"...USPAP Does Not Allow Appraisers To

[Dan Blanchard]

I saw an article a while back where Henry Harrison suggested that appraisers consider adding home inspections to the line of products offered. I don’t think Henry Harrison would suggest it if we can’t do it. There are several schools that teach this. I have considered it and decided not for now. If you have done FHA’s and RD’s, it would not be too different other than you would have to get on the roof, in the attic and crawl. Some home inspectors make more money than appraisers do and I would guess alot more make just as much. We ordered a home inspection on the last house we considered buying. I was present for the entire inspection. He charged the same fee we do for a 1004. It took him less time then it would have taken me to do the appraisal! If you don’t mind getting a little dirty, take the course and go for it!

 

[Mr Rex]

Dan is correct. Same fee for 1004, unless the house is really old then more for HI. Belly crawling through a crawl space or attic ain't for the folks that don't want to get dirty. I use a pentablet software and a bunch of pictures, can print on site, but mostly e-mail the reports. I find it somehow more rewarding than appraisal work. It is what it is, and your client wants to hear it.

 

[bradellis]

Verne,

George has this right but perhaps did not finish the thought.

1. You CAN do a home inspection on a property that you have appraised, are going to appraise, or even in conjunction with the appraisal inspection.

2. USPAP may apply. I say MAY because it will be dependent upon how/why you were hired as the inspector. IF you were hired because you are an appraiser, then it falls under the secondary heading of appraisal practice- the one in which the Ethics rule applies but for which there are no actual USPAP standards. If you were NOT hired as an appraiser for the home inspection portion, then your obligation is to NOT mislead anyone about your role. It would then be part of the broadest area of Valuation Services.

Now my assumption on this is that there is no advocacy involved- you know, it is what it is. Lack of bias is the key.

I'd produce separate reports and disclose in both exactly what you did.
YES- I have done this.

Brad

 

[Pat Butler]

Let's say you're hired to do both (appraise/inspect) by two different parties. The buyer wants you to do a home inspection and the lender wants you to appraise the property. The owner/seller of the property had no say as to who got hired, yet his appraised value is affected negatively because you, as a home inspector, have more knowledge about the deficiencies in his house than the typical appraiser would. He certainly could make a case that your dual role caused your appraisal to be too low and blew his deal. If the home inspector was another party then you probably would have never had access to the report.

The owner/seller could also accuse you of working for the buyer who is certainly paying you to assist them with telling them what's wrong with the subject property. They see that you are getting paid by the buyer and that makes them wonder if that same buyer had any influence over your appraisal. You are essentially receiving payment from two different parties with competing interests in the same transaction.

If multiple parties are involved in a transactions (buyer, seller, realtors, lenders) then I can see where a dual role of appraiser and home inspector could really be to the detriment to a lot of people's interests and a lot of those same people could claim that your independance has been blown.

On the other hand, if the buyer in a transaction is hiring you for both purposes then the seller is aware that you are being paid solely by the buyer and they (seller) THINK that you represent the buyers interests even though we don't represent their interests. My point is that no one is being harmed by relying upon your dual role by thinking that you are on their side.

 

[JSmith43]

A politician could legally make a stop at "the chicken ranch" in Nevada, but it might not be a good idea.

 

[bradellis]

Pat,

Your scenario may be a real life occurance but it assumes a lack of competency on the pat of the appraiser/inspector. It assumes that the appraiser would not be able to see deficiencies OR that he could not obtain a copy of the home inspection.

How is this different from the buiyer hiring someone else to do the inspection and giving the bank a copy to give to the appraiser?

Would you then assume that the appraiser, because he did not know about a problem that an inspector found that he ought to ignore it?

Verne asked if it was prohibited by USPAP. Lots of things are "prohibited" by USPAP. This is not one of them.

Brad

 

[Lee SW IL]

If an appraiser/inspector was hired by the home owner to make a decsion to make a purchase based off of his inspection, and does so. Then does this make the appraiser an advocate for the buyer? Meaning the appraiser is no longer an unbiased 3rd party. Is saying your not unbiased in your report sufficient?

 

[Dan Blanchard]

Then does this make the appraiser an advocate for the buyer?

No, not if you’re ethical

 

[Pat Butler]

Your scenario may be a real life occurance but it assumes a lack of competency on the pat of the appraiser/inspector. It assumes that the appraiser would not be able to see deficiencies OR that he could not obtain a copy of the home inspection.

Brad-- I am assuming that the inspector is doing a much more thorough inspection of the subject property that could easily find physical deficiences that the appraiser would not be expected to find (roof problems, heat exchanger, electrical). So I'm not assuming the appraiser in not competent but that his scope of work is not as thorough as the home inspectors. Of course, if they're one in the same person, then the appraisal's scope of work will be similar to that of his inspection. And that's what most home sellers would not be too happy about.

Insofar as the availability of the home inspection, it's very likely in my market that the agents would not make that available to the appraiser due to their advocacy relationship.

I have a visual image in my mind of a buyer standing in the driveway and writing a check to the inspector for the inspection- I've seen it hundreds of times. Pretend you are the home seller and see the same thing. Now assume that the property under appraises because of property deficiencies that were found out by that same inspector/appraiser. Do you think that seller might think there is some conflict of interest?

 

[jay trotta]

Being "Prohibited" may be part of the question, but "Ethics & Bias" also come to mind.

recently had to do a Review of a Home Inspection report and a Field Review (retrospective) of a Million plus dwelling on the waterfront. The lawsuit is claiming a "loss in value" and upgrades that were required etc. *Now, I would not have wanted to be "Both" in this scenerio - this could wind up with someone owing in excess of $250,000 +/- in damages.

whoooops. (Lets say $450 inspection - $750 for the appraisal) vs $250K - does not calculate to me

h34r: