More On Free Comp Checks

[Mike Kennedy]

"You obviously do not do commercial work. "

"Again, I will mention the apartment complex example. You really think you will get into 1000 units? Wont happen."


The topic of this thread, and all of my posts, are applicable to RESIDENTIAL:icon_idea: , applicable to demanding and obtaining a "qualifiying" value or "direction in value" sufficient to order a "full" RESIDENTIAL appraisal for the exact same Intended Use.

"IF the $$$ are there via either a free/fee desktop, oral, or homing pigeon report, THEN we will order a "real" appraisal.



In case you missed this above:

Stand alone orders based on distinctly different SOW AND DIFFERENT INTENDED USES is NOT the issue of this thread. Performing "preliminary" ANYTHING - whether free or free - to obtain "full appraisal orders" which ONLY materialize after one grabs her/her ankles...........IS.


Refer to the USPAP prohibition against Advocacy.


References to commercial are not germane to this Thread.


"ps - In the 20 or so properties I have bought, I have had 1 home inspection done. In the 30 or so vehicles I have owned, I have never had a mechanic check the vehicle out."


You personally choose to play "roulette" and get lucky. Congratulations. Millions of Buyers of both homes and cars are not so lucky and we both know it.

CAVEAT EMPTOR is alive and well.

 

[Mike Kennedy]

1. MB calls, "Mike, I will pay you $250 if you will do a desktop appraisal on 111 E Mulberry Street. I dont want to get into this loan to deep until I know if the borrower's opinion of value is way off."

What is the intended use of the appraisal? Establish an Opinion of Market Value expressed as point of value or a range of value to QUALIFY for a Residential Mortgage on behalf of the consumer who owns 111 E. Mulberry Street.

2. A week later - "Hi Mike, seems her wasnt terribly far off and we would like to proceed with a regular appraisal, here is the guys number, give him a call. We are going to do a refinance for him"

What is the intended use of the appraisal? SAME ANSWER. Order contingent upon "successful results" of the first one.
_______________________________________________________________

An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

An appraiser must not advocate the cause or interest of any party or issue.


STANDARD 1: REAL PROPERTY APPRAISAL, DEVELOPMENT


In developing a real property appraisal, an appraiser must identify the problem to be solved, determine the scope of work necessary to solve the problem, and correctly complete research and analyses necessary to produce a credible appraisal.


Scenario One above:

The problem: qualifying a residential property as Collateral for a residential mortage loan

Scenario Two above:

Ditto

 

[Bill_FL]

Mike, this is where we disagree. First, you make a huge assumption that the desktop is being ordered only to guarantee a value in a later assignment. That is why you are wrong on this issue. That may be your experience, but it isnt everyone's. We agree that the practice is wrong, unethical and violates USPAP. But in the example I gave you jump to that conclusion. The first intended use would be more along the lines of: "Client engaged appraiser to provide an opinion of value, based on public data about the propety, with no physical observations made by the appraiser, to provide a level of confindence in the owner's opinion of value. This owner's opinion of value was not provided to appraiser."

The first assignment is not for financing. The second assignment is. The second assignment is contingent upon nothing. You are just making an assumption that it is.

While thsi thread, in your opinion, is only about residential, when you go spouting off about laws that need to be made, rules that should be adopted, you affect all of the profession Mike, not just your little slice of it. All I am asking is that you take your blinders off and attempt to see the whole great big world of appraising, not just your narrow field of vision.

 

[Mike Kennedy]

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:

1. the reporting of a predetermined result (e.g., opinion of value);
2. a direction in assignment results that favors the cause of the client;
3. the amount of a value opinion;
4. the attainment of a stipulated result; or

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

Second "REGULAR" appraisal order clearly contingent upon successful results i.e. " PRELIMINARY direction in value" of the First Order from the same client, on behalf of the same borrower, on the same subject - for the EXACT SAME Intended Use.

 

[Mike Kennedy]

"I dont want to get into this loan to deep until I know if the borrower's opinion of value is way off."

1 & 2 - exact same Intended Use, exact same client, exact same borrower, exact same LOAN.

 

[Bill_FL]

Mike -

From AO19

2) assignment limitations affect the level of risk accepted by each party in an assignment;




Appraisers and users of appraisals should recognize that assignment limitations affect the reliability of an appraiser’s opinions and conclusions. In some assignments, an appraiser can reasonably apply extraordinary assumptions to compensate for assignment limitations. In other situations, the use of the same assumptions may not be acceptable.



When the intended use is to screen a potential business for feasibility, the use of assumptions or extraordinary assumptions is more appropriate than when the intended use is for loan documentation or loan settlement. Because intended users’ reliance on an appraisal may be affected by the scope of work, the report must enable them to be properly informed and not misled.



My red/bold. Even the ASB sees that its not the same intended use. That's their opinion, you have yours.

 

[JSmith43]

http://www.youtube.com/watch?v=2eMkth8FWno

No worries, Mike. It's only a flesh wound.

 

[Mister Ed]

http://www.youtube.com/watch?v=2eMkth8FWno

No worries, Mike. It's only a flesh wound.

Thanks for the laugh Roger Dodger

 

[expressv]

Comp Check Fee

We have our new clients sign the engagement letter with the following statement. Only had to use it a few times, the shady ones usually call someone else. Any thoughts on this would be appreciated.

"Comparable Check: The appraiser is willing to provide a preliminary comparable sales check prior to completing the appraisal inspection in order to provide the Client with recent sales for the subject's immediate developmenty. If the Client feels the estimate of value is inadequate, the Client may request to cancel the appraisal inspection, but will incur a fee assessment of $50.00. This fee will be waived if the Client wishes to proceed with the appraisal inspection. The information required for the comparable check will be obtained via hearsay and the appraiser will not be liable for discrepancies between the subjects actual amenities and stated."

 

[Pamela Crowley (Florida)]

We have our new clients sign the engagement letter with the following statement. Only had to use it a few times, the shady ones usually call someone else. Any thoughts on this would be appreciated.

"Comparable Check: The appraiser is willing to provide a preliminary comparable sales check prior to completing the appraisal inspection in order to provide the Client with recent sales for the subject's immediate developmenty. If the Client feels the estimate of value is inadequate, the Client may request to cancel the appraisal inspection, but will incur a fee assessment of $50.00. This fee will be waived if the Client wishes to proceed with the appraisal inspection. The information required for the comparable check will be obtained via hearsay and the appraiser will not be liable for discrepancies between the subjects actual amenities and stated."

The amount of your fee is contingent on your first desktop appraisal value being high enough for the client to close a loan and the first appraisal is free if the value is high enough for them to order a Fannie form report appraisal at full fee?????

You do have fully USPAP compliant workfiles with signed certifications and a summary of your oral appraisal report that was delivered for each and every one you do like this, right?????



(excuse me while I go take care of my nausea.)