More On Free Comp Checks

[Otis Key]

but i'm in oklahoma and i have no idea

That's something new?

 

[Rudy Canoza]

Every report I sign has a Cert 18 in it...

"My employment and/or compensation for performing this appraisal or any future or anticipated appraisals was not conditioned on any agreement or understanding, written or otherwise, that I would report (or present analysis supporting) a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurrence of a specific subsequent event (such as approval of a pending mortgage loan application)."

I guess if I do a comp check first, tell the MB that there are comps in the neighborhood that range between $425,000 and $450,000, and I get the order, and I do the appraisal, and the value is $440,000, I pretty much have violated Cert 18.

Because...

"My employment and/or compensation for performing this appraisal..." was "conditioned on any agreement or understanding, written or otherwise, that I would report (or present analysis supporting) a predetermined specific value, a predetermined minimum value, a range or direction in value, a value that favors the cause of any party, or the attainment of a specific result or occurrence of a specific subsequent event..."

So Cert 18 doesn't mean Jack...if you do comp checks...

/That's just my opinion, I could be wrong...

 

[Pamela Crowley (Florida)]

I do believe you are 100% correct Bob.

 

[T.E. Faravelli]

I have a form that I typed up with verbage from USPAP on the comp issue in the document stating that I have not seen the property nor the comparables and that I am merely reporting sales within a predetermined radius and time span as requested by the LO. I have the LO sign the form stating that they understand all of that and if they are requesting a value that I would be performing an appraisal and they need to order an appraisal instead.

If you are providing valuation services as an appraiser then you are most likely rendering an appraisal - regardless of the semantics. What are the expectations of the participants? Clearly the loan originator is engaging your services and expertise as an appraiser. An appraisal opinion can be expressed in several ways i.e., a range of value (like merely reporting sales). It appears that you are acting in the capacity of an appraiser. BTW, having to inspect the subject or comparables as nothing to do with rendering an opinion of value (appraisal) and will not insulate you from your obilgations to comply with USPAP.

I know of an appraiser who was doing the same thing - merely reporting sales to his "buddy" LO all with the clear understanding it wasn't really an appraisal-they just want to know the properties "range of value." The LO used the comp searches to fund loans, without the appraisers knowledge. Several deals went south and the appraiser was named a party to a civil action. He never received a dime. It will cost him several thousand dollars to either defend himself or buy his way out the the action and may be subject to disciplinary action by the state regulatory agency.

 

[Atlanta CG]

Maybe I'm different

If a client calls and asks for a comp check, I say no, sorry. Then they may ask if I can tell them what the sales price range in the neighborhood is - I look up MLS and just state "low $100,000, high $150,000." That, in my opinion, is a research project, not an appraisal. I never said, intimated, suggested or otherwise that any home in that neighborhood would fall within that range. Takes 30 seconds on the computer. That is not, to me, a comp check, nor do I do that for everyone who calls. Am I alone in this?
tdu

 

[Will43]

Comp checks?

I have never met a lender that wanted a comp check.
We all know they are asking for a value guarantee.
I worked for an appraiser shop that did thousands of free comp checks per month.

The appraisers that did not guarantee and inflate value received few orders.
However, the others laughed all the way to the bank.
According to these people, it is ok to inflate value as long as you don’t go to far.

 

[Webbed Feet]

The difference between a Desktop and Raw Data.

I have my standard group of LOs who send me "comp checks" and a majority of them turn into orders. I've dropped LOs who would send me comp after comp and never an order.

P.S. Before the USPAP police come and get me, I don't do "comps" in the sense that everyone is thinking. I have a form that I typed up with verbage from USPAP on the comp issue in the document stating that I have not seen the property nor the comparables and that I am merely reporting sales within a predetermined radius and time span as requested by the LO. I have the LO sign the form stating that they understand all of that and if they are requesting a value that I would be performing an appraisal and they need to order an appraisal instead.

Mr. Miller,

Not to jump on you.... But only to advise. If you then proceed to use your expertise as an appraiser to tailor all the other parameters of the search to match those comps up to the subject.. I.E. Age of the structures, GLA, Site size, Bedroom count, Outbuildings, Pools, etc... You sir, in fact, just did a real estate appraisal in my opinion when you send off the results to a client who then used your expertise to establish a range you created. The fact you did not reconcile it into a point value has no bearing. You may simply be sending out an appraisal where you failed to make needed market adjustments. You should call your board. Me thinks your client would have to detail ALL parameters you use, not just time and distance. Otherwise, it's not "their" parameters, they are "your" parameters professionally done. I doubt you are using just time and distance only as this would result in a large mixing of all sorts of sales dissimilar to your subject and including them in the raw data. This does not result in orders too often in my experience because the "client" did not get you to commit to a value range and can't understand all the mixed data you sent them.

So I hope you decided to define your Scope, Intended users, Purpose, place signed certifications in the file, defined the value used, expressed exposure time, in short comply with USPAP, and keep a work file for five years on it.

Barry Dayton

 

[Ken Miller]

In response

Barry,

I developed my "comp" (for lack of a better word) sheet based on AO 19 179-197. My form contains much of the language or ideas used in those paragraphs. I do not report a targeted value or targeted range of value. There is nowhere on my form for the LO to estimate a value. My LOs know that I won't commit myself to a number and they have gave up trying long ago. I lost a few people when I started using my form but I'm doing fine without them.

P.S. Thank you for your comments. I appreciate all of the people who take the time in here to share their knowledge and experiences. I have learned so much from the Q & A that takes place in here.

 

[Webbed Feet]

Mr. Miller,

I was just concerned. My understanding is similar actions were being done by Oregon appraisers. Last I checked, and it has been sometime now, the Oregon board stated that simply sending information, I.E. sales prices, of limited numbers of comparable sales developed by the appraiser's expertise was in fact a real estate appraisal... Because you had started into development...So in otherwords, if you sent information on six sales as a result of your search, using your parameters, and they sold from $145,000 to $165,000 then you in fact just established a value range.. if you stated so or not.. as part of a limited appraisal process.

At that time board staff stated if an appraiser sent larger numbers of raw sales data, such as thirty to fifty sales without drilling down the parameters for the search, then the appraiser had only provided neighborhood sales data, and it was not an appraisal.

I have no idea what your form involves. I just thought I would offer the above for your consideration... Plus I am well aware every state seems to be different on all sorts of things.

Barry Dayton

 

[Ken Miller]

Thanks again Barry for you valued input. Can I send you a copy of my form for your comments? I just want to make sure I'm covering my bases here and still keeping the beasts happy.