More On Free Comp Checks

[Pamela Crowley (Florida)]

http://commerce.appraisalfoundation.org/html/2006 USPAP/ethics_rule.htm

Management (ETHICS RULE)

The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.

Comment: 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. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment.

It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following:

the reporting of a predetermined result (e.g., opinion of value);

a direction in assignment results that favors the cause of the client;

the amount of a value opinion;

the attainment of a stipulated result; or

the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

Advertising for or soliciting assignments in a manner that is false, misleading, or exaggerated is unethical.

Comment: : In groups or organizations engaged in appraisal practice, decisions concerning finder or referral fees, contingent compensation, and advertising may not be the responsibility of an individual appraiser, but for a particular assignment, it is the responsibility of the individual appraiser to ascertain that there has been no breach of ethics, that the assignment is prepared in accordance with these Standards, and that the report can be properly certified when required by Standards Rules 2-3, 3-3, 5-3, 6-9, 8-3, or 10-3.

Questions that need to be answered:

* How much is that 'comp check' "Desktop" Appraisal worth???

* Is something of value provided via the 'comp check' "Desktop" Appraisal that now must be disclosed in the next appraisal assignment for that property???

* What does an appraiser 'sell' if not their professional opinion of value?

* How would a Judge consider this issue when looking at what I've just posted?????


BTW, I formally asked these questions of the Appraisal Foundation for the Q&As abuot a year ago. The email was received and responded to that they would get back to me about this. Never heard another word about it.

 

[Mike Kennedy]

Mike: That section says they can't accept a fee if they report a predetermined estimate

This part appears to only refer to a class of contingent fee based assignments allowed in OH, such as tax appeals.


In the last two posts there were lots of words, but really, you were essentially just copying Benji when he said "Comp checks suck"

R- this clarifies "comp checks suck" >>

It is unethical for an appraiser to accept an assignment, (***second contingent upon the first)

the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

Advertising for or soliciting assignments in a manner that is false, misleading, or exaggerated is unethical.


** NOT......."may be or possibly could be or only on every other wednesday in a leap year"... "is" = is.


Comment: : In groups or organizations engaged in appraisal practice, decisions concerning finder or referral fees, contingent compensation, and advertising may not be the responsibility of an individual appraiser, but

for a particular assignment, it is the responsibility of the individual appraiser to ascertain that there has been no breach of ethics, that the assignment is prepared in accordance with these Standards,

**** and that the report can be properly certified when required by Standards Rules 2-3, 3-3, 5-3, 6-9, 8-3, or 10-3.

 

[KenRossman]

I had to generate three documents for the "Comp Check Appraisal" to be USPAP compliant. They can be found at http://www.ifanw.com/archives/. I'd like to think I can accept criticism gratefully -- usually I'm pretty good at it. Then there are times..............

No criticism from me.

Seems well thought out and implemented.

I fail to see any "contingency" issues - otherwise, what is the purpose of the guidance in AO-19.

A comp check is a reduced reliability appraisal appropriate for screening purposes.

If appraisers cover themselves as Matt Suggests and comply with USPAP appraisal and record keeping requirements, I very seriously doubt State regulators would give it a second thought.

It is perfectly reasonable to offer a range of value in a comp check when laying out the parameters influencing the range, etc.

It is perfectly reasonable to expect a different outcome with enhanced reliability if the second appraisal includes a drive-by or better yet complete inspection.

If or how much to charge is a business decision.

If all comp checkers were as conscientious as Matt, many if not most of the associated problems would go away.

Flame Away...

 

[JSmith43]

* How would a Judge consider this issue when looking at what I've just posted?????

Unpredictable. If they actually were USPAP literate, they would consider the intent of the document as a whole. It is likely a judge would interpret the "subsequent event" stuff within the context of the "new assignment" paradigm.

I believe a desktop appraisal for a LO has a different client, a significantly different scope and need not be disclosed. However, I don't think it would do any harm to a loan file to properly disclose the desktop appraisal, unless Mike was the underwriter

My musings, my guess on how a judge would see this. I would like to hear what Edd has to say on this topic, or anyone that has clocked court time on appraisal issues. Santora?

