I think some folks are not thinking about the bigger picture and I can attribute that to the way appraisers (residential) have been treated for the past couple of years.
What happened to common courtesy and professionalism? Why would I produce a report for a client that the client will never be able to use. I think if EVERYONE involved in the particular case treated each other as professionals the road would be much easier to navigate, now and in the future.
Neither a or b. Complete the appraisal and let the lender decide what to do about the defects if any
you ordered a sandwich....you will get a sandwich...if you can't eat the sandwich after its ordered, that's not the cook's fault.
I see where the opinions of the two above posters come from. Let us say we are talking about a reasonable $400 assignment. If we break it down the inspection and the report writing take roughly ~40% (inspecting) and ~60% (writing) of the time to produce a report (residential not in cookie cutter world -- most of my work is rural). For the inspection I will have pulled the property record cards, hopefully some comps, researched the subject and maybe the comps, have to get ready, leave the computer, disrupt the train of thought that was going on, drive to the property, inspect the property and drive back. The preliminary work is considered part of the inspection time as it is prior to inspection.
If a typical appraisal takes 8 hours to produce and ~40% is pre-inspection and inspection then the appraiser has ~3+ hours invested in the assignment at this time. If the appraiser is to get to the property and discover that there is no way this will pass FHA the professional thing to do is to complete the inspection professionally and then notify the client that there is a problem.
HOWEVER, in the current state of affairs the residential appraiser is pressured to take the lowest possible fee for ANY work completed and the AMC model does not want to pay more that $x for a "trip fee". I have seen AMC agreements that NO trip fee will be paid.
Why would a professional (the appraiser) treat the client professionally if they have ~3+ hours already invested in an assignment and the "client" does not want to pay for a trip fee or will pay a miniscule $75-$100? Sorry, I don't work for $25/hour therefore if that time is invested then you will get the full report even though I know you cannot use it.
Is this professional on my part? No, but the AMC has created this environment. A professional relationship would be the client being notified and the appraiser being paid 1/2 the fee for the time, expertise and the fair warning of potential problems. The professional would be rewarded with future work because of his/her professionalism and due diligence.
That world has ended in the residential appraisal business. Most residential appraisers are tired of being screwed by the AMC and the AMC mindset so if you order a sandwich you get a sandwich professionalism be damned on both sides.
Well if a client wants to know if it passes or not I would give them a call; however, once inspected, I have no interest in whether you want to proceed or not. Seems to fall under USPAP 2-3 (Predetermined Results) and USPAP supersedes all lender guidelines. Just because it doesn't pass FHA guidelines doesn't mean it can't be completed as an FHA compliant report, i.e. subject-to repairs/inspections/etc. To be honest, your question implies that you are going to ask an appraiser not to continue the file because it doesn't comply to FHA guidelines. Please don't feel like I'm picking on you here because you are not the first person to ask this question. My time is worth more than a trip fee and an appraisal isn't useless because the borrower couldn't get a loan. There are many decisions one could make based on an appraisal and underwriting a loan is only 1 use of an appraisal.
Option B isn't an option, it's rude and unprofessional.
Because I don't know you, I would recommend a USPAP course if you have not taken one. Ask the instructor about 2-3. It's a fun debate and maybe you could shed some light from the other side.
Eddie.........seriously? I would respectfully suggest you join the OP at that USPAP class.
I have two examples to share. A couple years ago I had a house on 3-5 acres, not sure. The home was very old, small and an estate. The home USED to be part of a very large farm and the house was parceled off form the ag land years ago along with two large barns. Both barns were filled with junk which included "oil" drums filled with unknown substances. The junk in the barns was substantial and I noticed 1950's pop bottles. It was basically a small land fill.
One barn, maybe 3,000 SF with a loft had serious structural issues so much that I felt uncomfortable inspecting the interior of the barn (like I could considering the 5 decades of garbage).
This was a ~$50,000 sale. The cost to get rid of the barns (to meet FHA or any other lending guidelines) would be significant which I chose not to estimate because of the things I could not see and because of the things I could see. My policy for residential is that 1/2 the fee is earned upon inspection. I called the lender, informed them with a three minute e-mail including pictures that this should not proceed. They agreed and paid 1/2 my fee. That fee included my inspection, preliminary work and knowledge. For the client/AMC wants to pay nothing to $100, that is not acceptable; I provided a service.
My second example is a commercial property. It was a ~$4,000 assignment in which I discovered the subject property infringed on an adjoining abandoned railroad ROW. A significant amount of land used by the property to be appraised used land that was not owned by them but had a gentleman's agreement. They actually had improvements built on land that they did not own.
Keeping with the theme, would it have been ethical for me to give them the sandwich they ordered for $4,000 when I knew they could not use the report? I don't think so.
For the OP, the AMC model has created this lack of professionalism, and possibly your policies about payment for a trip fee. If you want me to go to a property for a pittance of a fee after initial work is performed I am going to give you a sandwich you cannot eat. If you treat me as a professional you will get treated as a professional. It is a two-way street.
are they supposed to call you if it's not gonna hit the borrowers estimated value also?
The above post is another example of what the current treatment of residential appraisers has created, the AMC model does not bode well for the future of professionalism in the residential lending world.
