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Lender "requiring" desktop appraisal PRIOR to appr

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Kathy in FL

Thread Starter
Member
Joined
Jan 17, 2002
Professional Status
Certified General Appraiser
State
Florida
One of my major customers (a national AMC) faxed me today with something I'm sure lots of you got as well. They are going to start ordering desktop appraisals. Fill out their form (It's labelled as a limited appraisal report) with various info including three comparable sales. Do not bother actually inspecting the property or sales. If you can hit their value, fax them your "appraisal." If you can't, call them and they may update it to an actual appraisal.

Aside from my doubts about complying with USPAP (which are legion)...how you gonna charge for this? A fee for the desktop (say, $100) then if you don't hit the fee, charge them full fee (say, $300) for the full appraisal? Something tells me they're going to expect you to do BOTH appraisals for the normal "full" fee.

I don't want to do this...but they are probably 40% of my business. How are you guys dealing with them?

All comments appreciated...
Kathy in FL
 

Blue1

Elite Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
California
This is just a glorified "comp search." There have been many discussions on this form about "comp searches" some say they are not USPAP compliant and some say they are. You need to ask yourself if you are meeting minimum USPAP requirements by just filling out a form and not inspecting the property. Seems to me you'd be on shaky ground by accepting such an assignment. That's just my opinion, I could be wrong....I'm sure others will reply to this one.

Good Luck
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Kathy:

Due to the USPAP compliance issues revolving around doing a project of the nature you describe, at this point I think ( hear the waffling?) EVEN in your described position I'd just say "no".

Somehow when doing a desk review which requires an appraisal (because it is soo bad) I rationalize my actions as 'best that can be done under the circumstances', mention that I am relying (to whatever extent applicable) on information contained in the reviewed report, use the alternate sources available and move on. Under the circumstances you indicate you are relying soley on county data. this does not seem wise(?)

Primary (but only one of the many other) compliance issues: it would appear that your fee might BE contingent on a value, you may want to re-read your USPAP on this matter.

Further: until I am unable to feed my child, I refuse to work for free on the hope of being paid tomorrow. And at that point I think I'd find a different job doing ANYTHING!

I really feel for folks who have not diversified, but I learned my lesson a lot of years ago when My primary client went bye-bye overnight. I may yet starve, but so far see no serious signs... You may need to put your energies into finding a different client base.

Good luck in your decision making.
Lee Ann in KS
 

BarbaraNJ

Junior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
New Jersey
I don't do these myself; it seems to me that the lender is looking for the same old FAST/CHEAP----in other words, they feel that if you do not have to go on the road or make an appointment, the process & research & resulting report will be turned around more quickly. Also, since you do not have to use gasoline and fill out a 20 page report, you will be willing to take a significantly reduced fee just for "research".

The lenders do not seem to realize that research is the main component of the valuation.

Two suggestions. First, tell them that you cannot possibly value a home without AT LEAST confirming that it truly EXISTS. Care to guess what your liability would be if you gave a value for a site with improvements (home) and someone went out to the site afterwards and found a vacant lot???

Second, call your State Board, and ask them what your liability is, and what they may charge you with should something like the above example happen.

I have known that sinking feeling created by loosing a good customer. The only advice I can give you about that is similar to LeeAnn's. You can always get other customers if you still have a license. You can't get ANY new customers if you loose your license.



___________________

The Harder I Work, The Luckier I Get
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
From a liability standpoint I would prefer to charge 300 for the desktop appraisal and 100 for the full appraisal as to do this. I would say only an idiot would do it, but this business has no shortage of people willing to do ANYTHING to get a foot in the door with a substantial client. To turn down the work would be to forfeit it unless you by pure chance are in a region of honest appraisers only. It is a choice. Any desktop appraisal form I would prefer someone to sign off on, say a reviewer who does work for the state board.....ask the board what they would do.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
Kathy,

Check with Frank Gregoire on this. I think FREAB was checking into these and decided they are not USPAP compliant which would make them illegal for an appraiser to do in Florida. I'm not sure since I will not do them. Please do check with the Board. This is basically wanting an appraiser to validate an AVM - gives the AVM the appraisers liability and E&O.

