Thanks for the reply. I am aware of what USPAP says and have read it. This topic has come up before as I read a response from an individual who had posted a letter that they send out when they get a request for a comp check or predetermined value. I went to search for the topic but nothing came up. Basically I was hoping that person would see my post and submit the letter again. It was brilliant.
I call them back immediately when I get the order. Usually the conversation goes something like this:
Me: An appraiser can't accept an assignment based on a contingency.
Them: I know that, I was just wanting to know if the value was way off.
Me: (To myself, Duh!) I won't know the value until I have appraised the property. However, if I get out to your $150k house and it looks like a $40k house I'll be gald to call you and describe it before I proceed. On the other hand, if it's a $140k house, I won't know that until I'm done.
Them: That's really all I was looking for, go ahead.
Me: Because of the way your order is worded, it will cause problems for me if I'm audited. I'm going to send you a fax about this discussion and as soon as you initial and return it I can proceed.
The reason these guys try this all the time is because they get an appraiser every now and then who will do it. You have to remember that they are sales people. They are used to being told "no" a hundred times before they get a "yes." Their attitude is "why not try."
Just because a lender says "We need $150,000 “or "Owners estimate of value $325,000." does not mean that I have taken the order based on a pre-determined value. They are simply stating their concerns. My actions are reveled in my FIRREA addendum when I say, in part;
"The final opinion of value was determined through a reconciliation of all previously determined and collected data. Neither the borrower's estimate of subject's value nor the borrower's borrowing needs have any relationship to value as defined herein nor any relationship to the appraisal process as defined by the Uniform Standards of Professional Appraisal Practice (USPAP)."
They can tell me all day long what they need, want, wish, hope, insist upon, demand, think or pray that the value will be. As long as I state in the appraisal report the procedures that I followed in arriving at value, plus the little statement that I fax back in the order acknowledgement regarding pre-determined value, there is no problem.
Taking an order based on a pre-determined value would be accepting an order based on my "...arriving at a value of $174,000" or accepting an order that states "Only do the appraisal if it can come in over $85,000." Then I might have problems. All of this gobbly-gook that they dance around doing is just so as not have to pay for an appraisal is nothing but silliness. Simple tell them that if there is any glaring problem, you will stop the process and call them, reporting just what you see. They will then have to make the decision if the report is a go-ahead. If there is nothing obvious to report, the value you come up with is the value that you arrive at WHEN THE REPORT IS FINISHED. At that point in time, you have finished the report and the order is complete.
No predetermined values.....period! But, if the lender pushes it and the subject property is within a subdivision, I will tell the lender that: (example) The subdivision consists of 30-40 yr. old predominantly ranch and two story dwellings, with some split levels. A few have some exterior physical obsolescence. A few have been improved due to gentrification. Some have garages and/or basements. Some don't. Some of those with basements have water problems, some don't. During the last year, sales in this subdivision which have been multi listed have ranged between $50,000 and $120,000. Having told you all I know, is this a request for an appraisal?
HO ESTIMATION OF VALUE....ARE THEY REAL ESTATE APPRAISERS?
I SPEND A COUPLE HOURS A WEEK WRITTING LETTERS DEFENDING MY VALUE AND TRYING TO EXPLAIN WHY THE METHODOLOGY HO WANTS IN REPORT IS NOT APPROPRIATE.($150,000 FOR BASEMENT FINISH IN $300K SUBDIVISION IE).
IT IS NICE TO KNOW, AT TIMES, THAT A VALUE YOU ARRIVE AT WILL WORK FOR EVERYONE AND AT TIMES EXCEED EXPECTATIONS.
This may be the letter that you referenced. I posted this in a previous thread on a similar topic. We call this our "Target Value Letter" and fax it immediately upon receipt of any order that implies any predetermined value or expected outcome of the appraisal. As I previously stated, this has apparently become a major audit issue by the appraisal commission (board) in my state. It is good practice as well as good file CYA.
[TRANSMITTED BY FACSIMILE]
(requesting party name)
(client company name)
(street or PO address)
(city, state, zip)
RE: Appraisal Request
(property street address, city, state, zip)
Dear Mr./Ms. (requesting individual’s name):
We have received letter of engagement or appraisal order for the above referenced property. In reviewing the order, we note that you have indicated that the estimated value is ($ state amount ), that you “need” that or some other amount or that you have instructed the appraiser to notify you before proceeding if it does not appear that the property will appraiser for the indicted amount.
Before we can proceed with processing your appraisal request several things should be clear with respect to the value related information you have supplied: So long as the amount stated is only to inform us of your objectives or someone else’s opinion, and are not a condition of your placement of this assignment with our firm, we can proceed. Further, with respect to notifying you if it is not possible to support a value at or above that indicated, your request is acknowledged. However, it is important for you to be aware that we must develop an appraisal before we can advise you whether the property will or will not support the value indicated. Finally, it is also important for you to be aware that your statement of the value amount with this request for service does not, in our view, establish a “condition” for our performing the appraisal.
However, if that amount is a condition of this assignment or condition of payment for completion of the assignment, accepting an assignment under that condition violates professional ethics and may be construed as an unacceptable appraisal condition under the Uniform Standards of Appraisal Practices (USPAP). In the absence of any response to the contrary, we will proceed assuming that no such conditions exist and that assignment is not subject to a predetermined value, direction of value or the occurrence of a subsequent event in order to receive compensation and/or employment for performing the appraisal. If this is not your intention please inform us immediately.