July 2008 ASC Q&a- Wink Wink Comp Comp

[Mike Kennedy]

MANY THANKS TO MR. BRENAN FOR REPLYING TO MY RECENT INQUIRY, AND PAM CROWLEYS YEAR OLD PRIOR INQUIRY, RE "A THING OF VALUE" i.e. free comp check prior to receiving an ACTUAL "full" appraisal order.

IS AN APPRAISERS' EXPERTISE AND EXPERIENCE WORTH ........ZILCH? EVIDENTLY.

IS A RANGE OF VALUES EXPRESSED EITHER VERBALLY OR IN WRITING OR VIA ELECTRONIC TRANSMISSION BY A LICENSED APPRAISER AN APPRAISAL ???

SOMETIMES. SOMETIMES NOT. POSSIBLY. COULD BE - MAYBE NOT..........

IS ACCEPTING AN ORDER FOR A "FULL" APPRAISAL CLEARLY CONDITIONAL UPON PROVIDING A RANGE OF VALUES I.E. SOME SALES OR ALL SALES WHICH DEMONSTRATE CURRENT RANGE OF VALUES IN A NEIGHBORHOOD - REALLY CONDITIONAL ????

WELL - YES AND NO

TO PRE-COMP OR NOT TO PRE-COMP - ..........THAT IS STILL THE QUESTION....THE STATUS-QUO IS PROTECTED ......ONCE AGAIN..

NON-SPECIFIC ANSWER MEANS ..............THE GAME CONTINUES.....


Question:
[FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free? [/FONT]
Response:
[FONT=Times New Roman,Times New Roman]Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment. [/FONT]


REALITY CHECK FOR THE ASC: ........DUH.......... UNLESS THE "COMPS" INDICATE A MINIMUM $$ POINT OR MINIMUM RANGE OF VALUES SUFFICIENT TO "DO THE DEAL" - THE "FULL" ORDER IS ........NEVER.....ISSUED.


LAST TIME WE LOOKED - " A POINT OR RANGE OF VALUES = AN APPRAISAL". IMAGINE THAT. WHO KNEW??

 

[Laughing Heir]

They should have phrased the comp check question in the Q and A more similar to those that occur in reality.

Ambiguous at best. Wiggle room should not exist.

 

[Rice Brewer]

REALITY CHECK FOR THE ASC: ........DUH.......... UNLESS THE "COMPS" INDICATE A MINIMUM $$ POINT OR MINIMUM RANGE OF VALUES SUFFICIENT TO "DO THE DEAL" - THE "FULL" ORDER IS ........NEVER.....ISSUED.

...and if the "full order" is forthcoming, you can bet your bottom dollar that it is contingent upon it coming in within the range indicated, if not the exact point value....

The ASC needs to pull their heads out of the sand and realize what is going on in the real world.

 

[Pamela Crowley (Florida)]

IMO, it's time to STOP asking TAF and start asking these questions of each and every State Appraisal Regulatory Board instead. It's become obvious the TAF does not intend to answer these kinds of questions with anything that makes sense, is easily understood, or better yet, could not be misunderstood.

m2:

 

[Rice Brewer]

IMO, it's time to STOP asking TAF and start asking these questions of each and every State Appraisal Regulatory Board instead. It's become obvious the TAF does not intend to answer these kinds of questions with anything that makes sense, is easily understood, or better yet, could not be misunderstood.

m2:

Pam, with all due respect, why do you think that a State Regulatory Board will say anything other than "let's see what TAF has to say about this issue"?

I understand why and how the answer to the Comp Check question was derived from USPAP. What I don't understand is how in the world those writing the answer doesn't seem to understand that 99.9% of the time, the "full order" is contingent upon the value / range of the "comp check". The door is much to wide open to protect the 0.1% that do it the "right" way. Furthermore, how in the world is Sally Order Processor at XYZ to know the difference???

 

[CANative]

I think these questions should be asked, very publicly, of the CEO's and Chief Appraisers of the country largest lending institutions... Chase, Wells, Lehman Bros., etc, etc. Public response required.

 

[leelansford]

MANY THANKS TO MR. BRENAN FOR REPLYING TO MY RECENT INQUIRY, AND PAM CROWLEYS YEAR OLD PRIOR INQUIRY, RE "A THING OF VALUE" i.e. free comp check prior to receiving an ACTUAL "full" appraisal order.

IS AN APPRAISERS' EXPERTISE AND EXPERIENCE WORTH ........ZILCH? EVIDENTLY.

IS A RANGE OF VALUES EXPRESSED EITHER VERBALLY OR IN WRITING OR VIA ELECTRONIC TRANSMISSION BY A LICENSED APPRAISER AN APPRAISAL ???

SOMETIMES. SOMETIMES NOT. POSSIBLY. COULD BE - MAYBE NOT..........

IS ACCEPTING AN ORDER FOR A "FULL" APPRAISAL CLEARLY CONDITIONAL UPON PROVIDING A RANGE OF VALUES I.E. SOME SALES OR ALL SALES WHICH DEMONSTRATE CURRENT RANGE OF VALUES IN A NEIGHBORHOOD - REALLY CONDITIONAL ????

