Rules of Engagement

Personal Property, permits...rules of engagementRecently a particular engagement letter format has been circulating amongst residential appraisers from several nationally chartered banks. Aside from the usual intended use and exposure time boilerplate requirements there are several new problematic inclusions.

Personal Property

All personal property transferring in a purchase transaction must be described in the appraisal whether or not it was listed in the sales contract.

Any client is free to ask for a shopping list of tchotchkes, but if an appraiser is appraising an abandoned residence with piles of junk laying everywhere…they couldn’t afford my time to sift through it all like in an episode of Storage Wars.

Personal property, if it has any value in Illinois, is dealt with through a bill of sale.

If sales without personal property aren’t available, appraiser should make negative adjustments to sales for value of items included in each. If personal property has value to (a) typical purchaser, appraised value should be reconciled below actual sale price. It is not acceptable for appraisers to simply state that fully furnished units are common for the area without adjusting for the personal property.

The only time I ever had to back-out personal property in a residential appraisal was in 1987 when a builder sold a fully furnished model home.

For a bank, any bank to insist that an adjustment must be made, even when the market won’t support it…is something the FDIC needs to examine with that bank.


Check utilities during inspection and comment whether or not ALL utilities were operable during the time of inspection, including electricity and water.

Unless you have an active, Illinois Home Inspection license…you’re not checking to see if anything is operable.

Not to mention the epic liability you’ll face if you damage any system that you’re “checking”.

Fair warning.


Any additions (to the improvement) must be described. If they are permitted, they are to be included in the GLA. If they are not permitted, the appraiser must address whether they impact the property’s legality under the zoning and quality of construction.

Most appraisers aren’t lawyers.

I don’t know. A $350 fee doesn’t seem to be enough to justify having an appraisal license, home inspection license, and a law license.

Maybe I’m just out of touch with the market.

Sounds like these banks are.

By Lee Lansford – Illinois Appraiser Newsletters – Volume 7, Issue 3

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Image credit flickr - Quinn Dombrowski


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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6 Responses

  1. Avatar Tom says:

    A $350 fee. I’ve got some jokers in my area accepting $200. Not me! You get what pay for! Banks can and always ask for the moon. I remind them that we are down on earth!

  2. Avatar AppraiserMorons says:

    There are a lot accepting fees much lower than that. That’s why this “profession” is history.

  3. Lee, that’s one engagement letter id modify and return the modified version. IF Personal property is not listed, how would I know for sure?
    If they disclose that the ferrari is included, id have to see IF the comps indicate a lower vslue without the ferrari, but thsts about the most id ever do. I refuse to include personal property inventories. I refuse to be drawn into future court battles over whether the Monet was an original or a copy.
    Any appraiser that does not not stand up to that idiot bank should go look for a job as a doormat.
    I am NOT doing personal property appraisals. Unless buyer and seller disclose an agreed personal prop value, how would one support any ” market” adjustment?

  4. This “Wack ah’ Mole” approach to professionalism is hilarious 😉

  5. Avatar Donna says:

    Here is a comment I got from one of this industry’s top minds. She has written several books (8-12 I believe), has served in several positions on several boards. I can go on and on about her but I don’t feel like typing that much.

    Anyway this is a comment that could address some of the issues in the engagement letter referenced in this article. This comment could easily be reworded to accommodate any of the other unreasonable request made of us.

    ” The appraiser has received the request to research the legal permits issued over the past history of the subject’s construction. The request exceeds the appraiser’s expertise and is beyond the purview of the appraiser’s task.

    The appraisal reports submitted on improved sites, cites in their limiting conditions, item #1 “The appraiser will not be responsible for matters of a legal nature that affect either the property being appraised or the title to it, except for information that he or she became aware of during the research involved in performing this appraisal. The appraiser assumes that the title is good and marketable and will not render any opinions about the title. ” That statement makes it clear to all parties of the appraiser’s limitations. Item #6 states “The appraiser has based his or her appraisal report and valuation conclusion for an appraisal that is subject to satisfactory completion, repairs, or alterations on the assumption that the completion, repairs, or alterations of the subject property will be performed in a professional manner.” This statement makes it clear that in the event any addition or work was to be assumed to be completed would be done in a professional manner which would include the assumption that all permits necessary were given.

    I am not statutorily qualified to render an opinion or title research on past permits. That task should be performed by one whose job it is to research and warrant such past legal processes such as title companies or attorneys who specialize in this type of research. Even if I were to accept the additional task for additional compensation your needs would not be met. I do not hold the credentials that would satisfy your need to prove diligence in your pursuit to identify whether or not legal permits have been issued for past construction.

    I understand your concerns for risk management of loans that have had additions or major renovation/remodeling. However, I am not the person who can offer you that protection or documentation.

    I am struggling with this request as I understand the Dodd-Frank Act and the Appraiser Independence Requirement was enacted to prevent unreasonable expectations of appraisers who have already provided credible support for their conclusion of value. I am in hopes these reasons will satisfy your understanding to seek this type of research elsewhere.”

  6. Avatar Fritz Vogel says:

    Just ask how much does it pay????
    If a typical fee in market is $ 375 and the lender wants additional BS to feel good about themselves, ask for more $$$$$ or decline.


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Rules of Engagement

by IDFPR Board time to read: 2 min