Lee Lansford
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- Certified Residential Appraiser
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- Illinois
"Amen, amen!"
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July 2008 ASC Q&a- Wink Wink Comp Comp
- Thread starter Mike Kennedy
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"Amen, amen!"
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I'm in complete agreement with Lee.
I've had issues with other USPAP Q&As, but this isn't one of them. The answer addresses USPAP, plain and simple, and that's all it is going to address.
The USPAP Q&As are not going to start addressing how those involved in lending should act and what their morals should be...that is clearly beyond its scope. The anger at many of these Q&As have nothing to do with USPAP, but rather anger at third parties not subject to USPAP. Those issue will have to be handled through the appropriate agencies, of which the ASB is not one.
I've had issues with other USPAP Q&As, but this isn't one of them. The answer addresses USPAP, plain and simple, and that's all it is going to address.
The USPAP Q&As are not going to start addressing how those involved in lending should act and what their morals should be...that is clearly beyond its scope. The anger at many of these Q&As have nothing to do with USPAP, but rather anger at third parties not subject to USPAP. Those issue will have to be handled through the appropriate agencies, of which the ASB is not one.
woodyva
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the state boards will have to start making their own minds up. If we come together as a Group, a large group we make our own policy.
Mike Kennedy
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April 2008
Sent: Saturday, April 26, 2008 3:40 PM
To: john@appraisalfoundation.org
Subject: Raging Debate on "free comp checks" to procure appraisal orders
Hello Mr. Brennan,
As a Member of www.appraisersforum.com
I write to you to obtain the AF/ASB interpretation on "things of value" per the below:
Thread 4/26/2008 on www.Appraisersforum.com
ISSUE: Real World results of MBs/Lenders requesting / requiring Appraisers' render a FREE "comp check", pencil check, etc........PRIOR TO ORDERING AN APPRAISAL.
THOUSANDS OF APPRAISERS ACROSS THE COUNTRY - ARE OBLIVIOUS TO AO-19 AND ROUTINELY PERFORM "COMP CHECKS" ......whether for a small fee OR free........
MOST OFTEN FREE......as the Requestors, under current federal and some state laws, are FREE to ask and it IS up to the Appraiser to comply with the USPAP.
the CORE ISSUE is below:
http://commerce.appraisalfoundation.org/html/USPAP2008/FAQ/faq_21_.htm
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.
IMO, a "free" verbal or written opinion of value expressed as a point or range of value based upon the knowledge, experience, work, and time required to perform both subject and potential comparable research and due diligence IS most certainly a "thing of value".
When proffered to PROCURE either a SUBSEQUENT "full order", the "thing of value" SHOULD be clearly stated in the SECOND appraisal report which is CLEARLY CONTINGENT upon the successful results of the first order i.e. a value or direction in value.
IMO - a second order, for the same client, same borrower, same loan application, and same intended use, which ONLY originated as a direct result of issuance of a successful "point of value or a range of value" is MOST certainly Contingent on the results of first order.
Interesting that the ASB chose NOT to clearly define "things of value". Further interesting that apparently the USER world, and those (a)ppraisers who routinely bend over, evidently believe the appraisers training, experience, knowledge, business costs, and personal research efforts have ZERO value.
Whether (a)ppraiser Jones pays $100. in cash to a client to obtain an order - or delivers a verbal / written opinion of value which took an hour to research, perform due diligence on the subject and comparables, and that service has a market value of $100. (for example) as/IF as BILLABLE Service by Appraisal Peers during the normal course of business....... then BOTH SHOULD BE perceived as having Equivalent Value$$.
Contingency argument aside for a moment -
Either "Thing of Value" $$$ SHOULD be cited in any SECOND Report.
If Appraisers do not value their services, no one else will.
ADVOCACY is what it is.
MR. BRENNAN, please advise the ASB/AF official stance per USPAP on this issue.
Thousands of ETHICAL USPAP compliant Appraisers are going bankrupt or leaving the business because
THOUSANDS of people licensed within the past 5-10 years ...............VIOLATE the USPAP DAILY on this issue..........and collude with Requestors...........to GET APPRAISAL ORDERS..... and they do.....!!!!!!!!!
Thank you in advance.
