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So, how would you handle this?

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Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
Sauy you are contacted by a buyer.. a related business contact refered her to me.. Buyer is purchasing first time and without a real estate agent. She tells me her lender instructed her to contact her own appraiser and to pay the appraiser herself. I asked for deed and purchase and salesa agreement and for the lender to send an apprisal requst.

Out of state lender flatly refused to send request. Saying it's not necessary AND an emailed, electronically signed report is not acceptable..
AND lender wants to be named as client on the report.

How would you proceed?
 

Oregon Doug

Senior Member
Joined
Jan 15, 2002
Professional Status
General Public
State
Oregon
Wendy - the buyer is your client - period.

You give the buyer their appraisal, they pay you. Buyer can assign the report to whoever (or frame it and hang it on the wall) they want.

If the client (buyer) provides you with a written assignment letter, I think that you can "re-type" the report with the lender's name as the new client but include a copy of the letter in the addendum of the new report. (you can charge the "new" client a processing fee).

I feel that would cover you under USPAP and would not be misleading. Some USPAP stickler may feel that it wouldn't........

Lets get an argument going, Oregon Doug
 

Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
Doug, thanks for your response.. Agreed buyer made contact, paid fee .. Is Client.. However, as a practical matter knowing the purpose of the report is for financing and that the lender expects to become my client by being named the client why not cut to the chase and just get a request from the lender? I was amazed at the lenders refusal to provide a request. I contacted a member of our state board and was advised to refuse the assignment and return the fee.. Sounds good to me!
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
I was amazed at the lenders refusal to provide a request. I contacted a member of our state board and was advised to refuse the assignment and return the fee.. Sounds good to me!

Ditto. I would not play ball the way the LO wants to. My license is worth more than one lousy fee.
 

Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
Thanks for the input.. I know these folks are going to be SOL to get someone else, however, this may be a blessing in disquise for them.. I am expected to believe house was appraised in the spring 20K higher than it's presently under contract.. Either they're crazy or they think I am! Yes, a bullet dodged!

Happy Thanksgiving One and All! We have lots to be thankful for !
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I treat every appraisal as if it were a federally related transaction. That way I have the same set of rules all the time. I will not do an appraisal if money is being loaned by a lender unless the lender faxes me an order. The order goes in my file wih a copy attached to my report.

I fax out the following regulation to anyone who balks. The comes from the OTM (Office of Thrift Management). See 564.5 (1) and read what is says about being engaged by the lender.



THIS DATA CURRENT AS OF THE FEDERAL REGISTER DATED APRIL 30, 2002


12 CFR - CHAPTER V - PART 564


View Part
§ 564.5 Appraiser independence. (a) Staff appraisers. If an appraisal is prepared by a staff appraiser, that appraiser must be independent of the lending, investment, and collection functions and not involved, except as an appraiser, in the federally related transaction, and have no direct or indirect interest, financial or otherwise, in the property. If the only qualified persons available to perform an appraisal are involved in the lending, investment, or collection functions of the regulated institution, the regulated institution shall take appropriate steps to ensure that the appraisers exercise independent judgment and that the appraisal is adequate. Such steps include, but are not limited to, prohibiting an individual from performing an appraisal in connection with federally related transactions in which the appraiser is otherwise involved and prohibiting directors and officers from participating in any vote or approval involving assets on which they performed an appraisal. (b) Fee appraisers. (1) If an appraisal is prepared by a fee appraiser, the appraiser shall be engaged directly by the regulated institution or its agent, and have no direct or indirect interest, financial or otherwise, in the property or the transaction. (2) A regulated institution also may accept an appraisal that was prepared by an appraiser engaged directly by another financial services institution, if: (i) The appraiser has no direct or indirect interest, financial or otherwise, in the property or the transaction; and (ii) The regulated institution determines that the appraisal conforms to the requirements of this part and is otherwise acceptable. [55 FR 34549, Aug. 23, 1990, as amended at 59 FR 29503, June 7, 1994]
 

Jeff Horton

Senior Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
Alabama
Bob, isn't there also a USPAP requirment along those lines? Maybe I am thinking what you quoted but I know I have read if it were Federally Regulated that we had to be engaged by the lender. I have that somewhere.

Wendy, not sure how I would handle that lender but might be tempted to suggest that the buyers find a new lender. I have always required the lender to engage me and never had one refuse. I would have a hard time with that lender and not sure if I would work for him.

An NO WAY NO HOW would he be the client without a request.
 

Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
Bob, thanks for that infomation: that will be very handy!

Jeff: I concur, No request~ you don't get to be client.

I did suggest to the buyer considering a local lender. She said no "we are all ready to close" :roll: Wellllll maybe, but you don't have an appraisal, do you?

