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Conflict Or Not?

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Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
My Pastors daughter is buying he first home. She is a freind of mine and if I had kids she would be about the age of my kids. I think a lot of this young lady and she is a freind of mine. Over the past year or so as she has house hunted she and I have talked a lot about houses and I have looked at a couple she was thinking of buying.

She finally found one and got an offer accepted. She told me up front that I was her Home Inspector and Appraiser and she would trust no one else. I have just completed her Home Inspection and she is about to renegotiate her offer based on some problems I found.

Assuming this goes through she wants me to do the Appraisal. I feel comfortable doing the appraisal and I can do it as a disinterested 3rd party. What I am uncertain of is our friendship something I need to disclose or not? I tend to lean toward disclosing it just to avoid any implication of bias. A very close Appraiser Freind says there is no need since we are not relatives and not super close friends.

I have also just thought of asking the loan officer when she decides if this is a problem and leaving it up to them to decide. I don't want to do it and then they not accept the appraisal.

Opinions?
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Jeff:

It is my opinion that you would not need to disclose the fact that your relationship with this young woman fould most appropriately be described as 'aquaintances'.

I mean in a smaller market the appraiser would have to disclose thier intertwined relationship with the pastors daughter, who was also on the softball team you coached last summer, who babysat your kids on occasion, and went to school with your oldest daughter, and was a cousin of your son's best friends, anddddd...

Naaah.

I am sure you can see that this would rapidly reach the point of absurdity.

Disclosure was (in my opinion) intended to insure that you the appraiser had "no financial interest" or portential interest other than as disclosed yada yada ya... Which means that one CAN appraise something which one might potentially eventually have an interest in...

I have appraised property owned by my mother-in-law, with client approval and permission. It ain't mine, it won't BE mine any time soon God willing, and even if she does pass on it becomes in MY opinion, "my husband's" inheritance! But you can be sure I disclosed the HECK out of the relationship, and got written client permission.

In the case of the gal who was wanting to know if she could/should appraise the property in which she was living with the borrower... that gets too close to home... according to the random
 
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Jeff,

You are the only one who knows, or can know, whether you can give an unbiased opinion of value under these circumstances.

I would be more concerned about your being both the home inspector and the appraiser than I would about your being fond of this young lady.

The characteristics of the young lady have nothing to do with the characteristics of the home and should have nothing to do with how you go about appraising it. However, I do think your home inspection MAY have provided you more information about the home than an ordinary appraisal would have.

On the other hand, you are pretty much stuck with this young lady. (I take it you live in a small town) Stay with it and see if you can do a decent job for all concerned. Stick to the subject at hand and dismiss the whole idea of any conflict of interest from your mind.

Regards,

Tom
 

Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
If you are not related, I wouldn' t feel that you must disclose. That is pretty much my policy.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Do you have a possible or actual financial interest in the property - yes or no. If yes, disclose. If no, do the report and boggie on down the road.

Roger
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Originally posted by Thomas N. Morgan+Mar 31 2003, 10:05 AM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Thomas N. Morgan @ Mar 31 2003, 10:05 AM)</td></tr><tr><td id='QUOTE'>The characteristics of the young lady have nothing to do with the characteristics of the home and should have nothing to do with how you go about appraising it. However, I do think your home inspection MAY have provided you more information about the home than an ordinary appraisal would have. [/b]


Interesting point there Thomas, I have never seen a problem doing both an inspection and appraisal. However it is rare that I act as both in a transaction. The way I have looked at is is that if anyone else was appraising the home and could get access my Inspection report he would have the same level of information I have. So I have never seen that as a problem. Do you see something I am missing?

<!--QuoteBegin--Thomas N. Morgan
@Mar 31 2003, 10:05 AM
On the other hand, you are pretty much stuck with this young lady. (I take it you live in a small town) Stay with it and see if you can do a decent job for all concerned. [/quote]

Yes we are small town but no I wouldn't say I am stuck with her. B) If I told her I was not comfortable appraising the house she would just ask me to send to her someone I trusted. Nice thing about her is she wants to know if she is overpaying for the house. She doesn't want the house at any cost. She is the kind of buyer we all wish we were working for! If I kill the deal because it is overpriced I will get a thank you and neck hug. :)

Lee Ann, Acquaintances is the perfect word. Thank You!
 

Lee SW IL

Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I cannot belieive doing a home inspection and an appraisal on the same property for the same transaction is kosher. Let alone performing both services at all.


When I inquired about also doing home inspection with our past state director, he advised against it. For the simple reason, even though your doing an appraisal, your also a home inspector, thus, must disclose problems normally identified by a home inspection.

Sometimes, you may know too much.

Just my opinion, it may and must be different in your state.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Lee:

I think it is kosher, but a little on the dangerous side... Jeff might have to write a little more... but I suspect he's the kind of guy who would disclose (or at least have notes on) the 'rough spots ' on a house anyway!

However with the right set of disclosures to cover his rear:

Lets think about it: The cost approach might be a little more tricky, as functional (cureable) depreciation issues might rear their ugly little heads to a greater extent than when performed by Bottle-glass/Blinders Bertha... :angry: Who seems to be MY major cometition around here :eyecrazy:

But in the market approach the appraiser is attempting to emulate the typical buyer and the MARKET response to the property: not the "response of an individual with enough knowledge to make them dangerous to nearly ALL transactions". :rolleyes:

So despite the dire warnings posed by some individuals (who I notice are mostly instructors who do COMMERCIAL appraisal work....) How much trouble can you get into as a dual performer that you can't get into as "an atypically knowlegable appraiser", or "a home inspector" ANYWAY?!?!?

I mean if they are gonna sue, they are gonna sue!

( ASSuming your state license/certification board(s) are not opposed to dual processing.... ) Check on that FIRST.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I don't see any reason or need to disclose a friend of a friend...ship.

As for appraising and inspecting, I don't see a problem there either. Sounds like you will serve the same client/customer in both areas. If you find some major problem that may not have been normally noticed, great! You may have save your clients $$. I don't think I would see the need to disclose every little detail, like the light switch cover is missing in the utility room. The market wouldn't realize that as having any effect. But, you would need to be sure that you don't disclose any private/privey info.
 

Roger

Junior Member
Joined
Jan 24, 2002
Professional Status
Certified General Appraiser
State
Missouri
Just keep the thought in the back of your mind that you may lose this friend at some point in time.

I did a pre-construction and a satisfactory completion for some friends from church about a year ago. Couple of months ago they wanted to refi, and the new lender needed a new appraisal, so they called me.

Well, the market for these upper end homes softened, and the refi appraisal came in slightly less than the original report. One sale I used in the original report was back on the market, at 10% less than the sale price 1.5 year ago.

Needless to say, these folks have not had too much to say to me at church these days.

They seem to think that it is all my fault.
 
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