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I Messed Up (Really!)
By Richard Hagar, SRA
A client contacted my office and asked a simple question concerning an appraisal. We messed up and didn’t get back to them within 24 hours. That was a rude mistake that’s bad for business. We didn’t send some cheezy email to repair the damage however….I made a personal phone call, fell on my sword and apologized. The client said the problem was minor, so don’t worry about it…but the apology was a nice touch (Yes! Score one for being businesslike). Then the client continued, “That’s nothing compared with what we are dealing with every day, let me tell you……”
Now since I did mess up, I listened politely to the lender’s list of complaints about appraisers. The examples the client mentioned to me are…shocking to say the least. Not believing their examples, I reached out to several other chief appraisers working for lenders and AMCs. They confirmed what my client was experiencing. What follows are not random issues, but reoccurring problems experienced daily by many lender/AMC clients.
I have so much material from my clients that I turned it into a webinar “Persistent Appraisal Failures” (OREPEducation.org). I’m providing a few examples here in the hopes it will help appraisers become Tier 1: more businesslike, more profitable and better able to avoid pitfalls that can kill business. With problems like these, it’s tough for appraisers to justify increased fees.
Communication
Considering how many things we have to explain in an appraisal, basic communication, writing and spelling skills must be sound. Here are some things to watch out for.
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#1. WRITING IN ALL CAPITAL LETTERS AND NOT USING COMMAS OR PERIODS BETWEEN SENTENCES.
First of all, writing in all CAPITAL LETTERS is equivalent to SHOUTING! And, not using commas or periods is akin to talking for hours without slowing down or taking a breath; it’s exhausting and hard to read. When lenders see these problems, first they snicker, then they have a mindset that the appraiser is less than competent and unaware of basic writing skills (Tier 2). If you want higher fees, please unlock your “Caps Lock” button and try to write complete sentences, starting off with a Capital letter and ending with a period.
#2. Appraisers must proofread what they are sending to clients not only for typos but for logic and common sense. Below are some verbatim examples from recent appraisals.
Example 1:
“Comp #3 …no adjustment has been made for the noise”
In the next paragraph: “Comp #3 was adjusted for freeway noise under location”
Well, which is it?
Example 2:
Within the same appraisal:
“The estimates of cost new, accrued depreciation, site value as well as the value indicated by this approach should not be relied upon by any party for any reason.
Clients hire appraisers expecting that their value conclusions are reliable. It appears the appraiser is stating that his work is so shoddy it can’t be relied upon.
Example 3:
Within the same appraisal:
“If the subject is improved;” “In the case of new construction,” “In the case of proposed developments, unless otherwise noted…”
This house is not new, proposed construction or in a proposed development; it is a 90 year old house in good condition in a subdivision near a downtown core. What do these hypothetical or extraordinary assumption statements have to do with the specific appraisal assignment? Nothing, it is meaningless, misleading text that concerned the client who stopped the loan process and asked legitimate questions of the appraiser. This is pure laziness; cloning reports and not proof reading the final results.
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My recommendation is that after the appraisal is complete, stop (I suggest printing) and read the appraisal for relevancy to the specific assignment, spelling, and correct punctuation. Do not clone reports from yester-year; create templates specific to certain areas and property types.
Answering Client Questions
After reading reports, clients sometimes have questions about the report or property. Understand this very important fact: The client has the legal right to ask for clarification and have the appraiser answer questions that are not answered by the report. There is a difference between a client’s legitimate question and attempts at influencing the final value conclusion. The problem is many appraisers falsely believe that every question is an attempt to influence the report; some are but many are not.
Example 1:
The client asks: “Within your analysis, did you consider the two sales, located on the same block as the subject?”
The appraiser responds by insulting the client’s knowledge and using statements such as: “Where did you obtain your appraiser license?” “How dare you question an appraiser with 30 years’ experience?” “This is an illegal attempt at influencing the appraiser!”
The appraiser wrote out a five-page diatribe slamming the client for asking a simple question. All the appraiser had to do was answer yes or no; there is no need, nor is the client asking for a long answer. The appraiser is no longer on the lender’s Tier 1 list or qualified to receive higher fees.