I balked at this at a few points along the way. One of my presure points was the "lender" doesn't accept emailed reports. What! ? Are there grown up lenders that don't accept email? but the biggest problem I had was the lender telling me what I would accept in terms of engaging my services.. That kinda put me off.

Thanks for all your input!
 

USPAP Compliant

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Wendy,

I am sure you and others often get requests from lenders, clients, borrowers and others for "recertifications" and "updates". You can find the Advisory Opinion for "updates" on page 129 of the 2002 USPAP.

There are 3 tests for doing an update. I have made copies of this and often give it to lenders, borrowers, clients who request an "update" or "recertification". If the 3 TESTS are not met, I will do a new appraisal with a new inspection and date at a reduced price from the original appraisal.

You may want to copy this Advisory Opinion and keep it handy for those who don't know the procedure.






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

ADVISORY OPINION 3 (AO-3)


This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

SUBJECT: Update of an Appraisal

THE ISSUE:

Statement on Appraisal Standards No. 7 (SMT-7) on Permitted Departure from Specific Requirements for Real Property and Personal Property Appraisal Assignments addresses the term "Update of an Appraisal." An update combines an original report with descriptions and analyses of changes in conditions between the effective date of the update and that of the prior report or update. What should be considered in agreeing to develop and report an update?

ADVICE FROM THE ASB ON THE ISSUE:

An update is an extension of an original Complete or Limited Appraisal and report relied on by a client for a prior business decision. The practice of requiring periodic updates is a reasonable portfolio management technique for financial institutions in monitoring asset quality and for certain other uses.

In residential practice, updates are commonly required by lenders and secondary market participants when the time frame between the effective date of the appraisal and the closing of a loan exceeds four months and is less than one year.

Because the update is an extension of an original appraisal, three conditions should be met before an update assignment is accepted:

1. the original appraiser’s firm and client are involved;

2. the real estate has undergone no significant changes since the original appraisal; and

3. the time period between the effective date of the original appraisal (or most recent update) and the effective date of the pending update is not unreasonably long for the type of real estate involved.

In the update, the appraiser addresses any changes in market conditions and the status of the subject property since the effective date of the original appraisal or prior update, then analyzes the effect of these changes in arriving at a current value opinion for the property.

All approaches to value developed in the original appraisal should be updated, and the data used in these approaches should be analyzed again. New data used in the update and data used in any prior updates also must be analyzed.

In preparing an update, an appraiser should clearly state that the update report can be relied on only by a reader familiar with the original report and any prior updates. In reviewing an update, a client should consider it in the context of the original appraisal and any prior updates. A good practice would be to file an original and updates in the same place.

Sample Content Outline for an Update Report

(Use for real estate or personal property other than a one-to-four family residence)

Introduction


Title page


Expanded Letter of Transmittal (Summary of Appraisal with reference to/excerpts from original appraisal, definition of value, date of value opinion, property rights appraised, approaches used, reconciliation and value conclusions, etc.)


Certification


Qualifying and limiting conditions/general underlying assumptions


Attachments


Identification of the subject property with photograph


Changes in market conditions since original appraisal (include current assessment/taxes, etc.)


Changes in subject property since original appraisal (repairs, new leases, damage, obsolescence,etc.)


Highest and best use update, if applicable


Cost approach update, if applicable


Sales comparison approach update, if applicable


Income capitalization approach update, if applicable

Addenda


Detailed description (legal description if real estate)


Other relevant information pertinent to the update


Qualifications of the appraiser


Sample Content Outline for an Update Report

(Use for a one-to-four family real estate holding or personal property)

Letter of Transmittal with:


Specific reference to original appraisal report


Statement of any changes in market conditions since original appraisal


Statement of any changes in subject property since original appraisal


Statement of value or extension of original value opinion and statement of new effective date


Certification


Attachment


Presentation and analysis of any additional data considered


This Advisory Opinion is based on presumed conditions without investigation or verification of actual circumstances. There is no assurance that this Advisory Opinion represents the only possible solution to the problems discussed or that it applies equally to seemingly similar situations.


Approved March 5, 1991
Revised May 25, 1993
Revised March 22, 1994
Revised September 16, 1998
Revised September 15, 1999
 

Pine Tree

Junior Member
Joined
Aug 19, 2002
Professional Status
Certified Residential Appraiser
State
Maine
Thanks for the AO reference..

I have not completed any appriasal at all for this prooperty and have refused the assignment all together. It appears that in most forum participants minds this should be done for the buyer as client and reassigned, updated or recertified to the lender when and if the lender makes a request to do so.

Many thanks for the input.
 
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