Client Supplying Comps
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CLIENT provides the appraiser with a list of comps…
I’ve heard about this practice, but this is the first time I’ve actually seen it ‘in print’:
I was doing some on-line research for a potential new client which provides a wide range of services to the mortgage industry, including appraisal, and found this statement among their Q&A document. Caused me to step back and ponder this situation, and evaluate whether to accept them as a potential client for my business.
Keep in mind, clients can do anything they darn well please, and ask for the moon if it suits their needs, because USPAP does not apply to them.
But when it comes to appraisers, ‘we’ had better be very careful and properly evaluate the presented Scope of Work, assignment conditions, and other info a client provides…such as a list of ‘comparable’ properties to potentially use in an appraisal… and.
Per USPAP, appraisers are expected to provide their valuation opinion without bias or coercion in a way that favors the client or parties to the report. Our independent opinion is supposed to be provided based on OUR own research and analysis, irrespective of what others desire.
When anprovides the appraiser with a list of comparables, that borders on coercion and may be considered intimidation from the client toward the appraiser. There can be an unwritten expectation that the client-provided comps be either the ‘only’ properties to include, or else must use one or two in the report to make it seem like the appraiser has done their own research.
This is NOT the same when a sales agent provides the appraiser with MLS print-outs of properties. The agent is not the appraiser’s client, even though the agent may represent a party to the transaction. Most appraisers will respectfully accept the MLS print-outs, and then analyze them for potential use. I, for one, don’t have any qualms about asking agents for properties they consider to compete with the appraised property when I find issues with supporting a contract sale price.
But when a CLIENT presents the appraiser a list of properties as comps, and basically says ‘use these’, it’s an entirely new ball game.
I would encourage appraisers to be very cautious about accepting CLIENT PROVIDED comps for any assignment. Per Dodd-Frank, mortgage lending assignment clients are supposed to have an Appraiser Independence Compliance contact person you can call. If low level clerks push you to accept ‘their’ comps, then you should talk with the compliance person before accepting the assignment.
“Let’s be careful out there.”