More On Free Comp Checks

[JSmith43]

USPAP is not law anywhere, it is a set of guidelines.

USPAP is incorporated into MN statutes covering appraisers. The statutes say that licensed appraisers have to follow USPAP. The vast majority of states incorporate USPAP in their statutes and/or rules and regulations covering licensed appraisers.

 

[Samshile]

USPAP is law in my state. It is adopted into State Law ... everytime USPAP changes my state law changes .. so yes USPAP is law in some jurisdictions.

I dont have USPAP in front of me .. but I do know what the definition of an appraisal is and simply you guys are doing appraisals ... again realize that fact and you are home free. Comp Check (err Appraise) all you wish.

What about Advisory 19? :new_multi:

 

[PropertyEconomics]

What about Advisory 19? :new_multi:

AO 19 is very clear .. you have to advise them that you cannot accept the assignment based upon a predetermined value .. the rub is that if you agree that the value is around or not less than X .. you have in fact done an appraisal.

AO 19 refers to this as being an appraisal. I also remind you that AOs are for guideance only and are not part of USPAP ... the definition of an appraisal remains the same ...

In Apprazurs example there is clearly a benchmark and he has clearly agreed to hit that benchmark or be higher ... that is an appraisal .... Im not saying that comp checks cant be done .. Im saying they are appraisals becuase they are .. USPAP clearly says so. Standards 1 and 2 apply.

 

[JSmith43]

From AO-19

1)
the type of assignment in each request described in the Background section of this Advisory Opinion is an appraisal.

If an appraiser is asked whether a specific property has a value (a point, a range, or a relationship to some benchmark), that request is for an opinion of value (an appraisal). Appraisers, obligated to comply with USPAP, must develop a real property appraisal in accordance with STANDARD 1. Communicating that value opinion must be accomplished in accordance with STANDARD 2.

Appraisers, like other professionals, must ensure that those who use their services recognize the amount of work required—and the expertise needed—to develop a credible value conclusion about a property.

However, this does not mean that the appraiser cannot provide an economic and competitive service. Indeed, the Uniform Standards of Professional Appraisal Practice recognize the need for different kinds of appraisals. A competent appraiser can vary the scope of work in an assignment, in accordance with the type and definition of value and intended use of the appraiser’s opinions and conclusions in the assignment, and remain in compliance with USPAP.

The part in Red verifies PE's contention & my observation that the example given clearly described an appraisal. What we assume to be missing is a work file that documents standard 1 & 2 were followed.

Why am I still up, participating in this?:new_smile-l:

 

[Samshile]

From AO-19



The part in Red verifies PE's contention & my observation that the example given clearly described an appraisal. What we assume to be missing is a work file that documents standard 1 & 2 were followed.

Why am I still up, participating in this?:new_smile-l:

A competent appraiser can vary the scope of work in an assignment (comp check), in accordance with the type and definition of value (comp check) and intended use of the appraiser’s opinions and conclusions in the assignment (value arrived at from comp check), and remain in compliance with USPAP. Yes appraisal. No. conflict w/ USPAP.

 

[Samshile]

AO 19 is very clear .. you have to advise them that you cannot accept the assignment based upon a predetermined value .. the rub is that if you agree that the value is around or not less than X .. you have in fact done an appraisal.

AO 19 refers to this as being an appraisal. I also remind you that AOs are for guideance only and are not part of USPAP ... the definition of an appraisal remains the same ...

In Apprazurs example there is clearly a benchmark and he has clearly agreed to hit that benchmark or be higher ... that is an appraisal .... Im not saying that comp checks cant be done .. Im saying they are appraisals becuase they are .. USPAP clearly says so. Standards 1 and 2 apply.

This explains how mistaken most of th responses have been.

