|
|||
|
|||
Editor’s Note: Appraisers report that despite tough new appraisal independence laws, lenders, AMCs and others haven’t stopped trying to influence the process- they’re just being more careful about covering their tracks. Fraud expert Richard Hagar, SRA, explains how to protect yourself and your independence.
Pressure, Subtle Influence and Plausible Deniability
Comp Requests
Hagar says that it is very rare for a request for additional comps to include any properties that he hasn’t already considered, but when there is a legitimate comp that he missed, he’s happy to consider it. For the vast majority of other cases, he says he refuses play their game.
“For comp requests, I usually
tell them very directly that their suggestions are not comparables so I won’t
consider them. Or that they were already considered in the original scope of the
assignment, and they aren’t comparable,” says Hagar. “I don’t need to write out
long explanations. They asked a simple question, so I give a simple answer, in
writing!” “My office has seen requests to not mention the moss on the roof of the house, to not mention the fact that there are water marks on the ceiling, to remove the photo of the street that includes a damaged car, and the list goes on,” says Hagar. Sometimes the request is legitimate. If, for example, a photo isn’t relevant to the appraisal, then the appraiser should comply with the request to remove it. But if the appraiser thinks that it’s a valid- a legitimate photo that is relevant to their report, then the answer “to remove the photograph” should be no, Hagar says. “The client doesn’t get to tell the appraiser how to do their job. Attempting to mold the appraisal report and tell the appraiser how to alter it is in violation of state and federal law,” says Hagar. “If the lender or client has particular needs about what photos they require, then that should be made clear up front, in the scope of work agreement before the appraisal is created or delivered. However, the majority of additional requests to alter a report after the fact are clearly attempts at influence and coercion.”
There are numerous examples of
appraisers who have lost their licenses, been sued, or both, because they
allowed their clients to influence their work. Hagar tells the story of an
appraiser who submitted an appraisal valuing a property at $1.5 million. The
client then requested that the appraiser remove the mention of the wetlands and
creek nearby. After agreeing to the initial request for changes, the client came
back with additional corrections, and by the time the appraiser had fully
complied with the client’s “requests,” the property appraised for a value of
$2.5 million.
Hagar points out that
sometimes asking the lender or AMC to put the request in writing stops the issue
in its tracks. Often they are ashamed or know their request is prohibited but
since it’s over the phone, they have plausible deniability if a federal auditor
inspects the file looking for written proof of the foolish request. “They don’t
want anything in writing because that way they can deny any wrong doing if an
appraiser ever files a complaint or regulators ever audit them,” Hagar says.
The point of documenting the
client’s requests and the appraiser’s responses is to create an audit trail for
federal auditors. It also gives the appraiser a very good case should they file
a complaint with government agencies to prove that their independence has been
violated. According to Hagar, this issue is incredibly important to the integrity of the industry. The fact that lenders and AMCs are trying to have plausible deniability while continuing to subtly pressure appraisers makes things more difficult for appraisers, since it’s harder to prove the violation of appraiser independence, but that shouldn’t stop appraisers from standing up for their rights. "People are so used to telling appraisers to alter their report and how to do their jobs. But we already know what happens if appraisers don't stand up and fight back, you get an out of control system filled with compromised appraisals and the $7 trillion failure we are living with today," Hagar says. “If appraisers had provided good quality work that was properly reviewed by qualified people who didn’t push appraisers around and influence the results, our economy today would be far healthier than it is.” **Join Richard Hagar, SRA this August 16th in his upcoming webinar: Top 5 Questions asked of an Appraiser and How to Answer. In this webinar, Hagar explains how certain requests/demands from a client can place the appraiser in legal jeopardy and helps appraisers understand how to answer legally and preserve their independence. Sign up today and learn the right way to help clients, answer their questions, and stay in business. About the Author Isaac Peck is the Associate Editor of Working RE Magazine and Marketing Coordinator at OREP.org, a leading provider of E&O insurance for appraisers, inspectors, and other real estate professionals in 49 states. He received his Bachelors in Business Management at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273. HTML Comment Box is loading comments... |
|
||
ATTENTION: You are receiving WRE Online News because you opted in at WorkingRE.com or purchased E&O insurance from OREP. WRE Online News Edition provides news-oriented content twice a month. The content for WRE Special Offer Editions is provided by paid sponsors. If you no longer wish to receive these emails from Working RE, please use the link found at the bottom of this newsletter to be removed from our mailing list. |