Mike Kennedy
Kennedy Appraisal Company
Sent: Saturday, April 26, 2008 3:40 PM
To: john@appraisalfoundation.org
Subject: Raging Debate on "free comp checks" to procure appraisal orders
Hello Mr. Brennan,
As a Member of www.appraisersforum.com
I write to you to obtain the AF/ASB interpretation on "things of value" per the below:
Thread 4/26/2008 on www.Appraisersforum.com
ISSUE: Real World results of MBs/Lenders requesting / requiring Appraisers' render a FREE "comp check", pencil check, etc........PRIOR TO ORDERING AN APPRAISAL.
THOUSANDS OF APPRAISERS ACROSS THE COUNTRY - ARE OBLIVIOUS TO AO-19 AND ROUTINELY PERFORM "COMP CHECKS" ......whether for a small fee OR free........
MOST OFTEN FREE......as the Requestors, under current federal and some state laws, are FREE to ask and it IS up to the Appraiser to comply with the USPAP.
the CORE ISSUE is below:
http://commerce.appraisalfoundation.org/html/USPAP2008/FAQ/faq_21_.htm
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.
IMO, a "free" verbal or written opinion of value expressed as a point or range of value based upon the knowledge, experience, work, and time required to perform both subject and potential comparable research and due diligence IS most certainly a "thing of value".
When proffered to PROCURE either a SUBSEQUENT "full order", the "thing of value" SHOULD be clearly stated in the SECOND appraisal report which is CLEARLY CONTINGENT upon the successful results of the first order i.e. a value or direction in value.
IMO - a second order, for the same client, same borrower, same loan application, and same intended use, which ONLY originated as a direct result of issuance of a successful "point of value or a range of value" is MOST certainly Contingent on the results of first order.
Interesting that the ASB chose NOT to clearly define "things of value". Further interesting that apparently the USER world, and those (a)ppraisers who routinely bend over, evidently believe the appraisers training, experience, knowledge, business costs, and personal research efforts have ZERO value.
Whether (a)ppraiser Jones pays $100. in cash to a client to obtain an order - or delivers a verbal / written opinion of value which took an hour to research, perform due diligence on the subject and comparables, and that service has a market value of $100. (for example) as/IF as BILLABLE Service by Appraisal Peers during the normal course of business....... then BOTH SHOULD BE perceived as having Equivalent Value$$.
Contingency argument aside for a moment -
Either "Thing of Value" $$$ SHOULD be cited in any SECOND Report.
If Appraisers do not value their services, no one else will.
ADVOCACY is what it is.
MR. BRENNAN, please advise the ASB/AF official stance per USPAP on this issue.
Thousands of ETHICAL USPAP compliant Appraisers are going bankrupt or leaving the business because
THOUSANDS of people licensed within the past 5-10 years ...............VIOLATE the USPAP DAILY on this issue..........and collude with Requestors...........to GET APPRAISAL ORDERS..... and they do.....!!!!!!!!!
Thank you in advance.
Mike Kennedy
Kennedy Appraisal Company
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Lee Lansford
Elite Member
- Joined
- Mar 29, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Illinois
What would be among your suggestions?
Mr Rex
Elite Member
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- Jan 12, 2004
- Professional Status
- Certified Residential Appraiser
- State
- North Carolina
Mike, preview, then post. Thank you for your attention to this matter. Also, 2 comps within 6 months and 1 mile would be helpful[ful/
Lee Lansford
Elite Member
- Joined
- Mar 29, 2002
- Professional Status
- Certified Residential Appraiser
- State
- Illinois
Mike Kennedy;1646331... [I said:
Mike, your post was a bit difficult to read and follow but I have honed in on one (the above) thing:
The ASB agrees with you (p. 3, July USPAP Q&A, response, top of page): "...the appraiser would have to ensure that receiving a 'full' appraisal assignment is not contingent upon the result of the 'comp check' assignment."
Now, I probably would have expressed it a bit differently and probably offered more explanation, but this all gets us back to this: what is the ASB to do about the appraiser who freely elects to practice appraising contrary of the ASB's pronouncements (including, but not limited to, the monthly Q&As)?
I'm aware of the problems, I just don't see the problem as being the ASB.
George Hatch
Elite Member
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- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- California
The reason thousands of appraisers are going out of business has almost nothing to do with comp checks. The reasons are evenly divided by the gross oversupply of residential appraisers we built up after 2001, the trend of lender acceptance of AVMs and BPOs in lieu of of 1004/2005 reports, and the fact that the lenders still accept appraisals from third party loan originators without completely cutting off the known idiot appraisers.
