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I Messed Up (Really!)
By Richard Hagar, SRA
A client contacted my office and asked a simple question concerning an appraisal. We messed up and didn’t get back to them within 24 hours. That was a rude mistake that’s bad for business. We didn’t send some cheezy email to repair the damage however….I made a personal phone call, fell on my sword and apologized. The client said the problem was minor, so don’t worry about it…but the apology was a nice touch (Yes! Score one for being businesslike). Then the client continued, “That’s nothing compared with what we are dealing with every day, let me tell you……”
Now since I did mess up, I listened politely to the lender’s list of complaints about appraisers. The examples the client mentioned to me are…shocking to say the least. Not believing their examples, I reached out to several other chief appraisers working for lenders and AMCs. They confirmed what my client was experiencing. What follows are not random issues, but reoccurring problems experienced daily by many lender/AMC clients.
I have so much material from my clients that I turned it into a webinar “Persistent Appraisal Failures” (OREPEducation.org). I’m providing a few examples here in the hopes it will help appraisers become Tier 1: more businesslike, more profitable and better able to avoid pitfalls that can kill business. With problems like these, it’s tough for appraisers to justify increased fees.
Considering how many things we have to explain in an appraisal, basic communication, writing and spelling skills must be sound. Here are some things to watch out for.
#1. WRITING IN ALL CAPITAL LETTERS AND NOT USING COMMAS OR PERIODS BETWEEN SENTENCES.
First of all, writing in all CAPITAL LETTERS is equivalent to SHOUTING! And, not using commas or periods is akin to talking for hours without slowing down or taking a breath; it’s exhausting and hard to read. When lenders see these problems, first they snicker, then they have a mindset that the appraiser is less than competent and unaware of basic writing skills (Tier 2). If you want higher fees, please unlock your “Caps Lock” button and try to write complete sentences, starting off with a Capital letter and ending with a period.
#2. Appraisers must proofread what they are sending to clients not only for typos but for logic and common sense. Below are some verbatim examples from recent appraisals.
“Comp #3 …no adjustment has been made for the noise”
In the next paragraph: “Comp #3 was adjusted for freeway noise under location”
Well, which is it?
Within the same appraisal:
“The estimates of cost new, accrued depreciation, site value as well as the value indicated by this approach should not be relied upon by any party for any reason.
Clients hire appraisers expecting that their value conclusions are reliable. It appears the appraiser is stating that his work is so shoddy it can’t be relied upon.
Within the same appraisal:
“If the subject is improved;” “In the case of new construction,” “In the case of proposed developments, unless otherwise noted…”
This house is not new, proposed construction or in a proposed development; it is a 90 year old house in good condition in a subdivision near a downtown core. What do these hypothetical or extraordinary assumption statements have to do with the specific appraisal assignment? Nothing, it is meaningless, misleading text that concerned the client who stopped the loan process and asked legitimate questions of the appraiser. This is pure laziness; cloning reports and not proof reading the final results.
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My recommendation is that after the appraisal is complete, stop (I suggest printing) and read the appraisal for relevancy to the specific assignment, spelling, and correct punctuation. Do not clone reports from yester-year; create templates specific to certain areas and property types.
Answering Client Questions
After reading reports, clients sometimes have questions about the report or property. Understand this very important fact: The client has the legal right to ask for clarification and have the appraiser answer questions that are not answered by the report. There is a difference between a client’s legitimate question and attempts at influencing the final value conclusion. The problem is many appraisers falsely believe that every question is an attempt to influence the report; some are but many are not.
The client asks: “Within your analysis, did you consider the two sales, located on the same block as the subject?”
The appraiser responds by insulting the client’s knowledge and using statements such as: “Where did you obtain your appraiser license?” “How dare you question an appraiser with 30 years’ experience?” “This is an illegal attempt at influencing the appraiser!”
The appraiser wrote out a five-page diatribe slamming the client for asking a simple question. All the appraiser had to do was answer yes or no; there is no need, nor is the client asking for a long answer. The appraiser is no longer on the lender’s Tier 1 list or qualified to receive higher fees.
The client asks: “What method did you use to determine the adjustments?
The appraiser responds:
“LISTING ADJUSTMENTS MADE BY THE LISTING REALTOR NOT THE APPRAISER.”
The Realtor!?! This is not Tier 1 or even Tier 2 work….this should be an immediate black listing by the lender and their AMC.
The appraisal indicates that the subject has a “beneficial view.” Adjustments were made between the subject and “non-view” comparables. There is no photograph or description of the view, which left the client wondering about the view. So the client asked, “Please provide photographs or descriptions of the subject’s beneficial view.”
The appraiser responded (and I quote word for word):
“The view and location have 3 predetermed definitions built into the software. The subject is listed as Beneficial because it is neither Nutral nor Adverse. IT HAS A BENEFICAL EFFECT ON THE ECONOMY. Beneficial being favorable or advantageous; resuling in good.”
Was this a lesson in economics combined with an inability to spell or a not-so-sober attempt at answering a client’s legitimate question? The client still does not have an answer to their question and from this point forward, the appraiser is going to wonder why they aren’t being paid more than $300 for appraisals. I’m not wondering, nor should you.
Every chief appraiser or reviewer I talk to, whether they work for lenders or AMCs, mention the same issue: They are experiencing massive numbers of what come across as rude, arrogant, ignorant and nonsensical replies. “How dare you question my 30 years’ in the business”; “I’m going to charge you $50 for every question you ask”; “I’m going to turn you in for pressuring the appraiser”; etc. I understand that appraisers receive numerous questions that are often answered with “It’s in the report, please read page X, paragraph Y.” Most chief appraisers understand appraiser independence issues and that the line is often crossed by poorly trained staff. Redundant and even seemingly ridiculous questions are not an excuse for rude unprofessional communication. Appraising is more than a report with a number, it is your livelihood. If you want to stay in business and earn more, you must interact professionally and courteously. Appraisers are in business to solve problems. Appraisers who solve the problems of their clients and satisfy their needs the best, while following USPAP, will be paid the most. Welcome to the system of free enterprise.
Impacting an Appraiser’s Future
I asked the lenders and AMCs, “Why do you put up with bad business practices and rude appraisers?” Most said that finding Tier 1 appraisers in some areas is difficult, if not impossible, and fees are not the issue. They are willing to pay more, “if only we could find better appraisers who were more professional.” Many of the clients I spoke with say that when business slows down, many of the appraisers with bad business practices and weak appraisals will be the first cut from approval lists.
I seek out clients who have problems- we get paid by solving their problems. Yes I messed up with this one client but proper communications and being polite cemented a good relationship with the client and ensured continued Tier 1 fees. So it’s time to ask yourself, how are your communication skills, spelling, and your relationships?
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Presented by: Richard Hagar, SRA
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About the Author
Richard Hagar, SRA is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in over 40 states through OREPEducation.org. The new 7-hour online CE course How to Support and Prove Your Adjustments shows appraisers proven methods for supporting adjustments. Learn how to improve the quality of your reports and defend your adjustments! OREP members save on this approved coursework. Sign up today at www.OREPEducation.org.
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