More On Free Comp Checks

[AJL118]

In my very VERY SHORT stint as a mortgage broker (had a problem with language), the lead dog in the shop had a requirement that I had to visit the property that I was trying to finance. Distance, inconvenience, etc didn't matter. If I wanted to try to finance a property 100 miles away, it was my call but I had to see it. End result was that I burned a lot of gas and had a lot of dead deals. But, at the end of the day, I wasn't calling an appraiser to try to make something work if I knew it was a dog. I haven't read on the AF of a similar requirement by any mortgage broker. I didn't make any money, but it was sure a learning experience. I hope he is still in business.

 

[MarcMangan]

Once you limit your search to parameters you have done an appraisal .. sorry thats just the way it is ... now if you wish to document your file for an appraisal and meet all of the USPAP guidelines thats cool if not .. in my opinion you are in violation.

Well I was refering to the article which stated if the lender determined the parameters and you provided all sales within their defined parameters then they have not been filtered by the appraiser. At that point you would be transmitting a list of sales the lender requested to look at?

Another option would be to get my grandfather to do a BPO with an estimated listing and sales price as a broker and sign it as a broker with the statement that trec requires letting the person in receipt know it's not an appraisal but a BPO and does not meet USPAP.

I think that is the only way to truely beable to do comp checks. Be a licensed broker and do cheap BPO's. Then he would be doing a BPO as a broker and then I could complete the appraisal as an appraiser without having to acknowledge that the BPO was done because I am an appraiser and I can't do BPO's therefore they would not affect the outcome of the appraisal.

Works great if there is a broker in your office. My mother and Grand mother are also real estate agents so they could do cma's.

 

[PropertyEconomics]

Well I was refering to the article which stated if the lender determined the parameters and you provided all sales within their defined parameters then they have not been filtered by the appraiser. At that point you would be transmitting a list of sales the lender requested to look at?

Another option would be to get my grandfather to do a BPO with an estimated listing and sales price as a broker and sign it as a broker with the statement that trec requires letting the person in receipt know it's not an appraisal but a BPO and does not meet USPAP.

I think that is the only way to truely beable to do comp checks. Be a licensed broker and do cheap BPO's. Then he would be doing a BPO as a broker and then I could complete the appraisal as an appraiser without having to acknowledge that the BPO was done because I am an appraiser and I can't do BPO's therefore they would not affect the outcome of the appraisal.

Works great if there is a broker in your office. My mother and Grand mother are also real estate agents so they could do cma's.

Not in my state. Any opinion of value in my state, other than to obtain a listing, is an appraisal and the broker is then bound by not only the state law requireing them to be a licensed or certified appraiser but also by USPAP which is part of our state law.

As far as your second statement, thin ice ... I dont think my board would look at such business practices among family members as being in compliance with the ethics provision of USPAP ... but thats just my opinion and I am not an appraisal board member.

 

[JSmith43]

if the lender determined the parameters and you provided all sales within their defined parameters then they have not been filtered by the appraiser. At that point you would be transmitting a list of sales the lender requested to look at?

IMO, that would be OK, Marc. No trial, no reports to file......away for 5 years.

Except, it would probably be a good idea to keep a shell file for 5 years to prove that the lender did the filtering. It is a hang-em high atmosphere

Like PE says, it is state by state on the BPO question. If I were to do BPO's in MN as a 2 hatter, it would require that the BPO was performed in the normal course of business wearing my broker hat (in search of future listings, etc).

I would also disclose that I am also a CG in MN, and also disclose the difference between a USPAP compliant report and a BPO as performed under my broker hat. Perhaps, I would have the client sign a statement that he/she was primarily enticed to do business with me by my competence as a broker. There is obviously a possibility of overlap.

Again, a bit wordy, all in the name of avoiding being tarred and feathered by a rogue crusader Is that redundant? Rouge crusader? Not sure

 

[MarcMangan]

Well in the State of Texas Trec allows brokers to do appraisals. All appraisals must meet USPAP whether done by a broker or an appraiser. However USPAP does not apply to a broker if they are seeking a listing or completing a CMV for a specific property.

Now if I could wear a broker hat or an appraisal hat as he can I don't think I would consider doing that as it could be mis-represented that the appraisal was done with your appraisal hat on.

I think if i can get my GF to do BPO's when these people call for comp checks then we could get more appraisal business.

The way I interpret that article which Mentor seems to agree that if the lender defines the criteria for the search then the appraiser has not filtered the search and therfore could not be construed as any form of valuation as it would simply be a list of sales the lender requested to look at. Not to mention that If I have no information on the property regarding location or other specifics that would increase the defense that no appraisal was completed as I didn't even have a subject. Can you do an appraisal without a subject?

