Drive By vs Interior Inspection

[Ken in Arkansas]

As I see it Jeff, with proposed construction you have a floor plan before you to forecast the utility of the improvements upon completion of construction. Additionally you have materials list to provide additional detail, but yes, you do have to make some assumptions concerning the quality of workmanship. But if your data source on a dirve-by is a perimeter sketch from the Assessor's Office, how do you know for instance how many bedrooms are present, or how do you know that the access to those bedrooms is not bedroom through bedroom through bedroom? Another example: I had another case some years ago where the brick veneer dwelling looked great from the street. Upon entering the home, I found myself standing in a bricked-up mobile home. That fact was not reflected on the Assessor's card. Would that property have the same value and market acceptance as a conventionally constructed dwelling? I don't think so.

I can do a drive-by and cover my rear if I write enough caveats. But who is going to cover that lender when he takes a bath?

 

[Jeff Horton]

Good points Ken. BTW I dont disagree just playing devils advocate here.

My point is that if we clearly state what we are assuming then I dont think we have any more liability than with any other assumptions we make. As for bedroom counts if I dont have a count I state what I assumed and go on. Square footage, same thing. State the source and go on.

As for the lender protecting himself it's a buisness decision as to whether he wants a full appriasal or Drive-by. We have to option to refuse it if we can not do a credible report. But my point is still that if we state what we are assuming and have reasonably assumptions then I dont see any more risk than a new construction.

 

[Ross (CO)]

Appears this thread has moved into mention of appraising proposed constrcution or by plans-and-specs. I recently went through the process of seeking approval with a local branch office of a bank with home office up in Denver. Gave the references, some samples with blacked-out confidential info, personal resume', license copy. This prospective client was a referral to me as "they were having difficulty getting appraisals they could rely on". All of what I provided was just fine....but then I was asked if I did a lot of plans and specs appraising. I said that my experience was limited...and that I have actually done one assignment of such. I then asked if they do a lot of lending on properties under construction or perhaps not even being started yet. "No, actually we do very little of that kind of loan", was the reply. The home office effectively could not grant me a formal and full approval UNLESS I could say that I had much experience in appraising properties that do not yet exist. I could only close out the conversation by saying that ...if any needs come up to appraise existing properties then by all means keep my business card and call me, to which the reply was an immediate "you bet I will, certainly after seeing those samples you left me". ....But, I am not formally approved ! What was the original appraising problem they had ? Having someone come down 60 miles from the Denver area to do $150 "appraisals" on a 3-to-4 page Word Document style of report, and having such values be "higher than what the branch thought was realistic for the Colorado Springs market". These "appraisals" were drive-by's !! But, they liked the fee charged for the report !!!!

 

[EDWARD BERRY]

Four years ago I felt like most of you.

However--remember the Golden Rule-

The clients have the Gold, they are customer.

Drive bys are legal--

I now do them, try to get all I can.

Thats the modern world.

Do not like it, may go back to raising chickens.

ed in arkansas

 

[Larry Lyke]

Ross --

Did a new construction on a $550,000 house on 2055 without costs of production at client's demand.

Did all three loan progress payments for another bank on it too.

Did the 2 finals on it too. Took 11 months from initial appraisal.

Sometimes you just can't talk the lender out of what they want!

All the fees were identical to regular fees.

One or two very brief paragraphs to "remodel" the appraisal form and you're in business.

When an order comes in, I assume the position of the "billing hunch [head down, legs apart]." Holler, "Hup ..." and I'm off running with the ball, of course!

Hey, guys (and dolls) -- It's a business.

 

[The Bob]

I've never understood the aversion to drive bys. They are legal, they are ethical and they comply with USPAP. As far as condition, do you warrant the condition on the ones you get see inside?

 

[Tim The Enchanter]

I specifically disavow any knowledge of the interior or sometimes even if the house exists! Think gated driveway, deep lot.

I remember seeing something in the paper years ago, about a place in Beverly Hills or Bel Aire or some such mega buck area. Turned out that big house was just a facade, like a movie set front only. :lol:

So the Secretary will disavow any knowledge of you if you are captured. :lol:

Seriously, in that worst case scenario, combined with the boilerplate on the 2055 form, and any extra disavowing you want to do, it works for me.

That said it's got to be conforming propery and area, and not too high value, or I must do a full interior inspection. Generally no drivebys in the mega buck areas. 8) What they can't afford the fee :?:

 

[Jo Ann Meyer Stratton]

I do a lot of exterior only 2055s and really don't have a problem with that. I have many, many disclaimers and statements about only observing from the street and that if what I can't see from the street affects value, then my value is worthless without that knowledge. Also, if there is limited information or conflicting information or just hesitation on my part, I contact the lender and discuss the problem with them. Most lenders will then upgrade to at least a 2055 with interior observation. A few won't, if it is a pre-foreclosure for example. Also just like on some of my URAR I make lots of profit with my regular fee and some it costs more to do the URAR than I charge. The first situation off sets the second situation and it all balances out. My liability is the same regardless of what report format I use, so I do have staggered fees. The FHA URAR is the highest, the conventional URAR is $xx less, the 2055 interior is $xx less than the conventional URAR, the 2055 exterior only but similar exhibits is $xx less than the 2055 interior and on down the line. Some clients want a front subject photo only, no exhibits of any kind, no maps, no comp photos, no nothing, so then those are the lowest fee. And again the easy ones offset the complicated ones and the end result is the same or more than if thet were all easy ones at standard fees. One fee isn't going to make a dent in any liability I may incur someday (I keep writing long explanations and do a lot of research so I hopefully will never have any liability), but my end amount of income based on staggered fees will take care of my expenses, provide me with a living and pay for my E & O insurance. But I set the fees, if the client doesn't like my fees, I provide them with my competition's phone number. So what more could I ask?

 

[Anonymous]

I think we can all dance around the issue but I still read USPAP as requiring IN LIEU OF an interior inspection a requirement that you obtain that information about the interior from someone who knows the house, either telephone interview of owner, listing info, friend who has been there before, something. I do not believe that you can safely CYA by disclaimers. You would really have to write some bullet proof text as both a limited appraisal, summary report, and extraordinary conditions. I am not that good of a wordsmith.

Ter

 

[Tim The Enchanter]

but I still read USPAP as requiring IN LIEU OF an interior inspection a requirement that you obtain that information about the interior from someone who knows the house, either telephone interview of owner, listing info, friend who has been there before, something

But, what if they lie?