Is a contingent SOW legal?

[Dublin ohio]

I was agreeing with you and amplifying for the benefit of the OP.

If the reviewer's OMV is required and more comps are needed, SR2-2(a) kicks in.

My bad. Must be the pain meds

 

[AppraisrSteve]

I appreciate your insights. I'm still not certain having a set fee tied to an expandable SOW is appropriate. Period, let alone should it be an industry standard. I understand answers such as, "Orders can be rejected.", "It's a business decision.", or "Renegotiate the fee." if new circumstances arise (like a cell tower in the front yard.. yikes!). These are all true. They may not put food on your table but they are true. However, it looks to me like classic scope creep. What I don't understand is appraiser's that just suck it up and give away their time. Obviously, this sets an expectation for the next appraiser. And so on. Hence, the industry standard. Expert analysis should be compensated based on time with consideration given to the complexity of the actual project rather than based on a competing bid based on a limited amount of information. Any thoughts? Disagree? Agree... anyone?

 

[J Grant]

Appraisers don't give away their time for free, the fact that a SOW can expand once into an an assignment is part of appraisal work. It would be better if appraisers could charge by the hour but most of time they are unfortunately working off a set fee or quoted bid. So charge enough upfront Some res lender work is under paid at this point and that is almost always the case with an AMC, so decide if this is a field you want to be in or Cali, notorious for low pay AMC work ( in many areas ) is where you want to practice. Appraising as I see it is becoming on res side a smaller core of higher pay clients and or complex or rural work but the appraiser has to be good at what they do.

 

[glenn walker]

I appreciate your insights. I'm still not certain having a set fee tied to an expandable SOW is appropriate. Period, let alone should it be an industry standard. I understand answers such as, "Orders can be rejected.", "It's a business decision.", or "Renegotiate the fee." if new circumstances arise (like a cell tower in the front yard.. yikes!). These are all true. They may not put food on your table but they are true. However, it looks to me like classic scope creep. What I don't understand is appraiser's that just suck it up and give away their time. Obviously, this sets an expectation for the next appraiser. And so on. Hence, the industry standard. Expert analysis should be compensated based on time with consideration given to the complexity of the actual project rather than based on a competing bid based on a limited amount of information. Any thoughts? Disagree? Agree... anyone?

Classic scope creep-maybe but you are making a big deal out of nothing.

 

[CANative]

My family has always had a set fee for most assignments. Lender clients need to have this and that's the cost of doing business for this type of appraisal practice. Generally, it's always worked out... eat some of the fee on the few assignments that go sideways, make up for it on the easy ones.

I was grumbling yesterday (out loud) about all the minutia that has to going into the report. They're hard enough without all the BS. But it is what it is. Just have to cope with it by having some internal procedures.

 

[BRCJR]

HVCC................

 

[George Hatch]

I appreciate your insights. I'm still not certain having a set fee tied to an expandable SOW is appropriate. Period, let alone should it be an industry standard. I understand answers such as, "Orders can be rejected.", "It's a business decision.", or "Renegotiate the fee." if new circumstances arise (like a cell tower in the front yard.. yikes!). These are all true. They may not put food on your table but they are true. However, it looks to me like classic scope creep. What I don't understand is appraiser's that just suck it up and give away their time. Obviously, this sets an expectation for the next appraiser. And so on. Hence, the industry standard. Expert analysis should be compensated based on time with consideration given to the complexity of the actual project rather than based on a competing bid based on a limited amount of information. Any thoughts? Disagree? Agree... anyone?

So really, you're not making a USPAP Argument at all. You're making a fee argument. Which is fine; nothing wrong with that except that if your concerns are about the fee then you shouldn't have dragged USPAP into it.

I think the way most appraisers look at it is that they recognize that a certain percentage of their assignments are going to blow up so that have to include that consideration in their fee. If I get 10 review assignments and 2 of them blow up on me than I need to figure out how long all 10 took and divide by 10 even if 8/10 took a lot less time/effort.

 

[Pittsburgh Pete]

My bad. Must be the pain meds

Hmmmmm!

 

[djd09]

of course it is contingent value work. no different then a ROV. both should be outlawed.

 

[George Hatch]

What's a little ironic is the point that an argument *could* be made that adding more fee to the assignment contingent upon the reviewer disagreeing with the original appraisal amounts to a fee inducement to disagree. But some of you can't see that because that actually is a USPAP argument and not a fee argument.