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Has Anyone Seen This?

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Jerry Bland

Freshman Member
Joined
Aug 27, 2003
Professional Status
Licensed Appraiser
State
Michigan
I was recently contracted to do a full appraisal on a purchase of of a 100+ year old home. The purchase price was $425,000. After the inspection and gathering of the comparable data, it was determined that the estimated value of the subject was in the $330,000 range. That value was justified with 7 comparables of 100+ year old homes all in the same neighborhood and all sales since 12/2002. After numerous conversations (@$$ chewings) with the mortgage company and realtors involved, I was told to put the job on a 2070 form with no stated value. The property has since closed at the $425,000 sales price. I was just wondering, has anyone seen this, and what would anyone else do??
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Never seen it, hard to beleive it, but I'd have done what you did...

THe responsibility is all on the lender.

I would keep EXTENSIVE file notes just in case some brigh person decided to come after me later.

Hope you charged plenty for the original appriasal and a fair fee for the 2070!

Frankly this is what SHOULD happen.

They want YOUR fanny on the firing-line?
Toss it back at them.

They wanna make the loan on probably insufficinet collaterol, nooo problem, but not with my John Henry to cover their rears.

But watch what happens now, in terms of other sales in the area :rolleyes:
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I'd bill them for the appraisal report, then do a 2070...... and bill them for that too. :mrgreen: You did your job... TWO jobs! ;) The fact that they don't like the number is their problem.

Go ahead, use the 2070 and an AVM....... be over extended on the loan...... that's not my problem.
 

xm39hnu

Senior Member
Joined
Jul 10, 2003
Professional Status
General Public
State
Florida
I don't suppose there were any current listings under contract which you could have used, were there?

Nahhh. Never happens that way :)
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
What should be a crime here is that an appraisal was completed that the buyer and the investor purchasing that loan will never see.

The Realtor and the loan officer should be heavily fined, lose their license, and spend a few months in jail!!!!!
 

liznindy

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Indiana
I wouldn't be surprised if they told the purchaser, if asked about the appraisal....."The house appraised just fine."

There should be a law that the lenders must tell the purchasers (and or homeowners) what type of appraisal was ordered and the extent to which the property was viewed by an appraiser. AND that a 2070 is NOT an appraisal.
 

Steve Owen

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
Missouri
All of the comments above are appropriate and I don't take issue with any of them. However, there is another possibility. I have seen this scenario before, though not with such high dollar figures. In the situation where I ran into this, the mortgage company asked for a comp search. I did a compliant comp search and charged them appropriately. The comps most likely to be used were all sold at lower dollar amounts than the subject. I discussed this with the mortgage broker, along with strong comments about it not being an appraisal and the fact that I didn't know how the property would appraise if those comps were analyzed. They ordered a 2070, which I completed for a small additional fee.

I found out from the realtor what happened in this case. The buyer had a large down and didn't care that the house was above market. (Sometimes buyers do that, you know.) In some cases, they will underwrite a loan without an appraisal if the ltv is high, based on tax valuation, AVM, or some other method, and the borrowers credit is excellent. As appraisers, we tend to think only of the value of the property, but that's not the only factor involved in the loan decision.

All of that being said, I've never seen one of these with such a high spread as yours. If the deal is legitimate, then your buyer must have a lot of bucks to throw away.

Additionally, I would not charge them for an appraisal in addition to the 2070 fee. (You didn't give them a value of range of value did you? If so, you may be in violation of USPAP.) Instead, I would have charged them for a comp search prior to their order for the 2070.
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I discussed this with the mortgage broker, along with strong comments about it not being an appraisal and the fact that I didn't know how the property would appraise if those comps were analyzed.

Instead, I would have charged them for a comp search prior to their order for the 2070.

<_< Do you just print out MLS sheets and fax them without any appraiser input? If YOU give them a value range, a comp search IS an appraisal. ;)

Besides that.... Data is the King. I sell data, with my opinion..... and that is not for free. :mrgreen:
 

Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
I think what you have here is a buyer with a significant down payment who wanted the house come hell or high water and the LO inadvertently ordered a 1004 when he could have done the mortgage and sold it on the secondary market based on a 2070.

The quandary they have is what to do with the 1004 that you did. Do they just dump it and close the loan? The real estate agent, if he is working as a Buyer Agent has a fiduciary obligation to inform the buyer. Otherwise, he is not obligated to say anything as he is working as the Sellers agent and cannot say anything that would harm his client.

As to pulling licenses, fining, etc., I think that we all from time to time forget that it is not illegal to purchase a property for more than the appraised value. A crime may occur when there is a conspiracy to defraud or if someone who has a legal responsibility to inform the buyer of a situation doesn't. There is no law that says you cannot pay more than the appraised value or more than market value or more than any other kind of value if you want to and have the money.

Best thing to do is to do the 2070 and bill them for both. Then keep out of it. You have no obligation to the borrower. That's what agents and attorneys are for. Stay clear of the whole situation and just do what you can for your client. What they or anybody else do with the 1st appraisal is their concern. Don't make it yours.
 

Jerry Bland

Freshman Member
Joined
Aug 27, 2003
Professional Status
Licensed Appraiser
State
Michigan
I should have also noted that the selling agent was employed by the listing company and the loan officer was the selling agent. I disclosed that on the original appraisal and the 2070. The sev of the subject dwelling was 138,000. Current sales in the area typically go for 2.2 - 2.5 times the sev. The first conference call i had with the listing agent, selling agent and owner of the mortgage company was to use lakefront comparables since the were down the street from the lake!! Then i was told to use newer, custom homes within the same township. My subject was in a small village within the township limits. And, it should also be noted that the realtor and mortgage company were extremely unhappy with me.
 
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