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Fee's & % of outcome

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jtrotta

Senior Member
Joined
Jan 16, 2002
need a reference to this situation- but forget where I can find it; Client claims last appraiser charged a % of the end result and if I remember correctly we aren't suppose to to do that. This is for an assessment appeal - tax.

Can anyone direct me to that reference :?:

8)
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
Ethics 2003 USPAP

It is unethical for an appraiser to accept compensation for performing an assignment when it is contingent upon:



the reporting of a predetermined result (e.g., opinion of value);
a direction in assignment results that favors the cause of the client;
the amount of a value opinion;
the attainment of a stipulated result; or
the occurrence of a subsequent event directly related to the appraiser's opinions and specific to the assignment's purpose

Is this what your looking for.
 

Ted Martin

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Kansas
Last "appraiser" violated the law with respect to an appraisal, or they were acting as a "consultant" and advocating the clients position with bias. As long as they disclosed the bias in a maner that was not misleading they could charge on a percentage basis.
 

rtubbs

Junior Member
Joined
Jan 15, 2002
jtrotta, see the 2000 FAQs published by the Appraisal Foundation (question 105 and 106). sounds like a bunch of barbledegook.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
ryan;

this is the ticket I believe; #2- a direction in assignment results that favors the Client; and it's the same in 2002 & 2001

ksappraiser;
yep they violated The "Appraiser's Bible", wheres my #2 rubber mallett, looks like frontal labotomy arrangement is necessary

rtubbs;
N/A -

IMHO - if you were to complete an assignment for a %; would this not violate also the competency provision, as the higher the value of the assignment the greater the compensation :?: therefore, the assignment could be a bogus job, depending on how Honest the appraiser is/was :wink:

thanks to all of you for your input :D all the answers were worth the thought & input

8)
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
j

Not necessarily........a consultant can act on a contingent fee basis and hire the unbiased appraiser paying him a non-contingent fee for the report.....well at least that was the way it was several USPAP's ago. :oops: :oops:

Don't get the rubber mallet ready..just yet... lest ye need hit yourself in the head with it... better clarify "appraiser" and if there was a consultant involved with the client 8O 8O
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
The % may relate to the amount of the reduction in taxes which is common for tax reps. For example if they reduce the taxes by $10,000, they charge $2000. On small homes, this is not attractive. On Multi-Million $ homes, its attractive. And if they are working as a tax rep not an appraiser, the rules are different.

Roger
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
AND the Colorado State Supreme Court said a tax appraiser CAN charge a contingent fee and USPAP can go eat a frog...at least in CO. A county contested the appraisers fee arrangement in an effort to overturn an adverse tax board ruling. They were hoping to have his testimony impeached. This was about 2000 I think.

What the gov't, deliberately or inadvertently has done is denied taxpayers the right to protest bad valuations (over-appraisal among tax assessors appraisers is at least as common as among private appraisers.) The reason it denies them a level playing field is that contingent fees force the property owner into a higher risk catagory if they appeal. They are not only out the tax, but a flat fee which under USPAP cannot be waived. The bad thing is no tax consultant can inflate the appraised value very much because most Boards of Equalization are well advised and/or peopled by persons with real estate and appraisal experience (when i served there were 2 certified appraisers, 2 commercial brokers (retired), and 3 ex-assessor appraisers serving the board. The other two had sold real estate.) You are not going to pull a fast one on these people. In fact, they are expecting you to inflate the value. A prior appraisal done for a different purpose likely is going to get a more sympathetic treatment than an appraisal done for the sole purpose of contesting the value before the B of E.

Most appeals should be handled as consultations. You do not need to appraise the property. Tax valuations are usually two-fold. The value of the land, the value of the improvements. Most assessors rely upon the cost approach while claiming they rely upon comparable sales. Showing two or three dwellings nearby with both lower values and lower tax values is the best way to appeal a high tax. Let the B of E adjust the value, you don't need to tell them what it is worth. Often you can argue that the land value is lower because of some defect in the land (too close to highway, steep lot, encroachment, etc.) and ditto for improvements (ancient heat system & broiler, for instance), cracks in foundation that need fixed.

For very large properties involving $10,000s of dollars, paying an appraiser is OK. But for small appeals where the savings may be only 300-500 dollars, the homeowner is risking throwing good money after bad. Some boards simply are controled by the assessor and will change nothing without appeal to a real court. I am lucky enough to live in an area where the board is very independent.
 
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Terrel's response is right on target. You don't need to appraise the property. In fact, I'd avise against it. The Tax Adjustment Boards, Boards of Equalization, or whatever they may be called in a particular jurisdiction, do not base assessed valuations on what an outside appraiser tells them.

Assessed values don't have to be "accurate", either. They must be fair. As Terrell said, best way is to find similar nearby properties with higher assessed values. Many ordinary homeowners would be better off if they represented themselves in front of the Board. The Board will be more sympathetic to them than they would be toward an outside expert. However, the homeowner must have valid and accurate data. That's where an appraiser could help them. Better to do it on an hourly basis.
Those are my observations from having represented the County Property Appraiser before such a board, years ago. I don't think things have changed much.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Ben V (I like the rubber mallet look on other peoples faces :lol: :lol: )

RStrahan; Terrell; and Sir Thomas -
thank you all for yer input, it is well thought and well taken into account, I was told the last person was an appraiser and there was no mention of a consultant. Terrell, you apparently have gone thru some of this in your area, along with a myriad of stuff, I am not familiar with (your background obviously helps a great deal); your expertise would be lost here and you would more than likely feel out of place. Sounds like your having Fun with your area. Enjoy the fruits of yer labor.

RStrahan and Sir Thomas, always great ta hear from you guys and your thoughts, they are all welcome and am always in hopes that some of the stuff I provide may help you in some way (large or small).

Ben - naaaa didn't fergit ya, you also have some good input and enjoy some of the fun stuff.

A Happy & Prosporus New Year ta Ya'll - Thanks

8)
 
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