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Fall 2011, Volume 28
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Fall 2011 Volume 28
From the Publisher Readers Respond
Why Appraisers Should Pat Themselves on the Back By David Brauner, WRE Editor
Comp Request or Value Pressure? By David Brauner, WRE Editor
Choosing Comps in Tough Market by Philip G. Spool, ASA
Insurance Insights By Cary Ryan, Assistant Editor
Making AMCs Pay Up By David Brauner, WRE Editor
Taking Back Control of Your Appraisals By David Brauner, WRE Editor
34 36 38
Customary & Reasonable Fees
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Fear of Fear Itself By David Brauner, Editor
I heard this statement recently in connection with the psycology that some-
times drives the stock market: there is nothing to fear but the fear of fear itself. For stock traders, it means rushing to sell—regardless of the actual economic data—out of fear that others might be selling out of fear regardless of the actual economic data. Yep, these are the kinds of vagaries on which our retirement accounts rise and fall. In the appraisal profession, fear is another sign of the further erosion of appraiser independence. Why do so few appraisers choose to put their But in my 20 names on comments for publication these days? plus years of Fear of retribution and losing what little work they covering this have left. There has always been the occasional profession I well-placed source wanting a story out but not willhave never ing to tie their name to it because of their insider position. But in my 20 plus years of covering this seen folks so profession I have never seen folks so universally universally afraid to go on the record. Why? Fear of losing afraid to go on business. The relentless consolidation of lenders the record. and AMCs means that losing one big box client can put an appraiser in serious trouble, given the state of things. Appraisers are jumping through more and more underwriting hoops to make AMCs happy, who in turn are trying to please their lender clients. Most appraisers know when request after request for “additional data” really means “we need a higher value.” Pressure is nothing new but here’s the twist: appraisers will tell you that it was much easier to fire a mortgage broker who exerted undue pressure before the Home Valuation Code of Conduct (HVCC) than it is firing an AMC today. This much consolidated power is dangerous for appraisers, consumers and taxpayers. And it isn’t only appraisers who won’t speak on the record. AMC management also are reluctant to say anything for attribution, even when they are defending their positions. More chilling, recently a spokesperson at a federal regulatory agency wished not to have the agency name attached to information they provided on how appraisers can better understand their rights under various appraisal independence legislation, with respect to filing complaints against AMCs. Someone has some serious juice when he or she can intimidate a federal regulator. We have not even emerged from the financial crisis and it seems the lessons are already lost or maybe they were never learned: no entity can be allowed to be too big or too powerful to fail or to be examined and criticized when warranted. As we have seen, when this happens we all lose. WRE 4 Working RE Fall 2011
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Customary and Reasonable Fees In the last 10 days I’ve been approached by no less than three new AMCs with orders they had for me. All three of them were readily willing to pay me $315 which, while still below the $400+ full fee for my market, is a positive development. Even more exciting, I got a call today from (medium-sized AMC). I have done almost no work for them for over two years because they wanted to pay me $230, even with all the extra work to be done. But today when they said they had an order, I told them I was hesitant to even consider it because my fees were very outdated/low in their system relative to current fees AMCs are paying in the wake of the reasonable and customary fee rules. She quickly told me that $300 for the 1004 conventional refi order is considered reasonable. I took the order. It’s still not the $400 that I should be getting but I never thought I’d see the day that this AMC would quickly offer a $300 fee. Guys, keep asking the AMCs, every time a new or old one calls with an order, to please quote you a reasonable fee and see how they react. No utopia but things appear to be improving with AMCs a bit. —Posted anonymously to the Orep/WorkingRE Challenging Low Fess Blog.
I figured out how to get paid higher fees. Call the AMCs you get orders from and change your profile to your new fees. It’s as simple as that. I have raised my fees to $350 with AMCs and they are still sending orders. Tell all other appraisers how it’s done. The reason they are not paying full fees to most appraisers is because they have simply not called to update the fee
they charge for their product. Think about it: why would they pay you $350 for a URAR when your profile still says you are accepting $200 for a URAR? —Appraiser wishes to remain anonymous
Since I stopped working for AMCs (except those who pay MY fee), I have enjoyed life more, been less stressed and have new clients who appreciate my services. Can you believe it? It was scary at first but it’s amazing how the work comes in when you put your foot down and say, “I’m not going to take this anymore!” Sorry, I don’t believe AVMs will win out. —Janice A Hiley, SRA
C&R Fee Survey/Results (now over 16,000) Can you email this information (Survey results) or do I have to pay a fee in order to get them? —Alexander Frank, Adviso Appraisal Management
Editor’s Note: There’s no cost to appraisers to download Survey results. You can find the latest results at WorkingRE.com (Click view Survey results.)
GAO Study Just a quick email to let you know that I was involved in the GAO appraiser independence study in 2010. I’m an independent appraiser who, along with two other appraisers, made the trip to D.C. We met with the top officials mentioned in the report to discuss appraiser independence issues. Many of the final conclusions included in the report reflect our discussion. —Dan Drelich Busy Appraiser She is exactly what is wrong with the appraisal profession—more specifically the shortsightedness of many residential appraisers. What will she do when she wakes up one day and some of those AMCs (based hundreds of miles away
from her hometown) simply turn off the spigot? It could be that they found a lower-cost “home-based appraiser,” lost a key client supplying volume in her market, disagreed with her on a report or closed their doors with no advanced warning because they were not profitable. How will she replace these precious clients—put on her business suit and hit the streets making cold calls to generate more work? Most AMCs call you out of the blue, right? Does your home-based appraisal business afford you the ability to travel to call on AMCs located in say, California? Or will you sit by the phone or computer waiting for the next AMC to find you? That’s a fantastic business model. This “busy” appraiser is just a few dropped AMC clients away from disaster just like the rest of us. I did not enter the appraisal profession to be forced to work out of a basement or kitchen. I did not enter this profession because it allowed me the ability to be at home when necessary. I entered this profession to build a professional career. To provide the best appraisal services in my market, target the best (local) clients in my market and to be rewarded accordingly. As professionals we cannot build or maintain a real business in a service industry where you have such limited access to the actual paying customer. Can you think of any other successful business that operates the way the appraisal profession must now? Appraisers must have a college degree, take the trainee course, endure a minimum of two years of apprenticeship while completing 300+ credit points experience and then pass the state exam. Most clients will not accept your work without five years of experience. You could get a PHD in the time it takes to become a competent Certified Residential Appraiser now. All this to enter a profession/business where you have to work at home to be profitable, much less support a family? Many seasoned appraisers have left the profession or are leaving soon. Most have a skill set that can pay them far more for
their efforts than the appraisal profession can now. — J. Hanes Walker
Housing Collapse: Whose Fault? Very well said. Unfortunately, the people who are blaming the appraisal are the same people who don’t understand the process, and won’t understand your well-written explanation. —posted to story anonymously It takes courage to appraise real estate, but even more stamina to write a truthful article about your own profession. Thank you for your insight. —posted to story anonymously
This article hit the nail on the head. Good job explaining. I couldn’t agree with you more. Now if they would only let us do our job. —posted to story anonymously Editor’s Note: This story, Housing Collapse, written by appraiser Mike Foil, is published in Working RE’s Online News Edition (8/31). To read it and other stories, go to WorkingRE.com and click WRE Online News Editions (left column). You can opt in to the email by clicking Opt-in Working RE Online.
UAD: Road to Ruin? The gurus at the GSEs don’t understand real estate. It is easy to view one property like any other when you are working with trillions of dollars in loans from all over the country. However, homes are not commodities like wheat, gold or oil. You cannot devise a set of codes for real estate to be analyzed by a computer that can apply adequately to all homes in all locations. As the GSEs take more people out of the review equation and eliminate the opportunity for common sense, more fraud will creep into the system. It will be very easy for corrupt appraisers and lenders to abuse the UAD system. page 6 8
Fall 2011 Working RE
Less in-depth information is going to be passed on in the process. Do we really need to learn another hard lesson in real estate on the national level? (See UADs story page 32.) —Posted anonymously to online story.
