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Should I accept this assignment (Read 1364 times)
uam297
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Should I accept this assignment
Apr 15th, 2004, 9:37am
 
Hi
I just receive two appraisal request from a lender.
After study the order, I found out that the owner of house A want to sell his house to the owner of house B. The owner of house B is going to sell his house to owner's house A and buy house A.
Both purchase contracts have NRCC = $10,000.
Both property's owners are know each other (or are friends to each other).
House A' value is about $50k more than value of house B.
Question is should I ignore the purpose of both buyer and seller and just do my appraisal work?
It bugged me that why would someone want to sell his higher value house and buy a lower value one??? By the way, both of these houses are located in a very hot market area. House's value in this area is going up like crazy.
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Bill Baughn
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Re: Should I accept this assignment
Reply #1 - Apr 15th, 2004, 10:19am
 
Sounds like you are in Vegas...   Grin

I have heard of similar deals, assuming the values are legitimate, one reason that they might be doing this is to get a rental tax break on the house they are living in.  You might want to check and see if owner A will be renting back his house from owner B and visversa.  More money for you cause now you have to investment properties to appraise?  Just a thought...

Bill Baughn
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Don Kellogg
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Re: Should I accept this assignment
Reply #2 - Apr 15th, 2004, 12:14pm
 
You are an appraiser.  You recieved two orders.  Do them.  Why would you care the reasons for the transactions in the first place?  Each appraisal is treated in severality.  No ones business, but the principals,  why they are exchanging properties.  My opinion

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Don Kellogg

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uam297
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Re: Should I accept this assignment
Reply #3 - Apr 15th, 2004, 4:22pm
 
Thank you for your feedbacks.
I understand that the purpose of buyer and seller should not be my concern, but also want to cover myself to any future potential law suit. I did the report and turn it to my client (lender).
One hour after that, house A's owner called me and upset. He wants his house's value should be 60k higher. I refuse to do what he wants. One hour after that, my client (lender) called me and said that I am fire by his client (house A's owner). I suppose to do another appraisal report for his client's rental property, but his client's cancel the order now. My client (lender) said that his client is able to find another appraiser, who is willing to appraise the value he wants. Oh! well.  Sad. Seem like I already work for free for this person. Usually, something like this, some lenders like to drag their feet before they sign any check payment.
And I am in CA.
Regards,
Uyen Marsh
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Bill Baughn
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Re: Should I accept this assignment
Reply #4 - Apr 15th, 2004, 5:36pm
 
uam297 wrote on Apr 15th, 2004, 4:22pm:
Thank you for your feedbacks.
I understand that the purpose of buyer and seller should not be my concern, but also want to cover myself to any future potential law suit. I did the report and turn it to my client (lender).
One hour after that, house A's owner called me and upset. He wants his house's value should be 60k higher. I refuse to do what he wants. One hour after that, my client (lender) called me and said that I am fire by his client (house A's owner). I suppose to do another appraisal report for his client's rental property, but his client's cancel the order now. My client (lender) said that his client is able to find another appraiser, who is willing to appraise the value he wants. Oh! well.  Sad. Seem like I already work for free for this person. Usually, something like this, some lenders like to drag their feet before they sign any check payment.
And I am in CA.
Regards,
Uyen Marsh


Sounds to me like the lender owes you for at least the one appraisal you turned in regardless of what value you brought it in at.  The homeowner can't "fire" you and the lender is a little late as far as the first appraisal goes.  I'm sure you did the best you could, you might want to suggest to the lender to take a good look the report to make sure it is on the up and up...If the lender sees that the other "appraiser/number chaser" pushed his value then he should (not saying he will) have more respect in your work.

This is another good reason to get your fees up front before turning in the report.  If you get any more work from this lender, I would be sure to tell them that all work from now on will be COD from the homeowner.  I made three inspections today, all were COD, am I worried about what value I am going to bring the reports in, not a bit...

