Requirement for Commercial Foreclosure Appraisal

[CBBoston]

I've got to agree with Mountain Man. When we bid its based on how many property types and properties there are. Also how hard it is to dig up and confirm sales, rents and other data. We've had requests for "summary" reports that included multiple properties with completely different uses in different markets. When we give them a bid they gag. They then tell us they got a bid from someone that was appropriate for a simple single use property where lots of data is available. Either these people are unable to calculate their per hour income (in which case they'd go to work for Mickey Ds) or they cut so many corners it boggles the mind. Properties that aren't comparable and unconfirmed plus only asking rents. I can understand to some extent the I need any kind of cash flow immediately mentality but at some point you have to take stock.

 

[Vernon Martin]

I do a summary report, any way, but still label it as a restricted use report just to make sure its use is restricted.

Several years ago a borrower applied for a second mortgage with a different lender with an unauthorized copy of a rough draft of my restricted use report, and another appraiser, even more self-riteous than me, submitted a complaint to the state licensing agency, not about my estimate of value but claiming several Standard 1 violations because my report was supposedly too short. My response to the state was the report was done exclusively for my employer, its reuse was unauthorized, and that the restricted use format is not meant to prove compliance with USPAP Standard 1 -- that is what the work file is for. The loan was also performing well in an appreciating market. The complaint didn't go any further.

 

[JSmith43]

and another appraiser, even more self-riteous than me

Vernon, I like your strategy. It's kind of like an "under promise and over deliver" policy with the extra benefit of it being harder to hijack & misuse your work product.

 

[Caligirl]

With regard to Vernon's post, there should never have been an investigation to begin with.

HOWEVER. This has been the case in several instances I have heard about recently. Hence my previous post in another thread about possible client abuse of valuation products causing disciplinary issues for appraisers. Another appraiser was not so lucky and almost lost his license. But that is another story.

Personally-as a general rule of thumb, after reconciling the proposed SOW with standards, I try to look at the assignment from a practical standpoint (ie., am't of work in relation to the fee), and then as a final step do a kind of 'risk assessment' before accepting. I'm a newer appraiser than many others here, and to get all that valuable experience that others have, one has to first stay alive. Which means I occasionally turn away assignments. I look at it as taking less upfront, with the opportunity to make more later.