I have been an appraiser for more years than I want to admit. I am used to being an appraiser and having my appraisals form a reliable value estimate to assist the lender in making sound lending decisions. I am now reduced to being a form filler, all for the convenience of
HVCC Appraiser Talkback Blog Giving Voice to Appraisers Nationwide
Now you can share your firsthand
experiences about life after HVCC with fellow appraisers, regulators and lawmakers at the HVCC Appraiser Talkback blog. You also can take a survey about how HVCC/AMCs are impacting the profession and your business. The blog and survey will be online most of the year and the results published. You can also respond to this or any story published in WRE. Visit the blog at WorkingRE.com or OREP.org and be heard! WRE
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How in the world can the integrity of work in any field be maintained when the vendor’s history, reputation, and recommendations mean absolutely nothing? agencies that could not manage themselves, much less the appraisal profession. Not only have the taxpayers had to bail out FNMA and FREDDIE MAC but now a responsibly created appraisal report is secondary to form filling. No wonder so many licensed and certified appraisal professionals are not renewing their licenses. —Posted anonymously to story.
Expert Witness I found your article quite helpful at educating us appraisers who want to get into this part of our industry. What I didn’t see was any kind of advice on how to become one. I have been appraising for over 10 years. For the past couple of years, I have been knocking on attorney’s doors trying to get into the field. Lately, I have been banging my head against the wall wondering how I can get there. I know there’s a market for it. I have a website, advertise, pass out cards, knock on doors—and nothing’s been happening. I make a very good living appraising for lenders but I want to branch out into something more meaningful and lucrative. Is there some kind of magic saying like “Open Sesame”? —Joe Cicalese Reply from author Phil Spool: “The most prevalent type of expert witness testimony needed is for divorce (dissolution of marriage). You can target family lawyers for that as well as accountants. The up and coming need for appraisers as an expert witness is for deficiency judgments. It will be difficult to find out who handles deficiency judgments but the best way of getting that work is to contact the lenders you do work for. It
will be in a different department than lending but if you have a contact with the bank, have that contact introduce you to the REO department (Real Estate Owned) or the attorneys who represent the bank. And when I talk about the bank, it has to be the local bank, not Wells Fargo or JP Morgan Chase.”
From the Publisher: Absurd, Isn’t It? I’m quite sure that the thoughts and opinions running around in my head have never been so succinctly expressed by someone else before your Spring 2011 letter. How in the world can the integrity of work in any field be maintained when the vendor’s history, reputation, and recommendations mean absolutely nothing? I read your letter two more times just to make myself feel better! —Kathleen Glass, Certified Residential
Closer Look Home Inspector Safety Great commentary and advice about letting someone know when you’re alone in a home. I usually try to call the listing agent or buyer’s agent to let them know when I’m starting and when I finish. I’ve always believed that’s important info for the record. However, I think I will be more vigilant in making sure someone always knows when I’m starting and when I expect to be finished. Thanks for sharing. —William A. Zoller, CRI Editor’s Note: You can find these stories at WorkingRE.com under Library/Previous Editions (Vol. 27). WRE
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Why Appraisers Should Pat Themselves on the Back By David Brauner, Editor
Editor’s Note: Despite getting the short end of the stick, appraisers have stood up, fought back and made progress since the Home Valuation Code of Conduct (HVCC) was imposed on the profession over two years ago. And the final story is not written yet.
Appraisers, pat yourselves on the back.
You helped Congress understand that the independence and vitality of this profession is vital; so vital, lawmakers said, as to warrant customary and reasonable fee language.
Appraiser pushback was a driving force in getting HVCC terminated over some very strong opposition from banks, AMCs, Fannie/Freddie, regulators and even from voices within the profession, who defended HVCC to the bitter end as being “good for appraising.” Your letters, emails and face-to-face meetings with lawmakers, along with vital input from industry vendors, appraiser organizations and other interested parties, were instrumental in having customary and reasonable fee language drafted into Dodd-Frank, as well as getting an AMC licensing requirement included over some very powerful ($$$) players. You helped Congress understand that the independence and vitality of this profession is vital; so vital, lawmakers said, as to warrant customary and reasonable fee language. As clumsy and watered-down as the final C&R fee language wound up, its inclusion is noteworthy given the forces in opposition. We do not yet see what “customary and reasonable” will look like post HVCC but it surely will not be today’s low-bid model.
AMC Licensing About half the states have passed AMC licensing legislation. This battleground may turn out to be the most important of all. Strong regulation can cure much
David Brauner is Editor of Working RE magazine and Senior Broker at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 49 states (OREP.org). He has covered the appraisal profession for over 20 years. He can be contacted at email@example.com or (888) 347-5273. Calif. Insurance Lic. #0C89873.
10 Working RE Fall 2011
of what ails appraisers, including ensuring that AMCs/staff and principals are licensed and in good ethical standing, the timely payment of fees, protection from being forced to sign onerous third party liability agreements and protections which assure that appraisers can’t be removed from an AMC panel without cause—a strong support of appraiser independence. Some states are even wading into the customary and reasonable fee bog. There are also mandates to identify incompetence and fraud by appraisers. AMC licensing laws are similar to those for appraisers: if a party breaks the rules, it faces disciplinary action, sanction (fines), and the possible suspension or loss of their license and ability to do business in that state. This is a pretty big stick. (For more, read State Watch: Regulating AMCs at WorkingRE.com, click library, issue 27).
What We Know We know that many appraisers refuse to work for “half” fees—some out of pride and some with a clear-eyed grasp of their bottom line, knowing they are not in business to lose money. As a former boss used to say, if we’re not going to make any money today, we might as well go fishing. Conversely, a silent majority/minority of appraisers work for reduced fees even if they’re not happy about it. We have seen some drop off in the number of active and licensed appraisers, as per the National Registry at the Appraiser Subcommittee, but no mass exodus, not even close. In fact, some appraisers say they are satisfied with AMC work. Why?
Some are ex-fee-shop appraisers who are getting a better deal from AMCs than they did in their split-fee days. But there is more to the story: some AMCs do pay fairly and some pay better in certain markets to certain appraisers: probably where they can’t find anyone to work for less. Some appraisers take lower fee work because they have lower overhead, others because they have lower expectations. Over the years many appraisers have diversified away from lending work and are enjoying the benefits of having a choice about whom to do business with and at what fee. Make no mistake, most feedback we see is similar to the following, sent by Jennifer Ostrowski. “I am working for the lowest fees ever; I am still receiving pressure to hit higher values and having to call and hound my clients to pay. I actually have one client who owes me for files almost a year old. It seems like we appraisers have been forgotten. There is nowhere to turn for help and if we complain too much we will lose our existing clients.” The last point Ostrowksi makes is ironic in this post HVCC world: because of the consolidation among lenders/AMCs, appraisal orders flow from far fewer sources, making it harder and more costly for an appraiser to “fire” an AMC (and exercise their independence), for what they deem to be inappropriate requests. Many appraisers tell of refusing to make a change they believed would result in a less accurate report and then not getting paid and not getting future orders. Appraisers say, in some ways, they have less independence than ever now that AMCs run the show. Others we have interviewed and featured in stories say they never feel pressure from AMCs to hit numbers or alter reports. We know that while fees have been cut in half, appraisals have grown more complex and involved—“scope creep.” Many appraisers describe a relentless stream of requests for changes and
additional information coming from AMC reviewers. Some see this as a failure by AMCs to provide the “gatekeeper” function that they are being paid for. AMCs simply forward lender requests to appraisers without reviewing their legitimacy. Evidence appraisers cite are repeated requests for information that is already in the report. They attribute this to incompetence and negligence on the part of ill-trained AMC staff. AMCs say good appraisals don’t have problems and that there are just too few properly trained appraisers capable of providing consistently good reports. We know that some appraisers earn higher fees when they dig in and refuse to work for less, while others say refusing an AMC’s low-bid fees means never having to cash a check. Many believe that fees will rise only when appraisers band together and refuse to work for less than market rates. Others say no one is forcing anyone to work for less than a fair wage. We know this unfortunate irony: HVCC, created and imposed to support appraisal independence and consumer protection, has had the opposite effect: appraisers have less independence and control of their businesses, pressure and undue influence remain, consumers are paying more for appraisals (while appraisers make less) and appraisal quality has declined. Many Fixes, One Problem These are the fixes heard most often: a customary and reasonable fee threshold, like Congress intended, similar to the VA Fee Panel, except with a minimum threshold that leaves room for variable pricing based on the complexity of an assignment and/or the greater expertise and experience of an appraiser. Most every appraiser knows what “customary and reasonable” fees are in their market. The OREP/Working RE Customary and Reasonable Fee Survey surpassed 16,000, ironically, right around Independence Day (July 4). As of this
writing, the number is over 16,000—a strong response and valid sampling by any measure. (You can take the survey and find links to the results at WorkingRE.com.) Many appraisers ask why we need surveys at all: aren’t customary and reasonable fees what consumers pay for appraisals today? A “cost plus” model where lenders pay AMCs for their services is another solution. Many call for greater transparency, clarity and honesty for consumers by separating fees paid to appraisers and AMCs on closing documents. You may be among those who believe that a boycott is the only tactic that will work. No matter which of the many solutions you favor or which you debunk, it’s disingenuous to say that nothing is wrong: appraiser fees began declining virtually overnight after the imposition of HVCC and the rise of AMCs. One does not have to be an economist to know that this is not the free market at work. Appraisers: 68% Satisfied There has been a lot said recently about appraisers intending to leave the profession. Indeed the HVCC Talkback Survey – which has taken the industry’s temperature since April 2010, finds 46 percent of appraisers answering “Yes,” they are “making plans to leave the profession.” But here is a surprise: 68 percent of survey takers say they are “generally satisfied with appraising.” Find more survey results at WorkingRE.com (left column).
