July 2008 ASC Q&a- Wink Wink Comp Comp

[Kevin Mc]

I suspect that the ASB understands.

Did not their response say that the practice is unacceptable for the appraiser who is subject to the USPAP?

It did. The reality of the "comp check" is that it is 99.999999% the driving force behind the decision to give an assignment to one appraiser over the other. If the ASB truly understands that, the ambiguity of even stating the practice is ever acceptable is problematic in my eyes.

 

[Tucson Appraisals]

This will not change a thing!!!!

The Appraisers that are performing Comp Checks right now, will in affect continue to do them. They will say to themselves that they are allowed by USPAP to perform them, just as long as they are done correctly and they will also say to themselves that the assignment that they "might" get are not contingent on the results of the comp check. They will go as far as lying to themselves in order to continue to do these comp checks. You all know it too!!

-Aaron

If you think for a second that comp checks don't hurt out industry, you need some serious ethics help!

 

[Webbed Feet]

As stated in the report: "the appraiser must be careful NOT to commmunicate ANY opinions or conclusions regarding the data provided."

That means to me you can not even say: "Yep, your value's within that range." But if you're doing a "comp check" for someone, you're most likely doing that (wrongly and a violation) for free.

If you're on the bus, you'd better be paying for the ride.

Lordy:icon_idea:

LofT

You're confusing the intended part regarding raw uninterpreted neighborhood sales data with appraiser interpreted sales data. The later in essence being a real estate appraisal and the former not.

Webbed.

 

[Lee Lansford]

It did. The reality of the "comp check" is that it is 99.999999% the driving force behind the decision to give an assignment to one appraiser over the other. If the ASB truly understands that, the ambiguity of even stating the practice is ever acceptable is problematic in my eyes.

The USPAP July Q&A does reiterate (fyi: you have to hunt around a wee bit...it's on page 2 in the response the 2nd question) that when the appraiser communicates an opinion of value--or, a range of value or "price"--the appraiser has communicated an appraisal.

The "Q&A", responding to the 3rd question (p. 3), offers "...that receiving a 'full' appraisal assignment is not contingent upon the result of the 'comp check' assignment."

I think that both you and I understand these words.

If I'm correct, what more would you have the ASB do?

You can write any "rule" or "law" or "thou shalt not..." anyway you like and, at the end of the day, if some people elect to ignore, what are you going to do?

 

[Ray Miller]

My web site www.raymiller.ws does 20 to 50 comp checks a day according to the stats on the number of times the page is view each day. It appears I never hear from the lender, it appears not to return any thing that becomes an order to my knowledge.

Could be because AVM don't work well in the rural area. Every so now and then I run a comp check on my home. The value ranges from $150K to $750K just depends on what day. Most of the time it tells me there is not enough data to give a value. I assume it is the same for most rural areas.

The comp check issue I don't think will ever die. I learn to live with it by letting my web site do the work for me. Now the flea's don't call me as much as they use to for numbers.

 

[Stone]

This keeps crossing my mind, but I never posted it. Put yourself in the shoes of a legislature. Who is it going to appear to be the ones who can't be trusted? If appraisers would do their job and just say no to htting numbers, then no one would be lobbying anyone to "fix" it. That's the whole reason the government has put appraisers in the middle of so many transactions.

This is the real heart of the matter.

 

[moh malekpour]

That's what both sides of this Q&A get for using squishy language.

Try rephrasing both the question and the answer using appraiserspeak:


Question:
[FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free? [/FONT]

Does USPAP allow appraisers to perform "appraisal" assignments for free?




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]

Yes. However, the appraiser would have to ensure that receiving any subsequent appraisal assignment is not contingent upon the result of the initial appraisal assignment.


On second thought, scratch that. Once you start using appraiserspeak the answer is obvious enough to not require further clarification.


If the reason you're performing the freebie is to comply with a strings-attached contingency then that contingency infringes on the second assignment. If the reason you're performing the freebie is out of professional courtesy to someone and you have no expectation of a second assignment then there is no contingency involved, and thus no problem with the Ethics Rule.

An appraisal is an appraisal, and a "desired result contingency' is an improper assignment condition. Pretty straightforward. It only becomes complicated when you participate in the word games that others use to rationalize bad behavior.

OK, Your fax rings and you get a request to do a free comp check. You do the comp check and attach a disclaimer to that comp check that says: “ I performed this free comp check out of my professional courtesy and I don’t have any expectation of the second assignment and send them to your favorite lender". Two days later, you get the assignment. What would you do? You already told the lender that you did it for free without expectation to get the assignment but he liked your comp check and sent you the assignment. Should you take it or reject it?

 

[Michigan CG]

In Michigan oral appraisals are illegal. In Ohio it is illegal for people to ask for one. Combine the two and then enforce it.

There are about 4,000 appraisers in Michigan. Hire a retired appraiser with great ethics, pay them $50/hour. This person can make phone calls from a home office, if 25% offer the comp check there is an hour of work for those cases, fill out a form, describe the offense, send them a fine of $2,000. 1,000 X $2,000 = $2,000,000.

The other 3,000 appraisers don't offer the comp check and the call takes 10 minutes or 500 hours. Total labor is 1,500 hours, 48 weeks @ 31.25/hours per week. $75,000 to the retired appraiser, add an additional $75,000 for clerical work and expenses and you have a profit of $1,850,000.

Hire another investigator (or two) to help with the back log of cases, make sure the board is compensated fairly for their services with additional left over funds for other needs.

 

[Webbed Feet]

<... snip...> Which state will lead the way?

Do you really want my prediction about that?

Webbed.

 

[Mike Kennedy]

"receiving a 'full' appraisal assignment is not contingent upon the result of the 'comp check' assignment."

When an appraisal order is WITHHELD unless and/or until a "PRELIM" "BALLPARK"
"RANGE" OR "TARGET" OR "BEST GUESTIMATE.........is rendered -

the "SECOND" order IS ALWAYS contingent. Same loan, same borrower, same requestor and same intended use. No prelim value - no "official" appraisal order.

Denial and/or Self-serving Semantics to preserve the Status Quo does no one - not the borrower, the lender, nor the Appraiser ANY legitimate service. The "game" lives on.