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Getting Paid At The Door

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jsradcliffe

Sophomore Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
South Carolina
My question is this. I receive orders and do the research before I go out to inspect the property. I already know what value they need because it is on the order. I used to call client and let him know up front if the value was not going to be there, not even close too getting the value they need. The way my mentor does it is this way. He will do the appraisal and if the value is not there he send the homeowner the check back. I think this is stupid. Why? Because the appraisal is not a guarantee that you will get the loan, and if you do not get the loan, that does not mean you get your money back.

I want to know how the rest of you do it. If you do the appraisal and the value does not work, do you give the money back after you did the work? Please let me know.

Jeff
 

David S. Roberson

Senior Member
Gold Supporting Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Tennessee
You need a new mentor, preferably one who has heard of USPAP.
 
W

walt kirk

Guest
I can understand your point. We earn our fee by estimating the value of the property. The fact that the property is not worth enough to qualify for the loan is not our concern.

That being said I have refused to collect the COD on several properties when I knew that the property would not make value and that the owner needed the money more than I did.
 

Dave Smith

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Wisconsin
Why work for free? Without sounding like I'm being mercenary about it I work so I can live.

I am in business to make a fair profit for my efforts. If my professional opinion is sought I provide it and I get paid for it.

Whether or not a loan closes is not the issue. A service is provided in exchange for a fair fee.

My $0.02 worth.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Basing a fee on the value is a major violation of USPAP.

Working for free is beyond stupid.

That said, I don't pay any attention to what value they 'want'. I complete the appraisal after I get paid and deliver what was ordered... an appraisal report. My opinion of the value of that property never, ever, has anything to do with what they want it to be. Sometimes it's higher than what they want!
 

jsradcliffe

Sophomore Member
Joined
Jan 27, 2003
Professional Status
Certified Residential Appraiser
State
South Carolina
I am going to start doing it your way Pamela. My instructor once said, "I don't think lenders should put the value they need on the request form, it gives the appraiser something to shoot for." I really appreciate your opinion.

Thank you.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I have great concerns for the future of your mentor's business. Like the others said, his method violates USPAP. Second, how does he make a profit??? :confused:

Now like Walt, I have felt some pitty on some folks before, and not accepted the assignment or "trip fee". But those were the harshest of conditions, where it was blatently obvious that no way in :eek:nfire: would it work.
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
jsr,.......You have been poorly lead by your mentor, and oh, what a shame, to hear you say that this sort of value pre-check and hunch-conclusion pre-reporting has been going on in your office and is the status quo. Chuck it !....and chuck it fast and as far as you can. My bet is, your mentor/supervisor is going to considerably dislike your suggesting that the process stop, and that you prefer to do things a different way. He/she just may suggest you seek a new mentor relationship elsewhere.....which may serve you better in the long run. These clients who share with you what value they "need" are playing you like a violin. Let your mentor do reports that way, for them, while you do reports only for clients who do not "push" the values needed and request your verbal (phone them) pre-reporting of how you "feel" it will turn out if you proceed. Do your best to kindle some new clients on your own, those who can work solely with you, and perhaps I must assume that your mentor need NOT co-sign your work product. As for giving the money back......the simplest answer is "no", if you have started and completed a report, regardless of whether the value pleases or not. If they send you a check in advance, and then the homeowner calls the office to completely cancel the set appmt. and you never go out there.....then you should consider sending back the check. All you may have done is the advance on-line data look-ups.....for YOUR purposes only.....and not for your sharing with the client if he/she is expecting an early verbal value hunch on the subject from you. Your client has multiple ways to access data from certain sources.....at which point then, they must decide to order your appraisal, or not. Make them pay for raw data from elsewhere, not freebie stuff from you. That's the part of any client's practice which has the stench. Better clients are out there, and the hunt for them can sometimes seem never-ending.
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Cash the check first! Your mentor is a nice guy but not the sharpest knife in the drawer!
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
ADVISORY OPINION 19 (AO-19)

This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

SUBJECT: Unacceptable Assignment Conditions in Real Property Appraisal Assignments

APPLICATION: Real Property

ISSUE:

All real property appraisal assignments involve conditions that affect the appraiser’s scope of work and the type of report. What types of conditions are unacceptable?

