Lender "requiring" desktop appraisal PRIOR to appr

[aprazer]

These reports are compliant, and they are here to stay. Wether we like it or not. Excellent post by Mr Clark. Too often we appraisers think "this is not what the client should do". You know what? They don't care. Most of them. Every loan comes down to a calculated risk decision. There are several contributing factors, the appraisal being only one of them.
If someone wants to borrow $25,000 and the median value in the area is $250,000-that is an acceptable risk, meaning no full appraisal.

Major lenders/AMC's allready have in place the process where the product gets upgraded in stages. First it's an AVM to see if the owners value is even close, then either a BPO or a desktop, driveby and full. I do believe the majority of them will be doing this within a year.

It is very commendable that you would even consider breaking ties with this company, but it has to be more of an issue to lose 40% of your business. These things are compliant, and if you don't do them, someone else in your town will. You have already demonstrated you have ethics, but will your replacement? They are asking you to do something you are not comfortable with, but it is not an unreasonable request. We get enough of those from mortgage brokers.

What kind of disclaimer does this thing get sent out with? That is where you should start. If this company is any good at all, I bet you that the risk is minimized by the disclaimer/limiting conditions. These companies all have lawyers on staff who sign off on these things. Any intelligent(not many of these)loan officer should realize the limits of a desktop anything. I know lots of bad appraisers who haven't been touched by any agency over bad full appraisals, and I can't imagine anybody going after you on a desktop report. Especially someone with ethics.

 

[Kevin Shannon]

I agree 100% regarding Don's post. Thanks Don for the advice and the information. It was like a breath of fresh air reading something positive and informative about the obvious direction of our business.
Particularly among all the negativity abundant on this Forum.

Kevin

 

[The Bob]

I agree with Don Clark and aprazer. Lately I have tended to look at USPAP as an enabling device versus a limiting device. In other words, give the client what they want as far as the report option goes. This has been very well explained in a paper put out by the AI involving "scope of work". Everyone on this forum should download, read it and understand it. This industry is changing. My opinion is that eventually most residential/mortgage related appraisals will probably be some sort of hybrid: a limited inspection with an AVM, or just an inspection.

 

[AC King]

Kathy, as long as you use plenty of "extraordinary assumptions" in your research, analysis and report; you can form an opinion on anything; and it should be "compliant."

The fee should typically be contingent on how long it takes you to complete the assignment. What is an hour of your time worth? Quote your fee based on that.

 

[Don Clark]

Kathy,

One word of caution. If memory serves me right, the information I received from the AMC you refer to states that they will order a Desk Top Appraisal. Then, if on the desk top appraisal you see it will not meet a certain amount, you are supposed to call them and they will decide whether or not to do a full appraisal. Don't do that. That is the same as a Comp Search. It also violates the contingent fee basis of USPAP. Treat the desk top appraisal request as an assignment, complete it, and deliver it. Then if the AMC or whoever wants a more detailed appraisal, inspection, etc treat that as a new assignment. And, charge a sufficient fee for both. If we are not all careful, clients will twist this process many different ways. It is up to us as professionals to decide what is necessary to be USPAP compliant.

To everyone, I appreciate the kind remarks some have made. I also appreciate the remarks of those who disagree with me. Unfortunately, we either have to change and embrace change or be left behind. A few years ago it was the first URAR, then that was changed in 1993. Then we had the 2 page 2-4 family form. That was changed to a 4 page. Then along comes a Condo form. Next we had "short forms", 704, 2055, etc. Now we have the Desk Top Appraisal. Change is not easy. In 1992 I purchased my first computer. I said my fond farewell to the typewriter, shed a tear and moved on. Within 30 days I was kicking myself for not switching sooner. Then it was EDI, digital camera. I lovingly said so long to my Minolta with the telephoto lens that had been repaired 4 times at over $100. each time. Within days I was wondering how I could have been so stupid as to not use all this stuff before. Gone were the film and film processing bills, the pasting of photos, etc. My mailing expenses went down, my delivery time went up.

Now, to think I may not have to even leave my office!!!! Not do an inspection? And still make money? Why I may even be able to save money on gas and tell the Saudis to kiss my %**. Gee, at 66 years old I wish I could do this another 30 years.

Don

 

[Jim McGrath]

Kathy, I had an REO appraisal in Sarasota last week that would be good for that kind of appraisal NOT. It was in a nice subdivision, with a mansard roof and all. It was listed for $140,000. It was empty and on lock box. When I went in it showed the roof had leaked and damaged the property over $35,000 worth, plus it had the worst case of Black Mold (Stacybatrys) that I had ever seen. It was in every room. I didn't feel the house could be cured, and recommended to the client that they just get a site value. But they wanted a full appraisal anyway, which I did since I was already in the house for 10 minutes. I called the real estate office and told them they were risking a law suit if anyone went in there and got toxic mold, which is fatal for some people. How would this work out for a drive by, or better yet, a desktop appraisal. This is the kind of stuff you can run across that will get you in trouble.

Jim

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

 

[Farm Gal]

Jim:

Not to be offensive: did you do a full lab test to determine if the 'black mold' you OBSERVED is actually Strachybotys?

Are you an expert in mold indentification?

I would be QUITE hesitant to identify any mold type lacking professional identification, and I suspect that the experts don't name molds til the tests come back either! There are many molds which are dark even black and are NOT toxic to most people!!

I think it is important to NOT cause undue panic with regard to value or potential cleanup costs lacking the information to do so!

Regards,

Lee Ann Patterson

 

[Jim McGrath]

Of course I didn't identify it in my report. I thought someone would bring that up. I never quote that in an appraisal, it looked to me like Stacybytrus. I only mentioned it so the people on this board wouldn't think I was talking about cheese mold. In my report I recommended an inspection by an environmental expert to determine what it is. One expert quoted me a fee of $2,500 for an inspection. i think we are in the wrong business. I will post some pictures of it when I get a chance to put them up.

Jim

Jim:

Not to be offensive: did you do a full lab test to determine if the 'black mold' you OBSERVED is actually Strachybotys?

Are you an expert in mold indentification?

I would be QUITE hesitant to identify any mold type lacking professional identification, and I suspect that the experts don't name molds til the tests come back either! There are many molds which are dark even black and are NOT toxic to most people!!

I think it is important to NOT cause undue panic with regard to value or potential cleanup costs lacking the information to do so!

Regards,

Lee Ann Patterson

 

[Bemis Pownall]

I understand the ValuIt staff appraisers are required to do the "desktop" without interior. If it misses value then they go inside.
Another reason to not work for the obogopolies(sp).