GAO Report Released Many of the points addressed in this story were heard by the Government Accountability Office (GAO) and acknowledged (rather matter-of-factly) in its report released in July, including lower appraisal quality, continuing pressure, low-bid ordering, etc. The report was mandated by Dodd-Frank. The bottom line recommendation of the page 128
Fall 2011 Working RE 11
study seems to be for Federal Regulators to develop minimum standards for the state registration of AMCs, reinforcing this as the new battlefield. Here is the Recommendation for Executive Action from the Report: To help ensure more consistent and effective oversight of the appraisal industry, we recommend that the heads of FDIC, the Federal Reserve, FHFA, NCUA, OCC, and the Bureau of Consumer Financial Protection—as part of their joint rulemaking required under the Act—consider including the following areas when developing minimum standards for state registration of AMCs: criteria for selecting appraisers for appraisal orders, review of completed appraisals, and qualifications for appraisal reviewers. (You can find the GAO Report at WorkingRE.com. Click sidebars and then GAO Report.)
No Choice = Low Quality/Higher Fees for Consumers The last word goes to a Wisconsin appraiser which highlights a “trifecta” of issues: appraisers and local banks are losing independence, fees for consumers are rising and quality is worsening. All of these assertions, by the way, are in dispute by AMCs according to the GAO
report. This appraiser writes, “Local banks are being forced to use specific AMCs when selling mortgages on the secondary market and are unable to use an appraiser, like me, whom they are familiar with. One local bank I work for has a rotating roster of appraisers for locally-held loans and pays C&R fees with turn times of two plus weeks. I have had exactly one stipulation call in dozens of appraisals for them. But they are given no choice in appraiser selection if they wish to sell the mortgage on the secondary market. I told the banker that $200 is the max the AMCs (they are forced to use) will pay local appraisers and that I have heard offers as low as $175 and even $125 per appraisal. The banker’s response was, ‘you don’t want to know what we are paying.’ This AMC is charging $600 plus. Suddenly I know why the local bank misses my customary and reasonable fees compared to AMC fees! They pay me about $350, if they order straight through me, for a loan they hold, and the borrower pays the same $350. With the AMC, I (the appraiser) get $200 to $240 and the bank/borrower is charged around $600,
on the loans that are to be sold through the secondary market. This is because the bank is required to use that AMC. And this is why I rarely, if ever, take AMC work. The problem with AMC fees is that they are unreasonably high to the borrower and unreasonably low to the appraiser, so, instead of the majority of the money staying in the local economy, it moves out of state. The secondary lenders are forcing local lenders to work with specific AMCs and denying them the ability to choose the appraiser. This bank sells a good chunk of loans to the secondary market. Therefore, they are seeing a wide disparity in both fees and quality of reports, with the local roster appraisers having lower costs to borrowers and higher quality, and the appraisals for the secondary market (through AMCs) generally having lower quality with higher cost to the borrower.” WRE
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Fall 2011 Working RE 13
Comp Request or Value Pressure? We dispu te that num b your prover ided.
by David Brauner, Editor
provide Please mps. o c more
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Editor’s Note: Are requests for “additional comps” and “clarifications” simply a reflection of newer, tougher underwriting standards or are they just another form of pressure? Also: using “appraiser survey cards” to diffuse complaints. This story was first published in Working RE’s Online News Edition (opt in at WorkingRE.com).
When are requests for additional comps
When are requests for additional comps and other items a legitimate part of underwriting and when are they a not-so-subtle attempt to influence value?
14 Working RE Fall 2011
and other items a legitimate part of underwriting and when are they a not-sosubtle attempt to influence value? That is a question many appraisers are asking lately. At stake are many things, including whether consumers are really better off after all. The Home Valuation Code of Conduct (HVCC), with its vast downside for most appraisers, at least removed the relentless lender/mortgage broker pressure that appraisers complained about for years, or did it? One of the goals of HVCC was appraiser independence. With appraisal management companies (AMCs) now handling the bulk of mortgage lending appraisals, there is some evidence of progress but many appraisers insist that “pressure” still exists: pressure for quick turn times, pressure for low fees and yes, pressure to alter reports to make a deal work. Posted to the OREP/Working RE HVCC Appraiser Talkback Survey, the following is representative of many (survey posts are anonymous): “Although AMCs do not pressure for values, there is still enormous pressure to manipulate the appraisal to fit their criteria. The end result is a value that is different than it might have been.” Over 10,000 appraisers have participated in two OREP.org-sponsored surveys, the original HVCC Talkback Survey and a second introduced a year later, HVCC: One Year On. The surveys are still active (find links at WorkingRE.com). For those
who believe HVCC cured lender pressure, consider this sobering survey result: less than half of all appraisers surveyed, just 44 percent, answer that they “never” experience pressure from AMCs. “With the AMCs you work with, are you asked to re-examine reports with the intention of trying to ‘make the deal work’?” Fortyfour percent (44%) answer Never, 41%/ Sometimes, 13%/Often, 2%/Always. For those who take Fannie/Freddie’s word that appraisal quality has improved since HVCC, most appraisers say otherwise. “Since HVCC, you’ve seen appraisal quality in general...” Sixty-one percent (61%) answer Worsen, 23%/Stay about the Same, 11%/Unsure-Don’t Know, 5%/ Improve.
Too Much Monkey Business Many appraisers say they feel greater pressure today because they have much more to lose if they are removed from an AMC approved list. The reason is the consolidation among giant lenders and their AMCs, putting more ordering power in fewer hands. Here is another post from the HVCC Talkback Survey that is representative of many: “Do I feel more pressure under AMCs? The answer is yes because if I refuse to make some ridiculous change…my score goes down and I get fewer orders. I never felt pressure before; now I feel it on every file.” And another post: “The pressure to perform is now evident in my business, or is it my business? I don’t work unless the AMC says I can. I only continue to
work if I satisfy the AMC’s clients—they call it customer service. The pressure to make values and turn times (many ask 48 hours) is tenfold what it used to be before HVCC. When a loan officer or anyone else used to ask me to do something that I felt was incorrect, I could tell them I reserve the right to deny service. Yes, I would run the risk of losing that client. However, that was just one client; with an AMC in the picture, if you are asked to do something you feel or know is not ethical or a violation of guidelines, you have to be careful because you are running the risk of losing an entire bank.”
