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Ethics Rule

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joelfallin

Thread Starter
Freshman Member
Joined
Mar 28, 2007
Professional Status
Licensed Appraiser
State
Wisconsin
I have a property I went to and comps do not even come close to supporting sales price of subject. Would it be in violation of the ethics rule management section to offer to my client that I not deliver a "written report" as requested on the assignment and offer a reduced fee (Obviously since the report will do them no good anyway)?? The original order was in no way contingent upon "hitting" the sales price or closing of the loan, but do I have the option to be a "nice" guy, and save them some money by cancelling the order at this time, for the reduced fee?? I do realize that most appraisers would say why the h would you do that, just give them the report and charge the full price, which I still may do, but just curious if have that option or if it may be in violation because I am reducing the assignment due to a "predetermined value."
 

PropertyEconomics

Elite Member
Joined
Jun 19, 2007
Professional Status
Certified General Appraiser
State
New Mexico
I have a property I went to and comps do not even come close to supporting sales price of subject. Would it be in violation of the ethics rule management section to offer to my client that I not deliver a "written report" as requested on the assignment and offer a reduced fee (Obviously since the report will do them no good anyway)?? The original order was in no way contingent upon "hitting" the sales price or closing of the loan, but do I have the option to be a "nice" guy, and save them some money by cancelling the order at this time, for the reduced fee?? I do realize that most appraisers would say why the h would you do that, just give them the report and charge the full price, which I still may do, but just curious if have that option or if it may be in violation because I am reducing the assignment due to a "predetermined value."


I think you have answered your own question based upon how you perceive your peers will answer the question. I dont see a "nice guy" provision in USPAP ... nor do I see anything that establishes a fee schedule.
Complete the report and charge what you wish to charge. Id be totally above board and complete the report and charge the normal fee becuase frankly MY JOB ETHICALLY is to provide an estimate of value on the collateral the lender is anticipating lending on. Whether it closes or not or works or not .. is of no consequence to me.
 

joelfallin

Thread Starter
Freshman Member
Joined
Mar 28, 2007
Professional Status
Licensed Appraiser
State
Wisconsin
I do agree with you, however, my "job" is also to make as much money I can legally and ethically in this business. And to not complete the full appraisal may be a business decision in order to increase my bottom line down the road. I am going to complete the order anyway, but wanted some feedback on the issue. Thanks!
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
I think you have answered your own question based upon how you perceive your peers will answer the question. I dont see a "nice guy" provision in USPAP ... nor do I see anything that establishes a fee schedule.
Complete the report and charge what you wish to charge. Id be totally above board and complete the report and charge the normal fee becuase frankly MY JOB ETHICALLY is to provide an estimate of value on the collateral the lender is anticipating lending on. Whether it closes or not or works or not .. is of no consequence to me.

I agree. And, you stated that you would be reducing the fee due to a predetermined amount. In addition to what PE said, I really believe you need to do some soul searching. When you do an appraisal, why would you allow the sales price or a lender stated loan amount guide you in doing the appraisal? In essence, you are violating the ethics rule in your thinking and conduct, although not yet expressed in a report. Remember, an appraisal has 2 parts. The appraisal process, and the appraisal report. At least in the process portion, which includes the intellectual process, you are factoring in an ethical violation. How do I know that? Because that is what you have stated.
 

joelfallin

Thread Starter
Freshman Member
Joined
Mar 28, 2007
Professional Status
Licensed Appraiser
State
Wisconsin
No, the sales price in no way is influencing my opinion of value what so ever! The market data is.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I do agree with you, however, my "job" is also to make as much money I can legally and ethically in this business. And to not complete the full appraisal may be a business decision in order to increase my bottom line down the road. I am going to complete the order anyway, but wanted some feedback on the issue. Thanks!

Joel,

What you are contemplating is a clear violation of the USPAP ethics rule IMHO. Once you start down that slippery slope, where do you stop...do you fail mention some relatively minor property defects, etc. next time in order to make the deal work?
Additionally, please consider what you are doing to your profession and how you are cheating your peers if you do this. Sure, the lender will love you if you do this and may even send you more business down the road because of it...but that business will likely be at the expense at a more eithical appraiser who followed the rules and did not cheat to win more business. If you want to join in the race to the bottom based on cutting corners and cheating the system, go right ahead, but don't look for validation from anyone else and don't think that for one second when you look in the mirror you won't be looking at a cheater.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
I have a property I went to and comps do not even come close to supporting sales price of subject. Would it be in violation of the ethics rule management section to offer to my client that I not deliver a "written report" as requested on the assignment and offer a reduced fee (Obviously since the report will do them no good anyway)?? The original order was in no way contingent upon "hitting" the sales price or closing of the loan, but do I have the option to be a "nice" guy, and save them some money by cancelling the order at this time, for the reduced fee?? I do realize that most appraisers would say why the h would you do that, just give them the report and charge the full price, which I still may do, but just curious if have that option or if it may be in violation because I am reducing the assignment due to a "predetermined value."

My red above. Keep in mind our client is the person loaning the funds, no one else. If our report stops them from making a bad loan, that could be doing them more good then when we agree with selling prices. They have to make many good loans to make up for the loss on one bad loan.

Also, many contracts of sale have appraisal contingencies. Even though the borrower is not our client, they need the report in writing to get out of the deal or renegotiate the transaction price.

If you want to be that "nice guy" to the client, you should finish the report. It is better for the lender that you do. It is better for the borrower that you do. The only client that will be unhappy that you finished the report will be the clients not worth trying to develop a long term relationship with. Because those types will just call another appraiser until they find one that will make it work, and both the lender and borrower end up getting screwed. Long story short, the good clients will not be upset when you do the job they hired you for. One last thing, if you do this once, they will expect it all the time on all orders (refis and sales), do you really want to head down that road?
 

joelfallin

Thread Starter
Freshman Member
Joined
Mar 28, 2007
Professional Status
Licensed Appraiser
State
Wisconsin
Thanks for your input. That is why I asked the question. I did not say I was going to not complete the assignment, I simply asked for an opinion on the ethics behind it. I can see that some feel strongly that I don't have an option to stop the assigment. I am all for making this profession as ethical as possible and eliminating the appraisers that do not practice that way. It just hurts all of us who are doing the right thing.

But back to the point, I did not accept an order with a predetermined value and did not let the sales price influence my opinion of value. It was just a question of whether or not I had the legal and ethical oportunity to stop the assignment, which I don't. No problem, thanks for your help all, and for the record, I am not on my way down a "slippery slope."
 

Hamlet

Elite Member
Joined
Aug 14, 2006
Professional Status
Certified Residential Appraiser
State
Ohio
The only ethical way I see for an appraiser to "stop" an assignment is if they find that they are not competent to perform.

While receiving your fee may not be contingent on the pre-determined value, you are most definately letting the value determine the fee in this scenario. JMHO but I believe that is the same thing even if the appraiser is the one determining the contingency.
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
The OP is proposing to do a reduced fee quasi comp check but recognizes its an appraisal.
 
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