 

[Offshore]

Anyone concerned about a one size fits all 50 states USPAP complaint comp check may want to stick a hard copy of this thread in their file. Sign it, date it and write that a loan officer on an internet forum say’s it’s okay and that was all you needed to know.

 

[JSmith43]

Based upon Ken's positive review, I decided to download the files offered by mgloege.

It was very readable and professional! The logic and purpose would not be easily twisted by detractors or those wishing to misuse the findings. Of course, with the written stuff in the file and only a verbal report rendered, I think we're safe.

I cannot imagine a loan closed by the most drunken hard money lender based upon contemporaneous notes from a loan officer listening to a verbal desktop appraisal report by an appraiser.

Nicely done! I will try and find some time to read it more carefully and contribute a comment or two.

 

[JSmith43]

Anyone concerned about a one size fits all 50 states USPAP complaint comp check may want to stick a hard copy of this thread in their file. Sign it, date it and write that a loan officer on an internet forum say’s it’s okay and that was all you needed to know.

What I think R H Ferebee was trying to say:

Nice example! Now be sure and compare it with your state requirements. For example, Michigan does not allow for oral reporting outside of a legal proceeding, so you will have to modify the forms and report to suit the circumstances.

 

[KenRossman]

One further comment Re: Matts System...

If I were going to do them, I would deliver them in writing, by email, with delivery and read receipts and load up the report with all the appropriate EA's and disclaimers etc., so there would be no dispute about what was delivered.

 

[Greenback]

Sounds like I'm saying, "Appraisal Appraisal" :Eyecrazy: when I say Comp. Check Appraisal.

 

[Steve Owen]

Btw, your level of knowledge of the workings of prostitutes sounds impressive

Used to work undercover.

Point is, if someone is willing to break the law, then crying entrapment is rarely going to gain them very much. I dont' really see how Matt's system is going to answer the primary problem... MB's calling for a "comp check" are really asking for predetermined value. They are blatant about it. They say something like "I've got this deal, can you run a comp check and see if it could come in about $zzz, if it does I'll need to order an appraisal."

It doesn't matter how many hoops you jump through. You cannot accept the above deal on the right side of the law. The only way you can do business with the above MB is if you can get them to back off from their demand for pre-determined value. To that end, I use the fax-back form

http://appraisersforum.com/1252187-post20.html

when I can get the order to start with and it has that kind of language on it. "Stop if you can't get the value and call us."

So, based on my experience with MB's, if I was to use Matt's plan I would deliver the "comp check appraisal" and they would order a "full appraisal" and then if the "full appraisal" did not come in at the desired value, the MB response would be, "But, you said it was worth $zzz when you ran the comp check." :new_2gunsfiring_v1:

I would stop way short of calling Matt unprofessional. I personally have always had a problem with the contention that you cannot accept an assignment whose purpose and intended use is to determine whether to order a more comprehensive appraisal product. It all depends upon intent... that is why the rumored "sting" operations may be the only possible way to ever get this under control.

If the intent is to make a business decision then it is probably okay. If the intent is to guarantee pre-determined value, then it is not. From my experience with MB's asking for comp checks, you are never going to convince most of them that the intent is not the second thing.

Some basic critisim of the forms:

I personally object to the use of the terms "comp check appraisal" and "full appraisal." Neither term is defined. I would much prefer the terms "limited scope of work appraisal" and "Fannie Mae/secondary market compliant appraisal." Or, something similar.

My only other immediate objection, after an admittedly cursory review, is that Matt indicates he is doing this for free. A couple of years ago a desparate banker called me asking for a new copy of an appraisal I had delivered three years earlier on a commercial property. I copied the 100+ page report and took it to them, along with a bill. I explained the bill in terms of "archive retrieval and copying charge." They had no objection to paying it.

I do some things for free. Limited scope appraisals are not going to be one of them. (Yes, Roger, that's a personal decision.)