What would you do? Addition Issues.

Real Estate Appraiser with Tri-County Appraisal Group, Inc. 1201069512


Here is the situation......

I received an order, set up an appt. go out to the property and...... Addition in progress!  The lender and the home owner failed to mention this. (FYI this is after a 45 minute drive, and a heck of a time looking up homes of that size in the area)

When I pulled up to the house, you can just see major construction going on.  They basically turned the old garage into a great room, added a Den, a 2nd foyer, 2nd bath, laundry room, pantry, a mud room and finally a 4 car garage in the rear (attached).  The house's total sq ft is 3445, with about 1500 sq ft being the new addition (w/o the new 4 car attached garage of course).

I immediately contact the lender and explain the situation, and they make it seem like they knew about it and its no big deal (so of course I assume the only logical thing which is the borrower may be getting a home equity type loan for improvements)  So I proceed with my work, get back to the office and send them the report  with it being "subject to completion".  I immediately get a call back from the lender saying what the heck is this?  I explain, and they were of course shocked to see all the work being done (I attached about 20 pictures). 

The next day, I literally received about 20 phone calls for this property, telling me to take out the "subject to" and make it "AS IS".  Of course I refused, so now they want me to remove the great room from the sq ft.  FYI, the great room is the only addition to the house that was standing before this started and it is the only part of the addition that is nearly completed (everything else is just 2 X 4's and plywood floors.)  I tried to explain that to the wizards working on this poor homeowners loan of 300K+, and they can't seem to understand that this house isn't anywhwere near completion.... it needs about another 40-50k to be finished, and the one part that they don't want me to include in my sketch is the only part that is 99% done! 

So.. I wanted to hear how other appraisers would handle this kind of a situation and if you would actually remove the "subject to" and make it "as is" for this lender (JPMorgan Chase).


Comments (18)

Rich Jacobson
Fathom Realty West Sound - Poulsbo, WA
Your Kitsap County WA Real Estate Broker

Moe (love that name!), I am so glad to see an appraiser on this network. We desperately need more opinions and input from your sector. Thanks for sharing this story. YIKES! What were they thinking? It's nice to know that realtors aren't the only ones who have their time robbed from them!

Feb 26, 2007 01:39 AM
SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO

I'm not an appraiser, but I am a lender and it sounds like you were dealing with a loan officer who didn't know what he or she was doing.

I think it was kind of you to even contact the lender, since you had to drive 45 minutes there.  I would have been afraid of a "never mind" and getting screwed out of your rightfully deserved money.

I would never even consider risking my license (even though I am not an appraiser-- ANY license) for $350.  The legal and ethical thing to do is "subject to completion."

Next time, this so-called loan officer will know better.  You get paid and he or she learns a lesson that he or she should have learned in training.

Don't you dare change that appraisal!

Feb 26, 2007 01:52 AM
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!
As a mortgage broker chiming in... I don't blame you... someone was trying to ignore the obvious.  I've seen this numerous times... it is particularly prevalent down here due to hurricane damage.
Feb 26, 2007 01:53 AM
Brian Papaccio
Wells Fargo Home Loans - Newark, DE

I am a Loan Officer, sounds like a rookie loan officer who doesn't know what they are doing.  Don't sacrifice your self (or your license) to save them.  Leave the appraisal with "subject to completion".  You did the right thing you called first, they said go ahead, it is their problem.  There are ways to get the loan done with an appraisal subject to completion.  Let them figure it out. 

Feb 26, 2007 02:03 AM
SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO
Oh you two guys are just jumping on my "cool loan officer" bandwagon.
Feb 26, 2007 02:10 AM
Roger Stensland
Keller Williams Realty Puget Sound - Maple Valley, WA
Let's Move!
I am a Real Estate Agent - not and appraiser.  As in my trade, I think that you need to call them as you see them.  Besides staying legal and ethical, you will gain credibility in your area as one who is a straight shooter.
Feb 26, 2007 02:14 AM
David A. Podgursky PA
THE PODGURSKY GROUP @ Re/Max Direct - Boynton Beach, FL
THE PODGURSKY GROUP - Make the Right Move!

karen... or vice versa!

moe... there will always be room in this world for appraisers that trust in the dark side.. then slowly but surely they will find themselves blackballed one by one by the lenders.  And as the lender base is shrinking, there will be fewer lists to get blackballed from which will cause that appraiser to have nowhere to go.

Feb 26, 2007 02:26 AM

I am an Appraiser and agree with the rest of the pack - don't risk your license. I'm sure whoever ordered this appraisal, knew the property was being remodelled, but didn't anticipate the implications.

It also sounds like you called the lender when you got to the property. If they said to proceed they should pay you for the appraisal & figure out how to do the loan "subject to"

Feb 26, 2007 02:31 AM
Sara Goodwin
Ashcroft & Associates - Portland, OR
Portland, Oregon Appraiser

Hey Moe -

Have you considered not only keeping the 'as per completion' but also writing up an addendum statement each time you are called to enter the names of people and what they are asking you to do?  I rarely resort to this, but when I do I find it to be an effective tool to get lenders to stop harrassing the appraiser.  Also, I would charge nearly as much to re-inspect the property upon completion (if you choose to continue with this assignment) and note any permits (or the lack there-of with the suspicious 'deletion of a portion of the sketch' request).

You could potentially give the 1,945 SF original portion of the structure giving it an 'as is' status if there are no open walls on the main living structure, the electrical and plumbing are up and running, etc while leaving all the information about the addition in the report.  Of course, this would decrease the value substantially (and probably get stuck in underwriting), and I'm sure this is not what the lender is looking for either.

