Reconsideration of Value anyone?

[Sandra Koutsopoulos]

Actually I got my first ROV in a long time on one of 3 new condos in a new development. Comps had been challenging b/c builder had not recorded the sales individually, so one whole street loaded with units didn't show up anywhere in the public domain. Had to use builder's grid active/pending/sold sheets plus contact the title company to confirm. Anyhow, they sent 4 of their new builds with ROV plus the title contact, which confirmed the specifics, revealing that only 1 sale could have improved the value, 1 showed adjusted value much lower, and two were out of comparable parameters, being significantly larger units.

Meanwhile, I'm receiving 4-12 phone calls, emails, texts from the AMC per day (including Thanksgiving), one saying lender is screaming and wants higher value RIGHT NOW! Every one of the contacts said RUSH, hurry, lender needs ASAP, etc. Apparently none of those ppl communicated with each other nor read my comments on their portal.

So now I'm p*$sed, and on the ROV addendum response, I told them the value hasn't changed, that their heavy-handedness including telling me the lender was screaming, led me to remove my signature from the Appraiser Independence Certification, and stating that it appeared I would be blackballed from getting further orders from their company if I did not bring in the value the builder insisted on. The ROV apparently originated from builder or their in-house lender. Then I sent the appraisal with ROV commentary to each and every email address who'd pressured me. Got a phone call bright & early next morning saying I'm a valued person, the in-house appraiser verified my value was well supported, and they take very seriously an appraiser raising issue of pressure to bring in a certain value, and I'll continue getting orders from them. OK. Sure, I believe 'em.

 

[sputnam]

I don't see much difference in the new vs the old. As long as the lender vets the "request" properly not much has changed. I do know for a fact that the reason I do not get rovs from two of my clients is because they "head them off at the pass". But both of them have appraisers that do QC as opposed to QC clerks

Right. The main difference is that now Lenders are required to inform borrowers that they can request an RoV. The details of what is required isn't much, if any, different that the procedure many lenders have been using for over a decade.

 

[J Grant]

I don't get many ROVs s but when they come in, they are very time-consuming. Folks who say they take five minutes have never done one. I anticipate a small uptick ( I hope it is small) with this new requirement.
The sales that people send in as "comps" in an ROV are often very strange. Usually cherry-picked by the high price, though on occasion, they include sales already in the report (doh). Tech has made all this possible - a ten-year-old can now pull up RE sales off a smartphone.

Because it adds hours of unpaid and stressful work to an assignment, an ROV acts as yet another form of punishment for "coming in low" _ ( slang for the appraiser did not hit the target but came in at the best-supported market value) The current system is a 100% fail at protecting appraisers from pressure and this is just one more example. An ROV of this type is rarely the result of an appraisal material error, it nearly always, and only, occurs when the value was not high enough to make someone happy or was below a sale price.

 

[GWISC]

After reading through this thread, I have to admit, I now remember hearing some tidbits about the ROV process, but forgot all about it. Thanks for starting this thread.

My initial reaction is that this is a great way for lenders to legally put pressure on the appraiser to increase values for each and every appraisal. The leverage is the threat of payless work in explaining why comps, submitted by a borrower, are not relevant to the subject.

Long time ago, I remember an AMC sending me 20, yes 20 comps, to consider. 5 of those 20 were already in the report. Made a complaint and a threat to complain to the state. They backed off. This was over 15 years ago.

I also vaguely remember explaining in another ROV that a 100+ year old Victorian house was not relevant as a comp to a large 1960's ranch house. It amounts to a tutorial for the borrower and lender in selecting comps for the SC approach.

Lots of time, no more money. It just amounts to a free lesson in how we select comps.

My suggestion is to start charging for these free lessons:.
1) If I am in error (ie.. borrower finds a comp that I missed and would have shown the subject to be worth more), then no charge.
2) If I review their submitted comps and find they are not relevant, then I may charge $100 per reviewed comparable. 5 comparables = $500.
After all, I not only have to review the comps, but I also have to go back and review the old appraisal. That all takes time. Of course, I will have to let my clients know this so that they, in turn, can inform their borrowers of the risk/reward as they will need to get payment up front for my efforts.

Hey, if the policy changes, then so can our fee structure. Also, no where does it state we are barred from charging for this service (thanks for the copied table Sadie). And yes, I am serious. If sense this new policy is going to be abused, then I will definitely start having talks with my clients about charging for this additional work. I have a great relationship with each of my clients, none are AMS's, and so I am confident they will be supportive. I think charging for ROV work would stem some of the abuse and would de-fang the lenders tool to put pressure on us with the threat of ROV's.

I guess it depends on how good of a relationship you have with your client as to whether you can charge for this service. I know I will inform my clients of charging additional fees, if I sense this will become a trend.

 

[Tom4value]

Right. The main difference is that now Lenders are required to inform borrowers that they can request an RoV. The details of what is required isn't much, if any, different that the procedure many lenders have been using for over a decade.

" The main difference is that now Lenders are required to inform borrowers that they can request an RoV."

