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Question about fee proposal

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Atlanta CG

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I have committed to something that I vowed never to do again, and that is to speak before a group of people (about 200) who are apparently mostly mortgage agents & underwriters, at a semi-annual meeting. Three "professionals" have been sponsored: appraiser, lawyer & ?, to offer information, advice, proposals, given 45 minutes to give their disertation. I am a very private, quiet, shy and bookworm-type and am very uncomfortable with public speaking engagements. However, I have been in the business over 25 years and do know what I'm doing (I think) so I guess I can wing it using only a portion of the time and leaving the rest for q & a. My problem is this: the sponsor suggested that I offer a compromise to the lending agents-one increased-from-normal fee for all types of appraisals (ie., 1004, FHA) but if the loan does not close, to offer a $75 alternative to the increased fee. He stated that his company only loses about 25% of the loans for not closing and claimed that my busines will double with this option. Has anyone ever offered this kind of incentive? And, it is based on sound logic? I would appreciate any advice. My "speech" is due on March 6th, but I'm already losing sleep ( I know, that's stupid, but that's me).
John from Atlanta
go h...
 

Francois K. Gregoire

Senior Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Florida
John,

2002 USPAP

Page 30:

Management:

The payment of undisclosed fees, commissions, or things of value in connection with the procurement of an assignment is unethical.

Comment: Disclosure of fees, commissions, or things of value connected to the procurement of an assignment must appear in the certification of the written report and in any transmittal letter in which conclusions are stated. In groups or organizations engaged in appraisal practice, intra-company payments to employees for business development are not considered to be unethical. Competency, rather than financial incentives, should be the primary basis for awarding an assignment.

It is unethical for an appraiser to accept compensation for performing an assignment when it is contingent upon:

the reporting of a predetermined result (e.g., opinion of value);
a direction in assignment results that favors the cause of the client;
the amount of a value opinion;
the attainment of a stipulated result; or
the occurrence of a subsequent event directly related to the appraiser's opinions and specific to the assignment's purpose.

Advertising for or soliciting assignments in a manner that is false, misleading, or exaggerated is unethical.

Comment: In groups or organizations engaged in appraisal practice, decisions concerning finder or referral fees, contingent compensation, and advertising may not be the responsibility of an individual appraiser, but for a particular assignment, it is the responsibility of the individual appraiser to ascertain that there has been no breach of ethics, that the assignment is prepared in accordance with these Standards, and that the report can be properly certified when required by Standards Rules 2-3, 3-2, 5-3, 6-8, 8-3, or 10-3.

Page 30:
Each written real property appraisal report must contain a signed certification that is similar in content to the following form:

I certify that, to the best of my knowledge and belief:

.
.
.
my compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

----------------------------

Have them collect appraisal fee prior to ordering the appraisal or collect the fee at the door.

Good luck at the speaking engagement. Sounds like you are destined to earn their respect.
 

jtrotta

Senior Member
Joined
Jan 16, 2002
Francois;

Point made :!:

Secondly- payment @ inspection is the only way to fly 8)

The most predominant problem within this field, is the lack of cash flow - based on "leverage" from and by the party that holds the larger amount of capital; has been & will always be as long as the playing field is allowed to remain out of wack :!:
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
Frank,

Could not John accept the assignment in two phases? The first phase for all his appraisals with that client would be $75 for a USPAP compliant restricted use report followed by the typical Summary Report at an additional $175/$200/whatever, if the client decides to proceed to the summary report for loan underwriting purposes?

John's only USPAP worry then would be what you had posted above: if the low first phase fee would lead him to report a pre-determined value to get the second phase higher fee......

Ah USPAP, such a wonderful document....

Ben
 

Ross (CO)

Senior Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
John, does $75 "alternative" mean a discount (off) of $75 from full fee.....as in, "I am sorry that your loan did not close, let me help ease your pain by not charging as much for my report ?" I guess it must be totally devastating for some of these folks to not see their loan "deal" come to a closing and they have to think of it as the "fish that got away". I almost had it, we had them ready to close tomorrow at 9:00am, and then..... we got an update on their credit history......and, they did not qualify! So it goes, there are costs to doing business, even getting appraisals done for files-in-process that never come to fruition. ........As for that speach your are giving on March 6th, do your best to bring in a few jokes. Here's one to start off with.....Loan originator has had a tough day at the office, lots of phone calls, lots of problems to resolve, and he's burned out. Last phone call was from appraiser saying he just EDI'd his completed appraisal report and mentions the final value which came in $20K less than was hoped for. On your way home, the loan originator stops at his favorite watering hole for a frosty beer from the tap. He takes a seat at the end of a long bar, with probably about 7 people seated to his left. Bartender places a tall one in front of the loan originator, who slowly raises his head...then pounds his fist down on the bar and shouts "ALL REAL ESTATE APPRAISERS ARE IDIOTS"! Everyone at the bar is suddenly hushed in silence, as each turns their head toward the loan originator and casts somewhat of a stare. A man at opposite end of the bar leans way forward, turns his head toward the loan originator, and says, "Heh, I resent that remark"! The loan originator takes the apologetic pose, knowing he has offended someone, and says to him, "I'm sorry, I did not know you are an appraiser". The man then says, "I'm not an appraiser......I am an idiot".
 

Charlotte Dixon

Senior Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Delaware

John,

2002 USPAP

Francois....Good advice!!!

By the way....lots of new hotels here in Dover...getting ready for NASCAR!
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
John from Atlanta,

I apologise for being so flippant earlier. Hot shot of anger hit me at what they are proposing for you to do.

They are trying to manipulate you and hoping you will 'lay down and just take it'. Trying to make a turd sound like a nice sweet carrot and hoping you'll go along.

Pay attention to what Frank said. Bring some jokes and teach them. I don't know of any appraiser that relishes not making a value wanted. I spend almost twice as long researching and going over my appraisal when it doesn't make a sale price. (unless it's beyond outrageous) Teach them, with a few jokes and some of the laws that we must abide by. I've talked to quite a few loan officers these past 3 weeks and NONE had even heard of the FNMA letter regarding appraisal issues. Bring that as a handout on light yellow paper with your letterhead on it. I also have the Definition of Market Value printed on my letterhead and go over it (maybe print that on a light green paper). I always start by asking "What is the definition of Market Value?" They always answer "Whatever you can get on the contract." I then go into who the appraiser's client really is and the real definition of Market Value that we sign we have completed the appraisal to. I go into the reasons for Underwriter questions and they already KNOW how those hold up a deal they are trying close.

"Hey, this deal isn't coming together. Let's blame the appraiser!" That's OK... I can take it.

If you would like, contact me and I'll be a sounding board for you to go over what you decide to use and do. I've done quite a few of these and will help any way I can. This really is a great opportunity for you!
 

Atlanta CG

Thread Starter
Senior Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Thanks to all who responded, and particularly to Francois and Pamela for your significant advice. I will not change my fee schedule and will quote the source for saying why I would like to but cannot, and will state that I can make it up with quick turn-around times and typical full explanations of any item that an underwriter would question so the process will proceed effortlessly and expediously for the agent and the lender. As for the joke, funny but I'm not a comic. And, in fact, we had 6 children with us for many years and I had a hard enough time remembing their names, so trying to remember a joke, even if I had to read it, would end up in disaster.
 
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