COD at The Door?

COD at The Door? - Can Appraisers Collect at the Door?

Can Appraisers Collect at the Door (COD)?

In the past, it was common for appraisers to collect their fees directly from the borrower at the time of the property visit (i.e., at the door). I would take credit cards, checks, or cash while at the door. Many years ago, this was common. Now, however, that rarely happens and we usually have to wait 30- to 60-days for payment from the AMC client. So recently, when I got a COD order from HUD, I was really surprised. In fact, I thought something was bogus. I needed to check this out since it was so out-of-the-ordinary.

To check it out, I got with my All Stars and Mastermind students, as well as my peers across this great country, to ask them what they thought of a COD coming thru HUD.  Some had never heard of such a request. Others told me it was an acceptable practice. In other words, there was no consensus as to what to do. So what did I decide to do?

I decided to do my own research. I searched the Fannie Mae Selling Guide for some guidance on the matter. I searched the HUD 4000.1 document for advice or instruction on collecting the fee from the property owner at the door. I queried USPAP (via some USPAP experts) about what it said about such practices. I even looked at the Idaho appraisal statutes on-line to see of they could help me answer the collect-at-the-door question. After all of this personal and secondary research, this is what I found:

  • Freddie and Fannie do not allow appraisers to collect at the door. The borrower must pay the correspondent lender the appraisal fee, which then pays the appraiser once the entire loan process is complete (which includes a review, as may include a field review);
  • FHA is not clear on the question. However, I had a letter from HUD saying it was OK. So I called my local HUD office and they told me to follow the mortgage letter (which itself was not clear). However, FHA does not have any restrictions on COD. Given this lack of clarity, I choose to interpret that as not allowing it;
  • Idaho state appraisal statute (incomprehensible to me as a non-attorney) gave me no guidance on the question;
  • USPAP says nothing on the issue since USPAP does not address an appraiser’s business plan or practices. This is because USPAP is mainly about appraisal ethics, and says essentially nothing on a appraiser’s business practices;
  • For non-lender work, it is perfectly OK to collect at the door since, in this case, the property owner is likely the client; and
  • Since collection of the appraisal fee is not an appraisal function, but a business function, the above authorities (except for Fannie and Freddie) do not even address this issue.

Since there is so little guidance on this issue, to be on the safe side, I have chosen not to collect any fees at the door. I expect to receive payment thru my client.  Note that my research is just that – my research.  If you were to research the issue, you might deduce a different answer. Therefore, the collect-at-the-door question is one only you can answer.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 35 Can an Appraiser Collect at the Door (COD) on Financial Transactions

Dustin Harris
Latest posts by Dustin Harris (see all)
Image credit flickr - Hideki Nara
Dustin Harris

Dustin Harris

A multi-business owner and residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and President of Appraisal Precision and Consulting Group, Inc. He owns and operates The Appraiser Coach where he personally advises and mentors other appraisers. His principles and methodologies are also taught in an online, Mastermind group. He and his wife reside in Idaho with their four children. Dustin Harris on

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28 Responses

  1. Sylvie Shurgot on Facebook Sylvie Shurgot on Facebook says:

    Over here in TX, the borrower gives a check to the lender at the time the appraisal is ordered, that’s before an appraiser is even assigned.

  2. Abby Piper Rutledge on Facebook Abby Piper Rutledge on Facebook says:

    I have one client that charges the borrower immediately upon acceptance of the order. If the charge doesn’t go through the order is immediately placed on hold until the charge clears. But then again, this is a non-AMC Lender.

  3. Elizabeth Morse Rhodes on Facebook Elizabeth Morse Rhodes on Facebook says:

    I don’t think the bank would like us to collect at the door. For one, I won’t complete the appraisal until the money clears. Depending on how fast I get to the bank, it could be a delay the bank does not want.

  4. Retired Appraiser Retired Appraiser says:

    This was the third reason for closing our 20 year old appraisal firm in 2009. The number two reason was HVCC and the loss of hundreds of clients overnight. The number one reason was the doubling of the work load per appraisal while simultaneously reducing fees by 40 to 50 percent.

  5. Avatar Bill Johnson says:

    The good ol days where the business owner (the appraiser), could set his or her work schedule around those who were serious and paid upfront. Today, things are blindly due in one week, unless you manage to see the property early in the process, then the goal line gets moved up to reflect 48 hours post inspection. Post HVCC/Dodd Frank, the appraisal business is nothing more than a Ponzi scheme where borrowers of today, are paying for completed appraisals from weeks or months earlier. Or at least we hope their in business months down the road to pay the appraiser of today.

