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?