Appraiser no-no: tells agent appraisal value before buyer gets report

By
Real Estate Agent with Alain Pinel BRE 01367196
https://activerain.com/droplet/Lpm

Appraiser’s boo-boo: telling listing agent appraisal value of property in the middle of negotiations! Whistle blower

During our buyer investigation period, we ordered inspections, and as a result of our findings, there was enough to justify a request for price reduction.

Imagine our surprise when the listing agent said the appraiser told her how much the property appraised for. She got the results of the appraisal before the buyer and I heard back from the lender.

What appraiser does that?

When I asked the listing agent why the appraiser would tell her about the appraisal value, she said she had worked with him before, and he probably thought it was okay to share that information.  

Well, it certainly was NOT okay.

He nearly blew our negotiation process into smithereens. Thankfully, the buyers and sellers reached an agreement for a price reduction --- just a day before that blabbbermouth appraiser called the listing agent.

NOTE

  • The appraisal was ordered by the lender, so the lender is the first one informed about the report
  • The buyer paid for that appraisal. If he wanted to share this information, it’s his prerogative....but if he doesn’t want to, he shouldn’t and couldn’t be compelled to share
  • The appraisal and inspection reports are tools for negotiation.
  • If the property appraises for less than what the buyer offered, this leaves room for negotiations wherein the buyer has to consider his options: a) come up with the extra cash; b) back out of the sale; or c) negotiate with the seller.  
    • In this case, because the appraiser notified the listing agent what the appraisal value was, he favored the seller when he interfered in this process


I complained to the lender. And the buyer and I made sure  this was relayed to the appropriate parties.

See:

California Office of Real Estate Appraisers Complaint Form

Dodd-Frank appraisals complaint hot line faces steep challenges

Angie’s List Appraiser Code of Conduct fails to curb complaints

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Rainmaker
1,058,316
John G. Johnston
John G. Johnston & Associates, LLC - Westcliffe, CO
An Exclusive Buyer's Agent ~ Westcliffe, CO

There are not too many things that would get me upset as I consider myself professional to be pretty cool and calm.  This one would set me off.  In Colorado appraisers are licensed by the Colorado Real Estate Commission.  This is a very small town and everyone knows everyone, including the appraisers.  I can not think of a breach of protocol to this extreme in  my neck of the woods.

Nov 12, 2012 05:57 AM #1
Rainmaker
710,558
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

John 

I was aghast when the listing agent told me what happened. She let it slip in her email....but I was really upset to hear this. And we had to file an official complaint. Glad you agree.

Nov 12, 2012 06:01 AM #2
Rainer
120,219
Steve Ewing - Keller Williams Realty
Keller Williams - Stockton, CA

Patcita - The free exchange of information that does not directly belong to someone is not a good idea.  There is no telling how much damage an innocent comment can do to an on going negotiation.  Thanks for the post.

Nov 12, 2012 06:50 AM #3
Rainmaker
743,738
Rob D. Shepherd
Windermere/lane county - Florence, OR
Principal Broker GRI, SRES

Sounds like the appraiser needs a trip to the "woodshed" to realign the thinking.

Nov 12, 2012 07:05 AM #4
Rainer
240,177
Peggy Hughes/pha logistix, inc.
pha logistix inc - San Francisco, CA
SF NYC LA

I'm so glad that the mishap did not interfere with your negotiations, Pacita... but, that appraiser really was out of line.  The listing agent was NOT paying for his services so he should have kept his mouth shut...

Nov 12, 2012 08:35 AM #5
Rainmaker
710,558
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Steve --- the appraiser may have known the agent, but that is absolutely not a justifiable excuse

Rob --- when he receives that complaint filed against him, he'll learn.

Peggy -- we were just one day apart. We managed to get the price reduction based on the inspection results, one day before the appraiser blabbed. He could have really hurt our negotiations.

 

 

Nov 12, 2012 12:44 PM #6
Rainmaker
710,558
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

I received a comment from Dave the Appraiser, and he said:

 

"From: Dave the Appraiser
Email: dtowne@fidalgo.net
Subject: Owner of appraisal report (Sent via Activerain)

Pacita....I'm not able to reply on Active Rain. System won't 'activate' properly.

You stated the borrower 'owns' the appraisal report because they paid for it. Actually, that's not the case, and is an urban myth. The LENDER actually owns the report per federal mortgage lending regulations when the typical FannieMae/FreddieMac appraisal form is used. The LENDER hires the appraiser, not the borrower, when a home is being mortgaged. So while it's true the borrower may indeed 'pay for' the report, they technically don't really own it. They become an intended user."

 

So I edited my post to say simply that the buyer paid for it.

Nov 13, 2012 01:19 PM #7
Rainmaker
3,238,637
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Mummmmm should have been the word....wow....can't imagine where her head was on this one !

Nov 25, 2012 06:36 PM #8
Rainer
261,429
Anthony Vosilla
Tony's Appraisal Services - Centereach, NY

ACTUALLY THE APPRAISER BROKE THE CONFIDENTIALITY PORTION OF THE ETHICS RULE WHICH IS PART OF USPAP.

As for your points towards the end of your post..

  • The appraisal was ordered by the lender, so the lender is the first one informed about the report

AND SHOULD BE THE ONLY ONE INFORMED BY THE APPRAISER

The buyer paid for that appraisal. If he wanted to share this information, it’s his prerogative....but if he doesn’t want to, he shouldn’t and couldn’t be compelled to share

NOPE..IT IS NOT HIS/HER PREROGATIVE...THE BUYER IS NOT THE CLIENT, ONLY THE LENDER

The appraisal and inspection reports are tools for negotiation.

  • If the property appraises for less than what the buyer offered, this leaves room for negotiations wherein the buyer has to consider his options: a) come up with the extra cash; b) back out of the sale; or c) negotiate with the seller.  
    • In this case, because the appraiser notified the listing agent what the appraisal value was, he favored the seller when he interfered in this process

INTERESTING WAY TO LOOK AT IT HOWEVER DID THE OFFENDING APPRAISER KNOW THAT THERE WAS NEGOTIATIONS GOING ON?  SAYING THAT HE FAVORED THE SELLER IS, IMHO A BIT OF A STRETCH ALTHOUGH I DO SEE WHERE YOU ARE GOING WITH THAT THOUGHT.  I DON'T KNOW IF HIS ACTIONS WERE DESIGNED TO FAVOR ANYONE....BUT THE APPRAISER WAS WRONG, WRONG, WRONG...

Jun 28, 2013 08:08 AM #9
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Rainmaker
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Pacita Dimacali

Alameda/Contra Costa Counties CA
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