WELL - YES AND NO

TO PRE-COMP OR NOT TO PRE-COMP - ..........THAT IS STILL THE QUESTION....THE STATUS-QUO IS PROTECTED ......ONCE AGAIN..

NON-SPECIFIC ANSWER MEANS ..............THE GAME CONTINUES.....


Question:
[FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free? [/FONT]
Response:
[FONT=Times New Roman,Times New Roman]Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment. [/FONT]


REALITY CHECK FOR THE ASC: ........DUH.......... UNLESS THE "COMPS" INDICATE A MINIMUM $$ POINT OR MINIMUM RANGE OF VALUES SUFFICIENT TO "DO THE DEAL" - THE "FULL" ORDER IS ........NEVER.....ISSUED.


LAST TIME WE LOOKED - " A POINT OR RANGE OF VALUES = AN APPRAISAL". IMAGINE THAT. WHO KNEW??

Help! What "problem" do you have with the responses by the ASB? What would you have the ASB do? I admit that I am mystified.

 

[leelansford]

And you would have the ASB (not "ASC") do what?

 

[leelansford]

...
Ambiguous at best. Wiggle room should not exist.

Can you expand on this a wee bit?

 

[Pamela Crowley (Florida)]

TAF has NO authority over the STATES Boards that regulate appraisers.

Here is what I wrote to TAF about this issue a long time ago. Take a look at the date on my emails to Mr. Brenan.

Pamela Crowley <pec514 @ yahoo .com> wrote:

Date: Sat, 9 Sep 2006 04:17:30 -0700 (PDT)
From: Pamela Crowley <pec514 @ yahoo .com>
Subject: Comp checks and the Ethics Rule
To: john @ appraisalfoundation .org

Per USPAP:

Quote:

Management (ETHICS RULE)

The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.

Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification and in any transmittal letter in which conclusions are stated. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment.

So, if the fact that a (comp check) desktop appraisal was given free to procure the fee paid Fannie form report appraisal, that IS a "thing of value connected to the procurement of an assignment" and should be disclosed within the subsequent appraisal report for that property.

If a desktop appraisal is properly prepared with the workfile that must legally be completed and kept for at least 5 years, most legitimate appraisers would charge at the very least $125 for that. Discounting that just a litte to say that the (comp check) desktop appraisal provided to procure that assignment is 'a thing of value' and is worth at least $100. That would have to be disclosed within the Fannie form appraisal report (or whatever type of appraisal was done after the 'comp check' appraisal) to be legal.

Wouldn't this be considered this, at the least, a USPAP Ethics Rule violation?

In the residential mortgage world, this kind of 'inducement' to procure the fee paid order has become prevalent, but nobody is disclosing it. The majority of the mortgage brokers are only using the appraisers that will give them a 'comp check' appraisal high enough for their mortgage loan to work and many of the AMCs are doing the same.

Pamela E. Crowley
FL St. Cert. Res. REA RD3158


**********************************************

-----Original Message-----
From: Pamela Crowley [mailto: pec514 @ yahoo .com]
Sent: Saturday, September 09, 2006 5:31 AM
To: John Brenan
Subject: RE: Comp checks and the Ethics Rule

Additional thoughts about this issue:

The comp check appraisal has been given FREE as an inducement to procure the fee paid appraisal order. I don't care what anybody wants to call the value opinion given. Sure, there are ways to do this legally, but who is doing them legally????? One out of a thousand? One out of Ten Thousand????? Are those comp check appraisal 'orders' coming in with NO value of any kind provided?

What does the residential mortgage appraiser sell?
THEIR PROFESSIONAL OPINION OF THE VALUE OF A RESIDENTIAL PROPERTY!!!!!

If you give that away in order to procure the fee paid assignment wanted on a Fannie Mae form report, does anybody question that something of value was given in order to procure THAT fee paid assignment?????

For example, is there an engagement letter - contract for services - spelled out with exactly what is being done, when, why, and what the compensation is for all 'individual' parts? Is a value wanted being provided by the 'client' up front?

I'm thinking that the 'keys' to this issue are:

#1 - NO value of any kind can be provided to the appraiser for the initial assignment.

#2 - There MUST be a contract spelling out exactly what will be done as a 'staged' assignment', at each 'stage', and what the appraiser's compensation for each 'stage' will be.

#3 - Each 'stage' of the assignment that will have any kind of value opinion by the appraiser MUST BE PAID FOR - INDIVIDUALLY.

IF THE INITIAL 'COMP CHECK' VALUE OPINION IS NOT PAID FOR, IT MUST BE DISCLOSED IN THE NEXT APPRAISAL REPORT THAT IT WAS GIVEN AS AN INDUCEMENT TO PROCURE THAT ASSIGNMENT.

Any future assignment for a different client, borrower, etc. that is not based on that particular 'comp check', is a different assignment and treated as such.

But, IMO, in light of the Ethics Rule, every assignment that was procured via a free 'comp check' appraisal should have that disclosed in the assignment that is being paid for.

PLEASE, how about an answer from someone that actually has some authority that CANNOT be MISunderstood.