More On Free Comp Checks

[Marcia Langley]

I wonder how things may have changed since this poll was first started. I wonder if a fresh poll worded exactly the same way would have even higher pecentages toward the top answers.

 

[Toldya]

Jeff- It may seem like you can't get work without doing "comp checks", and that's a decision you'll have to make on your own. Personally, I'm against it for the obvious ethical and legal reasons. However, my main objection is based on the fact that most "clients" who want "comp checks" WILL waste a lot of your time, and have NO sense of loyalty in giving the you the order. They are, in fact "window shopping" to find an appraiser willing to promise them the highest possible value, and that will be who gets the order.

As for the larger shops taking the "high road", my observation has been just the opposite. It's often the larger shops who have an army of trainees and split-fee appraisers who are expected to perform comp checks on every order they receive before proceeding. The owner of the company has absolutely no time invested in the comp check and still gets a nice chunk of the appraisal fee.

If you really think you'll get business by performing free "comp checks", I suggest you cultivate a few of the clients requesting them for your business. You'll find that 8 out of every 12 working hours will be spent doing value checks, trying in vain to convince unreasonable clients that their estimated value is unrealistic, arguing even more with unhappy clients who told you to proceed with the report but "bring it in as high as you can" (only to find that you couldn't hit their number), and chasing payment from slimeballs who promised you their check was in the mail 3 months ago.

Trust me, you're a lot better off having a few good clients who pay in a timely manner, understand USPAP, and want honest appraisals in order to make educated lending decisions. They're out there, but you'll have to be willing to say "no" to the ones who will gladly waste your time without giving a second thought to the fact that this is what you do for a living!

 

[J Grant]

Jeff I am against comp checksbesp for free, but done a certain ways they are permissable in USPAP advisory opinion standard 19, done as a limited appraisal with a workfile etc. You could alsod send these mortgage brokers raw data just sales in subdivision and talk about market in area, let them draw a value conclusion. also some AMC's are not the worst way to start out when you are new.

 

[Webbed Feet]

<snip>My dilemma is this: How can a starting-out appraiser actually get any work without doing comp checks, when there are so many appraisers in the market that DO do them?
<snip>
However, when there are so many people giving the milk away for free, how can I expect to sell my cow? I'm just starting out, so I can't afford to absorb clients turning away because I refuse to do comp checks. On the other hand, how can I keep my license if I violate ethics?
<snip>
Do I have to sacrifice making a living over the issue of comp checks?
<snip>
how does an appraiser just starting out do it and stay in business?
I am NOT advocating violating USPAP by any means. I'm just looking for a way to actually stay within guidlines AND stay in business. Or is it actually not possible for a new appraiser to do?

Mr. Booher,

Ahhh lots of good questions! Welcome to the forum....

You have to step back and look hard at what is going on in the mortgage broker industry to understand all of this. My view is most of the big (more than one man or woman) mortgage shops have all gone to hiring their brokers as independent contractors. By contract they have made these IC responsible for failing to collect the appraisal fee from the borrower. Due to the intense competition, large banks and now mortgage operations too advertising the appraisal fee is "included", the borrowers of the world have gotten it in their heads they can get a loan with a free appraisal.

Now selling a borrower on your services as a IC mortgage broker it is a tough sell to get that $300 to $1,000 appraisal fee out of them. Cannot you just hear the whining borrowers? "But Mr. Morgage Broker! XYC Bank does not charge for the appraisal! What if it my property does not appraise out... I will not get my loan and I am out all that money.. I do not have $400 for an appraisal.. I am broke, in financial trouble, and live paycheck to paycheck." ...So all the desperate IC mortgage brokers all start looking for the "Doable" deal where they can tell the borrower the fee will be put into the loan costs so the borrower does not have to "pay" it. Catch 22 time. This now leaves the IC mortgage broker personally responsible for the appraisal fee out of their commissions to the mortgage firm they are working with if the property does not have enough market value to do the loan. ... Ok? .... Now it is easy to understand all the freaking calls for "Comp Checks" .... The reality is these people really are fishing for an unspoken (or spoken for that matter) promise out of you that you will provide what they need before they will order an "Appraisal" from you. They have already checked Zillo... They have already contacted a dozen other appraisers. You might be the first one by accident.

Due to market forces, the need to sell loans, and the way mortgage brokerages run... the entire situation has been out of control for quite sometime now... I can promise you.. even if you do a ligit "Desktop" appraisal to attempt to provide the service these folks need with a full warning to them any later field appraisal could turn out completely different... if that turns out to be the case most of them will go ballistic and try and take everything you said, did, or provided out of context as if you told them you promised to hit what they needed. If you stand your ground about it they will stop using you, try not to pay you, threaten to turn you into the state, pick your field appraisal to pieces claiming you are a horrible appraiser and pound you to death with what ALL the OTHER appraisers do for them. Including claiming NONE of their OTHER appraisers charge if they can't 'hit value" and all of the OTHER appraisers know that 10 seconds after they look at the subject and call to tell them. "You have given me a useless appraisal Mr. Appraiser!~ You knew this! Why did you finish it and not call me so I could cancel !!!!!!"

