Stop doing "Comp Searches"

[Don Clark]

Just some friendly advice since this forum is supposed to be about improving the profession.....STOP DOING COMP SEARCHES. Please!

For all of you who do these, and you know who you are, please stop. Comp searches are a violation of USPAP. Please review the applicable Advisory Opinion(AO-19) unacceptable assignment conditions. You are giving away your time and money.

Several loan officers of a major lending institution out of New York has placed several assignments with me in the past week. They all wanted comp searches and to know "if the house will appraise for $xxxxx". The only way I can tell you that is to do an appraisal says I. "Well, we don't want to waste our time and our customers money if it won't work" said they. Well, I suppose what you are saying is that you would rather waste my time and money? And, you are asking me to break my state law, and our standards?

If you have not read A)-19 please do so. You are causing all os us problems when we have to explain that there are appraisers out there who will do just about anything asked, standards be damned. Personally, I am trying to get the names of every appraiser who will do comp searches, and I will turn you in. Don't you realize that every appraiser who has gone to prison the last several years has done so not for money but by cooperating with dead beat lenders? Please, for the good of our profession, stop doing comp searches.

Suggestion. Tell them you can do a desk top appraisal, which is allowed under USPAP, and for $xxxxx Then if a full appraisal is needed you can do it for $XXXXX

You are hurting the profession, and not making any money, when you give your expertise away.

Don Clark, IFA

 

[Terrel L. Shields]

hurting the profession, and not making any money

That baffles me as much as the shear illegality of it. The motives to commit a fraud should at least be avarice. Yet they commit a fraud without compensation....I know tons of them that argue if they did not do it, "someone else would get their work". So? Comp checks are nothing short of pressuring you to bring in a value. You are being manipulated to bring home the bacon so you can convert that money losing comp check into a fee appraisal....and some many mullets take the bait.

ter

 

[Mountain Man]

I just tell 'em that I sell a service and sell data. My data is not for free, and I am not a volunteer appraiser. Now my fee is $zzz, do you want an appraisal?? No? click goes the phone. 8) On to the next job. It's not like I sit and stare at the top of an empty, clean desk. :lol:

 

[Pat Butler]

I don't do them myself, but AO-19 clearly gives examples of ways in which they can legally be done. (lines 134+) talks about providing comps under a limited appraisal scenario. And (lines 174+) talks about providing data (comps!) without providing a value opinion.

I think they water down our profession and I think a lot of apppraisers who do comp checks end up taking the eventual order under an implied predetermined value scenario. Nonetheless, there are ways to provide that sort of service pursuant to AO19.

 

[Don Clark]

8)Pat,

You are correct. However, I charge for ALL appraisal services and the lenders who want a comp check want one free.

Don Clark, IFA

 

[Tom Hildebrandt]

Don

I know you do not want to hear about the NCAB but the fact is that in North Carolina, the NCAB has not adopted AO-19 as part of their rules. The boards attorney has argued that if the NCAB has not adopted these documents (AO's, F&Q, and other correspondence) they have no meaningful application in North Carolina. In other words appraisers should not rely on these documents for guidance. In other words, the NCAB will make up the rules and misinterpret them in order to pursue whatever undefined objectives the board has. I do not know what your good buddy Jack Horton ( a sitting member of the NCAB) has to say about this, or even if he knows what the staff attorney is saying on behalf of the board.

Nevertheless, I would speak to comp searches as follows.

Personally, I think the guidance in AO-19 is pretty clear. If you provide the raw data based on the clients search parameters, this is an appraisal service that can be provided in accordance with USPAP with general ethics principles of competency, independence, impartiality, and objectivity. This action would not rise to a level of an appraisal covered by Standards 1 and 2.

However, AO-19 goes on to essentially goes on to say that if the appraiser applies judgement in the selection of comps, then the range provided by the comparables implies a value opinion of the appraiser. This action would require compliance with Std 1 and 2. How rigorously the appraiser develops the analysis under Std 1 and how it is reported is a scope of work issue to be resolved between the appraiser and the client.

I agree with Butler, how you respond to these requests is what makes the difference. I do not reject such requests off hand, but will try to provide an appropriate service (for a fee) that is acceptable to the client so long as I can accomplish the work in accordance with USPAP.