Bill Baughn
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Greg Myers
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Re: Should I accept this assignment
Reply #5 - Apr 15th, 2004, 6:40pm
 
uam297 wrote on Apr 15th, 2004, 4:22pm:
Thank you for your feedbacks.
I understand that the purpose of buyer and seller should not be my concern, but also want to cover myself to any future potential law suit. I did the report and turn it to my client (lender).
One hour after that, house A's owner called me and upset. He wants his house's value should be 60k higher. I refuse to do what he wants. One hour after that, my client (lender) called me and said that I am fire by his client (house A's owner). I suppose to do another appraisal report for his client's rental property, but his client's cancel the order now. My client (lender) said that his client is able to find another appraiser, who is willing to appraise the value he wants. Oh! well.  Sad. Seem like I already work for free for this person. Usually, something like this, some lenders like to drag their feet before they sign any check payment.
And I am in CA.
Regards,
Uyen Marsh

He can't fire you from the first job because the job was already done. They owe you the fee. They can cancel the second job if they want to. I bet CA has some state regulatory agency that would love to hear about this if the client is in CA too. I like Bill's attitude about no money, no report.

On switching houses, there are many good reasons for wanting a smaller house, divorce, kids moved out, my wife wants a smaller house here in Florida than we had in North Carolina so that she can force me to get rid of some of the stuff I have accumulated over the years. The lack of capital gains taxes on house sales that went into effect a few years ago means you no longer need to worry about always moving up in value. As for the nature of this transaction, you would need to include a discussion of exposure to the market and the nature of the purchase agreement for each house. The motivation is only important if it affects the price offered or accepted in the transaction.
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Brew
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Re: Should I accept this assignment
Reply #6 - Apr 15th, 2004, 7:03pm
 
What Greg said is definitely true.  You are owed for the first appraisal.  That is one of the things I love about NC.  The have mandatory licensing of the lenders and when you have difficulty getting paid, you can file a complaint with the banking commission.  As long as the company is licensed in NC you almost always get paid.  I accept very few assignments from companies not licensed in NC.


Brew
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Drift Wood
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Re: Should I accept this assignment
Reply #7 - Apr 15th, 2004, 10:24pm
 
uam297 wrote on Apr 15th, 2004, 4:22pm:
Thank you for your feedbacks.
I understand that the purpose of buyer and seller should not be my concern, but also want to cover myself to any future potential law suit. I did the report and turn it to my client (lender).
One hour after that, house A's owner called me and upset. He wants his house's value should be 60k higher. I refuse to do what he wants. One hour after that, my client (lender) called me and said that I am fire by his client (house A's owner). I suppose to do another appraisal report for his client's rental property, but his client's cancel the order now. My client (lender) said that his client is able to find another appraiser, who is willing to appraise the value he wants. Oh! well.  Sad. Seem like I already work for free for this person. Usually, something like this, some lenders like to drag their feet before they sign any check payment.
And I am in CA.
Regards,
Uyen Marsh


Mr. Marsh,

Thought I'd counter point some of this.   I disagree with some statements made on the topic.   The motivations of buyers and sellers are certainly something we consider as appraisers.  That's one of the primary reasons the secondary mortgage market wants us to be examining the sales contracts other than concessions.   If your exchange of these two properties are by friends, without ever being offered on the market, then you didn't have arms length transactions taking place.   The fact it is not arms length, or market tested, is any appraisers explanation why the contract price and opinion of value are not in sync.   Additionally this can make it very easy for the parties to both attempt to get sales prices 30% over market value for both houses recorded at title if they can get an appraiser stupid enough (or willingly fraudulent) to fall for it.   They then take out cash at closing and now have a prior sale price recorded misleading everyone down the line.   Do this enough in one neighborhood with high appreciation rates generally in the area and pretty soon appraisers don't catch the comps have been manipulated.   This seems also a classic case of lender pressure and "punishment" for not hitting the numbers.   To call any appraiser up and tell them some other appraiser who hasn't even appraised the property yet will hit the number needed is blatant and grossly unprofessional.    If I were you I'd find new clients and tell this place they are COD due to lack of ethics on their part.
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Greg Myers
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Re: Should I accept this assignment
Reply #8 - Apr 16th, 2004, 4:43am
 
Quote:
Additionally this can make it very easy for the parties to both attempt to get sales prices 30% over market value for both houses recorded at title if they can get an appraiser stupid enough (or willingly fraudulent) to fall for it.   They then take out cash at closing and now have a prior sale price recorded misleading everyone down the line.   Do this enough in one neighborhood with high appreciation rates generally in the area and pretty soon appraisers don't catch the comps have been manipulated.

Barry, the scam you describe sent quite a few people to jail in North Carolina last year  and caused problems for some well established appraisers. If prices seem high for the houses you see in a neighborhood, look for the external factors that cause the extra value, talk to a real estate broker or two, use an extra comp from another neighborhood or for extreme cases like Bill has seen lately use that old comp from three weeks ago.
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