Is a contingent SOW legal?

[J Grant]

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.

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...

 

[CANative]

Another absurd conversation courtesy of the folks at appraisersforum dot com.

 

[djd09]

this is a great thread. i need to prepare to be a reviewer if they roll out hybrids . i should make a killing knowing that a good percentage of the hybrids will be worth less then the paper they are written on.

cue the violins and such.

 

[George Hatch]

this is a great thread. i need to prepare to be a reviewer if they roll out hybrids . i should make a killing knowing that a good percentage of the hybrids will be worth less then the paper they are written on.

cue the violins and such.

No problemo as long as you understand that reviewers can get into trouble, too.

Last year the director of our state appraiser regulatory agency mentioned that nearly 30% of the complaints they receive are made against reviewers.

 

[Tom4value]

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?

Put me in the disagree column. I think you are confusing or equating scope of work with time and reporting content to prepare your report.

Let’s take the review. The scope of work is to review an appraisal. You determine if the original appraiser utilized the best sales as comparables. Lazy appraisers might say, “yep, they look good to me!” Professional appraisers would look at all sales they could have utilized, the good, bad and ugly. If you determined that the answer was, “ no, the OA did not used the most reliable ones”, it means that you already did your work to make that determination. You then provide the comparables that you already examined in your review report, all in the scope of work. The time difference is only putting the comps in the report, same scope of work. If you think that is a pain, it is because you quoted your fee too low, not that they changed the scope.

Same thing with condition evaluation. The scope of work is not just click C5 or C6 and be done. If you look closely, in URAR you are expected to summarize your conclusions. You already did the work that caused you to determine that, “nope, because it needs this, this and this needs to be repaired, it is not a C4, it is a C5”. The scope of work dictates that you explain why it is a C5 and not a C4.

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

 

[djd09]

That is more good news. So when they start investigating me, i can direct them to the real crooks.

 

[George Hatch]

LOL

Suffice it to say that if you get too far out over your skis in attributing to an appraiser elements that are outside of the SOW for their assignment it will be you who generates the discipline for being incompetent with your SR3, not the appraiser.

 

[AppraisrSteve]

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.

I recognize that. That's an argument, for sure.

 

[mike32716]

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.

Flip the script. "We are paying you $225 to do a review, and provide comps since you don't agree with the value. But, hey, if you do agree with the value we will still pay you the same" . An inducement (more $ per hour) for an outcome.

IRL the OP's concern is legitimate. Back in the day when lenders sent out X number of reviews they were of random quality, and maybe 1 in 10 resulted in the reviewer not agreeing with the value. The gross fees covered that extra work. Now lenders seem to only send out the problem appraisals for review. They are hoping for a confirmation that the value is fine so they can send it on with a stamp of approval. Thus the low fees offered. It is similar to disparate impact. The rules are the same, and seem fair, but the outcome is quite different.

 

[CANative]

$5 or $500. The scope of work remains the same. Like the movie.