Taking a Breath According to Thomas Inserra, MAI, SRA, the issue of whether requests for additional comps and other information are veiled attempts to influence value is never clear cut, even to someone who has been on all sides of the issue. “I’ve worked all sides of this issue: as an independent fee appraiser, Chief Appraiser for a lender, federal regulator, state investigator, appraisal management company (AMC), Realtor supplying comps to an appraiser, homeowner trying to refinance and supplying comps to an appraiser and as a Receiver, tasked with cleaning up banks that failed because of these and other lending abuses,” Inserra said. “I had an AMC come back five times to ‘dispute’ a value when I was a fee appraiser, which, in my book, is clearly an attempt to compromise the independent nature of the relationship,” said Inserra. But, Inserra says, multiple comp requests could just be an honest attempt to ensure that the appraiser has not missed relevant data. In the wake of the real estate collapse, lenders have tightened underwriting and increased the demands on appraisers. He also says that some appraisers may be oversensitive to the issue because of the years of abuse. “I’ve caught myself a few times overreacting when presented with comps from a lender/AMC,” Inserra
said. “A good rule of thumb is to give the client the benefit of the doubt and to know when to professionally respond with a letter (only) and when to push back when the line is crossed. On occasion, I have responded in writing to loan officers, Realtors and AMCs with something like: ‘Gee, the three comps you supplied me are already among the seven comps I supplied in my report, so no, the fact that you are providing them will not alter the value.’ What I really wanted to say was, ‘Did you actually read the report?’” John Shives, an appraiser for 30 years, owns and operates the AMC SAMCO. “Working only for community banks, I have seen the review of the appraisal intensify dramatically. This has been caused by Fannie/Freddie taking a hard look at the file of every mortgage that is heading to foreclosure, and the first item they look at is the appraisal,” said Shives. “If there is any item that doesn’t conform exactly to their requirements, Fannie/Freddie force a buyback or “cram down” of the loan. My first concern is working with appraisers who will create USPAP-compliant reports that pass Fannie/Freddie guidelines. Many appraisers have been working ‘solo’ or in very small shops and have fallen into habits of creating a report a certain way. The 2010 Interagency Appraisal and Evaluation Guidelines have placed a renewed emphasis on USPAP reviews for all appraisals. I believe this has been a significant, positive turning point for the appraisal profession. If an appraiser has written a logical report that complies with USPAP and provided detailed Search Parameters and Results explanation, if the comparable sales are challenging, then that appraiser will not have any back and forth. The issue is that many appraisers do not truly understand USPAP or how to write a defensible report. At SAMCO, we very seldom receive underwriting requests for additional comparables or information. That is because the appraisers who work with
us do the job right the first time. There is no back and forth.” A highly-placed executive at a very large AMC who wishes not to be named, also a veteran appraiser, told WRE that he hears loud and clear the common complaints of the excessive back and forth between appraisers and AMCs and that most appraisers believe that AMC personnel don’t know what they’re doing. He says each lender has its own way of doing things and progress toward standardization is slow. “Appraisers are used to doing things one way but they have to accommodate what the client (lender) wants,” he said. “Appraisers complain that AMC staff asks for things that are already in the report, so they think the staff is not reading the reports, but each appraiser puts things in a different place. It would be good to explain more, to give a better road map and/or standardize things, and that is what’s coming.” Shives also sees things improving. “The appraisal industry is becoming more professional. The quality is getting better and better. Appraisers aren’t being pressured for value anymore; at least I don’t hear about it. And the industry is going more towards ‘customary and reasonable’ fees. I just see positives in the future.”
Diffusing Complaints: Appraiser Survey Cards Complaints by homeowners who are disgruntled with a low value are rampant in today’s down market. Taking a complaint from a citizen too lightly, by not responding completely and professionally, can be a big mistake, even if the complaint is half-baked or flatly ridiculous. But responding properly takes time and effort. According to Inserra, the use of appraiser survey cards can dramatically reduce complaints and value disputes. “When I worked as the lender, we supplied the borrowers with survey postcards to rate the page 168
Fall 2011 Working RE 15
appraiser. Did they show up on time? Were they appropriately and professionally dressed? Did they explain the appraisal process, provide an opportunity to supply comps and ask questions about the quality and features of your home? The beauty of the survey is that 95 percent of appraisers always received the highest rating, indicating the homeowner was pleased with the appraisal service,” Inserra said. “That meant that later, if and when they were unhappy with the value, they couldn’t make up stories about the appraiser’s poor service as an excuse to get us to order a new appraisal. I can’t tell you how many times a homeowner rated the appraiser ‘very good’ in writing and then later complained about the value and tried to raise service issues. The survey was extremely effective at establishing and documenting that the service was professionally rendered and at defusing all future complaints against the appraiser. Our rate of value disputes declined by 90 percent once we implemented the survey.”
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The beauty of the survey is that 95 percent of appraisers always received the highest rating. Dodd-Frank: Mandatory Reporting Concern is growing among appraisers that the “Mandatory Reporting” section of Dodd-Frank is an open invitation to pressure or punish appraisers who won’t play ball. The language says: ‘‘(e) MANDATORY REPORTING.— Any mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, or any other person involved in a real estate transaction involving an appraisal in connection with a consumer credit transaction secured by the principal dwelling of a consumer who has a reasonable basis to believe an appraiser is failing to comply with the Uniform Standards of Professional Appraisal Practice, is violating applicable laws, or is otherwise engaging in unethical or unprofessional conduct, shall refer the matter to the applicable state appraiser certifying and licensing agency.” Even though the language seems intended to address legitimate USPAP violations, any complaint, even a frivolous one, can tie an appraiser in knots, whether the origin is a lender, AMC or homeowner. A completed survey card showing high marks for the appraiser is one more exhibit for the defense in any dispute. Inserra says fee appraisers can implement their own survey so that when they get a complaint, they can pull out the survey card and say, “That complaint is strange: this card shows the homeowner rated me with the highest ratings in all categories, so why is he/she complaining now?” This will help confirm that the appraiser acted professionally. The appraiser can then legitimately raise
the issue that this “complaint” might be nothing more than an attempt to get the appraiser to change the value.
Appraiser Independence Inserra says other steps implemented at banks where he has worked were effective at supporting appraiser independence. “We notified loan officers, who in turn informed borrowers, that once the appraisal was received, there would be no appeal since an appraisal, by design, is an independent judgment,” Inserra said. “We also explained to borrowers that an appraiser’s opinion of value may differ with the opinion of value of the homeowner or Realtor, and that we can’t force an appraiser to change his/ her value because if that were to occur, it would no longer be an independent estimate of value from a third party. With the survey card, in effect, we limited the role of the loan officer and homeowner to providing feedback regarding service issues only, and we let our review staff independently determine whether the appraisal quality and value were reasonable. If the review appraiser discovered quality issues, he or she was required to provide the appraiser with the opportunity to respond.” Another helpful tip, says Inserra, is giving the homeowner the opportunity to submit comps up front. “I wish the industry would establish a best practice that all comps or relevant information is to be supplied to the appraiser at the time of inspection and then from that point forward, there should be no further contact,” Inserra said. “Quality and value issues should be off limits and reserved exclusively to review appraisal departments.” WRE
Fall 2011 Working RE 17
Choosing Right Comps in Tough Market by Philip G. Spool, ASA
Editor’s Note: Choosing the wrong comps means producing an unreliable appraisal report, according to author Phil Spool. Here, he explains the art of picking comps in a difficult market.
You can have the latest map program,
aerials and any other special effects to make your report look as attractive and professional as possible but if you choose the wrong comparables, your result will be the worst appraisal report possible. This article shows the best way to choose comps, especially when sales of properties are scarce or not similar to your subject. Whether appraising a property for a lender under the Uniform Appraisal Dataset (UAD) or a non-lender, choosing the appropriate comparable sales in today’s market is the single most important item in arriving at your value. Therefore, it is important to understand what criteria are important in choosing the right comparable sales, especially when good sales are few and far between. There are many ways to begin your research and choose your comparables that will give you the best results. When selecting your comps, focus on location, similarities to the subject and date of sale. Your selection may also be restricted by your client’s guidelines and not by what you believe to be appropriate comps. What constitutes a good sale? The best answer is the sale that has the most similar attributes and the least amount of adjustments required, compared to the subject property and which meets the definition of an arm’s length transaction.
