More On Free Comp Checks

[Bill_FL]

Mentor .. my biggest issue is with doing a "compliant" restricted report and then accepting the second full assignment and saying its not contingent upon a predetermined value. I think the ASB is fully wrong here just as they were wrong in the March Q&As ... thats just my position. You cant preach one of complete ethics .. and then bless something that at the very least smells of being unethical.

And no we dont have a problem.

PE, here is my issue with that. Have you ever appraised the same proeprty more than once? I have. Heck, I think I have done one house about 15 times. (Dr's wife that keeps adding on, remodeling different wings, etc). Anyway, if you did a purchase appraisal and the next year, they decide to refinance, do you turn the appraisal request down? Isn't that same contigency there? That you will hit at least what you hit before?

I have asked this question before and the answer many give is that its no problem. Two different assignments, two different scopes of work. Ok, what is the difference? First a restricted use desktop, then a full appraisal? Two assignments, two scopes of work.

Now, the other issue here, when trying to discuss this is intent. Often, many attempt to insert into the conversation the "intent" of the LO. Lets leave intent out and talk specifically about the two assignments. I dont care what "most LO's really want" I want to talk about being in compliance with the two assignments.

 

[Bob Ipock]

PE, here is my issue with that. Have you ever appraised the same proeprty more than once? I have. Heck, I think I have done one house about 15 times. (Dr's wife that keeps adding on, remodeling different wings, etc). Anyway, if you did a purchase appraisal and the next year, they decide to refinance, do you turn the appraisal request down? Isn't that same contigency there? That you will hit at least what you hit before?

Why is that a contingency (or what is it)?

 

[Mister Ed]

And many USPAP instructors are teaching that you can do a restricted use appraisal for that very purpose with some of them even handing out how they do it. They go on to say that accepting the second assignment is ok to complete a full report.

I say bunk ... and using words like ... "It wasnt based upon a predetermined value" are pretty hollow in my mind. Just cause you say it isnt so .. doesnt make it not so. Good luck with that one.

PE,

I am not disputing what you have stated here. What I have a question about is this: What is the definition of a full report? Is that a narrative? A report completed on a URAR? Or can a summary report like USPAP instructors have handed out (or at least displayed on overhead, in my case) be a full report?

When I took my 2006 USPAP update, the instructor explained in very great detail how doing a "desk-top" appraisal with a limited SOW, a "drive-by" with a more extensive SOW, and then what is often dubbed a "full" appraisal with an even more extensive SOW including an interior/exterior inspection of the subject are all legit appraisals with the proper SOW for each, and can legitimately lend three differing results. He also pointed out the extensive use of EA's and HC's would be required for the first two and possibly for the third SOW.

I see the logic flow behind this. Like you, two years later, I am still having a little trouble wrapping my mind around this one and how doing desk-tops for someone who will order another appraisal with a more extensive SOW is not letting themselves be set up to do appraisals with a pre-determined value contingency.

I was involved in some extensive threads on the subject last year discussing my own struggles with the process and do I offer a desk-top product to solid clients or leave it alone. I finally decided that for lender clients that I will not do them. However, I do have two attorneys for whom I do work and do provide them to attorneys for a reasonable fee (yes, work files are properly developed and stored with SOW clear between client and me before I move forward). I have had two or three times where the attorney ordered a second appraisal with a more extensive SOW. Their needs had nothing to do with hitting a magic number to get a deal done, but to get basic information on properties (in these cases for estate disputes) to decide what direction is needed to go with the court.

The starting point for every appraisal is the same, but doing strictly mortgage work (I believe) can make an appraiser a little bit lazy in handling the first step: "Define the problem to be solved." I would bet that your USPAP instructor may not have stressed that as well as he/she should have.:Eyecrazy: Mine stressed it very heavily.

 

[PropertyEconomics]

PE,

I am not disputing what you have stated here. What I have a question about is this: What is the definition of a full report? Is that a narrative? A report completed on a URAR? Or can a summary report like USPAP instructors have handed out (or at least displayed on overhead, in my case) be a full report?

When I took my 2006 USPAP update, the instructor explained in very great detail how doing a "desk-top" appraisal with a limited SOW, a "drive-by" with a more extensive SOW, and then what is often dubbed a "full" appraisal with an even more extensive SOW including an interior/exterior inspection of the subject are all legit appraisals with the proper SOW for each, and can legitimately lend three differing results. He also pointed out the extensive use of EA's and HC's would be required for the first two and possibly for the third SOW.

I see the logic flow behind this. Like you, two years later, I am still having a little trouble wrapping my mind around this one and how doing desk-tops for someone who will order another appraisal with a more extensive SOW is not letting themselves be set up to do appraisals with a pre-determined value contingency.

I was involved in some extensive threads on the subject last year discussing my own struggles with the process and do I offer a desk-top product to solid clients or leave it alone. I finally decided that for lender clients that I will not do them. However, I do have two attorneys for whom I do work and do provide them to attorneys for a reasonable fee (yes, work files are properly developed and stored with SOW clear between client and me before I move forward). I have had two or three times where the attorney ordered a second appraisal with a more extensive SOW. Their needs had nothing to do with hitting a magic number to get a deal done, but to get basic information on properties (in these cases for estate disputes) to decide what direction is needed to go with the court.