Welcome to the industry Mr. Booher! ... You are trying to start out after a prolonged period of none of the States having adequate dollars to pay for enforcement, some lenders and many brokers intentionally protecting their "Good" appraisers and weeding out the ones that had backbone, Skippy prolifically "training" newbies to commit fraud on a daily basis and the trainees not understanding this until after having been doing it for a couple of years, the trainees becoming licensed appraisers and soon thereafter getting hauled up in front of their state's appraisal board and crying out "But I was trained to do that!" whereupon the board members barf after hearing that yet again one more time... Oh yeah, and a percentage of appraisers who believe it is not polite to turn another appraiser into a state appraisal board.

What you need to accept.... Doing comp checks will not help you... because unless you intend to fall to the dark side, and hit that value whenever needed in the following field appraisal, you have only applied a short-sighted, short term bandaid to a long term problem... What I find is about all you can do is ask right off "Can't get the appraisal fee out of the borrower huh?" then the MG replies... "errrr no...that's why I am hoping you can help me determine value before I order an appraisal." Then about all you can do is explain the facts of life and appraising to them and hope to strike it off personality wise with them.

Good Luck!

Barry Dayton

 

[Webbed Feet]

Jeff I am against comp checksbesp for free, but done a certain ways they are permissable in USPAP advisory opinion standard 19, done as a limited appraisal with a workfile etc. You could alsod send these mortgage brokers raw data just sales in subdivision and talk about market in area, let them draw a value conclusion. also some AMC's are not the worst way to start out when you are new.

Ms. Glantz,

It's USPAP 2006 time remember? No such thing as a "Limited" appraisal anymore... Departure no longer exists hence "Complete" and "Limited" no longer exists.



Barry Dayton

 

[Steve Owen]

The poll is flawed...

I answered I always get the order without giving them a value first, because based on the way the poll is worded, that is the answer that most applies to me (the correct answer is the best answer, not necessarily the right answer). Obviously, I don't get an order everytime the question starts out with a request for a free comp check. I do such a small amount of MB work that it would be hard for me to quantify a percentage. However, almost every time I do a mortgage appraisal, it starts out with either a request for a free comp check or an estimate of value on the order with the language, "please stop if you can't make value" or something similar. Since I NEVER give them pre-determined value, therefore EVERY order I get is done without giving them value first. The fact that I've only done one of these so far this calendar year might be pertinent.

 

[Jeff Booher]

Thank you, those that replied, for some well-thought out advice. What I'm getting, in a nutshell, is...do it right or not at all, because any other way just isn't worth it. And I have to say, that sits well with my own internal ethics meter. I just hope I can make a living doing it that way. Time will tell.

I am seriously looking into Jo Anne's suggestion that some AMC's can be helpful to a newbie like myself. I realize this is all stuff for another thread, but...the problem I see with AMC's is the multitude of horror stories posted on this site involving them. Plus, my other online searches on AMC's suggests that there are both good ones and bad ones, but more of the latter than the former. I think I'll go find an AMC thread to post my questions about them there.

Again, thank you for both the welcomes I received, and the sound advice.

 

[Charlotte Dixon]

I don't have a problem with comp searches, because I don't answer my phone. I'm a one-person office and all messages are recorded. I don't have time to bargain with lenders/brokers, shoot the breeze, or "help" some homeowner trying to refi. I only return the calls I want to return. It can't be more simple than that. With this method, my blood pressure stays in tact.

 

[Jeff Squire]

We don't do "comp" checks, period. For good clients, we will provide settled sales data within their defined neighborhood boundaries.

 

[lmichels]

Our state board called a few years back and notified us that any "comp check" required a workfile and must be consistent with USPAP standards 1 and 2. I'm not sure that all the appraisers in town got the message however.

We have talking points now for phone conversations - "I'm sorry, the state has told us it's illegal to check comps before we receive an order. If you fax over the order we will start the research process. We always complete significant research before we inspect the property, and we will keep you informed every step of the way. Our focus is on client communication and customer service."

We have not lost any business (that we wanted) as a result of not doing comp checks. Over 95% of our business is with mortgage companies, and even in the current down-turn we have had no layoffs. However, we do find that we spend a lot more time educating loan officers about laws and regulations than we used to.

There is also zillow.com, yahoo real estate, and many many many other places that loan officers can get "ballpark values". That helps.