Sales in Substitute Neighborhood
What is a “substitute neighborhood”? A substitute neighborhood is a grouping of properties that have similar characteristics to your subject’s neighborhood and where the houses or condominium units are similar in price range, size, age and demand. With a shortage of good sales that have few adjustments, the appraiser sometimes has no choice but to expand the research area to include substitute areas. It is important if you go beyond your neighborhood boundaries to explain the shortage of comparable sales and the necessity for looking further away. Remember, there is no “one mile” guideline by Fannie Mae, Freddie Mac or FHA. This may be a guideline by a lender or appraisal management company (AMC) but it does not come from any quasi-government entity. Fannie Mae has instructed that appraisers set up neighborhood boundaries first, and then if need be, expand the choice of comparable sales beyond the neighborhood, but it says not to expand the neighborhood boundaries to fit the selection of comps. In your text addendum, explain why you need to go beyond your neighborhood for sales. You may find there are better sales in that substitute neighborhood that should not be ignored. Remember to think like a buyer. Would a buyer only consider the subject’s neighborhood or
Do you consider an older sale, say over one year, that is more similar to the subject, rather than a newer sale that is not similar and requires more adjustments? Not only do you have to consider the percentage net and gross adjustments for each sale, you should also consider the number of adjustments required. Would you rather have fewer adjustments with an older comparable sale or a more recent sale with many adjustments? Perhaps you would not want to consider the older sale as one of your first three comparables but it certainly can be considered as additional support. If your One Unit Housing Trends indicates a declining market, then you would be making a large negative market conditions (time) adjustment, but perhaps only one or two other adjustments, like size and other features. While a more recent sale would require a small time adjustment, it may require many other adjustments. I would rather choose a sale with the least amount of adjustments than the sale that is recent but less similar. If your sale is within the last three months but considerably less similar to the subject, is that sale truly comparable? Again, it may not be your first or second choice but with a market conditions adjustment being your main adjustment, that older sale may be your best sale. Conversely, I would not consider a two-year-old sale.
Philip G. Spool, ASA, is a State-Certified General Real Estate Appraiser in Florida, appraising since 1973. Formerly the Chief Appraiser of Flagler Federal Savings and Loan Association, he has been self-employed for the past 18 years. In addition to appraising, he is an instructor with Miami Dade College, teaching appraisal courses and continuing education. He is also the Vice President and Chairman of real estate programs with the Greater Miami Chapter of the American Society of Appraisers. He can be reached at email@example.com.
18 Working RE Fall 2011
would the buyer consider going a little further out to a similar neighborhood to look for what he or she wants?
Bracketing Sales One of the best ways to select good comparable sales is to bracket them
based on gross living area, site size and age/condition. If your property is under contract, do you consider bracketing the sales based on the contract price? Perhaps you shouldn’t as it might be considered a violation of USPAP under the Conduct section of the Ethics Rule, which states: an appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions. The fact that you are targeting the contract price might not be permissible. In many cases bracketing the gross living area is most important. If all of your sales are larger than your subject and your price per square foot adjustment is small, more than likely, this will result in a higher value for your subject. The same applies if the gross living area for all your sales is smaller than your subject; your adjustment per square foot might not reflect an adjusted sales price appropriate for your subject. I have seen adjustments as low as $15 per square foot for comparable sales that were significantly higher in gross living area than the subject, which resulted in the adjusted sales price of the larger comparables being similar to the smaller subject. In this situation, your adjustment for the gross living area has to be supportable.
Non-MLS Sales Would you consider the use of a nonMultiple Listing Service (MLS) sale if it is recent and similar to your subject? Perhaps you would. One should not only consider MLS sales but consider and analyze all sales to see which truly reflect the best comparison to the subject. MLS sales can be more easily verified with the listing agent and will more than likely list any sales or financing concessions. With a non-MLS sale, the appraiser must verify the sale price and any sales concessions with a party familiar to the transaction, whether it be the buyer, seller, attorney or title company (look at the recorded deed for the name of the attorney or title company).
Distressed Sales Distressed sales are a non-arm’s length transaction, such as a sale via an auction or bankruptcy. Some short and foreclosure sales can be considered distressed but not always. The use of a short sale or a foreclosure may be appropriate and meet the definition of arm’s length. What if a property is listed for sale that was not a short sale originally but became one due to it not selling? What about a property in foreclosure with a physical condition that is comparable to non-foreclosed properties and is listed for a period considered adequate, such as three to six months? If the property has an adequate marketing period and is in similar physical condition to the subject, then more than likely the short or foreclosure sale is not a distressed sale and should be considered as a comparable sale. Distressed sales should not be considered in your analysis but perhaps should be in a narrative discussion in your text addendum, to indicate that these sales do exist in your neighborhood but were not considered. Discussion of the sales not considered is very important. This may include sales that you considered well beyond an appropriate sales price. Overinflated, possibly fraudulent sales may still be taking place. Hopefully, the appraiser will not consider a questionable sale but just the same, he or she should not ignore it either. That is why discussing the sales in your neighborhood is important.
Abundant Foreclosures and Short Sales Many appraisers face the problem of having a majority of sales in their area as foreclosures or short sales. If the norm in your area is foreclosures and short sales, they cannot be overlooked and more than likely represent your market. If you explain this in your text addendum and they meet the criteria mentioned above (adequate marketing time and comparable physical
condition), hopefully your lender will accept them as bonafide sales. Active Listings/Pending Sales Many lenders, clients and AMCs require the appraiser to utilize listings or pending sales, especially in a declining market. Pending sales may appear to be a better choice than a listing that is not under contract, but remember that if you don’t have verifiable evidence of the contract price of that pending sale, it is no different than using a listing. No matter if it is a listing or a pending sale, the most important thing to remember is that the active listing or pending sale must have a reasonable exposure time in the market to assure that it is not overpriced as a comp. You would not consider a property that was just listed equally with a property that was listed many months ago with no recent price change. An active listing should reflect a price change within the past few months, otherwise the listing is not reflective of the current market. A good example would be a date of value of October 1, 2011. You have a choice of three listings: which one do you pick? Listing 1 was just listed on September 15, 2011. Listing 1 is not a good listing to use because it is too recent to test the market. If it resulted in a pending sale (sales contract entered into) within 15 days on the market, it does not have adequate exposure in the market. Listing 2 was listed in March 2011 and its most recent price change was May 1, 2011 or five months ago. Listing 2 is not a good listing because either the seller is in denial, refusing to lower the asking price, or the agent is not doing a good job keeping abreast of market conditions. Listing 3 was listed in April 2011 and its most recent price change was in September but it is a short sale. Would you use it as a listing? The answer depends on additional information about page 228
Fall 2011 Working RE 19
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the short sale listing. Is it an “approved” listing by the bank? Sometimes a short sale is listed at a very low price by an agent to attract potential buyers. The short sale listing has to be approved by the bank as a bonafide short sale. Would you then consider it in your report? The answer is stated in the March 23, 2009 Mortgagee Letter 2009-09, addressed to all FHA Roster appraisers. It states, under Appraisal Reporting Requirements in Declining Markets, appraisers must “insure that active listings and pending sales are market tested and have had reasonable market exposure to avoid the use of overpriced properties as comparables. Reasonable market exposure is reflected by typical marketing times for the neighborhood.” What this means is that your listing should be listed a minimum of three months in order to have enough time exposed in the market. Any time less is not enough.
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No Similar Sales With a market that has been slow with few sales taking place, there is a greater chance that your subject property might not have similar comparable sales. What if your subject property is unique to the extent that there are no similar sales within the past year or in your neighborhood? In this case, you have to lay out the facts and place them in the order of importance. Consider what is the most important line item adjustment: gross living area, site size, bedroom/bathroom count, design or location. Talk to the local Realtors to see what features are most important. Choose your sales with attributes most similar to the preferences of the buyer. What if your gross living area is most important yet your subject’s site size is considerably larger than other houses? Try selecting sales with a similar gross living area but with a smaller lot size. The same can apply to any attribute and
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select your comparables based on the most important attribute. In conclusion, choosing appropriate sales in today’s market is more challenging then when the market had an abundance of sales with few short or foreclosure sales and plenty of comps similar to your subject and in the same neighborhood. We did not choose to be in this situation, but following good and sensible procedures will make your selection of supportable comparable sales that much easier. I would like your feedback to this article. Please email me at firstname.lastname@example.org and a follow-up article on the selection of comparable sales will be published based on your comments. It is always good to get differing opinions, especially if your client restricts you to the type of comparables you select or if the review appraiser has a different opinion. WRE
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22 Working RE Fall 2011
Insurance: Insight and Advice from Inside Interview with David Brauner, Senior Insurance Broker OREP.org By Cary Ryan, Assistant Editor
Editor’s Note: David Brauner is Senior Broker at David Brauner Insurance Services/OREP. org. He has been providing E&O insurance to appraisers and home inspectors for 20 years. In this interview, he provides insight and advice from the inside on rates, claims, disciplinary actions, coverage and more. Ryan: Insurance professionals often say that not all errors and omissions policies are created equally—that which company/policy is important. Brauner: There are a handful of agencies, including our own, who have been around awhile and handle programs written specifically for appraisers and inspectors. These programs have underwriters, counsel and other staff who are familiar with the issues and have experience defending them. Some programs have “niche” extras also, like “pre-claims” advice and assistance and coverage for responding to state board complaints for appraisers. So yes, it’s important to know what you are buying. Most should offer you prior acts as well. Ryan: You always stress “prior acts.” Why is this coverage so important? Brauner: Most appraisers and inspectors understand by now that their policies are Claims Made, meaning that claims must be reported during the policy period. The “policy period” ends when a policy is cancelled or allowed to expire. Switching companies at renewal does not result in the loss of prior acts, as long as the switch is completed before the policy expires and the new company provides coverage for prior acts. Not every company does. If you switch to one that does not, you are running the risk of not having coverage for an old report when you need it. Most appraisers and inspectors realize that claims take a year or two to surface, which is why keeping prior acts coverage is so vital.
