Is it ethical to tell the appraisal how much you need?

[Smokey Bear]

It would not go over well with me, and I would interrupt you and stop you mid-sentence. If you persisted, I'd likely walk out and let your bank know. I'd also report it to a friend who will report it to the agencies who would flag your file as a possible fraud case and those agencies would go over the loan file with a fine toothed comb.

Your value need is irrelevant to the appraiser, so telling them what you need is an attempt to influence the appraiser, which is illegal in some states. It is an invitation for the appraiser to join you in commiting fraud. That falls under RICO. While the FBI probably wouldn't waste their time on little ole you, you might be caught up if the bank you're going with is being watched like a hawk by the FBI looking to make a case against them.

Okay, scare tactics aside, why would you want to insult the appraiser? Like someone already said, some appraisers would come in lower just to show they weren't influenced.

 

[prasercat]

To be honest, I feel humiliated when that happens. I have a knee jerk response in my brain that wants to ask if I should shine the owner's shoes or hub caps before I leave as well - but I don't. Actually, I just pretend I didn't hear them say anything. However, I do jot down the number so when this happens I'll know if you'll be happy or not when I finally complete my analysis (its natural curiosity) - actually, I'd rather not know. However, this allows me to develop a linear regression analysis of how much business I get from that lender/AMC per unit time as a function of not hitting the target and to see the results for the coefficient of determination, and whether it is a positive or negative relationship - this is really interesting stuff!

Sometimes I think there was some skippy appraiser that came before me that actually ASKED! what they needed and then and there the poor homeowner was misguided as to what real appraisers do.

When I feel good and in a generous mind, I can understand how people can be confused, since they can go out and get a lawyer to be their advocate and represent their interests, they can go out and get a realtor to advocate for them and represent their interests; but that doesn't extend to appraisers, we can only advocate for the accuracy of our analysis and results (as unbiased and competently performed).

Actually, I prefer that the question of ethicality was asked rather than the assumption made without regard.

 

[hastalavista]

We would like to re-finance our home and get some money out to pay some debts. The bank says our home needs to come in at X amount of dollars. Is it ethical to tell the appraiser beforehand what we need, or would he be insulted? Or should we just keep our mouth shut and hope for the best? Thanks!

Ideally, keep your mouth shut.

However, I think most of us appraisers have been told by borrowers at some time what they hope to get (in terms of value) or what their loan amount is.
In my opinion, there is a difference between making an off-the-cuff reference by the borrower and implying that the value/deal better go through.

I don't expect John/Jane Public to know the mortgage-lending or appraisal regulation (such that exists in California where no party that has an interest in the outcome of the transaction can pressure the appraiser to work toward the desired outcome). Like the others, if a borrower mentions a figure it goes in one-ear and out the other with me. I wouldn't be insulted if the remark was off-the-cuff.
On the other hand, I will (politely and professionally) let the borrower know that discussions of value are not permitted if the borrower's comments go beyond a certain point.

You had the insight to come to an appraisal forum and ask the question first; that (to me) implies your sincere concern to be not only "legal" but "ethical" in your dealings with the appraiser who comes out to appraise your home. I commend you. Now that you've heard multiple feedback to your question, I'm confident you'll approach the situation ethically. As an appraiser, I appreciate it. :new_smile-l:

 

[Kevin Pennick]

I get it all the time. Doesn't phase me in the least. My stock answer to when they ask what I think its worth is that I'm not being paid to guess.

 

[Hamlet]

We would like to re-finance our home and get some money out to pay some debts. The bank says our home needs to come in at X amount of dollars. Is it ethical to tell the appraiser beforehand what we need, or would he be insulted? Or should we just keep our mouth shut and hope for the best? Thanks!

It is neither ethical or unethical to simply tell the appraiser what values you need to make the loan. Applying pressure, bribes or threats to make the appraiser "come in" at that value is unethical and in Ohio that would be illegal.

Personally, I wouldn't be insulted because I understand the emotion on the borrowers end of the transaction. Would it have any bearing on my opinion of Market Value? The answer would be no. Only the data that I find would have any bearing on that. I wouldn't be rude or lecture you, however, I would simply move along in my inspection.

That being said, as you can tell some appraisers would take offense, and because it will make no difference in their opinion, it would be best to not mention your needed value. If, however, you have factual information regarding the condition, or upgrades to your home that would be welcome information to the appraiser.

Good luck and welcome to the forum.

 

[Webbed Feet]

I like the prior three answers qute a bit.. I've always thought property owners doing their best to try and sway me are just so cute!

 

[PropertyEconomics]

It would be interesting to see how states who have passed "appraiser non influencing laws" would deal with this issue.
Interestingly enough, in most states, other than an expert witness approved by the court, the only other person allowed to testify as to value .. is the property owner.

And like the others ... if I had $10 for everytime I heard how much a homeowner thought their house was worth ... well lets just say Id be visiting here from a beach somewhere and certainly not caring much what the real answers were.
Gin Therapy has a tendency to do that to me.