    As a wise man once said, “Follow the money”.

    Seek the truth.

  6. Avatar Scott says:

    This comment is absurd, ignorant and possibly dangerous to the appraisal industry as a whole “Since there is so little guidance on this issue, to be on the safe side, I have chosen not to collect any fees at the door.”

    It is my appraisal business and I rely on my appraisal business to pay my personal debts. Anytime I can collect “at the door” I’m doing so. It’s not up to Freddie, Fannie or any 3rd party to dictate how I get paid.

  7. Avatar Andrew T Picarsic says:

    Where does say that GSE’s don’t allow payment at the door for the appraisal fee?

    See Below

    • FNMA DOES prohibit it but FNMA does not write the rules for all other GSEs. This was a non article stretched to ridiculous lengths to arrive at a misinformed answer. The ONLY credible information source for the questions is HUD regs and policies as published BY HUD. Sorry Dustin, this one went astray.

  8. Avatar Andrew Picarsic says:

    I found where FNMA does not allow Appraisers to be paid by borrower:

    Q42. Does AIR prohibit an appraiser from collecting payment for the appraisal directly from the borrower? Yes. For loans to be eligible for delivery to Fannie Mae, AIR requires the lender or any third party specifically authorized by the lender to select, retain, and provide for all compensation to the appraiser.

    • Baggins Baggins says:

      However, AIR applies to lenders, not appraisers. An appraiser can not intimidate, coerce, or withhold payment from himself. Bureaucratic boondoggles further cemented by tech companies. Riddle me this riddle me that, why did alamode include the air doc in available forms meant for appraisers?

  9. Avatar Seneca says:

    Used to have $1000s in cash laying around. Now I barely have $5 in my wallet. And the “tax” benefit was nice too.

    • Avatar mdwnlk says:

      Tax benefit? Are you implying not reporting cash transactions? Sort of fraud, ethics violations etc???

      • Baggins Baggins says:

        When I corrected dozens of amc taxable amounts and voluntarily paid more on my taxes because multiple amc’s clearly and consistently under reported my income, nothing came of it.

  10. Avatar Ed Walter says:

    Completely agree with Scott! I still collect at the door whenever possible, primarily for credit unions, portfolio and private appraisals. I would collect a HUD fee at the door in a heart beat if it was sent to me. I bought a home FHA a few years ago and the AMC wanted my $500 paid on line up front before they would send the appraiser out. So the appraiser waiting 30 days or more to get paid is absurd.

    • Baggins Baggins says:

      When the borrower refuses to fess up a payment method, that’s when cod can happen. I don’t like cod because there is no ready to go who’s the client who owns the report, yada yada pre made fnma form. It’s easier to send the bill, then cash the check. Those fannie rules regarding payment are for lenders and borrowers, gse’s only provides guidelines for appraisers. Nobody is going to get an appraiser in trouble for accepting payment for their own services. What planet are we on?

  11. Avatar don says:

    I gave a receipt for all COD’s, clearly naming my client and acknowledging the money. The payor signed my copy I signed his, I kept blanks on my clipboard. In California it is assumed that your client is who pays you, therefore, if you don’t make value the home owner has a complaint.

  12. Avatar John Pratt says:

    Don: I hate to be the one that corrects you but California does NOT assume that the one who pays you is the client and in most loan transactions the Homeowner, borrower and/or seller are not your client and can not sue you if they don’t like your value. Your client is the one named in the report. See California case law which has been affirmed this on appeal.

  13. You CHOSE to reinterpret their (HUD) written letter? WHY?

  14. Avatar John Pratt says:

    Mike you are correct anyone can bring a suit however when there is case law and it has been affirmed on appeal I think that the appraiser is on pretty firm ground.

    In response to Dustin’s comments:
    I am strong a supporter of Dustin Harris. He is very intelligent and knowledgeable in the appraisal industry and probably many others. However I must disagree with his conclusion on how to handle this awkward situation for payment by COD. In this matter your client HUD has requested that the appraiser COD at the door. If you fail to follow that request of your client, in this case HUD, they can refuse to pay and tell you to collect from the homeowner. They already have the completed appraisal and you the appraiser are left holding the bag. You probably have very little recourse except to go to the homeowner on your knees and beg for your payment. I would recommend that you collect in cash or a check in which case I would take it directly to the bank that it was drawn on cash it.