Ryan: So it’s important that appraisers ask their agent whether they will be getting prior acts? Brauner: Yes it’s vital. Appraisers especially are being sued in record numbers today—even the careful ones. You could be making a big mistake by giving up your coverage for past work. Ryan: What about complaints against appraisers from state boards? Brauner: Unfortunately, we are seeing a large number of complaints that are ill-conceived, emotional responses to the dramatic loss in equity many homeowners are suffering. No matter the merit, appraisers have to spend time and resources defending themselves—even if they did nothing wrong. It’s not fair but that’s the way it is. This is why losing your prior acts coverage can really cost you should a problem arise from the past. Ryan: Price is always front and center. Why do appraiser premiums continue to rise? This does not seem to be the case with inspectors. Brauner: Premiums for appraisers have risen over the last two to three years industry-wide, at all carriers, due to an increase in claims. The volume of work created by the refinance boom and housing bubble, and the subsequent pain caused by its collapse, have caught appraisers in the middle. Claims against appraisers have skyrocketed as a result. The good news is that we are seeing signs that the worst is over. Claims are slowing and premiums are leveling off, but it’s been a rough couple of years for
appraisers. For inspectors, rates have held steady or declined in the last few years, but they are still higher relative to appraisers. Ryan: Why do premiums continue to go up on appraisers, even those with clean records? Brauner: Premiums have risen industry-wide in the last few years for most appraisers, even those with clean records. Risk is always spread over the entire insurance pool. Again, it’s not fair but if your record is clean, at our company at least, you can take some comfort in knowing that you are receiving the very lowest premium possible beginning at year one. If your rate goes down each year, I would wonder why you didn’t get the lowest rate to begin with. Ryan: If you have a claim and it’s bad enough that an insurance company drops you, how hard is it to get insurance elsewhere? Brauner: Many times you can obtain coverage from another carrier if you are dropped. We work with several alternate carriers. If you have a claim, don’t give up. Sometimes all it takes is a fresh set of eyes, especially if the issue is not too serious. We advise clients to prepare their claim summaries and rebuttals for the best possible outcome: concisely, professionally and with inclusion of new procedures that might prevent the problem from happening again. Conversely, and I say this respectfully, handwritten page 408
Fall 2011 Working RE 23
Making AMCs Pay Up By David Brauner, Editor
Editor’s Note: Being paid half fees is bad enough; lately appraisers are complaining of being paid very slowly or not at all by certain appraisal management companies (AMCs). Here’s what you can do.
To most appraisers this story is famil-
In states where AMC regulation has been enacted and where “prompt payment” language made it into the final bill, appraisers do have recourse.
24 Working RE Fall 2011
iar: “I have been working with an AMC who shall remain nameless,” says Vrej Avedissian. “Having accepted a few assignments from them and dealing with their constant emails and phone calls regarding the status of each report, which borders on harassment, when it comes time to pay, it is a very different story. My contract with them states 30 days net but it has taken me in excess of 60 days to receive payments for my work. Is there a governing body or watchdog where an appraiser like me can file a complaint regarding late payment or non-payment?” In certain states, a civil action may be all that someone in a scenario like Avedissian can pursue, unless the delay in payment can be tied to coercion under a state’s appraisal independence law or in states where appraisal management company (AMC) regulation demands prompt payment for appraisers. In states where AMC regulation has been enacted and where “prompt payment” language made it into the final bill, appraisers do have recourse. As of this writing the states with “prompt pay” provisions in their AMC law include AZ, CT, MD, MO, MT, NM, OK, OR, TN, MS. Montana is one of these states, according to appraiser Darwin Ernst, a member of Appraisal Institute and Montana’s State Appraiser Board. “The guaranty of payment provision is section 17 of the Montana AMC regulatory statute, which was signed by the governor on April 22, 2011,” says Ernst. “Section 16(a) has related information regarding withholding or threatening to withhold timely payment. A violation of either statute allows appraisers to file
a complaint with the Montana Board of Real Estate Appraisers. Non-compliance may also be discovered through the audit provisions within Section 14.” According to Ernst, if found guilty, an AMC could lose the right to do business in Montana. “The AMC interests wanted language that would allow them to withhold payment if there was a dispute over a quality issue,” says Ernst. “But we said, pay the appraiser first and if there is a problem with the appraisal, report it to the Board for review.” Dodd-Frank, signed into law July 2010, calls for each state to enact AMC regulation within five years. Twentyseven states have AMC regulation as of this writing but only those listed above have “prompt pay” language, according to Scott Dibiasio, Manager of State and Industry Affairs for the Appraisal Institute. The bills require payment between 30 and 60 days depending on the state. According to Dibiasio, appraisers in these states can file a complaint with their state appraisal board, which regulates AMCs. If found guilty, AMCs could lose the right to do business in that state or could have some other, lesser, sanction imposed.
States: Do Not Coerce Many states have adopted appraiser independence laws with language prohibiting coercion in the form of withholding or threatening to withhold payment. These states include, as of this writing: AZ, AR, CA, CT, FL, JI, LA, MD, MN, MS, MO, NV, MT, NM, NC, OK, OR, SD, TN, UT, VA, VT, WA, WV. There is similar language in the Dodd-Frank Act, which is federal legislation and covers appraisers in every state. Here is sample language from the
Arizona law: § 32-3674. Appraiser independence; prohibitions A. Any employee, director, officer or agent of an appraisal management company registered pursuant to this article shall not influence or attempt to influence the development, reporting or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery or any other manner, including: 1. Withholding or threatening to withhold timely payment for an appraisal. Many appraisers report that they face the same kinds of pressures from AMCs today as they did from mortgage broker clients prior to the Home Valuation Code of Conduct (HVCC): namely withholding or threatening to withhold payments or future work as a result of not “making a deal work.” This post from the Working RE/OREP.org AMC Rater Blog, an information exchange for appraisers regarding AMCs, is one of many similar comments (posts are anonymous): “Regarding (XYZ ) AMC, I used to do appraisals for them until one day they told me the lender needed the value raised about $100,000. That I would not do, so they emailed me to say they would not pay for the appraisal. End of the work from (XYZ) AMC.” (Find a link to AMC Rater Blog at WorkingRE.com, left column.) Appraisers who live in a state with appraiser independence laws can file a complaint with the state regulator of the offending party if the payment issue can be tied to coercion, said Dibiasio. For instance, if the offending party is a real estate broker or salesperson, and he or she is specifically mentioned in the appraiser independence law, then the complaint would be filed with the state real estate commission. If it is a mortgage loan originator, then the complaint would be filed with the agency responsible for regulating mortgage loan originators. Most threats to withhold payment for an appraisal are going to come from a lender or an AMC. In those cases, the complaint would be filed with the state or federal regulator of the lender, and if the state has enacted an AMC law, the regulator of the AMC. In states
with “prompt pay” language included in AMC regulation, the coercion standard is not required. These complaints can be filed with the state appraisal board. States cannot force an AMC to pay an appraiser but they can sanction an AMC if it is found that the AMC withheld payment without good cause.
