July 2008 ASC Q&a- Wink Wink Comp Comp

[Mr Rex]

Thus my point, further action on the appraiser side is not needed. The elimination and enforcement must come from the other side. Simple. If that doesn't occur, then the acceptable risk of baiting appraisers with mortgage brokers numbers is acceptable and let the 2008 plus mortgage Olympics begin. With the powers that be trotting the flag between towns and right up to the Stadium, formerly known as Fan and Fred.

 

[timd354]

You didn't get the reason for my question. I have no quarrel for not doing a comp check at all but the reason for my question was this statement which I also agree with: 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.

This statement says that if you do the comp check out of your professional courtesy and don't have an expetctaion to get a second assignment, it is oK to do it. Do you agree with this statement or not?
If you agree, then what is wrong to put your intention in writing?

Its a really wonderful statement that works very well in fantasyland...in the real world, that is just not how things work. and eveyone knows that to be the case.

 

[The Warrior Monk]

You are right the ASB is likely powerless to stop this, but they sure as hell did not have to issue a Q&A that mortgage brokers who use so called "comp checks" to shop for appraised values, etc, will say justifies their behavoir:

Here is the applicable part of the Q&A....there is more, but the mortgage brokers will see this part of it and not bother with the full explanation:


I’m a residential appraiser and have been asked to perform a "comp check" (or "pre-comp") assignment, where a client wants to get an idea of the value of a home prior to proceeding with a mortgage financing transaction. Does USPAP allow me to perform this type of assignment?
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Response: [/FONT]
[/FONT]Yes.

People are reading way to much into this and also misinterpreting was said. This issue of what is a "comp check" is sidestepped (which is has to be since there is no uniform definition) and the USPAP issues addressed.

I don't do what I define comp checks to be (i.e., contingent valuation), but that is not how it is being used in the bolded paragraph. In fact, I provide appraisal services that are addressed in that paragraph. An example would be someone interested in buying a home, but doesn't know what to pay. They hire me to figure out the market value, which in turn determines whether or not they get involved in purchasing the property (i.e., proceed with a mortgage finance transaction).

 

[Kevin Mc]

If you guys think you can do a better job with the appraisal standards then knock yourselves out. It wouldn't be the first time the ASB adopted something that was developed outside their internal process.

Point taken. Stating Yes and then back stepping throughout the explanation is just ridiculous. Check the theory at the door, can it be done? yes, can it be done addressing USPAP and satisfying the needs of those who demand them?, No. Why waste time with rhetoric?

Just be aware that no matter what you come up with there WILL be some collateral damage and there WILL be some form monkey who will find a way to work around your wording.

They do it now, they will aways do it. Crooks are crooks.

There will also be a lot of appraisers who will never read it (for content) on the one hand and then complain how it can't be understood on the other.

I would guess the vast majority.

Go ahead and do it. I think you might learn something from the experience.

No thanks, I'll save the time for something else.

 

[Brian Weaver]

I don't refer to the monthly Q&A's from the Foundation and I sure as heck don't consider them any kind of useful aid. If I did, we'd have link to them from the Illinois website. But...we don't...they serve only to cloud the real issues. They aren't part of USPAP so they are of little to no use in Illinois.

Fortunately, the ASB doesn't issue licenses in this state...they don't hold disciplinary hearings in this state.

I've been less than impressed with the drivel that has appeared in the form of Q&A's for quite some time.

Today I fired off a snippy note to them, thanking them for muddying up the water with their ridiculous July Q&A on comp checks.

 

[Mark to market]

The answer seems pretty straightforward to me. If you provide unfiltered, raw data you have not done an appraisal. If you filter, process or analyze the data, say by selecting comps or indicating a range of value, you've done an appraisal and are subject to SR 1 and SR 2. If you accept an assignment contingent on a predetermined outcome, like a minimum value, you're in violation of USPAP. How much more clear can this be?

Alex I couldn't agree more.

 

[Fred]

Today I fired off a snippy note to them, thanking them for muddying up the water with their ridiculous July Q&A on comp checks.

Muddying? I see posts complaining that the ASB is not some political battering ram smiting down the wicked enemies of appraisers, and almost nothing quoting USPAP to indicate that the answers are wrong. It will help put to bed the many "comp-checks-are-illegal" threads we have seen. They should have published it five years ago.

 

[Dutchman]

Could all this comp check/second appraisal controversy be put to bed by the use of a properly defined staged assignment?

 

[George Hatch]

The problem at hand here isn't whether it's one assignment or two. The problem is that on a practical basis these requests usually involve a value contingency and represent another form of external pressure on the appraiser.

There is no cure for that all-or-nothing contingency, regardless of how the assignment is structured or the nomenclature being used to describe what is going on. That's why it's pointless to get all twisted over either the structure or the nomenclature.


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This Q&A included the following sequence of questions:

1 - Can an appraiser perform either a data dump and/or a no-look appraisal? Yes


2 - Can an appraiser perform either of the above for free? Yes


3- If the client orders a more comprehensive full-fee assignment contingent on the results being at least equal to those of the initial assignment, is the appraiser required to disclose the fact that they performed the initial appraisal in the second appraisal report?
No, because under USPAP there can be no second assignment with these improper contingencies. As there will be no contingent fee assignment, there will be no report, thus no reporting requirements for disclosure of prior "free" work performed.

There is no provision in USPAP for "curing" the prohibition on improper contingencies by merely disclosing the contingency in a report.



The 3-question sequence actually included the answer to a 4th question as part of the answer to #2 above:

2a - Can the appraiser accept an engagement or compensation for a second assignment that's contingent on returning the same or "better" results as found in the previous appraisal? No. USPAP specifically prohibits accepting assignments with those improper contingencies.


The ASB apparently assumed that appraisers would read the entire response to question 2 and recognize that it provided the context for the answer to question 3. That apparently turned out to be a faulty assumption.

 

[Lee Lansford]

Could all this comp check/second appraisal controversy be put to bed by the use of a properly defined staged assignment?

Not really...at least not for the majority of instances where "comp checks" are requested.

If the "comp check" requestor is a MB, the MB will find the willing appraiser who provides the MB with the value that the MB needs.