Yes, you will most likely lose this client, but they're probably already gone and sometimes it's just OK to lose that kind of client.

Best of luck, 


Feb 26, 2007 03:25 AM
Moe Farhat
Tri-County Appraisal Group, Inc. - Dearborn, MI

I'm not worried about losing this account... sometimes I wish I would with the crap I have to put up with, this is just one of the few problems I've had with these guys.  They wont go away :).  I will not change the "subject to" believe me, they are just trying to make me change some ridiculous stuff on there that don't make sense just so I'll give in and say get off my back Ill change it. 

I really appreciate the responses from everyone.  And it's good to see some Realtors and L/O's  actually agreeing with an appraiser for once ;).  Thanks Guys.

Feb 26, 2007 04:27 AM
SEO Expert: Michael George
Phoenix, AZ
Real Estate and Law Firm SEO

I always keep my appraiser happy.  What do I know of measuring houses?

Now how about sending in little Kibbee Nayhee in ice packs?  I'm kidding of course, but Man, do I miss La Shish and The Sahara in Oak Park.   !!!!!!!!!!!!!!!!!!!!!!!!!!

Feb 26, 2007 04:38 AM
Brian Brass
Brian Brass - Guaranteed Rate - Troy, MI


I am a mortgage originator looking to add new appraisers in Metro Detroit...I'll contact you.

Good luck on this report...

Feb 26, 2007 04:53 AM
Brian Papaccio
Wells Fargo Home Loans - Newark, DE
It it is just a rookie LO coping an attitude you could always go over their head and talk to the Owner/Broker/Manager at that office.  If that person knows you, has a good relationship, and wants you to keep putting up with the rest of their crap, they should put that LO in their place.  I would if it was my shop.
Feb 26, 2007 04:57 AM
Luke Constantino
Brooklyn/Manhattan Real Estate - Brooklyn, NY
Residential/Commercial Real Estate Brooklyn NY
I'm not a lender, i'm a realtor. The words "as is" cheapens the value of a nice home on the market here. I think the house shouldn't be appraised till all construction is finished.
Feb 26, 2007 04:58 AM
Virginia Halter
RE/MAX Signature Properties - Harrisburg, NC

Karen, I LOVE La Shish!!! I moved from Farmington Hills nine years ago but I just loved going there to eat.  I had to mention it because I haven't thought of that for years!!!

Moe, You obviously know your job very well!  I am only a Realtor so I don't know your job the way you do but it SOUNDS to me like you handled this right on the money! 

Feb 26, 2007 06:04 AM
Nick M.
Certified Residential Appraiser- West Palm Beach Real Estate - West Palm Beach, FL
Realtor-Appraiser in West Palm-South Florida Real Estate Appraiser

Hey Moe.. here's my take. you called the dork, i mean LO at the time you reached the property. You're getting paid for the trip regardless of their answer at that point. (was it COD? paid before -credit card- or invoiced?) They said to do it. You did it ..the house's addition is not completed.  With all that construction, i'm not sure i would do As-Is and think you handled it correctly.. subject to.  I'm not going to say you took the wrong path, and depending if you got paid already or not, i may have asked the LO about how they wanted it done, subject to or AsIs before i start typing. (i think that may fall under scope work, dare i say) but now its out there.. i hope you got paid already and it is what it is.

Sara,. wow i never knew you were so evil!! haha i like how you would comment on all those calls, requests and etc in the addendum.. maybe even a note under the subject to box to make sure they read that addendum. We need more standup people like you! Moe could do it AsIs and with all those comments, it still wouldn't make underwriting.. haha.. goooood onnnnneeee!! :)

Feb 28, 2007 11:35 PM
Moe Farhat
Tri-County Appraisal Group, Inc. - Dearborn, MI

Hello Nick, Thanks for the comment.  I did get paid for my work... I always get paid :).  Just so you know, Im still getting calls on it till this day to change it to "AS IS" and remove the addition area... LOL  They really think its that easy.  Here is what the lender requested I do.  "Please remove the unfinished area from your sketch, and state wether or not it effects the livability of the home" ... Here is what I said "the addition/unfinished area does not effect the livability of the home (obviously They are living in it) due to the work being done on the same side of the property (which is near the new garage and the second bath). All the mechanical components in the home are in working order; the kitchen and the second floor bath are in working order and the plumbing is in working order;  But that still does not make it "AS IS" and I cannot remove it from my sketch"  And if it did effect the livability, what am I suppose to do, pretend it's not there and remove it from my sketch?

The only reason I called the Dorks from the site is because usually they will put it on hold until the repairs/additions are done. 


Mar 01, 2007 01:41 AM
Matt Lemansky, Certified Residential Appraiser, SoCal
Matthew J. Lemansky, CREA - Long Beach, CA
I agree with Nick.  Whether or not they are living in a halfway completed house doesn't change the fact that it's a halfway completed house.  I would have done the same thing and appraised it "subject to" completion.  Livability doesn't equal marketability and that counts in a big way when appraising a house.  Look at it like a prospective buyer.  Would you buy it "as-is" at full market value in the current condition?  Does it conform to the rest of the area in the half completed state?  Obviously, the answer to both of these dopey questions is no and no.  The broker is way off base in asking you to ignore what you already know exists.  Fight the good fight...too many appraisers would happily change it just so they don't lose a client.
Mar 10, 2007 05:42 PM