Problem Identification!

[Midwest Guy]

I have a new client who asked me for review, I agreed and he sent me the prior appraisal. No instructions for SOW attached. I asked what he wanted and he asked me to help him determine what SOW would be necessary for credible results. Field, Desktop, or other???

I am wondering at what point in helping identify the problem am I performing a review? Scope or Work Rule should apply and anybody have ideas for when standard 3 kicks in?

Maybe I should have the person order a Desktop Review and determine whether or not that is feasible and request Field if it is necessary for credible results.

While this particular one might require research to determine results, I do not want this guy in a habit of me giving him the SOW, before ordering. Any ideas:icon_question:

 

[Mike Kennedy]

Client type ? Intended Use? Technical Review only? Requires a Disparate Value Opinion should Review indicate report is deficient? Suggest soliciting client to identify EXACTLY what he needs, then determine appropriate SOW.

 

[Midwest Guy]

In previous talks he said basically that he does not want "Skippy" to hurt him.
The SOW might be different every time if he wants mininum fees and fast turnaround.

Small wholesale lender with FDIC money.

Client type ? Intended Use? Technical Review only? Requires a Disparate Value Opinion should Review indicate report is deficient? Suggest soliciting client to identify EXACTLY what he needs, then determine appropriate SOW.

 

[hastalavista]

Jim-

Sounds like you have the type of client I seek; one who thinks they need an appraiser service, but isn't sure how to set it up. These are clients I can customize a specific engagement agreement and SOW which satisfies their needs and defines exactly what I will and will not do. Little room for ambiguity if done correctly and collectively with the client!

I am wondering at what point in helping identify the problem am I performing a review?

Developing an engagement agreement (which will drive the SOW) is not assignment acceptance. So, no SR3 at this stage of the game.

The first thing you need to do is determine the purpose and intended use of the assignment.
Does your client want strictly a quality review with no independent review valuation?
This will tell him your opinion of the report without you providing your own independent value. For some clients, this works. For others, it doesn't.
A strict quality rating works well in QC maintenance of approved appraiser panels. It may also work well in terms of UW standards-review.
My experience with lenders is that when a lender is making a lending decision, they want to know the quality of the original report and want to confirm the original report's value via a reviewer.

The process to determine what they want and how to do it is the engagement and SOW development process. None of which constitutes assignment acceptance. IMO, you can even use a specific report to discuss what a general (or, specific) engagement agreement and SOW would be without performing the review on that report.

Scope or Work Rule should apply and anybody have ideas for when standard 3 kicks in?

Standard 3 kicks-in upon engagement acceptance. A good engagement agreement will outline the general SOW to be used. There may be specifics of an assignment which will warrant a change in the SOW; those changes usually need to be done in consultation with your client. An example may be when what is agreed to be a desk review is found to warrant an exterior inspection, so the scope of work will change. You can get your client to agree that a SOW-change (desk to something more) decision is made by you- I've had such authority to unilaterally upgrade the assignment with increased fee from a desk to an exterior (or interior) SOW when I felt the complexities of the assignment warrant such an upgrade in order to return credible results given the specifics of the assignment.

If you are going to customize your SOW (which I would strongly advise to do, if you can), then I would also suggest that you stay away from the Fannie Mae review form. My experience is that most lending clients like forms. The problem with using Fannie's is that they have a pre-printed SOW and certification which may be different than what you and your client agree to. Unlike Fannie's origination appraisal forms, there is no prohibition of changing the SOW in their pre-printed review form. However, for simplicity sake, I prefer to use another non-Fannie form (if a form is the way to go) so there isn't confusion about SOW.

Good luck!

 

[PropertyEconomics]

Jim-

Sounds like you have the type of client I seek; one who thinks they need an appraiser service, but isn't sure how to set it up. These are clients I can customize a specific engagement agreement and SOW which satisfies their needs and defines exactly what I will and will not do. Little room for ambiguity if done correctly and collectively with the client!



Developing an engagement agreement (which will drive the SOW) is not assignment acceptance. So, no SR3 at this stage of the game.

The first thing you need to do is determine the purpose and intended use of the assignment.
Does your client want strictly a quality review with no independent review valuation?
This will tell him your opinion of the report without you providing your own independent value. For some clients, this works. For others, it doesn't.
A strict quality rating works well in QC maintenance of approved appraiser panels. It may also work well in terms of UW standards-review.
My experience with lenders is that when a lender is making a lending decision, they want to know the quality of the original report and want to confirm the original report's value via a reviewer.

The process to determine what they want and how to do it is the engagement and SOW development process. None of which constitutes assignment acceptance. IMO, you can even use a specific report to discuss what a general (or, specific) engagement agreement and SOW would be without performing the review on that report.



