Client Assignment Conditions & Appraisers

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Illinois Appraisal Newsletters at IDFPR
Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.
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Appraisers and Client Assignment Conditions

Client Kickbacks

No, it’s not what you think. We’re talking about when a client kicks your report back to you because you did something wrong. Or did you?

I was looking over a recent ServiceLink order that came in on a complaint. There were 32 requirements spelled out for the appraiser to follow. A four page order sheet with an 8 hour turn time for $200. Eerything was laid out from who could inspect to “your report must include photos of all 4 sides of the subject dwelling” (which is a cute trick for an inside rowhouse or townhome).

Let’s examine one of the most common assignment conditions imposed upon appraisers: “The client requires at least two closed sales within six months.”

While this requirement appears reasonable on its face, such a thing really isn’t the client’s call, is it? What if the only two sales in the past six months have absolutely nothing to do with your subject property? What if you’re appraising a three bedroom Cape Cod and the only two sales that occurred within the past six months were a pair of condos? Do you toss these on the grid? Of course not. As the appraiser, you’re the one who selects the most appropriate data, not the client.

The Scope of Work Rule states the following:

An appraiser must not allow assignment conditions to limit the scope of work to such a degree that the assignment results are not credible in the context of the intended use.

I’m sure that the AMC representative would gladly tell you to ignore the two condos and just expand your search parameters to include a couple of houses…somewhere.

Their point is…the client really needs something house-ish that sold within the past six months or…or…something awful will happen. Right? That’s not appraising. That’s paint-by-numbers. Drawing ever expanding circles from your subject until you hit two sales of any pile of bricks, isn’t the answer to the appraisal problem. What is the correct path to take on assignments like this? Should you focus on the sale date of the comparables? The style of the residence? The distance of the sales from the subject? School districts? Proximity to employment?

The answer is, you’re the appraiser. This is your market. You tell them. They don’t get to tell you…unless you let them.

AVMs & You

Another favorite kickback is when you receive a note like this: The subject property value exceeds the AVM high/medium value. Appraiser must explain the discrepancy.

This is no different than having to explain why an appraiser’s actual, measured square footage isn’t a spot-on match for the assessor’s record. Both are pale attempts at due diligence by the client. While AVMS can be a useful tool, they are incapable of discussing their rationale for data selection. Those questions are best aimed at the AVM programmers who set it up.

In the case of the AVM question, all you can do is address what your criteria was for selecting data. You cannot be expected to know anything about any AVM that was relied upon by the client. Keep your cool, do your best, and use common sense when approaching any appraisal problem.

Illinois Appraiser Newsletters – June 2011 issue

IDFPR Board

IDFPR Board

Provided as a service to licensed and registered Illinois appraisal professionals as well as Illinois course providers and users of appraisals. Illinois Appraiser Newsletters promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois. promote a greater understanding of USPAP, the Act, and the Administrative Rules of the State of Illinois.

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3 Responses

  1. Retired Appraiser Retired Appraiser says:

    I wouldn’t wish that “profession” on my worst enemy and frankly I would not accept those types of orders for $1,000. Appraisers are already doing twice the work (6 comps, 1004MC, interior & exterior photos, etc) for half their old fee.

    Spend another 2 hours anwering these 8 page interrogations (that you actually answered in the report itself) and you’re doing 4 times the labor for 1/2 the old fee.

    The good news is that appraisers are due for a break and they’ll have one very soon. A new real estate related profession is about to arrive on the scene that will give appraisers the opportunity to tell AMCs and banks where to shove those $200 orders. You’ll start hearing more about it by mid to late summer.

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    • Frustrated Appraiser says:

      What new break/profession are you referring to? I can’t believe we let the Banks control our fees to begin with. I started off as an Independent Appraiser…but i don’t feel so Independent anymore.

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  2. Kathleen M. Aube says:

    Very interested, can’t wait to hear the full story.

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