Flexible Fees for Field Reviews

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Real Estate Appraiser with Ashcroft & Associates

I was just offered a field review assignment with the fee based on whether or not I agreed upon the original appraisal. This company offered more if my opinion differed from the original report siting the additional work involved.

I can't argue with the fact that more work is involved if the review appraiser disagrees, however I find the flexible fee structure disturbing and quite non-USPAP compliant.

Wouldn't it behoove a starving appraiser to disagree with the original report simply for a few extra coins? Has anyone run into this and/or accepted an assignment?

 

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Rainer
34,959
David Mescon
DAVID B. MESCON REAL ESTATE APPRAISER AND CONSULTANT - Kailua-Kona, HI

I have only one client for whom I will perform reviews.  I have an agreement with them, (originally my idea, which they accepted), that my fee structure is tiered depending upon the work performed.  I don't see how this could constitute a USPAP violation.  With a field review, I have no way of knowing beforehand what the eventual scope of work will be.  Will I have to re-grid and re-adjust the original appraiser's comparables?  Will I have to provide and grid new comparables?  Or, will I just need to analyze and comment upon the original appraiser's work?  We have agreed upon three different fees for each of these three scenarios.  If the assignment turns out to be more complex than average, we have also re-negotiated the structure on a case-by-case basis.  I may be wrong here, but it seems like an equitable arrangement to me.  I certainly have no desire to "upsell" my client and would never consider doing such a thing.

If my fees weren't structured in such a manner, I would either over-charge or under-charge my client much of the time.  If I under-charged them, I would be selling myself short.  If I over-charged them, I would be stealing.  Neither of these choices is acceptable to me, personally.

Jan 27, 2010 05:33 AM #1
Rainer
241,053
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

The fee structure offered by most lender/clients out there is the reason that I don't do reviews.  The flexible fee structure makes sense based upon the amount of work perceived to be required during the scope of work process.

That said, I do understand your uneasiness at such an arrangement, as some may perceive it to be a contingent fee.

Jan 27, 2010 06:52 AM #2
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Thanks for your input, David.  That's good to know.  There have been times when I wanted to charge an extra $5 for client condition questions that were already detailed in my appraisal reports.  I could afford to cut my fees in half if only that were possible. 

Hi Jesse.  That's kind of what I'm thinking, but I'm really on the fence with the answer still.

Jan 27, 2010 12:07 PM #3
Rainmaker
90,411
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

It is an interesteng situation.  I've not run into it much, as most lenders I've worked with seem to want one low fee for the review, either way.  In this situation, there seems to be potential to agree instead, since there is no extra pay for the extra work of disagreeing.  Gee, we can't win either way. In my mind the review should be a separate assignment from any regriding & a reviewers value estimate.  They should just order a review which would "only" address the quality of the original report & any inadequacies, etc.  There would be no grid work, or putting in new comps, or any "new value estimate".  If the lender then wanted a 2nd opinion of value, based on a low quality review, they could order one, from any appraiser.  This would end the potential problem that appears to exist with the variable or non variable fee.  I don't suppose lenders would be interested, as it would probably cost them more $$$. 

Feb 01, 2010 05:31 AM #4
Rainmaker
120,300
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Here is the answer that I received from Oregon ACLB:

"Based upon what I understand of your situation, it would be unethical for you to accept an assignment under those terms."

... Thus, I have declined the assignment...

And Craig, I agree.  Field Reviews always take me as long as a 1004 as I have to get into another appraiser's head and disect how they're going about their appraisal.

Feb 08, 2010 12:59 AM #5
Rainer
71,990
Connie Hall
All Brokers Real Estate - Portland, OR

I have often wondered why an appraiser would do something like this. It gives appraisers all a bad name and makes they all look like it is arbitrary when it is far from that. What you do takes skill and to be questioned  undermines the business as a whole. If you don't trust the opinion of a certain appraiser, then stop hiring them.

Mar 08, 2010 11:32 PM #6
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Rainmaker
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Sara Goodwin

Portland, Oregon Appraiser
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