I recently completed an appraisal request by a client. Shortly after it was submitted to the lender I received a call from the lender stating that an appraisal was completed on the same property one month earlier for $85,000 more than my appraisal. The lender then asked if I could review the previous appraisal to see if I could use any of the sales the other appraiser used and determine why our values were so different. Included in the email with the previous report was a specific dollar amount that the loan officer was looking for. This request had USPAP violations written all over it.
1. As soon as the lender asked me to review the previous appraisal he was actually requesting a new assignment which would be an appraisal review. Although the lender does not see it this way and was not willing to pay the additional fee for a review.
2. The desired amount in the email is a violation of USPAP ETHICS RULE.
a. The Conduct section states;
An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.
An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions.
b. The Management section states:
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.
The bottom line to this scenario was that I suggested the lender have the original appraisal reviewed. I do not believe that the most comparable sales were used in the report and the report contained numerous errors. I was not willing to change my report based on another appraiser’s opinions. It was obvious to me why there was a discrepancy in the values. It all comes back to the sales used. Based on this, don’t think I low ball values because I don’t. I believe in giving the most supportable market value possible. In this case the appraiser chose to use sales with a superior location and not adjust properly according to the market.
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