Of the three elements, we never exercised any discipline over the one element in which we actually had some control - the number of new trainees coming in. We can't blame anyone else but ourselves for that one.
The comp check issue is a symptom, not a cause of these underlying problems.
Of the three elements, we never exercised any discipline over the one element in which we actually had some control - the number of new trainees coming in. We can't blame anyone else but ourselves for that one.
The comp check issue is a symptom, not a cause of these underlying problems.
George W Dodd
Senior Member
- Joined
- Jul 9, 2002
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- Certified Residential Appraiser
- State
- Virginia
It is "a dimension not only of sight and sound but of mind", "a place of things and ideas", "between the pit of Man's fears, and the summit of his knowledge". (Rod Serling).
You are now entering the ASB zone where questions are answers and answers are questions.
1. You cannot do a comp check with the purpose of receiving an order for appraisal on the same property. However you can do comp checks for the purpose of maintaining a business relationship with a client in the attempt of getting business. (see the difference?)
2. You can do a comp check and get an appraisal order for an appraisal on the same property as long as you didn’t do a comp check for the purpose of getting the order. And you can continue to do comp checks as long as you are not doing comp checks to get specific appraisal requests. (see the difference?)
3. If you did a comp check and then received an appraisal request for a property you did a comp check for, but you didn’t do the comp check in order to get the appraisal assignment, then you don’t need to disclose that you did a comp check because the comp check was not done for the purpose of getting the appraisal request. However, if you did the comp check for the purpose of getting the appraisal request than you cannot do the appraisal because it was conditioned on doing the comp check. However, if you did the comp check for the purpose of getting the appraisal request and then received the appraisal request as a result of doing the comp check then you need to disclose you did the comp check in the appraisal you can’t do.
Of course this does not answer the question: If I do comp checks for a client on a regular basis in the course of receiving work, or the client otherwise expects comp checks to be done in order to receive appraisal requests, does that evade the specific property comp check and appraisal request dilemma?
Once must concede the ultimate humor with these Q&A from the ASB. Who else could answer a question so directly and specifically and provide guidance for us grunts.
In the end it is up to each of us individually to do right and maintain our own ethics. It is unfortunate that others will subvert the USPAP rules to their own ends. But the USPAP is not created to protect appraisers, its purpose and function is to protect the users of appraisal services and provide them the maximum amount of latitude in demanding appraisers do what they want.
You are now entering the ASB zone where questions are answers and answers are questions.
1. You cannot do a comp check with the purpose of receiving an order for appraisal on the same property. However you can do comp checks for the purpose of maintaining a business relationship with a client in the attempt of getting business. (see the difference?)
2. You can do a comp check and get an appraisal order for an appraisal on the same property as long as you didn’t do a comp check for the purpose of getting the order. And you can continue to do comp checks as long as you are not doing comp checks to get specific appraisal requests. (see the difference?)
3. If you did a comp check and then received an appraisal request for a property you did a comp check for, but you didn’t do the comp check in order to get the appraisal assignment, then you don’t need to disclose that you did a comp check because the comp check was not done for the purpose of getting the appraisal request. However, if you did the comp check for the purpose of getting the appraisal request than you cannot do the appraisal because it was conditioned on doing the comp check. However, if you did the comp check for the purpose of getting the appraisal request and then received the appraisal request as a result of doing the comp check then you need to disclose you did the comp check in the appraisal you can’t do.
Of course this does not answer the question: If I do comp checks for a client on a regular basis in the course of receiving work, or the client otherwise expects comp checks to be done in order to receive appraisal requests, does that evade the specific property comp check and appraisal request dilemma?
Once must concede the ultimate humor with these Q&A from the ASB. Who else could answer a question so directly and specifically and provide guidance for us grunts.
In the end it is up to each of us individually to do right and maintain our own ethics. It is unfortunate that others will subvert the USPAP rules to their own ends. But the USPAP is not created to protect appraisers, its purpose and function is to protect the users of appraisal services and provide them the maximum amount of latitude in demanding appraisers do what they want.
I can see your problem. They gave you the same answers I have been posting here for years. You didn't seem to like it when I said it either. I don't see any problem with the answers not making sense or not being understandable. They're just not the answers you want.
So if they charge $20 for the comp check, you could say by not charging $30, the appraiser paid something of value?
Whew! And the thread title refercing ASC instead of ASB is no bargain either.
Unethical contingencies do not "subvert" USPAP rules. Unethical contingencies violate the rules.
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