If you don't want to dance, don't go to the dance hall!

[Smokey Bear]

The letter of engagement should cover cancellation fees. By the time I go the the property, I've already spent time researching the property, pulling records, etc. I expect to get paid for the work I've put into it, not just for gas. In fact, under common law contract law, if they cancel, you're still entitled to the entire fee, since they breached the contract by canceling.

 

[Mike Boyd]

This is not one of those..."one size fits all..." issues. Typically, I will start my research, break out a file folder and start writing on it.....right after I get the order. I would guestimate that 25% of the time the order gets cancelled before I go out to inspect. Yes, I am ****ed because of the time already spent but consider it to be the nature of the business and a part of building and maintaining a practice. Nobody likes it but it is a necessary evil.

Maybe when ALL our orders arrive from a centralized ordering system this type of thing will be minimized if not stopped altogether.

 

[panappr]

Ray I have to agree with Jay, that your first mistake was making that call. I'm working on an assignment right now, that probably has a few issues that will kill the deal (flood zone, no permits, and a good ole' cost to cure). I'm gonna get it out of here over the weekend finished. Collections, however is an entirely separate issue. I have to assume they will pay without any problems because of who they are.

Ray.... In most all cases involving a change in scope, ("as-is", "subject to") I have to also agree with Doug, I have in the past and I'm not that Brash (I apologize). Not to sound like a politician here, but in this particular case what would YOU do??? I received and inspected the property on Friday as a "rush" promised to be delivered on Tuesday morning (long weekend) and now there is nobody to contact. I feel as though I was duped from the start!!! I always ask the owner in advance if there are any additions or alterations to the property as a normal course, and he had somehow skirted the following issue: Turns out there is an illegal garage conversion to a guest unit (occupied) with a full bath and kitchenette. I am preparing the report "as-is" with an estimated "cost to cure" the garage back to its original use (done). Now the possibility does exist that there will be a change or cancellation, however, knowing that they (my client) have accepted this in the past, I am completing the report (hedging) giving the UW the option to fund the loan. In addition, the property will now require flood insurance (not sure if they already have it). My dilemma may be quite different but, I feel I will need to be paid regardless.

Its hard enough being a human.

 

[Abester]

If you bill by the hour, it won't matter...

 

[DTB]

This is not one of those..."one size fits all..." issues. Typically, I will start my research, break out a file folder and start writing on it.....right after I get the order. I would guestimate that 25% of the time the order gets cancelled before I go out to inspect. Yes, I am ****ed because of the time already spent but consider it to be the nature of the business and a part of building and maintaining a practice. Nobody likes it but it is a necessary evil. Necessary how?

Maybe when ALL our orders arrive from a centralized ordering system this type of thing will be minimized if not stopped altogether.

I love it when all the problems are laid at the feet of 5 year or less appraisers. Mike has been around a looong time and this is SOP?

 

[Ray Miller]

I should add in my engagement letter a paragraph that states something to the fact:

If for any reason this order and/or contract is canceled by the lender, mortgage broker, processor, loan officer or borrower, I am due compensation for drive time and mileage, research time and hours spent at the rate of $___________ per hour and $.75 per mile, up to the agreement on fee.

If the SOW of work changes then a new fee will be established for the work.

How's that???

 

[Terrel L. Shields]

Determining the scope of work is an ongoing process in an assignment. Information or conditions discovered during the course of an assignment might cause the appraiser to reconsider the scope of work.

Some in previous posts have suggested that it doesn't matter if the property turns out to be in a flood plain or that there are expensive repairs necessary. Pay these no mind, just finish the appraisal and expect to be paid. NO SUCH RULE IS CONTEMPLATED BY USPAP.

Basically USPAP demands we not perform on a contingency then turns around and demands that we do. Is that what you are saying Doug?
I mean really....you are right. USPAP demands we work for free and revise the report even after it is completed (at least it does not prohibit us from redoing with "stips" while at the same time it demands that be called a "new assignment" and / or we give a "heads up". It also implies we know the exact target market for the appraisal. In other words, we have to know the intentions of the client. Is it going to Fannie? Or to a private secondary market fund? It is really being used solely for estate purposes? or perhaps to borrow money. It is another example of an incredibly self-conflicted document which serves appraisers very poorly. USPAP needs abolished clearly.

 

[xmmcsmielr]

Loan officer demands

In the residential mortgage lending segment of appraising, loan officers do not want an appraisal report that does anything other than grease the skids to funding a loan. Most loan officers don't care, and many demand, that an appraiser lie about value, condition, tenant occupancy for an owner occupied loan, and everything else that may prevent or slow down funding a loan.

As a result, I demand full payment of the appraisal fees from all mortgage lenders, BEFORE any work. I may set up a file, complete part of the office research, but I do NOT do any field work until the appraisal fee check clears the bank, if it's a personal or company check. Cashier's checks and money orders receive immediate work. I do not accept credit card payments, because they can be reversed.

During discussion with loan officers about my work, I specify, in writing, that my appraisals may report values higher, equal to or lower than anyone's expectations of values.

Then, if there is a problem with the property, and anyone is disappointed at my opinion of value, I've been paid, I complete the report and delivery it to the client.

The idea that I'm supposed to halt work upon discovery of some condition that prevents a loan from funding and not receive full payment of the appraisal fee is not acceptable. I schedule my time only for clients who pay my fee, up front, without any condition on value.

The pervasive history of mortgage loan officers' demands that appraisers lie and regular failure to pay appraisers anything, when work is halted due to lower market values than requested values or upon discovery of any condition that prevents lending, is abhorrent.

Many of those loan officers simply move on to other appraisers who readily comply with requests that violate USPAP.

I will not participate in halting work upon discovery of some condition that prevents loan funding. My scope of work is established at the outset: do an appraisal and report the conditions I find. Period. End of story.

If you, Mr. or Ms. Loan Officer, don't want to dance, don't ask me to. Doug Smith will cut the rug with you.

 

[xmmcsmielr]

And, Doug Smith, if the client is so uninformed that an SFR is a manufactured house, instead of a site built house, it demonstrates an utter lack of fact gathering necessary to determine what type of loan program a borrower should be placed in.

It is NOT my job, as the appraiser, to complete basic information gathering that the loan officer should have obtained through discussion with the borrower and/or searching the public records.

If the lender pays the full appraisal fee up front, then I will be happy to schedule time to work for the lender. However, my scope of work does NOT include halting work upon discovery of some information that conflicts with the lender's predetermined value or grease the skids to closing efforts.

 

[David S. Roberson]

Order an appraisal, get an appraisal.

I don't do trip charges. I can't afford to take trips; I gotta work.