Federal Legislation As stated, Dodd-Frank has tough appraiser independence language that covers all appraisers who allege coercion with respect to non-payment. According to federal regulators, in general, contract disputes between appraisers and AMCs are governed by state law (not by the Truth in Lending Act or Regulation Z). But to the extent that nonpayment is linked to appraiser coercion, appraisers have another arrow in their quiver: the conduct is prohibited by Section 226.42(c)(1) of the Truth in Lending Act: “In connection with a covered transaction, no covered person shall or shall attempt to directly or indirectly cause the value assigned to the consumer’s principal dwelling to be based on any factor other than the independent judgment of a person that prepares valuations, through coercion, extortion, inducement, bribery, or intimidation of, compensation or instruction to, or collusion with a person that prepares valuations or performs valuation management functions. (i) Examples of actions that violate paragraph (c)(1) include:...(B) Withholding or threatening to withhold timely payment to a person that prepares a valuation or performs valuation management functions because the person does not value the consumer’s principal dwelling at or above a certain amount.” The example in Section 226.42(c) (1)(i)(B) is illustrative, not exclusive; so other conduct may violate the general rule under Section 226.42 (c)(1). However, withholding compensation due to breach of contractor substandard performance of services does not violate the rule. See Section 226.42(c)(3)(v).
Filing Federal Complaints This language provides a pretty broad stick. Appraisers may file a complaint regarding a violation of Section 226.42 (c)(1) of the Truth in Lending Act, with respect to alleged coercion, by contacting the federal agency that supervises the party believed to have violated the rule or its affiliate. For example, to complain about a violation by an AMC that is not a depository institution but is affiliated with a national bank that has violated the rule, the appraiser can contact the Office of the Comptroller of the Currency. (The Federal Trade Commission has enforcement authority over non-depository institutions but does not investigate individual complaints.) If the complaint is not linked to alleged coercion, the appraiser should be able to file a complaint with the state agency that supervises or licenses the entity in question (such as a state banking department or corporations licensing department). WRE
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MEMBERSHIP. FOR APPRAISERS, IT’S THE CORNERSTONE OF SUCCESS.
Membership Gives You Access to Knowledge —Free, or at Deep Discounts
Membership Is Your Key to a Personalized Web Portal
Only members have total, free access to the Appraisal Institute’s online Lum Library, where you can download more than 1,000 expert papers on a wide range of appraisal topics. Membership also gets you a 20 percent discount on most educational courses, including specialized offerings such as how to appraise in declining markets and a seminar on valuing green buildings.
In addition to the membership directory, the newly redesigned Web site lets you create a personalized page, “My Appraisal Institute.” You can update and manage your member profile, review your educational history, register for courses and much more.
Membership Brings Clients Right to You
Two new services, free and for members only, can be critical aids to professional success. The Ethics and Counseling Hotline answers questions about USPAP issues and other concerns. And the Appraisal Institute Service Center has knowledgeable staff counselors to help you find the best education path, support you through the designation process and much more. As a member, you will also be able to network with highly experienced appraisers who can provide advice and even referrals.
With our “Find an Appraiser” member directory on the Web site’s home page, your contact information and specialty is just a click away for clients. The directory now receives more than 75,000 hits a month.
26 Working RE Fall 2011
Membership Lets You Tap Into Free, Expert Guidance
Real estate valuation is a highly competitive business. And membership in the Appraisal Institute is the best way to get the competitive advantage that can be the cornerstone of your success. If you’re not yet a member, look at what you’re missing. If you are a member, be sure you’re taking full advantage of a wide range of enhanced member services.
Membership Puts You on the Way to Designation Members of the Appraisal Institute know that earning the MAI or SRA designation provides an even greater competitive advantage in a real estate market that now, more than ever, values the skills of independent, professional appraisers. For new members, joining is the first step to earning a valuable designation. Designated members earn, on average, 30 percent more than nondesignated appraiser.
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Taking Back Control of Your Appraisals by David Brauner, Editor
The lack of responsibility by AMCs to truly manage the process is also a failure to provide the appraiser with independence as required by law.
28 Working RE Fall 2011
to appraiser David Smith, AMCs just need to be told to do their job. “When an AMC receives a request from a lender for more information, BANG, it is immediately forwarded to the appraiser for correction without the AMC reviewing the legitimacy of the lender’s request,” says Smith (not his real name). “I often wonder if appraisers realize the function of an appraisal management company (AMC). These companies continue to eat into the revenues of appraisers while professing to provide a valuable service to lenders by improving the quality of the reports. Yet, they are far from providing this service. The lack of responsibility by AMCs to truly manage the process is also a failure to provide the appraiser with independence as required by law,” says Smith. Smith wonders why appraisers let themselves be pushed around when both state and federal law is on their side—at least in North Carolina. “Lenders and AMCs continue to request additional comps and appraisers continue to waste time by providing them, afraid they will lose work,” said Smith. “What many appraisers may not realize is that it is their responsibility to establish the Scope of Work, not the AMC. This should always take place prior to accepting any assignment and should include the number of comps that will be provided in the report. Certifications in appraisal reports include statements by which the appraiser ‘certifies’ that he or she has ‘selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property.’ Lenders and AMCs requesting additional comps should be directed to the Appraiser’s Certification, Item 7
(1004 forms) and the Scope of Work. The question I pose when asked for additional comps is, why would you want comps which I obviously think are less reliable than those already provided?” According to Smith, various state and federal appraisal laws exist to prevent pressure and that spell out what the lender/client can ask of an appraiser after a report has been completed. The DoddFrank Financial Reform Act on the federal level is one that provides protection, says Smith, and in North Carolina, General Statute S829, the Appraiser’s Act and the North Carolina Appraisal Board Rules all speak to these issues. Many other states have similar laws.
Independence Lost Smith is not alone. Many appraisers object to the deepening influence on their work product exerted by AMCs and lenders. While AMCs insist that many appraisers need “remedial instruction” in producing reports acceptable to Fannie Mae, Freddie Mac and others (see Comp Request or Value Pressure? Pg. 14), appraisers insist that the growing pressure to reshape and remold their reports threatens their independence like the neighborhood mortgage broker never could: today if you refuse to play ball with an AMC you run the risk of losing work from an entire bank, not just one loan officer. Given the growing leverage AMCs have, the stakes are higher than ever for consumers and taxpayers if appraiser independence continues to erode. To make matters worse, appraisers say many requests to alter their reports are so idiotic that they wonder who really is minding the store. “I was contacted to do page 308
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a field review with six comparables for $73,” says an appraiser in a posting to the OREP.org/Working RE AMC Rater Blog (WorkingRE.com, under Blogs, left column), designed as an AMC information exchange for appraisers (posts are anonymous). “I quickly declined. When I told the clerk it would cost $50 in gas, she wanted to know if I had to drive by the properties! These are the people earning the other portion of our fees. When the government steers the business through the AMCs because of their regulations, how are we independent?”
