Is a contingent SOW legal?

[Vermonter]

Again, it is not that the scope of work changed. It is maybe you are charging too little for what the SOW entails.

There's the correct answer.

I know lenders used to push a certain percentage of all loans to review, so you'd have a mix of mostly simple reviews with a few problem ones in there, and now they just review the problem reports.....but the SOW has always been the same. The lower fee for a review work never made sense to me.

I still get steady review work from 2 local clients and they're never easy ones. They're just about always a problem report or a complex property....or most of the time both. So my fee has always been based on the appraisal of the subject in the review (which is based on the complexity) PLUS the time it takes to address the report under review.

 

[TRESinc]

That is true. I always recognized that. However the opposite problem exists as well...the fact that the fee is set no matter what might create incentive to agree with value.
The fact is appraisal fees even at "full fees" are often below what the actual work ends up taking...

there is only one party to blame when that happens....

 

[Tom4value]

there is only one party to blame when that happens....

Bingo!
That is why I charge the same amount for a full appraisal. I have gotten some push back....”why are you charging a ‘full fee’ (whatever that means) to just agree with the appraiser?” I answer with, “because it takes the same amount of work to agree with the appraiser as it does to disagree!”

 

[Peter LeQuire]

OK - smear on the dinosaur repellent: But, there were dang few reviews I’ve done that ONLY asked whether I agreed with the value oplnlon reached in the appraisal being reviewed. Their SsOW required I also opine the reasonableness of the adjustments, appropriateness of comparables and all the rest. One doesn’t have to be an efficiency expert to figure out that very few lenders want more than a blessing of the appraisals upon which their loans are based. But, as with other work, there are other clients willing to pay for a thorough review done by an appraiser who owns a dark suit and who keeps his or hair neat.

 

[glenn walker]

It was common for lenders to ask the reviewer to look at the original appraisers revised report but its not really necessary because the Underwriter can and should read the revised appraisal and see if has been changed. The problem with sending revised back to the reviewer is the lender is trying to clean up the review and sanitize the file. I do not want to state that just because some changes were made everything is wonderful. On technical reviews with no opinion of value I may have a report that has 10 to 15 factual errors, mistakes or the appraiser was just plain lazy and I am not going to review his revised report because those are the kind of appraisers that lenders need to eliminate from their fee panels, but no they just keep sanitizing the bad appraisers reports because he/she is a numbers hitter. Anyway I don't care if they want to pay an-additional fee I am not cleaning up the guys mess. The lender can always just hit delete and throw the review into the trash and BINGO they have a clean file , hey if your going to clean up the crime scene you may as well go all the way : )

 

[bnmappraisal]

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

You picked up on that too?!

 

[TRESinc]

Bingo!
That is why I charge the same amount for a full appraisal. I have gotten some push back....”why are you charging a ‘full fee’ (whatever that means) to just agree with the appraiser?” I answer with, “because it takes the same amount of work to agree with the appraiser as it does to disagree!”

the same? i charge more for a review. it's more work.