always blatant value pressure and I can say this based on factual experience with working on the lender's side of the table (although, those cases were for mortgage loans but not FNMA).
Sometimes, like it or not, the lender is relying on the appraiser to be the local expert. Sometimes, there is a question asked that may be crystal-clear to the local-expert appraiser but is not that clear to the lender. Those requests get forwarded to the appraiser to address because the lender concludes the appraiser is best able to address them and the lender wants to be sure that the issue isn't relevant.

If the lender has any sense, they would recognize that the 45% larger sale isn't going to move the needle on an appraisal at all. Other situations aren't as clear cut.

I'm sorry, Res. The purpose of forwarding information to the appraiser and asking for a reconsideration may be the motivation by the outside originator of that information (broker, buyer, borrower, etc.). It isn't always (and in my experience, rarely) the reason the lender forwards it to the appraiser. The lender gets the information and if they address it, they forward it to the expert who they think can. Is there abuse? Yes. Is it always the case? No. In my experience, it is rarely the case. The lender's I do my review work for only care if the value is credible and reliable; they don't want inflated appraisals to make loans; on the other hand, they don't want deflated appraisers to make loans. They want credible valuations because that is one of the components of their risk-analysis. Where that point-value exists isn't the issue; that the point-value is credible is the issue.

Our experiences and opinions on this vary significantly.

 

[djd09]

The line i get about doing fannie appraisals with bad rules is you can either do it or not.

The lenders should take the same advice. Either accept the appraisal or reject it.

Other wise it is blatant value pressure. Any other spin is public relations from the top.

 

[hastalavista]

I also disagree with your glance and respond tactic for reviewing the comps. Considerable time and effort is put into qualifying comparable sales as they must be researched, analyzed, inspected, and verified with the parties of that transaction, etc. Reconsideration of other sales as a comparable must have the same due diligence..

You can disagree with it.
I've already defined what I consider to be my comparable selection criteria (in the report) and I've provided those sales that match that criteria (in the 1004MC) for properties within the defined neighborhood. It doesn't take me long to determine that a 45% larger-size sale doesn't meet that (a) the criteria, (b) determining the sales that were considered and presented are superior, and (c) making that conclusion in a minute or so.

I can apply my judgment in the 45% larger-comparable sale based on the research I've already done for the assignment rather quickly and can exclude using simple logic (a recognized technique, by the way).

However, if the sales presented require me to do a more detailed analysis, then maybe there is something to them. Ergo, the submission/request isn't that all unreasonable and I'm probably the only one who can do it.

 

[Meandering]

Don't worry Res,

You can always ask for the lender's analysis of any data they send for any "new comps" for consideration, then start stipping their data before you will accept it.

Make sure all their data is in UAD format, and the like. All their thoughts are fully explained and supported by the market, blah, blah, blah. Oh, and have them include maps and distances from the subject so that they verify they're not sending you sales from the other side of town. And make sure their "new comps" have their respective school districts stated.

After all, their data should meet their own pre-determined "assignment conditions".

 

[hastalavista]

The line i get about doing fannie appraisals with bad rules is you can either do it or not.

Why do the lenders take the same advice. Either accept the appraisal or reject it.

Other wise it is blatant value pressure. Any other spin is public relations from the top.

djd-

I think that I read you are relatively busy and have a steady volume. I don't know how much is residential mortgage and what isn't, but you are busy. That implies to me that you've spent some time building up your business.
I have a question for you: Do you mostly like the clients you work with for residential mortgage assignments or mostly dislike them? (I've already posted that I like the clients I work with and want to keep them; so this isn't a gotcha question)
I ask that because what I gleen from your posts is that you don't much like the clients who order residential mortgage assignments in general. I'm wondering if your specific clients are any different than the general description (as I infer from your posts)?

 

[The Warrior Monk]

The appraiser can request that the third party provide an explanation as to what is wrong with the analysis contained in the report, and why they feel their comparables are better. I started doing this years ago, because what was happening was a substantial amount of what was being provided was already addressed in the report, meaning the third party never read the report. So what could happen is endless requests because that third party wouldn't pay attention to anything the appraiser was saying or doing. Once the third party actually had to read the report, and/or provide explanations, the issue would quickly be settled.

 

[Meandering]

The onus for the "analysis" is on the lender per Fannie. The appraiser is only required to "consider" per the TILA. So don't send address to appraisers. Appraiser's need the lender's analysis of those sales, so the appraiser can consider them.

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