"Free Appraisal"

[Wally Jones]

I just ran across a listing in our local MLS with the following:

"Free appraisal with our preferred lender."

Is there a chance this may be a violation of the Realtor's code of ethics?

Or is it just good advertising?

Thanks for the help.

 

[Ms. Janet]

maybe the lender they're pushing has a loan program with no charge for the appraisal?

 

[Elliott]

Is that like Ditech's or Quicken's no loan fee? Where they
only charge you an extra 1/2% on the interest rate for
30 years? Which probably comes out to you paying $15,000
in loan fees, escrow fee, loan fees, etc. Sounds
like a land shark to me.

There really is no free lunch.

elliott

 

[Annemieke Roell]

Sounds to me as if an enterprising appraiser is offering a pre-listing appraisal which has been paid by the seller or realtor and has been paid enough money to turn it into an appraisal for lending purposes after it has been ordered by the lender.

 

[Jungle Boy]

Lender gives a kick-back to the Realtor, and Realiter decides to extend the kick-back to the buyer. No problem, as long as kick-backs are not a problem.
Appraiser doesn't get paid until the loan closes.
No skin off the Realiters or Lenders back. Everybody wins !

 

[Lobo Fan]

There is a lender here that advertises free appraisals if you mention the radio ad. I am assuming that they cut a deal with the appraiser for a discount and eat the rest.

 

[Marcia Langley]

Maybe the only ones that actually get the free appraisal are the ones that get approved through the use of AVMs or free comp checks.

Maybe the rest are simply lied to and the appraiser's fee is rolled into the loan.

 

[Wally Jones]

Thanks for all the replies.

I'm convinced that nothing is "free". This was just the first time I had seen something like this in the MLS. Probably nothing illegal about it. It just kinda smells funny.

 

[JSmith43]

Imagine the top 3 residential lenders in the US. Their LO's have all sorts of marketing resources that are pre-designed and blessed by corporate (so as to keep with branding policy, etc).

One of the little certificates I could print at my former big three employer was a Free Appraisal Certificate. I could mail them out to every agent in town if I were willing to pay the postage and take the appraisal fee as a direct hit on my commission report.

Of course, LO's that chose to use that certificate or 1,000 other gimmicks had to figure it into their own business plan.

The question always was do you make it up on volume or not? BTW, the policy on so called junk fees was kind of flexible & many of the LO's would just add an off-setting fee to the Good Faith Estimate. Lender paid appraisal fee but a $350 Processing or Underwriting fee

Junk fees are so prevalent, I am considering quoting a typical set and pricing loans with and without. The risk is getting bogged down in a discussion of "USPAP Confidentiality" proportions. It is hard to get credit for doing the right thing in this environment.:icon_smile:

 

[Mike Boyd]

As Roger has implied and Marcia hit on, they are rolled into the loan or called something else in the closing costs. Direct lenders might have a more honest approach and mortgage brokers can pay for it in the "Yield Spread Premium" that is paid to them by the direct lender. 1/8th of a percent increase in the interest rate is typically more than enough to pay for the appraisal