Example 2:
The client asks: “What method did you use to determine the adjustments?
The appraiser responds:
“LISTING ADJUSTMENTS MADE BY THE LISTING REALTOR NOT THE APPRAISER.”
The Realtor!?! This is not Tier 1 or even Tier 2 work….this should be an immediate black listing by the lender and their AMC.
Example 3:
The appraisal indicates that the subject has a “beneficial view.” Adjustments were made between the subject and “non-view” comparables. There is no photograph or description of the view, which left the client wondering about the view. So the client asked, “Please provide photographs or descriptions of the subject’s beneficial view.”
The appraiser responded (and I quote word for word):
“The view and location have 3 predetermed definitions built into the software. The subject is listed as Beneficial because it is neither Nutral nor Adverse. IT HAS A BENEFICAL EFFECT ON THE ECONOMY. Beneficial being favorable or advantageous; resuling in good.”
Was this a lesson in economics combined with an inability to spell or a not-so-sober attempt at answering a client’s legitimate question? The client still does not have an answer to their question and from this point forward, the appraiser is going to wonder why they aren’t being paid more than $300 for appraisals. I’m not wondering, nor should you.
Rude Retort
Every chief appraiser or reviewer I talk to, whether they work for lenders or AMCs, mention the same issue: They are experiencing massive numbers of what come across as rude, arrogant, ignorant and nonsensical replies. “How dare you question my 30 years’ in the business”; “I’m going to charge you $50 for every question you ask”; “I’m going to turn you in for pressuring the appraiser”; etc. I understand that appraisers receive numerous questions that are often answered with “It’s in the report, please read page X, paragraph Y.” Most chief appraisers understand appraiser independence issues and that the line is often crossed by poorly trained staff. Redundant and even seemingly ridiculous questions are not an excuse for rude unprofessional communication. Appraising is more than a report with a number, it is your livelihood. If you want to stay in business and earn more, you must interact professionally and courteously. Appraisers are in business to solve problems. Appraisers who solve the problems of their clients and satisfy their needs the best, while following USPAP, will be paid the most. Welcome to the system of free enterprise.
Impacting an Appraiser’s Future
I asked the lenders and AMCs, “Why do you put up with bad business practices and rude appraisers?” Most said that finding Tier 1 appraisers in some areas is difficult, if not impossible, and fees are not the issue. They are willing to pay more, “if only we could find better appraisers who were more professional.” Many of the clients I spoke with say that when business slows down, many of the appraisers with bad business practices and weak appraisals will be the first cut from approval lists.
I seek out clients who have problems- we get paid by solving their problems. Yes I messed up with this one client but proper communications and being polite cemented a good relationship with the client and ensured continued Tier 1 fees. So it’s time to ask yourself, how are your communication skills, spelling, and your relationships?
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About the Author
Richard Hagar, SRA is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in over 40 states through OREPEducation.org. The new 7-hour online CE course How to Support and Prove Your Adjustments shows appraisers proven methods for supporting adjustments. Learn how to improve the quality of your reports and defend your adjustments! OREP members save on this approved coursework. Sign up today at www.OREPEducation.org.
Send your story submission/idea to the Editor: isaac@orep.org
by John Hicks
Mr. Hagar:
I look forward to your articles as they are insightful and typically on the money. However, the tone of this recent article is deaf to the plight of modern appraisers. I agree that we, as a profession, must behave in a business-like manner. However, I find it hypocritical that your top-tier clients lambast appraisers for relishing antiquated business practices when they exacerbate these problems by subcontracting their assignments to AMCs; a formality that has lost its necessity. Before my tenure as an appraiser, I worked as a telemarketer in college and as a collections agent after college. I can ensure you that the AMC culture is eerily similar to that of telemarketers and collections agencies; persistent to the point of aggression, lacking in empathy, unrealistic standards. Having worked as a staff appraiser for an AMC (feel fee to contact me privately for further details), I can also attest to the fact that AMCs’ reviewers often rely on software instead of judgement, and they are constantly on the lookout for “what’s wrong” with the appraisal. Since USPAP states perfection is not obtainable and perfection isn’t necessary to be USPAP compliant, it seems counter-intuitive for reviewers to persistently look for “what’s wrong” with the appraisal…because imperfection implies at least one thing is wrong. I would advise your clients to reallocate the funds sent to AMCs to looking for/hiring qualified reviewers who are more adept with proper appraisal methodology. After all, there are many ways an appraisal can be done. Instead of insisting an appraisal be done one particular way, why not have competent reviewers who are well-versed in an array of proper appraisal methodologies? Thanks for your articles. Please, keep them coming.
