I Declined the Order

[Jim Bartley]

Got a request for an FHA purchase. Start to pull data and lo and behold, it sold in 4/02 for $89,000. MLS comments say "New!!, carpet, paint roof. New range, siding, glass will be replaced, back door to be replaced. $1500 Closing paid for quick closing". It was listed for $92,950 with about 60 DOM. It was bought by an investor.

Now it has a contract for $99,950! after being on market for a 118 DOM. I called lender and politely declined the order. Just too much risk.

 

[David S. Roberson]

What risk? Just report what the market says it's worth. High or low, up or down, why do we feel like we are doing a disservice when we report what the market says it's worth like we are supposed to do?

 

[Jim Bartley]

David,

If this wasn't an FHA with a previous sale I would have. But with FHA focusing on appraisers as the "bad guys", why tempt fate? This has all the appearances of a "flip". According to MLS, nothing was done to this property after the earlier sale this past spring. Is it legitimate? Who knows. As long as HUD is going to focus on appraisers, as opposed to LO/Lenders, I will be very careful about the types of FHA assignments I accept.

 

[George Hatch]

JimBob,

Forewarned is forearmed. You know ahead of time that the subject's property sales history is going to be an issue and that it should be one of the major themes in any appraisal report. You'll actually be doing everyone a favor if you run down each transaction and listing, talk to both sides of each transaction and find out what did and didn't happen to result in these increases. Disclose this information in your report and include lots of detail about the subject property, verify your comparable data, make realistic adjustments and let the chips fall where they may. Make sure you include lots of photos to back up your quality and condition ratings. In other words, just do what you would normally do for any appraisal assignment.

Observe and report. The more that you disclose, the less wiggle room you leave for them to lay it all on you. Once the lender has the information they can make an informed decision. They can't say they don't know unless your report is insufficient. Really, your appraised value isn't the big issue here; it's whether you disclose enough of the information they need about the subject proeprty to intellgently underwrite their loan. I don't know, but I'd bet that once you run down and disclose all this information, the facts will kill the deal; value opinion notwithstanding.

Don't back away from this just because it's a high(er) risk assignment. This is exactly the kind of assignment that an AVM or 'desktop' appraisal would screw up, and is exactly the kind of assignment that calls for a professional appraiser (you) to do a professional appraisal.


George Hatch

 

[Tom Hildebrandt]

George

Nice post, and I agree.

One final thought for JimBob, you know because of the sales history that additional work and effort will be required to comply with your professional standards, therefore a prudent business person would charge more.

Regards

Tom Hildebrandt GAA

 

[Larry Lyke]

JimBob --

The greater risk is that of not accepting this fantastic challenge to one's growth as an appraiser.

I love doing appraisals where there's a scent of something amiss. Like a detective, you know damned well that somebody or somebodies have been shading reality.

Drag the info out into the open. Present it in a very, very straightforward, professional way. Research everything of interest to you and just pass it along to the underwriter.

Let her carry out the ablution!

There's no game in town like it.

 

[Austin]

I think JimBob raises an interesting avenue of discussion for the reasons he gave for declining this assignment. I am using Tom Hilderbrandt’s case as a reference. As a result of his case and other experiences, I have completely changed by mode of operation. I will never again do an appraisal in the state of NC (My office is about 2 miles from the NC state line and got a call for a farm appraisal today over there); I will not appraise any property that is not straight forward with no complications that requires judgment unless it is for a regular client of which I have many; I will not do any FNMA, VA, or FHA work; I will not appraise any property that has historically been assigned to the private domain of AI members; I would not turn an AI member in if I saw him/her commit murder because I know what side my bread is buttered on; I will not accept any assignment from a person I do not know or have not had dealings with.
I have been out of town since last Tuesday and had 19 calls for assignments on my answering machine this morning. Never heard of any one of them and did not and will not call any of them back. To much legal risk that I don’t have to take because I have an ample supply of work from safe sources with little or no risk involved. I could keep five trainees busy but am not willing to take the risk involved. I have no employees because they have to many rights and I don’t have any apparently. Making out like a fat rats thinks for axing. As soon as something else comes along, I am out of this business because it is a nightmare.

 

[Joe Birrell (NY)]

I actually agree with George Hatch, inspite of the fact that I don't do FHA anymore since 99% of them are some kind of scam. I got sick and tired of all the nonsense associated with them and decided the pay didn't equal the aggrevation dealing with it, especially in light of the recent HUD "appraiser default" thing.