The starting point for every appraisal is the same, but doing strictly mortgage work (I believe) can make an appraiser a little bit lazy in handling the first step: "Define the problem to be solved." I would bet that your USPAP instructor may not have stressed that as well as he/she should have.:Eyecrazy: Mine stressed it very heavily.

The USPAP Instructor handed out a two page form they had designed called a Comp Check-Restricted Use Appraisal report which provided a value range for the subject. They then said they could complete a 1004 Full Interior Inspection report if their client then ordered one. I remain convinced the second assignment is predicated upon the value range given in the "comp check".

I have appraised many homes a number of times, but never after first providing a "comp check" and then two days later accepting a full interior assignment on the same property. Therein lies my heartburn.

Even though they said the value conclusion of the second full report was not predicated upon the value indication of the first comp check .. Im not sure how that can possibly be ... even though they said it was so. I wonder how a board would look at it or a court of law would should it ever be taken to that level.

 

[psmith2170]

Comp Check boxes.

My identity is not a secret, my user name is my web address and I'm sure the USPAP police can find me if they really want. But I'm not too worried in that department, unless USPAP is like the IRS and they never leave empty handed, my work-files are pretty clean. Over the years I've developed my own order form (with the help and suggestions of a couple USPAP instructors) that allows the client to decide whether they would like the assignment to continue with an inspection after a Preliminary Value Survey is completed from the desk. No need to waste anyone’s time and money for an inspection. I'm always interested in the input from a fellow USPAPian as you appear to be. So if you'd like to take a look at my order form and tell me if it's strong enough or where there's holes, I can send it to you, if you don’t mind. By the way, I'm staring at three banker boxes of 2007 "comp checks". I'd hope an audit would show how many assignments the values I didn’t push. Here in Ca, like many states, our USPAP investigators are understaffed, and if they are looking for comp check violators there is a real problem. I mean c'mon, are the ones telling the bank the house ISN'T worth it the real criminals?

You can call me Mrs. Smith

I too have a sheet we read on every oral report. I have sent a copy of mine to the VA Appraiser Board asking they look it over. For the signed certification, we copied the page from USPAP and attach a signed copy to every report. Our comp check boxes get stored every year with all the rest of the files.

Mr. Smith

 

[Mister Ed]

The USPAP Instructor handed out a two page form they had designed called a Comp Check-Restricted Use Appraisal report which provided a value range for the subject. They then said they could complete a 1004 Full Interior Inspection report if their client then ordered one.

It appears that, technically, they are correct.

I remain convinced the second assignment is predicated upon the value range given in the "comp check".

I have appraised many homes a number of times, but never after first providing a "comp check" and then two days later accepting a full interior assignment on the same property. Therein lies my heartburn.

If, as my instructor taught it, the problem to solve in the desktop appraisal that is initially given is, "What do sales that could potentially be comps for the subject, based strictly on tax/MLS records, indicated could be a possible value/range of value for the subject?" then you can legitimately complete that assignment, no problem. If the MB/lender/whoever, likes the numbers, he/she can order another appraisal. That is where the rub comes in (and where I could not make it work cleanly in my mind). The argument that these are two differing assignments is true. The argument that the second assignment came out of the results of the first assignment is true. If an appraiser accepts that second assignment, he better know his clients to know that they understand and accept the potential differing results based on the SOW. The lending clients who I have who would understand that difference NEVER ask for a "comp check" or a "desktop" appraisal. They just order what they need (usually a "drive-by" or a "full inspection" appraisal) and let the chips fall where they may. They get the information they need from me, and I get the payment I need from them in trade for that information. If they make a loan, great. If not, they are usually okay with that because most of my work is in house bank work or FHA, and they do not want bad loans on their hands.

Even though they said the value conclusion of the second full report was not predicated upon the value indication of the first comp check .. Im not sure how that can possibly be ... even though they said it was so. I wonder how a board would look at it or a court of law would should it ever be taken to that level.

If an appraiser is honest, the value conclusion in that second report may not be. That said, I know that I run the risk of being "tainted" by the first set of results. I just do not want to go there.

PE, reading most of your comments, I would say that you and I are in agreement on this.

 

[PropertyEconomics]

It appears that, technically, they are correct.



If, as my instructor taught it, the problem to solve in the desktop appraisal that is initially given is, "What do sales that could potentially be comps for the subject, based strictly on tax/MLS records, indicated could be a possible value/range of value for the subject?" then you can legitimately complete that assignment, no problem. If the MB/lender/whoever, likes the numbers, he/she can order another appraisal. That is where the rub comes in (and where I could not make it work cleanly in my mind). The argument that these are two differing assignments is true. The argument that the second assignment came out of the results of the first assignment is true. If an appraiser accepts that second assignment, he better know his clients to know that they understand and accept the potential differing results based on the SOW. The lending clients who I have who would understand that difference NEVER ask for a "comp check" or a "desktop" appraisal. They just order what they need (usually a "drive-by" or a "full inspection" appraisal) and let the chips fall where they may. They get the information they need from me, and I get the payment I need from them in trade for that information. If they make a loan, great. If not, they are usually okay with that because most of my work is in house bank work or FHA, and they do not want bad loans on their hands.