    As I stated earlier, California case law has found that the appraiser is not liable to the borrower, seller, purchaser or the homeowner for deficiencies in the appraisal report. This was upheld on appeal. This is in spite of Certification # 23 on page 6 of the URAR which may indicate otherwise. On advice of my E & O Ins. I have added a statement in all of my report to clarify statement # 23 which states that in part “This appraiser has not intended any purchaser, borrower or seller, as an intended user of this appraisal and no such party should use or rely on this appraisal for any purpose.” …etc I also include a statement about the limits of the Appraisers Liability which in part states the following. The appraiser’s liability for errors, omissions or other deficiencies in this appraisal report is limited to the “Intended Users” as stated in this report. …etc

    On a related subject, many AMCs appear to be having trouble paying the appraisers. I put the following statement in all my report that are not paid COD. Pay particular attention to the words “severally and jointly” these are very important in a court of law when you are trying to collect a debt. This statement may allow you to collect your unpaid invoice from the Lender or others if your AMC filed for bankruptcy.

    “This appraisal report is considered completed when it is signed by the appraiser and submitted to the AMC/Lender. The agreed compensation for completion of this appraisal assignment between the appraiser and the AMC/Lender is $ XXX. Use of this appraisal report for any purpose by any party, including the AMC/Lender Client named in the report, is prohibited without payment of the agreed fee to the appraiser. At the time of submitting the completed appraisal to the AMC/Lender the appraiser has not been paid the agreed upon fee. This is typical in the appraisal industry. The use of this appraisal report for any purpose by the AMC, Lender/Client (this includes the AMC & Lender/Client named in the report) or any other party, severally and jointly, assumes complete responsibility for payment of the agreed fee to the appraiser which signed this report.

  15. Avatar don says:

    “no such party should use or rely on this appraisal for any purpose.”

    This phrase completely defeats your certification of value and get you off the liability hook. The appraisal is worthless to any and all.

    The suggestion that the fee paid obligates the payor to the service is easily overcome by an attorney, do you want the lender to turn down a potential loan.

    Who wants to pay an attorney?? Anyway it’s your attorney against mine for all definitions. Your attorney commits to defend you. Yours may or may not defend your position.

    • Baggins Baggins says:

      Yes, an attorney recommended this as well specifically for appraisers. Can you imagine a doctor, a lawyer, a judge, even a plumber or utility technician of any sort using such language? If the goal is to make sure this industry is wiped off the map sooner than later, be sure to tell them the service is absolutely worthless, in other legalese terms. I believe another legal language for such a statement would be termed jargon. I can’t bring myself to use such self defeating language. If I ever end up in court, I’ll probably find a new line of work anyways. All it takes is once and appraisers who think they can cut corners and use clever jargon to stay off the hook are likely fooling themselves. I can not understand how an appraiser or lawyer can recommend such language with a straight face. Perhaps they should quit while they’re ahead if they find themselves compelled to make statements their own service is worthless. What exactly does ‘obligates the payor to the service’ mean? On one hand appraisers claim they’re not attorneys, then they turn around and act like slickster lawyers. It’s time to land.

    • Baggins Baggins says:

      Also just to follow up. I’m not sure if you’re promoting such language or taking a jab at it. Please clarify.

  16. Avatar John Pratt says:

    I am very serious, this is in all my reports.

    First read Certification # 23 which the appraiser can NOT change. This implies that almost anybody in the world can rely on this report for whatever purpose they can imagine. The report usually has one “Intended Use” and it is stated in the report, usually mortgage lending. It usually has one or two intended “Users” the Client which are identified in the report. This wording which was provided by my E & O ins. is to provide some protection from those that are not the intended users and the report not to be used for purposes other than that which it was intended. California Case Law has stated that borrowers, seller, buyers and homeowners are not the client of the appraiser and cannot sue the appraiser and this was affirmed by the courts on appeal. If you disagree you may want to pass it by your E & O ins. Company.

    I have been putting this in my reports for several months and have not had one comment from any client.

    • Baggins Baggins says:

      I just stick with, it’s only an opinion, not a guarantee, any further participation by me is completely up to me and nobody else, etc. Mckissock classes on avoiding liability and such had a lot of great language which had already been through the fnma ringer and I tossed those into the template. Cheers.

  17. Avatar don says:

    Good on you, Opinions are all an appraiser has, Guarantees are for insurance companies and Government bodies


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COD at The Door?

by Dustin Harris time to read: 2 min