When You Complete a Final and Were Not the Original Appraiser

First of all, let’s clear the air of any initial confusion that could be potentially floating around out there. It is absolutely okay for an appraiser to complete a final for a property when they were not the original appraiser on the original report. It is perhaps slightly more unusual, but completely ethical. However, there are a few issues that an appraiser could potentially run into if they are completing a final for a report where they were not the original appraiser. I am going to talk about one of those issues here, but for a more in depth understanding, check out the related podcast linked below.

Imagine you are asked, as one of my peers was, to complete an FHA final (1004D) for a report where you were not the original appraiser. You accept the request. When you arrive to the property, you see that the FHA issues indicated in the original report have indeed been fixed. However, while walking around the property, you also notice a few other FHA issues that were not mentioned in the original report. At this point, what is your responsibility? Do you simply say that things were completed according to the original report, or are you expected to report the other issues as well?

If you read what you are signing in the 1004D form, you will see that you only need to certify that the requirements or conditions listed in the original report were met. This is all you need to do in order to fulfill what was requested in the form and most likely in then engagement letter (although you will want to double check that). However, I think it is also wise in a situation like this to include a statement in an addendum that is similar to the following. “Upon inspecting this property, I did note that the repairs as requested in the original report were completed according to FHA guidelines. However, I also noticed the following potentially problematic issues that will likely cause the property to not be FHA compliant, though these issues were not noted in the original report.” This way I am taking extra steps to insure that it is clear that I saw and noted these additional issues so that I am safe from any potential problems that may arise in the future.

To be clear, usually when I perform finals when I am not the original appraiser, I don’t have any issues. They are typically fairly simple reports that go off without a hitch. However, it is important to be aware of these potential difficulties so that you know how to handle them if they do arise.

For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: 285 What is a Final Anyway?


10 thoughts on “When You Complete a Final and Were Not the Original Appraiser”

  1. Of course it’s ok to finish a 1004D (notice of completion) but it’s also ok, to say, no! The confusion is not about being ethical, it’s about taking on the responsibility and attaching your E&O to the assignment. Many times an AMC wants you to do a 1004D “update” and that is also something that you can say no to. Just because something is ethical doesn’t mean it’s smart! Responsibility is a funny thing to get out of in a court of law, when someone feels they have been dealt a bad hand.

  2. I regularly receive these orders- the client ALWAYS asks to have the “this property meets FHA handbook 4000.1 guidelines…” verbiage. So that can be an issue, as I had on the last one I did: there were numerous issues I noted that were not in the repairs list. So I had to mention these, and did not add the meets 4000.1 verbiage.

    Additionally, I always always request a copy of the original report as this is what I am finaling.

  3. Dustin, you get those 1004D requests because often times the original appraisers are tilted toward being unethical to begin with. They make $50 to $100 more per pop (FHA work), while pre-planning to say no when asked to do the follow up inspection. In you step to say all is good, while the original appraiser makes 5 times as much claiming “subject to”. If you think the lenders care, how about the times they send over summary appraisal update reports (1004D), FROM a different appraiser.

    FHA and conventional loans should follow the path of the VA, meaning stick to peeling and chipping paint, versus having us sign off on roofs, foundations, etc.

    Seek the truth, have a backbone, find some morals, question everyone and everything (talking to you Guaranteed Rate / No-Contact Appraisal), and say no before you consider to say yes.

  4. Bill, How does the original appraiser make 5 times as much claiming “subject to” if they don’t do the final? Curious

    1. If the original appraiser makes $600 and states the property does not meet FHA handbook 4000.1 guidelines, while knowing in advance he will say no to a future $100 1004D request, than he makes 5 times more than the 2nd appraiser (1004D) who will have the AMC/client/state board liability of defending “The property now meets FHA handbook 4000.1 guidelines”.

      Seek the truth.

  5. Bill, I am also more than a little confused about your comments. Are you an appraiser? To assume that the original appraiser is tilted towards being unethical is a strong statement about your fellow appraisers. Perhaps you are an underwriter for an AMC? Not sure

    1. James, do you work the same big city areas over and over while also using a la mode software? Do you also participate in their peer comps viewing feature? If you do, like me then at times you will see the same property used as a comp upwards of 10 to 40 times. How can a certain percentage of appraisers claim good ethics, while avoiding calling that freeway backing comp what it is (an adverse location)? The examples go on and on James, but to say a percentage of your peers won’t in advance have a policy or thought on how to deal with issues (perhaps no to 1004d’s), is to be naive.

      I for one serve MY business first, and if at times that means saying no to 1004D’s (special trip (non filler location), distance to, increased liability, ow pay, etc.), as a new assignment, that’s my right.

      Seek the truth.

  6. Bill, You have made many unsubstantiated assumptions about others and perhaps myself. I have ala mode but do not participate in the peer comps viewing feature. You keep repeating seek the truth. You might need to seek something that you really love in life. You are getting a little too intense.

    1. James, if one independently narrows down market data to a single sale on a single date and in turn can see how others (say 10 to 40) choose to display the same sale (comp data) using a la mode peer comp sharing, than one is not making assumptions, but rather is dealing with very focused data. I’m not pointing a finger at you James, but rather at those (previous example) who choose to ignore the truth (massive freeway noise / adverse location), while they attempt to churn out high appraisal volume.

      Don’t even get me started James on those appraisers who complain about taking comp pictures the first time, and entertain/ignore the truth when the subject is different upon inspection from what their Filipino friend told them. There are those among us who seek the truth, find the truth, bracket the truth, and go back out to photograph the truth (a new comp picture), and there are those who ignore it in the name of keeping their AMC matrix score high.

      Seek the truth.

  7. I only accept those for really good clients after thoroughly checking out the original report. I think I have only accepted a couple of them because most of them I have been asked to do seem sketchy. One of the requests I got was because the borrower switched lenders and the original appraiser wasn’t approved with the new lender. I happened to know the appraiser who completed the appraisal but still thoroughly checked out his appraisal and also was very observant while I was at the property in case anything was missed.

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