Communication between a mortgage loan officer and his appraiser can often be frustrating.

The ethical apraiser lives by a set of rules called USPAP which stands for Uniform Standards of Professional Appraisal Practice. If he/she is found in violation of these rules the state certification of the appraiser can be suspended or revoked and his/her livelihood is gone.

Most mortgage brokers are unaware of these rules, so a few of them which impinge upon our relationship are mentioned here. Some of the language is paraphrased.

"I'll pay you out of the closing!"

The appraiser can not accept an assignment that is predicated upon the happening of a future event. This includes a mortgage closing. The appraiser's fees must be secured ahead of time (which avoids the perception that the value sought after must be attained to enable the closing that triggers the appraiser's fee payment.) While some brokers in this situation promise to pay the appraiser anyway, sometimes this does not happen. An experienced appraiser avoids this situation. When the the applicant pays for the appraisal fee up front (as the great majority of brokers arrange) the ordering process can flow smoothly. This can be through a C.O.D. by the borrower or through the broker if the fee is prepaid. 

It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent on any of the following:

1. the reporting of a predetermined result (e.g., opinion of value);
2. a direction in assignment results that favors the cause of the client;
3. the amount of a value opinion;
4. the attainment of a stipulated result; or
5. the occurrence of a subsequent event directly related to the appraiser's opinions and specific to the assignment's purpose.

(Bold added for emphasis)

This appraiser also accepts credit cards and uses Pay Pal as well as accepting CHECKS-BY-FAX.

" I need you to (reassign) (readdress) (recertify) the appraisal you did for the first mortgage company to me!"

USPAP has always said that the appraisal is misleading if the conditions originally contracted for (the original client) are changed. In this case a new assignment is called for with a much narrower scope (and possibly a minimal fee) if the time frame of the original appraisal is the same. In actual fact, a federally regulated lender does not require a re-addressing of the appraisal as long as it meets USPAP conditions. The reason the new lender wants their name on it is to extend the appraiser's liability. This does not come free. While the appraiser does not normally need the permission of the first lender to do a new appraisal on the same property, there is a fee for this service.

"Why can't you just do a pencil search and if the value is there I'll order the appraisal?"

USPAP says the appraiser may not communicate an appraisal without properly developing it. Communicating an appraisal includes an approximate 'ballpark figure', a range of values, and even (believe it or not) "No, the value is not there.' Also we cannot accept an assignment, paid for or free, which is dependent on a desired result; "I'll order the appraisal if the value is there."  (See above 5 point table from USPAP)To meet the needs of the broker who legitimately wants to save their borrower an appraisal fee if the value is not there as well as the broker's processing time I have developed a pre-appraisal service. See the home page for a description of this service.

Why should I use Electronic Appraisals to order my appraisals from?

This "mobile" appraiser can now inspect a property at 9 AM, sit in his car to finish the analysis, attach pictures and maps, print a file copy on a portable inkjet printer if desired, electronically sign it, upload it in AppraisalPort or other true EDI (Electronic Delivery) program or encapsulate it with Adobe Acrobat or similar program to a ".pdf" format to the client in seconds.( by 1 or 2 PM) even from the field with his laptop using a wireless "air card". He can accept credit cards for COD when you haven't collected the fee up front from the borrower. Very few apraisers are equpped to accomplish all that. It takes an investment of several thousands of dollars. The rush appraisal costs a little more but takes a broker or processor "off the hook" when the appraisal hasn't been ordered in a timely fashion. Ordering the appraisal on line also saves time.

Why can't you appraise this property for more money? The Realtors all agree that its worth it!!

The underwriter will probably "red flag"  the appraisal if the final value is above the raw sales price of the comparables. Realtors are usually not that "appraisal savvy" and don't have as much to lose if their opinions of value are wrong. The appraiser that wants to stay off lender's "do not use" lists knows that the value must be "bracketed" on the high side by raw sales prices that are equal to or higher than the final value. Most lenders do not want to end up owning the most expensive house, condo or 2-4 family income property in the neighborhood if the loan "goes south".

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