BACKGROUND:

Many residential property appraisers report requests for service where the caller includes statements or information in the request similar to the following:

1. We need comps for (property description) that will support a loan of $___________; can you provide them?

2. Sales Price: ___________.

3. Approximate (or Minimum) value needed: __________.

4. Amount needed: ______________.

5. Owner’s estimate of value: ___________.

6. If this property will not appraise for at least ___________, stop and call us immediately.

7. Please call and notify if it is NOT possible to support a value at or above ___________, BEFORE YOU PROCEED!!!!

Appraisers report that the caller usually makes it clear that they do not want the appraiser to do any fieldwork. Some callers refer to the service requested as a “comp check” while others refer to it as a “preliminary appraisal” or use some terms other than appraisal (such as preliminary evaluation, study, analysis, etc.). Some callers indicate that if the numbers will not work, the appraiser can send a bill for research services or a “preliminary” inspection. Other callers promise future assignments if the appraiser can make the present deal work.

Appraisers ask, “Can I respond to such requests without violating USPAP and, if so, how?”

ADVICE FROM THE ASB ON THE ISSUE:

Relevant USPAP References

Appraisers receiving requests for services that include the kind of information and situations described in the Background section of this Advisory Opinion should carefully review:

the Conduct and Management sections of the ETHICS RULE, particularly in regard to assignments offered under condition of “predetermined opinions or conclusions” or compensation conditioned on the reporting of a predetermined value, on a direction in value that favors the cause of the client, on the amount of the value opinion, on the attainment of a stipulated result, or on the occurrence of a subsequent event directly related to the value opinion.

The definitions of “Appraisal,” “Appraisal Practice,” “Assignment” and “Scope of Work” in the DEFINITIONS section of USPAP.

Standards Rule 1-1(B), particularly as it relates to diligence in the level of research and analysis necessary to develop credible opinions and conclusions.

Standards Rules 1-2(f), (g), and (h), regarding identification of the scope of work necessary to complete an assignment and any extraordinary assumptions or hypothetical conditions necessary in an assignment.

Standards Rules 1-5(a) and (B), regarding the analysis of current or historical market activity regarding the property appraised.

the DEPARTURE RULE, with particular attention to the appraiser’s burden of proof in connection with the appraiser’s scope of work decision and burden of disclosure in connection with any departures from specific requirements.

Statement on Appraisal Standards No. 7 (SMT-7), particularly the Scope of Work and Levels of Reliability sections.

as guidance, Advisory Opinions AO-11, 12, 13, and 15.



Unacceptable Conditions

Certain types of conditions are unacceptable in any assignment because performing an assignment under such conditions violates USPAP. Specifically, an assignment condition is unacceptable when it:

precludes an appraiser’s impartiality. Because such a condition destroys the objectivity and independence required for the development and communication of credible results;

limits the scope of work to such a degree that the assignment results are not credible, given the purpose of the assignment and the intended use of those results;

limits the content of a report in a way that results in the report being misleading.



Accepting Assignment Conditions

The purpose of an assignment and the intended use of the assignment results affect whether assignment conditions are acceptable. Some assignment conditions may be acceptable in one type of assignment but not in another. An appraiser should carefully consider the information provided by the client in a prospective assignment before accepting or declining the assignment. (See Statement on Appraisal Standards No. 9 (SMT-9)

In the highly competitive financial services market, cost versus benefit is always an issue. Residential appraisers, particularly, have seen an increase in the use of sophisticated loan application screening tools by their lender-clients. Many lenders believe an appraiser can enhance their screening efforts by doing “preliminary work” that they do not view as an “appraisal.”

Other client groups also ask appraisers to provide services under conditions that limit the appraiser’s scope of work. Investors, trust administrators, and portfolio account managers often require opinions and data from appraisers in order to make decisions. Attorneys often rely on appraisers in counseling their clients and in preparing for litigation.

When considering a request for service, appraisers should ascertain:

whether the service involves an appraisal,

what levels of risk are associated with the service, and

whether there are any unacceptable conditions attached to the assignment.
 
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