-by Richard Hagar, SRA
Many, but not all AMCs and lenders have classified appraisers into groups or Tiers. They use different designations or categories but in the end it’s a grading of the appraiser based on several factors: Turn time, quality of work, number of corrections, business practices, etc. Higher Tier appraisers usually, but not always, get paid more and are the first to receive orders. Yesterday (April 27) I sat in a room with several chief appraisers from the NW area. They were paying their Tier 1 appraisers between $700 to $1,500 (depending on location), for standard 1004 form appraisals (waterfront and complex appraisals had even higher fees). Their Tier 2 appraisers were paid less than $500 in the same areas.
-by Will
Good examples of appraisal quality when lenders/clients shop for the lowest bid and fastest turn time.
-by Michael Neal Arnold
First and formost, appraisers must think of their endeavor as a profession, not as a business. (Which is not to say there are no business aspects to administrating a professional practice.) Professions are not always about the bottom line. However, if one consistently acts professionally, the income side of things, tends to take care of itself.
-by Kram Tnegras
Bunch of crap. AMCs do not pay more money, it is all about fact and cheap with the exception of maybe a couple. I understand some appraisers that are rude and horrible at the profession and the AMC does not have to use them but they do because they are cheap and get it back fast. Two things which are made up the appraiser shortage and this arbitrary turn time rule. Bunch of crap and everyone is buying into it.
-by Brad Bassi
Hello Richard, your blog was interesting and as stated above, I try to be respectful, but that is a two way street. I found it interesting that chief appraisers recognize that there are some staff out there in the industry (AMC) that are not well trained or trained at all. So if the appraiser is to be respectful, should that also be considered from the other side of the fence as well. Last week I had 3 requests come into my office, all with similar questions. Out here in SoCal I live in a county with a weird set up for the APN. Most of my clients get it, some don’t. So I have a comment in all my narrative addenda that highlights the issue up front. Each request for revision was greeted by my email back to them stating, please read page 1, fourth paragraph. Two different lenders, same response. Oh I didn’t have time to read your addendum, I thought it was boiler plate. Well that lead to my boiler increasing in temperature. My response, was if you didn’t read the addenda, then you missed a lot of information. Might I suggest you review first then we can discuss. Now can you or your tier 1 clients please explain to me how that is acceptable. I find it interesting that more and more it is always the appraiser’s fault or issue. hmmmmm, maybe I should not include an Addenda and see how that flies since no one seems to want to read my report. Regards and thanks for the blog.
-by John Hicks
Well said, Brad! I totally agree.
-by K L - Aurora appraiser
I completely agree – the lenders and AMC’s pay us and we should do our best to appreciate them. That being said, I have had days when I am stressed, angry and annoyed by all the “revisions” over and over requested by reviewers that seem insignificant to me but I remind myself to be polite and try to work with them, no matter how stupid and insulting the revision request is. The underwriters and reviewers are just doing their jobs too and we should always do our best to be polite. I have been at times guilty of being less polite than I could be and if so, I apologize to the victim of my wrath. Also, we should always proof read our work. It is a reflection of our competence and attention to detail. I never clone reports – never. I do a fresh report each time with the only areas pre-filled being the client info but otherwise, the report is blank and that forces me to look at each field and line carefully to make sure its done right. Even so, I still find typos and mistakes when rushing to meet a due date. In spite of the stress, work load, due dates, and sometimes low fees, I believe we should do our best to be very polite, return calls and emails and put ourselves in their shoes too. They are just doing their jobs and collecting a paycheck. I also agree with Old Appraiser – beat me up on the airplane and let me collect a $2 million settlement for the inconvenience so that I can retire.