Can Appraisers Perform "Comp Check" Assignments?
Question:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]I’m a residential appraiser and have been asked to perform a "comp check" (or "pre-comp") assignment, where a client wants to get an idea of the value of a home prior to proceeding with a mortgage financing transaction. Does USPAP allow me to perform this type of assignment?
[/FONT][/FONT]Response:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Yes. As stated in FAQ #130 in the 2008-09 edition of the USPAP document, these types of assignments are allowed under USPAP. To understand the USPAP requirements, it is important to identify exactly what the appraiser is being asked to do. If the appraiser is asked to "provide comps," that would typically mean the appraiser would be exercising his or her own judgment to determine which sales are most "comparable" to the subject property. The appraiser may choose to include only those sales that he or she deems are most similar to the subject in size, location, quality, etc., which could mean that certain sales may be omitted. In this case, the resulting data would have been "filtered" by the appraiser’s judgment, which would have the net effect of providing a range of value to the client. This range of value is defined as an appraisal under USPAP; therefore, the appraiser would be obligated to comply with STANDARDS 1 and 2.
But as FAQ #130 also states, "comp check" assignments should be contrasted to requests for an appraiser to simply provide data. For example, an appraiser asked by a client to provide "sales data of all homes located within a one mile radius" of a specific address could comply with the client’s request without complying with STANDARDS 1 and 2, because the appraiser would just be providing sales data pursuant to the client’s defined parameters. In this example, the appraiser must be careful not to communicate any opinions or conclusions regarding the data provided.
For additional related guidance on this topic, please refer to Advisory Opinion 19, [/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Unacceptable Assignment Conditions in Real Property Appraisal Assignments [/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]and Illustration #4 "Appraisal and Market Information" in Advisory Opinion 21, [/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]USPAP Compliance[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]. [/FONT][/FONT][FONT=Arial,Arial][FONT=Arial,Arial]USPAP Q&A Page 3 Vol. 10, No. 7 July 2008
[/FONT][/FONT]Can Appraisers Perform "Comp Check" Assignments for Free?
Question:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Does USPAP allow appraisers to perform "comp check" assignments for free?
[/FONT][/FONT]Response:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Yes. However, the appraiser would have to ensure that receiving a "full" appraisal assignment is not contingent upon the result of the "comp check" assignment. The Management section of the ETHICS RULE states, in part:
[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]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

1. [/FONT]

1. [/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]
   [*]the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose.

[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman](Bold added for emphasis)
[/FONT][/FONT]Is Disclosure of a Free "Comp Check" Assignment Required?
Question:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]If I perform a free "comp check" assignment and my client subsequently requests me to perform a "full" (or more "traditional") assignment on the same property, do I have to disclose the free "comp check" assignment as having provided a "thing of value" to procure the new assignment?
[/FONT][/FONT]Response:
[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]No. The Management section of the ETHICS RULE states, in part:
[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.
[/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Since USPAP prohibits the second assignment from being contingent upon the first, the free "comp check" could not be considered part of "procuring" the second assignment. Therefore, disclosure of the free "comp check" assignment would not be required. Appraisers may, of course, [/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]elect [/FONT][/FONT][FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]to disclose the prior assignment, but it is not required by USPAP.
An appraiser can provide a free "comp check." An appraiser cannot provide a free "comp check" AND the pursuant appraisal if the engagement was contingent upon developing or reporting predetermined results.
[/FONT][/FONT]

 

[Ken B]

Read USPAP Frequently Asked Question number 130; it is on pages F59-F60. You are performing appraisals.

Just because there is no proof that you performed an illegal appraisal doesn't mean the crime wasn't committed.



So if I offer a bribe to an elected official but no one else hears it I have committed no crime. "It is just the work of one person against the word of another person."

You mean even if someone whacked Ed but the body was never found, he was still murdered? And someone still might go to jail?

"Yo Vinnie, we got a little problem in WA wit a wiseguy named Ed. I need someone to permanently resolve de situation. I'm just sayin."
"No problems boss, I know someone experienced in pest control, fugedaboutit."
"Yeah, make sure everyone fugedaboutits. We never had dis discussion."
"What discussion boss?"
"You a good kid Vinnie, you gonna go far."

 

[Pamela Crowley (Florida)]

Can you hit $250,000 ?
Whats the least you can live with?
Around $190,000.

THAT IS DOABLE ... .the number was expressed and you spoke it. You spoke against a benchmark ... in this instance Equal To or Greater than $190,000.

Appraisal has been done.

And, this is now a fee contingency appraisal order. The appraiser only gets paid if the first freebie 'comp check' appraisal is a value opinion that will get the loan closed.

THIS is what brought on the HVCC.

 

[C Alexander]

perplexed-

Mentor, that's the reason all my 3 trainees in the last 20 years have been guys

hand in hand with the nailing comment for post of the week.

 

[fifteen]

Prove that I said it - you can't. I'm supposed to have some internal moral definition of what an appraisal is and never cross that line? Sorry, I don't see USPAP as the holy grail of appraising.

I suppose if I said I was going to rob the bank at the corner I've committed a robbery. Words do not a crime make and words do not necessarily an appraisal make. Get used to it.

I spoke against a benchmark??!! Anytime you speak against a benchmark you've committed an appraisal? That's ridiculous and you know why? I never mentioned a number. No numerical value was expressed by me in my saying "that's doable" - no appraisal. Letter of the law bud. An appraisal happens when a numerical value is expressed by ME, not by anyone else. Why? Because I'm the only one in that conversation that can legally do an appraisal.

So please stop lying - thanks.

Can you hit $250,000 ?
Whats the least you can live with?
Around $190,000.

THAT IS DOABLE ... .the number was expressed and you spoke it. You spoke against a benchmark ... in this instance Equal To or Greater than $190,000.

Appraisal has been done.