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Is this a conflict of interest?

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CatherineR

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Joined
Jan 24, 2008
Professional Status
Appraiser Trainee
State
New Mexico
I'm a new Apprentice and looking for ways to get in my 2500 hours. I'm also a Realtor. An Appraiser friend of mine had a suggestion on how I might be able to get a lot of hours in. He suggested I ask my Qualifying Broker to "hire" me for zero dollars to do an appraisal for all of the listings in the office. The appraisals would be for the benefit of the office only and would not be for the property owner or any sales transaction of the property. He then suggested that I could possibly work an arrangement with my Supervisor where I pay my Supervisor, say, a $50 fee per appraisal to have my Supervisor review each appraisal. It will cost me some money, but I will get in my hours. I like his idea but I'm concerned that there is too much potential for conflict of interest with doing this in the office where I am a Realtor. Do you think this is a conflict of interest? And what if I did this with another real estate office, where I am not a Realtor? I have a good enough relationship with a couple of Qualifying Brokers that they might be willing to hire me for no money to do an appraisal for each of their listings. What do you think?
 

David Wimpelberg

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Mar 30, 2005
Professional Status
Certified General Appraiser
State
New York
I don't think this situation would be acceptable. The problem is that as an appraiser you are an advocate only for the appraisal; i.e., a unbiased party. As a realtor with a listing, you are an advocate for the seller, or a biased party. You can be considered a interested, or biased, party for any listing the realtor that holds your license. So you be claiming to be an unbiased party for something that you potentially have a interest in.

See Standards Rule 2-3:

http://commerce.appraisalfoundation.org/html/USPAP2008/USPAP_folder/standards/Standards_Rule_2_3.htm

Your state is going to require USPAP compliance for experience credit, and you cannot sign that certification in the situation that you have described.

I also have a RE salesperson license. I will not do any appraisal work for which my principal broker has an interest in.
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
As each State has their own regs, I don't see anything wrong with it. Just be sure to ckeck with your State and make sure the Supervisor goes with you when you do the inspections. It is possible to appraise and sell real estate as long as you remember which hat you are wearing when you go to the house.
 

George Hatch

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Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
In my state (California) the regulations include a kicker that the appraisals have to be for "a legitimate business purpose". Your state may or may not have a similar requirement - you'd have to check with them to know one way or the other. If your state does have such a requirement you'll want to define exactly what their criteria are for meeting it.

You almost certainly have a personal interest - albeit indirectly - with respect to the properties your broker's firm represents. The Ethics Rule doesn't prohibit you from appraising properties in this situation but it does prohibit you from accomodating those interests, and SR2-3 requires that you disclose them in your report.

If you do work out the details with your state board, you probably shouldn't use the Fannie Mae forms, and especially not the assumptions/limitng conditions/Appraiser's Certification pages from those report forms. They make some very specific assertions, some of which wouldn't be appropriate for the type of assignment you're talking about. The better course would be to use them as a template but edit them to say exactly what you mean to say and avoid saying things that you don't mean.
 

JJohnson1985

Sophomore Member
Joined
Feb 27, 2007
Professional Status
General Public
State
Ohio
I don't see anything wrong with it. It is possible to appraise and sell real estate as long as you remember which hat you are wearing when you go to the house.

Are you just guessing or do you know for a fact? I am curious because I'm only taking classes, but I am in Ohio too. I have not asked either state board about this but I believe it is most certainly a conflict of interest.

An appraisal is an opinion of value from an uninterested party. That is basic. This is out of the board's consumer publication about the roles of an appraiser...

Does not advocate the needs or desires of the client or lender.


As a Realtor, you have a fiduciary responsibility to the client. That is basic. Fiduciary and not advocate conflict. Fiduciary is forever, it doesn't end at closing.

Your relationship with interested parties as an appraiser will influence the same parties when you are a Realtor. I do not see how you can truely separate the two. Dealing in real estate, the two sides will criss cross and intersect, causing conflicts. Did you give a meet the number price on your last appraisal to gain a listing? Even if you are 100% honest and try your best, I just don't see how it is NOT a conflict of interest.

Please let me know why you believe otherwise. I originally went in this field thinking I could earn a sales license and an appraisal license to give me more options of making money. After learning about both fields and just real estate and law in general, I don't see how I could do both ethically.

:new_newbie: :shrug:
 
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