You are certainly correct that it is the latter action (value opinions for nothing) that most lenders (and attorneys) seek for free. As appraisers we always need to be vigilant to prevent these practices.

Regards

Tom Hildebrandt GAA

 

[Don Clark]

Tom,

I agree with Butler and with you. It was the "free" service that I objected too, as the general lender population seems to think it is our obligation, based on what other appraisers have done for them, for us to provide.

Tom, the ASB as well as USPAP itself states that an advisory opinion does not carry the weight of a Standard or a Statement. I have always believed, and have taught others, that you would be ill advised to disregard an Advisory opinion. However, it is clear that the ASB believes you can do so. I believe the NCAB is wrong in advising against following an Advisory Opinion.

BTW, I do not know Jack Horton personally, have only met him at an prganized meeting probably 3 times. So, he is not my buddy, friend, confidant, or anything else. Please e-mail me privately and I will share something else with you.
cdclark3@ix.netcom.com

Tom, it is my belief that a special forum for North Carolina Appraisers, and NCAB matters would benifit us all. Wayne seemed to think so too until he received some opposition. I would hope the forum would be readable to all, not just NC appraisers. However, it would keep comments like your's in a place where they could be easily searched. If not for your comments above, i would not have known about the NCAB aversion to advisory opinions. Please consider asking Wayne for a seperate forum, and I promise I will read every post.

You are under the impression that I disagree with you on most matters. However, I agree with you more often than I disagree. I hope to meet you sometime. I consider you an authority on NCAB issues & concerns. The fact that we disagree sometimes is just a healthy disagreement, not a dislike.

My PO, the NAIFA is having a conference in Charleston, SC next September. I would like to personally invite you to attend, as well Bob Ipock, and other NC appraisers who frequently post on this forum.

Don Clark, IFA

 

[Fred]

Terry,
Don't you just love the humanitarian nature of these lenders who do not want to waste the borrowers money if the property won't appraise high enough? It is the banks' unilateral decision to pass the appraisal fee on to the borrower in the first place. So if they don't want to make the borrower pay, then they shold not make the borrower pay. The banks should eat all these fees where the property doesn't appraise high enough, because it is the bank's error. The loan officer erred by putting together the loan package BEFORE knowing how much loan the collateral would support. D-uh?!

Steve

 

[Ross (CO)]

Steve, ......Bingo !, Touche' ! and Voila ! Yes, these folks who "hate to waste the borrowers' money" are gutless to be the ones who want to "help out" their applicant by "picking up the tab" for the very people who are going to provide a healthy commission to them when all is concluded......or, maybe is not concluded. In the real world of selling, and making the world continue to turn because something just got sold, these wonderful humanitarians expect that every loan app. will close and that everybody IS worthy of a new loan and that every house IS worthy of a new loan being granted against it. False. No person with a lick of common sense, or guts, is willing to "teach" their employees that "you just don't win every time". These banks have a zillion avenues to "get an idea" about the subject's value.....they can pay $75 and get 3 "ideas" of subject value. But, they realize that most of those sources are pure junk and they try the ploy of getting an appraiser to give them an "idea" or a "hunch" or a "ballpark" guesstimate of the subject value. Of course, they have already TOLD us what THEY and the H/O think it's value is ....and want a verbal confirmation of that so we can then get their order for the appraisal. If you do all that checking, and give them a hunch that the subject may be $20K less than......do you still think they are going to give you the order ? Just completed one last week -- c.o.d. from h/o -- and came in $20K less than their wildest dreams. Surrounded by homes selling for nearly just what my value was. Hello h/o, wake up and smell the neighborhood ! These h/o's will lie to the l.o. about what they've "done to the house, and how nice it is" and you get there and see how wrong that is ! The L.O. e-mails me back asking if I can "find more value". Duh ! A second e-mail says the U/W approves me to "go out 16 months in sale dates and up to 5-mile radius" to find more value. (Why not 18 months and 6 miles ?) Suburban tract neighborhood with lots of similarity and homogeneity, across the board, and I can now go 16 months and 5 miles ! I asked for the U/W to send me something in print, signed and dated, explaining those underwriting guidelines.....nothing came back. The c.o.d. check was cashed before I sat down to the dinner table that evening, and report sent out the next day......Like Frank G. said in a recent post...."They just won't stop ! "