Standard 3 kicks-in upon engagement acceptance. A good engagement agreement will outline the general SOW to be used. There may be specifics of an assignment which will warrant a change in the SOW; those changes usually need to be done in consultation with your client. An example may be when what is agreed to be a desk review is found to warrant an exterior inspection, so the scope of work will change. You can get your client to agree that a SOW-change (desk to something more) decision is made by you- I've had such authority to unilaterally upgrade the assignment with increased fee from a desk to an exterior (or interior) SOW when I felt the complexities of the assignment warrant such an upgrade in order to return credible results given the specifics of the assignment.

If you are going to customize your SOW (which I would strongly advise to do, if you can), then I would also suggest that you stay away from the Fannie Mae review form. My experience is that most lending clients like forms. The problem with using Fannie's is that they have a pre-printed SOW and certification which may be different than what you and your client agree to. Unlike Fannie's origination appraisal forms, there is no prohibition of changing the SOW in their pre-printed review form. However, for simplicity sake, I prefer to use another non-Fannie form (if a form is the way to go) so there isn't confusion about SOW.

Good luck!

Denis ... as always very well illustrated and presented. So good it needed to be posted twice.

I guess thats about the end of this thread ....

 

[Midwest Guy]

Dennis,

This is exactly the information that I was seeking. I thank you very much for your expertise.

Jim-

Sounds like you have the type of client I seek; one who thinks they need an appraiser service, but isn't sure how to set it up. These are clients I can customize a specific engagement agreement and SOW which satisfies their needs and defines exactly what I will and will not do. Little room for ambiguity if done correctly and collectively with the client!



Developing an engagement agreement (which will drive the SOW) is not assignment acceptance. So, no SR3 at this stage of the game.

The first thing you need to do is determine the purpose and intended use of the assignment.
Does your client want strictly a quality review with no independent review valuation?
This will tell him your opinion of the report without you providing your own independent value. For some clients, this works. For others, it doesn't.
A strict quality rating works well in QC maintenance of approved appraiser panels. It may also work well in terms of UW standards-review.
My experience with lenders is that when a lender is making a lending decision, they want to know the quality of the original report and want to confirm the original report's value via a reviewer.

The process to determine what they want and how to do it is the engagement and SOW development process. None of which constitutes assignment acceptance. IMO, you can even use a specific report to discuss what a general (or, specific) engagement agreement and SOW would be without performing the review on that report.



Standard 3 kicks-in upon engagement acceptance. A good engagement agreement will outline the general SOW to be used. There may be specifics of an assignment which will warrant a change in the SOW; those changes usually need to be done in consultation with your client. An example may be when what is agreed to be a desk review is found to warrant an exterior inspection, so the scope of work will change. You can get your client to agree that a SOW-change (desk to something more) decision is made by you- I've had such authority to unilaterally upgrade the assignment with increased fee from a desk to an exterior (or interior) SOW when I felt the complexities of the assignment warrant such an upgrade in order to return credible results given the specifics of the assignment.

If you are going to customize your SOW (which I would strongly advise to do, if you can), then I would also suggest that you stay away from the Fannie Mae review form. My experience is that most lending clients like forms. The problem with using Fannie's is that they have a pre-printed SOW and certification which may be different than what you and your client agree to. Unlike Fannie's origination appraisal forms, there is no prohibition of changing the SOW in their pre-printed review form. However, for simplicity sake, I prefer to use another non-Fannie form (if a form is the way to go) so there isn't confusion about SOW.

Good luck!

 

[Midwest Guy]

I hope more will write in!

I guess thats about the end of this thread ....

 

[Carnivore]

Jim,

Yes, Denis post was great. Lets shift over to the business side of this thread.

You have a great oppurtunity here to get some solid on-going business. You might think about discussing with the client a package of review products with an ascending detail of SOW. The idea is to develope product/pricing on an ascending scale. The first product/assignment is a simple technical review(least expensive). One that establishes wether you have a good appraiser and everything is fine(continue to use this guy) to the other exteme of a complete cover all the bases review that either causes the original appraiser to answer to the clients satisfaction or gets him fired for being a skippy/Vic(Soprano's appraiser).

What ever you do, dont offer a second appraisal as a result of your review conclusions. I believe thats treading on thin ice. I personally think that offering a counter opinion goes againts the intent of USPAP. Advise clients to order a second appraisal from a different appraiser.

Set this all up in advance and if it goes well offer it to other clients.

ESTABLISH A GOOD PROFITABLE PRICING STRUCTURE!!! Provide a review service that NO AMC can ever equal! DONOT GIVE THIS AWAY!

Why is this important to the lender? The answer is loan pricing, satisfys auditors and getting the loan sold to the secondary market when that time comes?

 

[Mike Kennedy]

"What ever you do, dont offer a second appraisal as a result of your review conclusions."

Unfortunately, in MOST cases, that's all the requestor is concerned with. If all they need is Tech Review - they tell you upfront. In the majority of cases, "Review" really means "Second Value Opinion".