I was recently asked by a local lender to appraise 14 vacant lots. Though the lots were all quite similar, 14 separate appraisals were needed (obviously, a large discount was given for the multiplicity). Once a value was established for each individual lot, the lender came back and now wanted a ‘bulk value’ for 10 of the lots. Hmmm. That certainly changes things. Per USPAP in fact, we now have a new assignment.
As I inquired to the bank and got more information, it was clear that I was out of my element. The lender did not just need a total value (each appraised value added together), but a bulk discount rate (estimated reduction that might come from a single-buyer situation). What is a novice, like me, to do in such a situation? Well, of course, I turned to Facebook.
I belong to two, private Facebook groups that cater to appraisers. They have proven to be a great resource when appraisers have questions about how to proceed with unusual circumstances. Within just a few minutes of posting my questions, I began receiving feedback from other appraisers across the country. Almost immediately, I was asked if I had considered including a Certified General (CG) appraiser in this assignment. Honestly, it had never even crossed my mind. Due to the nature of the assignment, ‘commercial’ just did not enter my thinking. Certainly, the suggestion was sound. I should have immediately thought of it, but I am only human and I didn’t. Since I could have ended up in trouble by not including a CG for this type of assignment, I was very glad I had asked the question.
The next day, I picked up the phone and called a CG that I know and trust. He was kind and helpful. Within just a few minutes, he taught me things I had not considered. Armed with his information, I was able to get back with the lender, ask additional questions and explain what was necessary if they wanted to continue forward with the assignment. All in all, it was a positive experience.
When was the last time you involved another appraiser in an assignment due to your lack of experience? Honestly for me, it has been a long time. In some ways, that is kind of sad. It either means that I am pushing my limits without the use of a mentor, or I am stuck in my comfort zone and not taking on projects that stretch my abilities. Reality is probably more the latter, but I should be doing more to expand my horizons.
It is quite possible to have an entire 30-year (or 45-year as things are today) career and—other than our original mentor— never involve another appraiser (or expert) in our assignments. Perhaps that is the business model you prefer. Consider however the possibilities when you develop relationships and work together within your appraiser-expert network. The increased fee I received from the lender was slightly higher than the fee I paid the CG for his work. Furthermore, I received an education in the process. Truly, it can be a win-win for both parties.
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This attitude is a function of character and also an essential element of critical thinking and appraiser competence. As professionals not only must we know our limitations, but we must honestly admit them to ourselves, our peers and our clients.
Kudos to you Dustin for the way you handled this situation and for your courage to publish the story. You are a part of a trade that characteristically views asking a question, particularly one that has to do with appraising, as a weakness.
I too am on a several appraisal forums. It might surprise you how often an appraiser posts a question to which the answer is: Have you considered involving a CG? And the reply is: Gee, it never even crossed my mind, thanks!
There are many HABU questions that require a CG to answer. Oftentimes these are glossed over but boy-o-boy you better hope these reports don’t end up on some bureaucrat’s desk! I have been in more than one discussion with high level AMC reviewers at a large national bank who prefer the appraiser use a few carefully chosen weasel words that give the appearance of compliance, but in fact do not. To me this is pressure and undue influence because it allows them to satisfy the bank’s requirements to “get er’ done” while hanging the appraiser’s tail out in the wind. It’s relatively rare but when I do see it happening I have developed a few carefully chosen weasel words of my own that allow me to back out of the assignment.
Good article. My question is what are the Facebook groups you are in for appraisers and how do I join?
I would also like to about joining the Facebook groups for appraisers.
I have several appraiser friends. Most are competitors but I have a good relationship with them. I regularly call one or two of them to ask a question and I have been at it for 18 years. They have similar experience. On one assignment last year I called 8 appraisers to get their opinion and advice. 7 of them all had the same thought process I did with one half and half. It’s good to get the input and see what our peers are doing. We may have competition but if we treat each other like the enemy we are only killing ourselves.
I, also, would like to join this FB group. Please let us know their names
Here are the FB pages I belong to that are open for all appraisers:
And, of course, there is my All Star Team’s page, but you will need to be a member to join that one:
Thanks for the great feedback everyone. See you all on FB.
Great post. Peer feedback and advice is the main reason I follow this blog. It is a challenge of our industry that while many of us work in isolation from our peers, we are required to do as they do. I have a couple of competitors that I bounce stuff off of too. Fighting like cats and dogs to obtain clients can be separated from healthy peer relationships. I simply leave the competition part out and regularly discuss how my business is going, leaving out the names of my key clients! Were all in this together often goes a long way.
I am not on facebook, but maybe should be just for appraiser and other business stuff. I am part of appraisersforum.com and find that an invaluable resource.