I'm sorry this is happening to you. Shouldn't be happening to any of us!
 

Francois K. Gregoire

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Florida
Kathy,

Check with Frank Gregoire on this. I think FREAB was checking into these and decided they are not USPAP compliant which would make them illegal for an appraiser to do in Florida. I'm not sure since I will not do them. Please do check with the Board. This is basically wanting an appraiser to validate an AVM - gives the AVM the appraisers liability and E&O.

I'm sorry this is happening to you. Shouldn't be happening to any of us!
Pam and Kathy,

If the client is seeking a limited appraisal there does not appear to be a problem with USPAP Compliance. Neither USPAP nor Florida Law requires a personal inspection of the subject property.

Reach an agreement with your client concerning the fee, purpose of the appraisal, the intended use and the intended user, the scope or work as well as the report format. Recognize the requirements of Standard 1 and Standard 2. Use AO-11 and the table on page 149 of the 2002 USPAP as a guide for the minimum content of your report. My guess is the client is looking for either a Summary or Restricted Use Report.

Maintain a workfile for the limited apparaisal. Recognize that any subsequent order for valuation services concerning the same property would be a separate assignment. Maintain a separate and distinct workfile for any subsequent assignment for the same property.

DISCLAIMER: These are my personal opinions only. Please do ot infer this represents the opinion or official policy of the Florida Real Estate Appraisal Board. The FREAB has not discussed this specific issue and has not provided a decision on a similar case.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
Frank:

This type of report was discussed in great detail in the USPAP Instructor Certification course taught by the Appraisal Foundation. Your outline is superb, and, if followed as well as following USPAP, the requirements of scope of work, identifying the intended use and intended user, as you have stated, they can be USPAP compliant. The idea that we must provide the client what WE THINK they need is ridiculous. If the client wants less, we give them less. If they want more, we give them more. If you went to a Dentist and asked to have your teeth clean the Dentist would not insist on pulling your teeth. Why is it that we appraisers believe that one size fits all? Better get ready for an onslaught of this type request. The word is out. Many of the AMC's have had their in house appraisers take the same course. Some were in my class in Baltimore in June. You can ridicule the idea, cast dispersions on it(I DO NOT MEAN YOU FRANK, you know what you are doing), demean it but it will be a big part of your business, if you stay in business, beginning now.

The scope of work defines what the client, the intended user and users of the report want, what steps you have taken to provide that, and to make the report to the client USPAP compliant. The report is not the appraisal. The appraisal is the intelectual work of the appraiser. Only the report belongs to the client. This will be clear(I hope) with the adopted modification to AO-3 and SMT-7 on updating an appraisal. This is going to be a very important modification. Look for it, read it, understand it. This makes the "Appraisal" and the appraisal process the intelectual work of the appraiser as is the appraisers work file which is the repository of data collected by the appraiser to support the opinion of value. Only the report belongs to the client. As such, and as long as you do not disclose what is confidential to the client, the intended user and intended users of the report that came from the appraisal process, you can use your intelectual work, and it's workfile, as the basis of other reports to other clients, intended uses, and intended users as long as a proper scope ow work is developed for each.

Realizing that many may question what I have just written, I suggest you contact the appraisal foundation at
www.appraisalfoundation.org
and request a copy of the the above for your own reading and edification.

Also, please note, this is my own opinion and interpretation of what I have read and heard.

Don
 

Fred

Elite Member
Joined
Jan 15, 2002
Professional Status
Retired Appraiser
State
Virgin Islands
AO-19 addresses boh "preliminary appraisal" and "comp search."
 
Joined
Jan 16, 2002
This is just an opinion (and you know what they say about opinions).
I could care less about wether or not it complies with USPAP - as usual
all the USPAP gurus will make claim it comforms - that's another issue
long debated - bottom line is that USPAP is the vehicle by which appraisers are being manupulated by members of the AF and in turn
their banker cronies. Let's not even go there.

Your problem appears to center on a business decision. The fact that this AMC represents 40% of your business is the problem. In an ideal world no single client should represent 40%, especially an AMC. Charge what your time is worth, and start looking for some new clients. It's a tough
call at this point.

Good luck.
 
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