If an appraiser is honest, the value conclusion in that second report may not be. That said, I know that I run the risk of being "tainted" by the first set of results. I just do not want to go there.

PE, reading most of your comments, I would say that you and I are in agreement on this.

Yes I would say we do. I have always felt that if others have a legit argument of why something is not allowed ... then its best that I dont allow it in my practice. So far ... so good.

 

[Webbed Feet]

The Smiths, Mentor, Mr. Foskey, P.E, Anybody else that cares to read.

In my mind so far in the last ten posts Mr. Foskey is doing the best job of trying to express the situation. The Smiths are doing the best job of trying to make things sound as if the rest of us never deal with any of these constant requests from mortgage sources so that is why we are wrong, and they are right.

To the Smiths all I can say is I know Donkey Kong when I hear it. True, you two may work in some vast area of construction sameness where every house is a clone of every other house. Most of the rest of us don't. Then this claim of ten minutes to accomplish a USPAP compliant real estate appraisal, even a desktop style, during steeply increasing and then decreasing markets is just an April's fools joke. Who do you think you are posting to anyway? A bunch of school children? Reality: It takes more than ten minutes just to get a mortgage based commissioned type client to agree to an intended use that would be allowable under USPAP. And when 95% of them completely understand the next phase would have absolutely no promises regarding its outcome, and understand they have to sign in writing that they understand and agree to that, they don't want the desktop appraisal (Comp Check)any longer. The other 5%? .. Guess what folks, these people will agree to ONLY a raw neighborhood data search. Thereby taking the responsibility upon themselves for their own choices regarding moving forward to a real estate appraisal. A “Comp Search” is not needed. This brings us to exactly what Mr. Foskey and P.E both have been trying to say.

Parsing USPAP down to each little sentence and word of it seeking “Technical” correctness in an effort to show ethics can successfully be skirted is beneath us, or it should be. The difference between “just two assignments,” and a first assignment that leads to unacceptable assignment conditions for a second assignment, is directly the first assignment's intended use and engagement contract in unison. Can we phase an assignment number two to be contingent on the outcome of an assignment number one? Yes, we can. But can we do it if the client's intended uses causes that client to refuse to commit to an agreement for both phases to be unbiased? When that client refuses to acknowledge that the differing SOW's between the two appraisals may certainly cause drastically different results, and agree to that? The answer to these last two questions is no, we can't.

So the expectations, the intended uses, of the clients do matter! And those here trying to say that because they have “two” different assignments that expectations of clients from one assignment to the other have no bearing.... are full of crap in my opinion. If so, those people, the prospective clients of the appraisers, will sign an engagement contract saying they agree to unbiased results that could be drastically different each time.

And to beat up the Smiths a bit more, because it is making me feel warm and fuzzy to do so. Again, I can't remotely in ten minutes get through reaching a clear understanding regarding intended use, arrive at a CREDIBLE Scope of Work, document the engagement agreement in writing with the client I don't trust (which is why I would demand any such type assignment to be in writing in the first place), log in the appraisal assignment, create a work file, COMPLY WITH STANDARDS ONE AND TWO IN ANALYIZING AND REPORTING MARKET CONDITIONS, and provide a USPAP compliant real estate appraisal report for any mortgage motivated client. So this nonsense that you charge if it takes over ten minutes is just that. Because I know right off you would have to charge all the time in that case. And I know darn well what happens the moment any appraiser attempts to charge mortgage based commissioned clients for desktop appraisal reports (comp checks).

So all we really have going in this thread, at the very most forgiving viewpoint on this, is appraisers located in areas of vast subdivisions of thousands of properties with only four models of homes, versus the other 98% of real estate appraisers located everywhere else in this great North American country we live in. Know what the immediate valid point of that is? Our dear mortgage friends do NOT need a comp check in that case! They need, and want, them on the tough stuff, and there is no flipping way of doing them CREDIBLY in ten minutes. Try a minimum of an hour, probably longer. Then try to get the jackasses to sign off on the needed EA's (making sure the client actually understands what the use of the EA's means) and SOW understanding that would be REQUIRED or USPAP violated otherwise without it.

All of the above is what makes threads like this such a joke when we get these technically correct views promoting the legitimacy of comp searches. The disconnect is what gets left out by those trying to claim they can do them, per USPAP, for commissioned based mortgage purpose clients, and that the rest of us just don't get it. WE get it. Very well. Wink! Wink! Wink!

Webbed.

 

[JSmith43]

I can imagine the arguments by members of the establishment budget dining options in the '50's when McDonalds started blazing a trail.


Can't make a meal to go for $2.

 

[PropertyEconomics]

Webbed .... as always quite eloquent if not down right rudely true. I just didnt want to take that much time writing. Thank you for putting it so well.