M: I used to be a part of appraisersforum, but I found the attitude to be mostly negative. If I had asked the same question there, it would have been, “Dustin, you idiot! You are way out of your element here. Did you not think to ask a Cert. Gen. on this you incorrigible D-bag!” Just saying. Sure, it can get a little negative on FB too once in a while, but I just got tired of the superiority complex among some on the other. FB has been much better to me.
Yea…lots of peacocks on that site for sure. But, appraisers are skilled in weeding through irrelevant data and I do just that when on the site. I use their need to be heard in my favor when I am in need of a quick answer. I too have mostly stopped getting into discussions on that forum as it usually turns into a competition very quickly. Though, sometimes a good old fashioned brawl is just what I need to determine that a certain issue has no absolute answer and is open to interpretation/opinion. Not an appraisal phrase, but one of my favorite sayings is “take the good and leave the bad behind”. All that said, there a couple of very nice and very knowledgeable appraisers who frequent that forum.
A Membership in and attending meeting of various professional organizations can be very beneficial as well.
It is a licensing violation in most states to do more than 4 units without an absorption study and a DCF.
Now that’s funny.
I have found that, being a member of the Appraisal Institute gives me alot of support, as well. More appraisers should think about becoming a member…
Good article. Hardly a week goes by that I don’t pick up the phone and call one of three or four local knowledgeable appraisers, both residential and commercial guys, and get their opinion on an appraisal issue that I am working on. This is a great asset for me, and for them, as they know they can call on me for my thoughts, also…and I’ve been appraising for 25 years. Yep. This is not a business to be too prideful in. None of us knows it all, and we better constantly be trying to learn.
I’m curious of your HABU analysis for both situations. Fourteen lots would hardly constitue a subdivision analysis. And if demand is good in that area, why would a lender want to offer any buyer a “discount” to take down all fourteen lots when it would be highly likely that the most profitable scenarior would be to market the lots on a singular basis.
If the seller does not have (or want to take) the, say 8 months to sell 10 individual lots if the current absorption rate is 2 lots per month and three other developers are active. The bank is not offering the discount, the builder is probably demanding a discount from the developer.
Another problem that I have seen frequently is a residential appraiser doing a single family home on an acreage site in an area that has been rezoned. An old, well-maintained home on a 3 acre parcel, previously zoned as RA-5 (Rural Area – 5 acre min) but now zoned R-6 (Single Family – 6 dwellings per acre).
Three years ago it could not have been divided because it was already smaller than the minimum. Now, the site (if vacant) could be subdivided into 18 building lots. And (as improved) could probably be divided into 10-15 lots, leaving the existing dwelling on a large lot. If the site is capable (legally permissible, physically possible) of being divided into 5 or more parcels, it is a commercial assignment requiring a general certification.
Having key appraisers to consult about certain assignments to gain knowledge and experience is essential. But, also realtors who specialize in certain properties can also provide beneficial insight. It just might be another avenue to gain knowledge and develop potential referral business.
I have a major issue with a lender who not only does not want to use me but now calling other lenders and slandering my name. The issue started last fall with Liberty home equity who will not accept my appraisals out of nowhere . I contacted the lender after finding out through AMC to dispute this matter. Liberty claimed they sent a letter on October 29 2014 to my home address but then told the AMC and Bill Merrill my professor who was helping with this matter they sent this letter to my PO Box. It seemed to me and everyone who was aware that there was never a letter sent out. Finally on Christmas eve I get a letter on a file that never closed . The file and order was never for Liberty Home it was for Perry Funding. However the I sent back my rebuttal letter and also contacted the AMC about these revisions they claimed they had asked for. Apparently Liberty never sent these revisions to Perry nor the AMC. I addressed each concern accordingly . The AMC contacted liberty letting them know these revisions where never requested and it’s not the appraiser fault. Liberty never contacted me back and then a month later removed the AMC basically for verifying we were correct and this was a misunderstanding. Six months later as of April 2015 I received a call stating Liberty Home Equity contacted a lender in which I do work for slandering my name. Now this lender does not want to use. me. None of these banks have notified me or the AMC as to why. I have now hired an attorney because this is affecting my lively hood and causing me stress and loss of business. I have been an appraiser for over 12 years and never had a bank remove me.
There needs to be some kind of guideline set forth on this issue. These banks are getting away with everything. There underwriter is the one who approves these loans not the appraiser. My job is to inspect a property and have competence to come up with an opinion of value. I don’t think it’s fair that us appraisers go thru schooling and take courses every 2 years to keep our license for a person who sits behind a desk to dictate my job and who is not licensed. The worst part is I have under writers in different states reviewing my appraisal who have no knowledge of my state or area in which I have appraised. USPAP states you must be competent to appraise a certain area and hold a state certified license in order to complete the job. This is the cause of the issues in the banking industry. Everyone blames the appraiser who is licensed and has the education to conduct their job. I’m tired of reading about an appraiser who loosing there lively hood and has to start all over in a new career all because an uneducated person with no real knowledge of my field tarnishes their name.