Again in my case it could also be directed to my grandfather in which case he provided sales to a lender as a broker. And as a broker sent the lender properties that were similar to the property in question.

 

[JSmith43]

Can you do an appraisal without a subject?

One would at least need a hypothetical subject property.

 

[Bruce Marcom]

Well in the State of Texas Trec allows brokers to do appraisals. All appraisals must meet USPAP whether done by a broker or an appraiser. However USPAP does not apply to a broker if they are seeking a listing or completing a CMV for a specific property.

Now if I could wear a broker hat or an appraisal hat as he can I don't think I would consider doing that as it could be mis-represented that the appraisal was done with your appraisal hat on.

I think if i can get my GF to do BPO's when these people call for comp checks then we could get more appraisal business.

The way I interpret that article which Mentor seems to agree that if the lender defines the criteria for the search then the appraiser has not filtered the search and therfore could not be construed as any form of valuation as it would simply be a list of sales the lender requested to look at. Not to mention that If I have no information on the property regarding location or other specifics that would increase the defense that no appraisal was completed as I didn't even have a subject. Can you do an appraisal without a subject?

Again in my case it could also be directed to my grandfather in which case he provided sales to a lender as a broker. And as a broker sent the lender properties that were similar to the property in question.

Texas Brokers cant do appraisals that are for federally related transactions(IE: loans or anything that goes out of state) and they are not bound by USPAP. Texas appraisers are bound by USPAP because it is incorporated into the Appraiser Licensing Laws. The Appraisal Board in Texas is not a part of Trec , it is a seperate entity has nothing to do with TREC. TREC is for RE inspectors, RE brokers and RE agents.

 

[Bruce Marcom]

For those that do not do free comp checks: After you explain why you can't / won't do a free comp check to see if the value they want is possible, how often do you actually get the appraisal order that's NOT based on a "free comp check, pre-determined" value?

How often do you actually get an appraisal order if they want a free comp check and you won't do that?

Comp Checks are a USPAP violation for 1 thing. Giving an opinion of value isnt a try it before you by it service no matter how much the mortgage industry tries to extort appraisers into do it. Oral appraisal is still an opinion of value and you are still liable for it even though its not write down, but hard to prove with no written report. Even if it is a range of values it is STILL an opinion of value.

Loan officers try to give you that spill out not wasting his time or his clients money on an appraisal. So he wants YOU to waste your time instead of him wasting his, and he wants you to help his borrower get out of an appraisal fee. Why would any sane appraiser do this? To get business? Really? Do any of them ever call you back? 1 in 1000 maybe. Why is it your job to help someone get out of paying you for your service?

 

[JSmith43]

Comp Checks are a USPAP violation for 1 thing.

An appraiser can perform a USPAP compliant "comp check" if the appraiser has the skill (and will) to follow standards 1 & 2. Since you are not considering that possibility, I understand the context of your comment. Keeping records electronically stored for 5 years is no big deal.

Do you have a template set up that would aid in offering a USPAP Compliant Desktop Appraisal, should a reasonable request be made that could be developed and reported via such a product?

 

[Joyce Potts]

Appraisals are either USPAP compliant or non-USPAP compliant.

All comp checks are appraisals, therefore, all comp checks are either USPAP compliant or non-USPAP compliant.

Not all comp checks are predicated on the appraiser looking to 'hook' the larger fee for a full appraisal based on the bi-lateral contract of hitting a number. The MLS/FNMA data is a perfect example. What if the appraiser who regularly provides comp checks has a file of those USPAP compliant comp checks that didn't give the requester what they wanted? How do you prove the mental state or intent of the appraiser?

You do not need a comp check for a 'skippy' to target or hit a number, they are going to do it anyway.

If anyone wants to get rid of the comp check, then change USPAP and provide the resources that enables ADEQUATE, EFFECTIVE enforcement.

Then change the mortgage broker laws and make it illegal to SHOP for a value on that end as well.

Better yet, the optimum solution is to simply disconnect any contact between the lender/MB and the appraiser, so the appraiser is free to do the job with no pressure, but I don't see much hope for that. That said, I can see where certain AMC's or in house lenders will start keeping track of those appraisers who generally afford 'high' numbers or hit contract prices vs. those that don't. I can also see MB's 'coaching' their borrowers to suggest a needed value to the appraiser when they do the inspection.

Which is why I advocate raising the bar on education and experience for all appraisers and put in the realm of a true 'profession' instead of a trade as the best, most realistic solution.