More On Free Comp Checks

[JSmith43]

Used to work undercover.

I suppose that's quicker than pulling down the shades

 

[Pamela Crowley (Florida)]

Ditto what Steve Owen wrote.

 

[mgloege]

OK folks, I can see you all are struggling with this concept the same way I did way back when - here are some answers to the above postings. 1. Yeah, OK OK you guys, "Comp Check Appraisal" does sound like a pretty stupid name, doesn't it. I really struggled over this one in the beginning. I settled on that name because it communicates. No, really, I first ginned up all sorts of lofty stuff. Things that could be really achieve confusion and vaguery. Really complex stuff in 10th water Appraisaleze. But, sadly, if we are serious about wanting to communicate, we have to keep it simple and universal. We have to admit that the one single term that all lenders universally understand is "Comp Check". My first comment to the request for a comp check is: " I don't do Comp Checks, they're illegal. I can, however do a "Comp Check Appraisal"......... which, of course, starts a dialog. Subsequently, if the dialog is fruitful, which it often is, they get my "Comp Check appraisal" agreement (see last posting) via email. When they send it back, signed, with an appraisal order for a "Comp Check Appraisal" (not a 1004 etc.) then and then only will they get a "Comp Check Appraisal". If they don't, I never hear from them again........... they just got subtly fired and good riddance. No disagreeable confrontations, no pressure, no opportunity for the lender try to coerce. No "Comp Check Appraisal" agreement, NO COMP CHECK APPRAISAL!! PERIOD!! 2. EEUUU --- NEVER NEVER NEVER give, convey, mail, email, note in a bottle, back of a lunch sack or match book cover ANYTHING in writing!! If you do USPAP 2-3 kicks in. Think about the ramifications.......just think....... hmmmmm Just a tip. When the comp check is ready to go and you make the call (render the verbal report in accordance [iaw] with USPAP 2-4) the first thing you ask is "Do you have the file in front of you and do you have a pen?" if they say no your reply should be "Go get them, I'll wait." (NOT kidding here, folks). After you've given them the high, low and average (ROV iaw USPAP) ask them if they have written it down on the file. Invariably they will say "No". Great, now you get a chance to reinforce what you said (not what they wanted to hear -- which is probably what they heard). Now, after they have written it down, ASK THEM TO READ BACK what they wrote. I don't know how many times they have read back something completely different than what I told them. When they finally get it right, tell them that you are making a written record of this phone call (certification iaw USPAP) -- which you keep on file and do NOT send to the client (USPAP 2-3 see above). 3. The magic bullet. Once you've delivered the ROV the next question is "Now that you know the kind of comparables a local appraiser would be taking with them into the field if they were doing a full appraisal what do you want to do." Really stress the "you". Give 'er hell! ".... what do YOU want to do????????" Puts the shoe on the other foot. They have asked for an answer and you have given it to them. You've gone as far as anyone can reasonable be expected to go. You've done it professionally and legally. And, you've advised them what they already know and thats simply that you can't go any ****her until you've seen the property. At which point you have to be paid......... by the applicant up front........ zero delinquent accounts that way. Try it, you'll like it. I started that practice about five years ago when a lender neewbie (bless his heart) advised me that "if I collected up front he would loose all his leverage.", and thats a verbatim quote. He further advised me that that is what they had told him in his training class. The practice of collecting up front nearly eliminates all lender pressure. If that was an industry wide practice the lenders would still order the same number of appraisals and no one would lose any business. 4. Regarding the thread on weather there are two reports or just one contingent one etc. Consider this: The intended user of a comp check is the lender only. The intended use is "to aid in making an informed business decision regarding loan feasibility on residential property." This first report is a full appraisal in every sense of the word. It has its own file number and after the verbal report and certification is completed it is done, over and archived. Done - finis. If the lender wishes to use the information they can call me or any other appraiser they want for that matter. I certainly hope they call me but if they don't who cares. Once that Comp Check appraisal is put to bed its over, done and forgotten just like any other job we all do. IF that lender calls me back and sends me a second order for a 1004 etc. then, of course, I'll pull the old file because the lion's share of the work is already done. But, lets look at intended use / intended user. On this subsequent (ooooo the "S" contingent word) file. The second Use is to support a mortgage and the Intended Users include the Client, wholesaler, FannieMae, PMI, Fred Arstair and Ginger Rogers, who I understand dances backwards (or did), and nowadays their entire damn dance band!! If that's not a different Appraisal (iaw USPAP) you can call me a taxi and I'll get out of town!! 5. Any more questions? Good Lord its 2am. Its a lovely evening!! Matt

 

[KenRossman]

2. EEUUU --- NEVER NEVER NEVER give, convey, mail, email, note in a bottle, back of a lunch sack or match book cover ANYTHING in writing!! If you do USPAP 2-3 kicks in. Think about the ramifications.......just think....... hmmmmm Matt

What ramifications?

What in 2-3 changes anything?

Most of 2-3 is already in your certification.

Regardless what the client thinks he/she hears and repeats back verbally, if a dispute ensues, it becomes he said she said.