This was brought up at the Appraiser Expo. It is actually a good thing. They argued that most lawsuits stem from a borrower frustrated that there is no other way to express recourse. By having the lender essentially say, "got a beef with the appraisal? Here is how you can respond.", they are more likely to not chose a legal course.

 

[TerryRohrer]

So if we are responding to requests from borrowers, are they intended users?

 

[Zoe]

Actually I got my first ROV in a long time on one of 3 new condos in a new development. Comps had been challenging b/c builder had not recorded the sales individually, so one whole street loaded with units didn't show up anywhere in the public domain. Had to use builder's grid active/pending/sold sheets plus contact the title company to confirm. Anyhow, they sent 4 of their new builds with ROV plus the title contact, which confirmed the specifics, revealing that only 1 sale could have improved the value, 1 showed adjusted value much lower, and two were out of comparable parameters, being significantly larger units.

Meanwhile, I'm receiving 4-12 phone calls, emails, texts from the AMC per day (including Thanksgiving), one saying lender is screaming and wants higher value RIGHT NOW! Every one of the contacts said RUSH, hurry, lender needs ASAP, etc. Apparently none of those ppl communicated with each other nor read my comments on their portal.

So now I'm p*$sed, and on the ROV addendum response, I told them the value hasn't changed, that their heavy-handedness including telling me the lender was screaming, led me to remove my signature from the Appraiser Independence Certification, and stating that it appeared I would be blackballed from getting further orders from their company if I did not bring in the value the builder insisted on. The ROV apparently originated from builder or their in-house lender. Then I sent the appraisal with ROV commentary to each and every email address who'd pressured me. Got a phone call bright & early next morning saying I'm a valued person, the in-house appraiser verified my value was well supported, and they take very seriously an appraiser raising issue of pressure to bring in a certain value, and I'll continue getting orders from them. OK. Sure, I believe 'em.

You may be surprised. They may be out of other targets.

 

[Zoe]

There is an old saying. You probably should not use it. It goes something like:

"With friends like you, who needs enemies?".

 

[Zoe]

Especially since they are coming from the borrower, it is better to make them do it right on the ROV before you even address it.

Then go from there in a very professional manner.

You may want more information or something on the ROV.

You may change your appraised value sometimes on new data. Nothing wrong with that as long as you keep it all above water and clean in your appraisal.

New data was provided in ROV dated XX/XX/XXXX and information provided is included in this revised appraisal report. The appraiser performed a prior appraisal on the subject with an effective date of XX/XX/XXXX. This is a revised appraisal report. (and mark it revised appraisal report). New signature date. If you change effective date, it is new assignment.

 

[J Grant]

After reading through this thread, I have to admit, I now remember hearing some tidbits about the ROV process, but forgot all about it. Thanks for starting this thread.

My initial reaction is that this is a great way for lenders to legally put pressure on the appraiser to increase values for each and every appraisal. The leverage is the threat of payless work in explaining why comps, submitted by a borrower, are not relevant to the subject.

Long time ago, I remember an AMC sending me 20, yes 20 comps, to consider. 5 of those 20 were already in the report. Made a complaint and a threat to complain to the state. They backed off. This was over 15 years ago.

I also vaguely remember explaining in another ROV that a 100+ year old Victorian house was not relevant as a comp to a large 1960's ranch house. It amounts to a tutorial for the borrower and lender in selecting comps for the SC approach.

Lots of time, no more money. It just amounts to a free lesson in how we select comps.

My suggestion is to start charging for these free lessons:.
1) If I am in error (ie.. borrower finds a comp that I missed and would have shown the subject to be worth more), then no charge.
2) If I review their submitted comps and find they are not relevant, then I may charge $100 per reviewed comparable. 5 comparables = $500.
After all, I not only have to review the comps, but I also have to go back and review the old appraisal. That all takes time. Of course, I will have to let my clients know this so that they, in turn, can inform their borrowers of the risk/reward as they will need to get payment up front for my efforts.

Hey, if the policy changes, then so can our fee structure. Also, no where does it state we are barred from charging for this service (thanks for the copied table Sadie). And yes, I am serious. If sense this new policy is going to be abused, then I will definitely start having talks with my clients about charging for this additional work. I have a great relationship with each of my clients, none are AMS's, and so I am confident they will be supportive. I think charging for ROV work would stem some of the abuse and would de-fang the lenders tool to put pressure on us with the threat of ROV's.

I guess it depends on how good of a relationship you have with your client as to whether you can charge for this service. I know I will inform my clients of charging additional fees, if I sense this will become a trend.

I truly wish we could charge extra whenever an ROV is not connected to a material error. But the reality is that we can not because of the TRID appraisal fee rules ( read up on it ). I mean, yes, we can charge the client extra , but it would have to come out of their pocket. Not that I have a problem with that, but a client would probably cut off an appraiser for doing it.

The solution is, at some point, to raise our upfront fee, with the view that there will be more ROV- plus every new reg or guideline coming from the GSEs, increasing the workload and level of scrutiny. More and more time, "defending" a value ( usually for being too low, so it definitely acts as a pressure ), and the "accuracy" expectation is impossible to meet. It becomes a collision of interests because the RE market is imperfect, and participants do not always act rationally or pay a standard $ amount for X or Y.