-by Joyce J. Potts, SRA, AI-RRS
Sparky,
Thank you for your intro Appraiser’s Manners Class 101.
-by dave
Very sad and looking at this issue the wrong way and Richard hope does not spring eternal for appraisers. First of all so many appraisers are beat down by the AMC’s, so they react in a strong and negative manner, as a lot of pent up upset. I told many clients to F off out of anger, but had a plan. Many in the business a long time have seen newbies come into the market, and then accept low fees, and then AMC’s complain as they are all bottom feeders and liars if they say they look for quality. A tier 1 appraiser should be starting at $750 and it is a joke to suggest a fee from $300 to say $450 for tier 1 as a real fee. Many appraisers have realized that it is better to work at Costco or Home improvement with benefits. I ended up saying no from all AMC’s a long time ago and now focus on litigation and estate commercial work. Some have quit and saw no reason to fight the system and others in denial accepted the lower fees and are angry about it. Leaving the business was a realistic alternative for many competent appraisers, and the bar is so low now it has become the market. Soon the computer models will take over SFR valuation and many are making choices to look for another line of work. I recommend that if you have awesome appraisal skills move up to commercial and litigation work on a paid hourly fee. I have been in the business 34 years, and I think we need a further cut in the supply of appraisers. To cover all expenses, retirement and insurance fees one will need to start at $750 for a basic SFR.
-by Older Appraiser
You are completely correct. This is an issue of an appraiser that isn’t competent. It is killing the business they keep taking these jobs and think that they are being picked on when they want 2 to 3 additional properties. When this is happening then the appraiser should state in the report before it gets to that point. You would have competent appraisers believe that we are all this way. You really need to stay and work and the call you made wouldn’t have had to happen…
-by James R. Engler
I started in the Real Estate/Property Management business with my Father in 1984 in Rapid City, SD. I worked very hard and studied the same to become a Licensed Salesman and then Broker, and at same time attended schools out of state to acquire my CPM Designation from the Institute of Real Estate Management. During this time I was in control of all monies coming in and out of 150 plus separate trust and earnest money accounts and preparing monthly statements and disbursing funds, maintenance orders, rent up and evictions having a mixture of residential, multi-family, apartments and commercial & industrial properties. The business was sold when my Father retired and I moved to Idaho to start all over again and again pushed and worked very hard and diligently, while working as a Certified Tax Appraiser, to become a LRA and then a CRA, which I am today. But anyone had any affiliation with government workers 20% perform 80% of the work and no enforcement whatsoever, on cracking down on those that wasted hours of tax payer time shopping online or chatting it up for hours on end. The fact that I was ethical, and considered myself a public servant who worked hard every single day for 12 years to carve out a career as a Tax Appraiser to no avail as I was terminated, a whole other story. I have taken well over 1,500 hours of CE to learn, to become proficient, educated, ethical and professional every single day, now under the tutelage of a Certified General appraiser who owns a very professional business for 40 years. The point I am making is ethics, professionalism, and due diligence is out the door now days for many of these so called appraisers/professionals, to include all levels of the appraisal licensing and designation tier levels. Yes, this includes the great MAI’s- The Appraisal Institute finest. Not all mind you are this way, but it does not take but a few bad apples to make the profession look like a bunch of amateurs and misfits and consequently what comes from that is low appraisal fees and or appraisers in residential, instead of working together cut each others throats to get an assignment. This in turn creates fees charged, same $ amounts as those charged back in 1990’s. Then of course you have those that are negligent and misleading and beyond reproach as far as ethical conduct. Then the all enforcement arm of the profession, the State Licensing boards slap their hands and send them on their way to continue producing the type of work and communication thus described in the article. My question then is unless these people are eliminated from the profession not just fined $500-$1,000 or put on notice these practices will continue throughout the profession which before long will no longer be a profession one can even hope to survive in financially. It is a shame and without enforcement of a meaningful nature or professional appraisers, lenders, underwriters, review appraisers, and AMC ‘s turning in these shoddy appraisers for their work product, etc., then followed up with sanctioning by the State Licensing Boards, those involved in this activity, will continue to wander about licensed, which will continue to allow the erosion of this profession. In my opinion, unless these non-professional licensee’s running amuck allowed to run rough shod over this business, and enforcement of ethical standards, due diligence, competency, etc. being nothing more than a paper tiger at best, good at growling but no teeth this will continue to plague those involved in this phase of the Real Estate/Real Property industry.
