We Must Start Policing Our Own!

[KD247]

DeeDee,

We probably share the same philosophy regarding listings. In your example, with two stagnant listings of similar homes at $250,000 I would consider $250,000 to be the absolute upper limit of value, and my opinion of value would certainly be at some point well below that.

If there was a sales contract on that same property for $275,000 I wouldn't rest until I came to a reasonable explanation for the buyers paying more than they needed to. Only after I had that explanation would I decide how strongly to consider the contract price in my opinion of value.

A lot of appraisers would ignore those listings if they could produce the necessary value. Now, if Quark wants to turn in those appraisers or the appraiser who willfully and knowingly ignored an obvious location factor, then I'm behind Quark 100%.

 

[Karl]

Even in this little unincorparated town of 5,000+/- there R 4 verifiable sales that have sold 4 more than there Appraised value, One for 2,500 over. two for 4,000 one for 10,000 How do I know this our company appraised these homes. (In fact the home I live in here I paid a little more than I should have but it had everything I wanted I put down over 20% The Appraisal was 1,000 more than I paid Hmmm?.) The people wanted them & paid the extra. Are we as Appraisers suppose to now ignore these sales? Or turn the people in for overpayin. Don't get me wrong there R some BAD Appraisers & Appraisals out there BUT sometimes in SOME Field Reviews I'm betting we do NOT know all the facts. MY OPINION if U can Comp out the subject & bewithin a couple ( no more than 5) thousand dollars of the Reviewed Appraisal I would say NO PROBLEMS Am I wrong? AND Guys & Girls LOAN CO's DO TURN APPRAISERS IN. Happened here in AZ.

 

[Dee Dee]

Koert,

Ignoring an obvious sale to hit a number is definately not acceptable.

But sometimes I think appraisers and reviewers don't take into consideration that often the home under contract was the only one available, or when it was put under contract it may have been the best deal compared with other listings in that time frame. Not analyzing all of the neighborhood market data, past sales AS WELL AS present listings, can often give the appearance of a bogus appraisal to someone who doesn't get any more information that three previous sales.

The point that I was trying to make in explaining the home that I'm currently appraising is that not only can those active listings be a helpful indicator and influence an appraiser to push a value down, it can also work in the other direction.

 

[Joe Birrell (NY)]

Quark:

You are correct, however, who's going to be the "police" - the 10% of us who are honest ? Then, if and when it does come to a state hearing who's
got the time to spend days testifying in court ? I'm scheduled to go to a hearing on just such a matter, the state isn't going to be paying me for the time and effort it's going to take. In this case it worth the time and trouble based upon the circumstances, I'm more than willing to testify on the facts and get this particuliar dirtball out of the business. HOWEVER, if we start turning every bad appraiser in it would become a full time job. It's a big problem without a realistic solution. I find the whole thing extremely frustrating.

 

[David Mullen]

Brad

Thanks for responding. I was not sure that USPAP would allow reviewers to turn in bad appraisals because I have seen postings that indicate that some reviewers feel that they cannot do it without the lenders permission.

I think that reviewers should be required to turn them in. They have the most exposure to the bad work while the rest of us just see an occasional report.

I used to do a lot of reviews but the overall quality of "appraisals" is so bad that I really did wake up in the middle of the night thinking of some of the garbage that I was reading. Combining that with pay that barely covers expenses and leaves nothing for my time, I decided to quit doing them.

Thanks again,

DaveM

 

[Paulette in Texas]

Saw it, not the worst appraisal we've ever seen. We even agreed with the value. Our problem was the adjustments were just off the wall and not supported by the market. I think the only reason it was a valid value was because the asales price reflected the market. We ended up supplying 4th comp and readjusting and supporting the value. Wasn't that big a deal and just one more $$$ in the day. We don't do a whole lot of them and won't do ANY of them for less than what we would charge for the 1004 because we know they never order anything reviewed if it is good. Paulette in Houston...Rotts rule and Shih tzus fine too...go w...

 

[bradellis]

DaveM,

Yes. I have seen and heard the same thing.

I think what happens mostly, is that the reviewer is afraid to turn in the appraisal reprot without the client's permission for fear of angering the client. What a pity.

Here is what I tell originators: Use GOOD appraisers. GOOD appraisers know how to do an appraisal and construct a report that everyone can understand. They will help make EVERY deal that should be made. When you get a bad appraisal, you can spend double or triple the amount of time trying to get the loan placed than it would take you to get a new loan started. Why waste your time on deals that will not fly?

I once had a deal that spanned 4 months. The LO kept trying to get me to change the value- calls every other day. It finally died a slow death. The value simply was not there. When he got another appraiser to "make the number", it still died. Why? Because a good reviewer recognized it immediately. I came to find out that this LO had invested nearly 2 solid weeks of time on the deal (a mortgage of $200K!). When I asked him how many sales calls he could have made and how many deals he could have got going with that time, he was embarrassed.

Your first loss is your smallest loss.

Bard Ellis, IFA, RAA

 

[Leon Stewart]

USPAP needs to be amended to allow and require a reviewer to turn in poor appraisals to the state.

We cannot rely on the lenders to police this because that is not in their best interest. As is, they can make these fraudulent loans and when they default, the taxpayer picks up the tab. They have nothing to lose and everything to gain under the present conditions.

It is my understanding that an Appraiser has a responsibility for and to delivers his Report to the individual or organization who hired him. By distributing any information about, or that which is contained in the Report without the Lenders consent could violate some ethical rules, i.e. confidentially, and maybe Privacy Laws. I think the Appraiser's function is to prepare an honest and accurate Report (to the best of their ability) and deliver it to whom ever hired him/her. I think the Lender is the owner of the Appraisal Report, and they have the responsibility to do whatever they wish with the report. I think the Appraiser should concentrate on doing the job he/she was paid to do, and going beyond that level could make the Appraiser subject to Legal Action or at least the loss of a good Client.

leon

 

[George Hatch]

A couple posters in this thread have opined that handing over an appraisal report to a state board might violate the Confidentiality section of the Ethics Rule in USPAP. Below is a quote from that section in USPAP.

An appraiser must not disclose confidential information or assignment results prepared for a client to anyone other than the client and persons specifically authorized by the client; state enforcement agencies and such third parties as may be authorized by due process of law; and a duly authorized professional peer review committee except when such disclosure to a committee would violate applicable law or regulation. It is unethical for a member of a duly authorized professional peer review committee to disclose confidential information presented to the committee.

Thus, it is not a violation of USPAP for a reviewer to send in an appraisal report to a state board. From a USPAP perspective, the Client's permission is not necessary. Incidentally, the term "professional peer review committee" does not refer to state appraisal boards, it refers to peer review committees of professional appraisal organizations like the Appraisal Institute, the American Society of Appraisers, etc..

The way it is right now, citing the Confidentiality section of the Ethics Rule is not a valid reason for not turning in bad appraisals. I know of at least a couple of state boards that have encouraged reviewers to send in the really bad ones. So for those of you who are concerned about your exposure as reviewers, there is no need to worry about it from the USPAP aspect.


George Hatch

 

[Bob Ipock]

Thanks for that point George. If appraisers really want to make a difference, turn in these bad reports. Remember, you are not reviewing an APPRAISER, just the appraisal.

I have heard this "reason" before for not turning in bad work, and it just simply holds no water. If anyone has any doubts about this, contact your state board. If ANY STATE board out there is saying it is a violation, please let the forum know.

Bob