Reducing it to writing and saving the transmission time stamps exactly what was delivered.

 

[Mike Kennedy]

The intended user of a comp check is the lender only. The intended use is "to aid in making an informed business decision regarding loan feasibility on residential property."

SEMANTIC DISTORTION OF REALITY - "CONFIRM THE NUMBER BEFORE I ORDER A REAL APPRAISAL".

IF that lender calls me back and sends me a second order for a 1004 etc. then, of course, I'll pull the old file because the lion's share of the work is already done.

But, lets look at intended use / intended user. On this subsequent (ooooo the "S" contingent word) file. The second Use is to support a mortgage and the Intended Users include the Client, (i.e. that Lender above, that same residential property, same borrower, loan application, and intended use - "get the number and do the deal".)

" taxxxxxxxieeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!!!!!!!!!"

 

[Mike Kennedy]

Intended Use: To assist client in making a lending decision. May not be used to apply for loan.

Too late, Borrower already applied for a Loan (via phone, email, weblink, or in person).

The decision to require the Borrower to complete an Expanded Application is predicated upon receipt of "the number"; whether included in the "range of value" or a "stand alone" ...........the ADVANCE NUMBER which solicits the Contingent "full" appraisal HAS the exact same intended use, by the exact same Intended User, on behalf of the exact same Borrower.

Semantics change nothing .......... Application of Semantics is acceptable - outside of Appraisal.

 

[Deleted member 128537]

I agree that "comp check" is not an appropriate name. When a MB calls and asks for one we should immediately say, "So you are asking for a desktop appraisal. I would like a letter of engagement, and my fee is _________"

I recently had an MB fax me a "request" for an "estimated value" based upon his stated criteria of a home. I emailed him back and told him my charge for a desktop appraisal. He got angry with me that I was some how jacking him around. He told me 5 other appraisers did it for him. I told him that if he wanted to hire incompetent appraisers who don't follow USPAP guidelines that's his choice. This all sounds suspicious. I believe that this is par for the course. MB's are calling up appraisers to get free desktop appraisals and then it gets sent out the highest "bidder".

I believe that if we get into the habit of doing desktop appraisals for free we are simply going to marginalize our opinions into a bidding war. MB's will salivate trying to find the guy who can "hit the number." Doesn't matter how competent he/she is. Doesn't matter if they see the work file to have an idea if the appraiser was full of it or not.

And what happens if after doing the inspection the appraisal now comes in lower. The MB is ****ed. The borrower is ****ed, because he/she thinks it's a "done deal" and has paid money for the appraisal. Plus our credibility is diminished.

Also it has been my experience that "comp check" askers are dealing with marginal loans at best. These loans can often hinge on a value from 5,000 to 10,000 dollars to make the deal work. How can a desktop appraisal even come close to that kind of accuracy? It can't. It's a waste of time to do them unless you are getting paid.

By the way try calling up a lawyer on the phone and asking for a legal opinion! He'll send you a bill. They at least value their time. If we don't value our time we should get out of the business.

 

[Mike Kennedy]

"It's a waste of time to do them unless you are getting paid."


Its' also throwing "spaghetti on the wall" ........... so much for Credibility.

 

[Steve Owen]

The poll is flawed!

It should be a two-part question:

How often do you actually get an appraisal order if they want a free comp check first and you hit the number they want?

Ans: most of the time.

How often do you actually get an appraisal order if they want a free comp check first and you don't hit the number they want?

Ans: never.

My main problem with Matt's method is that it plays to this scenario whether he realizes it or not. So, lets consider a scenario where everyone did a free desktop appraisal using Matt's method. What would happen?

The MB would call half a dozen appraisers, would sign all the agreements. And then would go with the appraiser who had the highest value indication. How long do you think it would take before appraisers in the market started figuring that out and started pushing values?

That is not the same as saying that what Matt is doing is unethical. I don't have the available information to determine that.

Would I consider doing a limited scope appraisal to help a client decide whether to proceed with their process? Yes, in fact I have. I did this exactly one time, because that is the only time I was ever able to find a client who actually wanted that service. How do you know you have a client who actually wants that service and not just one who is shopping value? That's easy: if they really want that service for that purpose, they will be willing to pay for it.

The one I did was several years ago. I designed the work product, which was fairly similar to Matt's, but of course USPAP was different then... it was a departure situation. The design of the product was more work than the actual comp check. I delivered the product in writing, meeting Std 2, and charged a whopping $50, which the client was glad to pay. In fact, there was not a subsequent appraisal order... I never found out why, but it could have had more to do with the borrower than the property. Never found another client like that, though... to many Skippies around here doing non-compliant work for free.

 

[Pamela Crowley (Florida)]

The MB would call half a dozen appraisers, would sign all the agreements. And then would go with the appraiser who had the highest value indication. How long do you think it would take before appraisers in the market started figuring that out and started pushing values?

Which is EXACTLY what we have now! Doesn't matter if it's a legal 'desktop appraisal' or illegal 'comp check' appraisal - they want it free and it will be a value and fee contingent appraisal order when the Fannie form report is ordered - and a violation of Fannie form Cert #18.