What do I do now???

[Warren Sumner]

Hey ladies and gents...need some advice.
Completed an appraisal for a new client this week. A dream order, no doubt. Got an address, contact number...and NO Estimated Value. Did the inspection on a pretty contemporary property on a nice 2 Acre lot in a relatively small subdivision. Found one comp of similar style and square footage in the subject development. Used another comp with considerably more square footage to adjust down. Found two sales in nearby subdivisions and made standard adjustments for locational superiority. Pretty cut and dry report. Low adjustments, good comps. Indicated value came in consistent with other sales and at the same reasonable percentage over tax value. Had a very pleasant conversation with the borrowers at time of inspection. Liked them, think they liked me. Collected a check at the door. Easy enough...right???

MY MISTAKE: Not cashing check immediately.

I had no estimated value which would have provided a red flag. Based upon our pleasant coversation, I assumed the borrowers were reasonable. (another mistake). Anyway, after I e-mailed the report to the client the next day, I get a nasty call from the borrower on my voice-mail informing me that my work was "unacceptable" and I couldn't appraise his house with the "20-minute eyeball inspection" I had performed (More like 45 minutes with interior measurements and pictures) and he had put a stop on his check. His bank was about 10 miles from my house and I had no chance to cash it.

This borrower was bound and determined that
A: His house was worth $100,000 more than I had appraised it and
B: that I am the dumbest SOB on the planet.

I KNOW he's definitely wrong on one of those points...the other, according to my business partner, is probably debatable.

The borrower wants to "meet" with me. I told him I'd be more than happy to do that ONCE HIS CHECK CLEARS. (Have lender permission who unbelievably is on my side. This seems to be a DREAM client!) I'm not going to meet with him before I get paid because there's no way I'm going to get involved in a pissing contest and there's no way I'm going to change my value. So, meeting with him would be a waste of time. I wouldn't get paid either way.

My question is...What Can I legally do to force payment?? Can I put a lien on his home?? Small claims?? What's my best bet?? I would greatly appreciate any advice on this issue. THANKS!!!

 

[Mountain Man]

Check your state laws. In GA, if the check was not post dated and you did not agree to "hold" the check until funds were deposited, you may have a good case in small claims court. Don't know about NC, but at the very least, you learned something. I always cash a COD even BEFORE typing in the address on the form.

 

[Jeff Horton]

My father ran into a similar situation before he retired from appraising. My suggestion is to send him a demand latter and give him 10 days (or whatever) to pay. If you dont receive payemtn by ____ you file in small claims court.

There is no way he can win. You were asked to do an appraisal and that is what you did. Your report and you client is your proof. He can not produce a contract stating that you had to hit a predetermined number. Of course that is illegal for us anyway. You were to do an appraisal and you did. Therefore he owes you. There were no conditions on you meeting any values or conditions so he has no legal leg to stand on.

And in Alabama he will also owe you interest and the court cost you incure collecting it. My best advice is to move swiftly. Don't waste time.

So far I am 3 for 3 in small claims court. None of them ever made it before the judge yet either. Good Luck and don't back down!!

 

[airphoto]

Warren,

Don't meet with the homeowner. He's not your client, and (by confidentiality) you have nothing to discuss with him, other than his default on the payment.

Begin your small claims procedure immediately! You have no other involvement, particularly if your client (lender) is happy .. and guarantee that no loan is gonna happen with the default on this payment!

 

[Les Brant]

Now is you chance to find out about our new state(NC) law that makes it illegal to not pay for an appraisal. This is one of the reasons it is in effect.

Les in Sunny Coastal (N)Carolina

 

[J. Parker Graham]

Hello Warren,

Sorry to hear of your plight,

Insist on a money order or certified check at the time of booking the appointment. Cash will also work.

You can not lein the house because you did not do any physical work on it, and you are not a licensed contractor with a signed contract. You also can not file a material man's lein because you did not supply any materials for building to the home.

The problem is your client. The homeowner is NOT the client. File in small claims court in the municipality where the subject is located. The defendant is the AMC company that hired you and you are the plantiff. There is a filing fee involved and the process is not fast. The court will process all paperwork. Most Defendant don't show and you will win a judgnment by default. Collecting on a judgement is another matter, but is possible.

