Appraisal Matters

We are constantly being asked for "comp runs." Lenders and buyers don’t want to spend money for an appraiser’s expertise. They want to KNOW what a value will be before engaging our services. Although I can appreciate that the cost of an appraisal fee is significant, we just cannot take assignments with value conditions.

I do know of many firms that do this. There are several problems with this:

1. Until we inspect the property, how do we know what is a comp?

2. USPAP does not allow contingent assignments. Once you make the choice of hiring an appraiser, you are paying for the report and advise, not a rubber stamp.

3. Do you work for free? Free consultations cannot be part of a business model.

4. Although with certain parameters, sales data can be provided independently, we feel that then doing an appraisal assignment can show bias.

There are assignments that do not involve providing an appraised value that are legal and correct. There are also limited assignments that can be performed with less due diligence to arrive at a value, but the user must know that any change in scope (more research) could change the value conclusion. Very often we are asked to provide research within a market without any conclusions for lenders, especially hard-money lenders. There is nothing wrong with that.

What we cannot do is provide comps and say we think it is worth "X" before taking an assignment. It’s illegal and completely diminishes our role in helping our client’s make informed decisions.

Eileen