-by Tom D
being on the top rung, on this tier ladder, only means that the zombies below you are pulling on your leg to eat you. funny article. love dem bipolar appraisers.
-by Gerard C Record
There is no excuse for the appraiser conduct that you described but I can understand how it happens. I’ve never acted that way but have been tempted to. There is a general lack of competence vis a vis the staff that appraisers deal with, usually from AMCs. In general the AMCs just pass along “underwriting issues” without even reading the report . This is very frustrating, the typical comment is “it’s not from us, it’s from the lender.” Doesn’t the AMC have any responsibility for their own due diligence. They are supposed to be professional, not just button pushers .They act often like they are actually afraid to address the lender directly. Clarity and communication is a two way street. No one is infallible and often the matter should not even get back to the appraiser if a competent staffer at the AMC intervened. Lender and GSE attitudes are often arrogant and close minded. The attitude is often, what ever we tell you to do, DO IT!
-Anyone involved in the process, lender, GSE, AMC or whomever should be required to take a USPAP course before they start making demands.
The amount of time spent on non-sensical revision requests is over the top and a schedule killer. Because of the tight turn around time being demanded, there are silly mistakes being made by appraisers. Personally, I prefer to leave a report overnight before it’s reviewed the next day with a fresh eye. This is generally not possible because of the TAT demanded.
As a final thought, my best guess is that many of those AMC gripes are coming from those who assign to the cheapest/fastest after blast emails. I don’t find any of these issues from the clients I deal with. They know who I am, my competence and my diligence.
Bottom line, most of what you described could and should be avoided with a little bit of cooperation on both ends.
by Barry Noble
Thank you for this article. Grammar and spelling – common sense and thorough explanations, are key to appraisal reports. Every spelling mistake, poorly written explanations, or simply no explanations, are destructive, to a concise and believable report. Thank you for the article.
-by George St Johns
Mr. Hager,
-Would you please elaborate on your ‘tiered fee’ comments. This is the first time I have encountered the reference. In my practice I have always used a suggested fee schedule with notes as to exceptions. I make this available to my clients as requested. My clients typically pay a stated fee amount based on the assignment type. In my experience fees are only changed given extraneous circumstances and then after discussion. You refer to a tier 1 fee or some other fee (greater perhaps). Are we to believe then, let alone accept, that there are clients that have a graduated schedule of fees which is based on their perception of the appraisers work product? Something that is a “lets pay less to start” and go from there approach? If this is so do you support this practice or not?
by John Wold
excellent article. We appraisers should consider humility as a positive personal characteristic. Each report is important to the borrower as well as the lender.
-by Jallegro
Horse hockey!! You waste all this time worrying about capital letters Instead of the racist activities of these amcs bozos ! It isn’t ALWAYS the appraiser. Let’s see you can crop and blur photos so you can commit fraud and misrepresent because one of these idiots hasn’t learned to not be a bigot. Or tell the homeowner to remove their menorah or crucifixes ( this list never ends) horse manure on that. How about asking not to be emailed act 3:30 am by the yahoos in India where they are farming out their labor and then being blacklisted for complaining!! Or the Amc you had to turn into the state who won’t pay and the state sits on their butts. You need a life and to get into the real world there are much bigger fish to fry instead of this frivolous pander to the crappy Amc mentality!!! AND IF I WERE SHOUTING YOU WOULD KNOW IT!!
-by Older Appraiser
LoL Completely correct. A waste of my time reading the article. They think that will make you a better appraiser…. LOL>>>>
-by Old Appraiser
I Just want to be bumped and drag off a plane so I can retire.
-by Will
LOL!
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