The client got the results of your apprisal, informed the homeowner and then wants to have another appraiser "hit" the desired number. You are now out of the loop. The proposed meeting with the homeowner is highly discouraged. They will just try to influence you to give the value that the loan originator gave them.

These are despirate times. AMC lenders are working all ends against the middle. Any appraisal request that has a specific number to "hit" is not an appraisal request. But is rather a request for nothing more than paperwork to make the homeowners desired loan at 225% of value.
Happens all the time. AMC lenders sometimes require re-writes so your payment can be delayed, while all the time your original report was used.
These predatory lenders are not making loans but rather buying houses cheap, as the payments are set-up higher than owner income.

Try to develop a larger client base. Stop giving your work away. AMC's exist because appraiser's make it easy for them. Has the Greystone story slipped from memory ? They were busted big time. See prior posts.

Protect yourself,

Living Large in Detroit

J. Parker Graham

 

[Ross (CO)]

Warren, your beef now is with your client, and meeting this h/o again is senseless......but if you do, do you have a big friend ?, like 6'5" and 265 lbs. ? If so, take him along with you, carry a small tape recorder in your shirt pocket and turn it on just before you start talking with this guy....or else, you simply suggest you meet him inside the court house or the police station. Don't worry, he won't show. You did learn a valuable lesson, to cash that check before you have pulled into your garage. Usually, not always, if a local job and c.o.d., the check is from a local bank, and I would go to one of their branches. You know in 20 seconds if the funds are there. With the marketplace being what it is today, and more and more of these over-priced and over-sold homes coming around 6 and 12 and 18 months later for some re-fi magic many are learning that they got stiffed, in the bginning. Your assignment simply brings forth that unpleasant truth and no doubt everybody else is freaking out. It is amazing how many folks have 1st's, 2nd's, equity loans and massive credit card burdens......and your report is now the one to bail them out. I just did a modular + land package re-fi and have 3 stellar comps in that local market area, all with 2-car detached's and the subject does not. These folks are $50K over their head, and Friday pm's fax after client (middle man) got the report was that their client is "concerned with your value, call me". Unfortunately, the h/o should be even more concerned. Get ready, more of these are coming home to roost ! Stick to your guns, not literally, unless of course you feel the need now to pack some heat ! ( I think Pam in Florida is now packin' heat.) Go a notch above your first contact person at your client's office, this one now requires someone discussing this outcome who has more responsibility.

 

[jtrotta]

Warren, a few thoughts :roll:

1) You admit your mistake of not cashing check before completing assignment.

2) Airphoto - has afforded very goood advice

3) Your order "form" from the "Lender" stipulates the assignment is Cash/Check at Inspection by the homeowner :?: If yes - (4)

4) Contact the "Lender" and advise his customer has made an "attempt to defraud" you on payment for professional services rendered and if an attorney is required for collection of the debt, that cost will be added to the Bill, let him (LO) relay that to his customer. *Would first recomend a minimal conversation with your attorney first- as Law in your state may be slightly different.

Good Luck 8)

 

[Larry Lyke]

Warren --

It's OK to be frustrated and feel like beating yourself up because you THINK the Borrower is going to beat you out of a fee.

BUT, immediately file a small claims for the funds and the claim fee too. Depending on your state laws, you'll end up with a judgment and immediately file that. It'll damage the smart-a**'s credit and he'll still have to pay you.

Take good care of this new Client. That, by the way ought to be your main area of concentration. GOOD Clients are the hardest kind of people to find. While there's a million bad-a**es lying out there in the weeds.

Years ago when I went to real estate school, the instructors used to tell us to take such good care of the buying and selling public. MY instructions to any Realtors, subsequently, was 'Beware of the Public!'

The reason for the latter is that they know who you are but you don't know who they are! The facts are that the Realtor is more likely to get hurt than the public!

 

[Warren Sumner]

Looks like small claims will be my route.

Sometimes being an appraiser is soooooo much fun!!!