Relentless Reviews The trend is toward an ever increasing number of requests for corrections from AMCs/lenders after the report has passed an AMC’s review process. AMCs review reports to ensure that they adhere to the conditions of the assignment, meet the needs of the lender (except for value issues) and present an understandable view of the position of the property within its market area. According to many appraisers, requests for corrections are seldom related to identifiable USPAP issues. Dave Smith, the North Carolina appraiser quote above, says
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this is likely because AMC reviewers have a minimal understanding of the Uniform Standards of Professional Appraisal Practice (USPAP) and the laws of each state. Smith says he recently refused a request for an additional comp citing the applicable laws in his state and the issue was resolved. Another incident involved an AMC providing an additional comparable for Smith to consider. After citing text from the laws relating to the “consideration of appropriate information,” (Dodd-Frank, NC Appraisers Act and NC Appraisal Board Rules) and then learning that the request had not been vetted first by the lender or AMC as being legitimate, Smith asked the AMC to perform the function it was being paid for—management of the process. “The issue simply went away,” Smith says. “I’ve had instances in which I received correction requests generated by lenders, after the appraisal report passed the AMC’s review process, where I knew that the information being requested was in the report. After the AMC admitted they had not verified the request prior to submitting it to my office, I asked why, given that the report passed their review process initially. Dead air! Those types of calls have decreased dramatically,” says Smith. “If they want part of my pay, I’m certainly going to hold them accountable for the function they profess to provide.” According to Smith, North Carolina Appraisal Board Rules include a section related specifically to what AMCs can ask of an appraiser (21 NCAC 57D .0312 Requesting Additional Information from an Appraiser). It states, “An appraisal management company may request that a real estate appraiser who performs an appraisal for the appraisal management company may be asked to: • consider additional appropriate property information, • provide further detail, substantiation, or explanation for the appraiser’s value conclusion, or
• to correct errors in an appraisal report. And that if the AMC requests an appraiser to consider additional information, such request shall be sent to the appraiser in writing or by electronic means within 30 days of the date the appraisal is transmitted by the appraiser to the appraisal management company.” There are various state and federal protections in place, Smith says, that all say pretty much the same thing, including language in Dodd-Frank legislation (find the Bill posted WorkingRE.com, click sidebars and Dodd-Frank—see page 813 of the Bill). Here is Smith’s take on what an AMC/lender is permitted to ask. Consider additional appropriate property information: “The key words are ‘consider’ and ‘appropriate,’” says Smith. “When a client or lender asks for additional comps, there is an underlying reason. It is not unreasonable for an appraiser to ask the purpose for such a request or to ask the client/lender which property they would like to be considered. If they can’t produce specific information or a valid reason for the request, the request usually goes away with no additional time wasted.” To provide further detail, substantiation or explanation for the real estate appraiser’s value conclusion, through the registrant’s established dispute process: “Requests related to this issue are usually related to an unknowledgeable underwriter or AMC reviewer who is simply trying to avoid a potential problem by anticipating that the lender ‘might’ request an explanation,” says Smith. “I’ve seen numerous reports where Reconciliation was totally lacking and with little or no detail related as to how the report was developed, what steps occurred during the development process or how the appraiser arrived at the final conclusions. If a report is not self-supportive with a detailed Reconciliation, appraisers are likely to receive additional requests to provide further explanation or substantiation. However, appraisers who do
provide adequate Reconciliation and receive such requests often find that AMC Reviewers or lenders simply did not read the report, which is a much too often occurrence.” To correct errors in the real estate appraisal report: this should be self-explanatory, Smith says. Smith says appraisers can always call an AMC’s bluff but seldom do. “Appraisers are reluctant to tell clients that if they feel the report is inadequate or in violation of regulation, then they have the right to have the report reviewed or to file a complaint,” says Smith. “Why are appraisers not standing up to AMCs instead of wasting so much valuable time? It is either because they’re afraid the reports will be found to be in violation of regulations, they’re afraid of losing a client, don’t understand the role of the AMC or are unaware of laws that provide them with a means to handle such issues.” Smith says that the appraisal process gives lenders tools that allow reports to be reviewed but lenders and AMCs often return to the original appraiser to get the information rather than incurring additional costs associated with reviews. So the appraiser who continues to respond to such requests bears the additional cost burden. Considering he/she may already receive a less than adequate fee, his/her profit margin shrinks, considerably. “I find it amazing and disheartening to realize that most appraisers do not know or understand the laws which regulate them and their profession nor the responsibilities of AMCs, including dealing with lenders over issues arising after the report has passed their review process,” said Smith. “Until appraisers gain a full understanding of the regulations and demand independence, they will continue to be frustrated by a steady stream of time-wasting, profitconsuming trivia.” Smith concludes that appraisers must take responsibility for the work
they produce and do the things necessary to allow themselves to operate efficiently and profitably, and AMCs have a responsibility to notify state regulatory agencies when USPAP violations occur, as required by law. “I do not see this happening. When this begins to take place, I have no doubt that there will be
appraisers, who may be part of our problem, removed from the profession. And until appraisers start filing complaints on AMCs who violate their independence and fail to adhere to regulations, appraisers can rest assured that they will continue to face these issues,” he said. WRE
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Industry News In this opinion piece, Andy Anderson expresses what many fellow appraisers are thinking about the UMDP requirements. The story first ran in Working RE’s Online News Edition, emailing to 80,000 appraisers every other week. To opt in, go to WorkingRE.com and click Opt-in Working RE Online (left column).
to Ruin The UMDP/UAD Road ie Mae ram (UMDP) is mandated by Fann he Uniform Mortgage Data Prog regulator, ral fede r thei of ction dire the and Freddie Mac (GSEs) under knows by ncy (FHFA). As every appraiser Age nce Fina sing Hou ral Fede the pleting com for ents irem requ methods and now, these mandates include new al reports. rais app and s age pack loan of ery appraisal reports and for the deliv and Freddie the best interests of Fannie Mae These new requirements are in ng financial enci peri s ex es i Stat . The United Mac, not the American taxpayer and quality s rcement of lending guideline instability due to the lack of enfo place. The in ady alre e ew policies that wer control of regulations and revi stors to inve and ers lend s), (GSE ties ed Enti failure of the Government Sponsor elves ours find now of the economic crisis we follow the rules is at the heart and ing lend in ges chan atic e types of dram in. This is NOT the time for thes will continue and is t Wha . ents irem requ ery appraisal quality control and deliv ew appraiseducated underwriters and revi to be needed are experienced and raisal report app ible cred a and age loan pack ers who can recognize a reliable s regarding them. and make good business decision
By Andy Anderson
d- Um...Not Good
Fannie/Freddie Track Recor
inspections with less than diligent property The use of automated evaluations The attempt des. deca for ark chm ben ie redd of collateral has been a Fannie/F in lessduring the past “bubble” resulted to speed up the lending process fact The rts. repo al rais app le edib less-than-cr than-reliable loan packages and ew, revi er und loan packages and appraisals that the GSEs have thousands of that tive posi f proo is ult, back” loans in defa to force loan originators to “buy acceptable. ers and the GSEs was less than lend ks, ban the by rol quality cont continue to to able l appraisers should be Where is the accountability? Loca r and lendowe borr l loca the terminology that complete a report in English with ires each e the Dodd/Frank Reform Bill requ er can understand. Especially sinc al client rais app No r to the close of escrow. borrower to receive a copy prio out a With rts. repo the in es” “cod want to see other than the GSEs and lenders to ing ead misl anation, the new codes will be substantial addenda with an expl pdisa a is . It ents irem iliar with the UAD requ any reader of the report not fam the GSE rnment agencies have agreed to gove FHA and VA the at pointment th ting a crea of l ntia appear to have the pote mandates. The new requirements . ents irem requ and s code trained in the new misleading report to anyone not riterw und to have qualified and experienced It is much more important the reports rt for clarity than to streamline repo the ers and reviewers reading ncial mess fina the into us got t wha .” That is and loan files with “fast and easy raiser who app s may be an asset but the we are in. Some uniform standard a report in nts eme stat etc. quality, condition, puts misleading or inaccurate a lie, and is lie A rt. repo the in s code curate will also put misleading and inac r of the person at will not change the characte changing to the mandated form who completes the report.
Appraisal Program (UMDP) and the Uniform The new Uniform Mortgage Data ew revi of indig steps toward the automated Dataset (UAD) are the beginnin very Dataset Deli Loan al reports. The Uniform vidual loan packages and apprais MISMO and to rity” secu “job and re income (ULDD) requirement assures futu to the connse erate additional cost and expe possibly the GSEs but will gen assistance l ncia fina e mor continue to request sumer/tax payer, as the GSEs and easier er fast the d, ente lem imp n ges. Whe from Uncle Sam to fund the chan financial and s crisi to fuel the economic methods of review will continue include: ns latio regu d date man changes and instability of our nation. The new to standardram prog a is h whic , ram Prog • UMDP – Uniform Mortgage Data hased by data for mortgages that are purc ize appraisals and loan delivery the GSEs. dardize key set, which is intended to stan • UAD – Uniform Appraisal Data ote consistency. appraisal data elements to prom ction of al, which is a portal for the colle Port Data al ater Coll orm Unif • UCDP – , which Mac die Fred s sold to Fannie Mae or loan and appraisal data for loan . must be used by lenders (sellers) at for set, which is a standardized form Data very Deli Loan orm Unif – • ULDD er lend ing inat orig the g appraisal data) from transmitting loan data (includin ® 3.0. ion Vers MO MIS of entation to the GSEs; this includes implem tion, which Standards Maintenance Organiza ® stry Indu e tgag Mor – O ISM M • l standards nica tech of set a tion that created is a mortgage industry organiza P. UMD the of part as s GSE which are being leveraged by the Association. idiary of the Mortgage Bankers MISMO is a wholly-owned subs this entire that and you will find confirmation Visit the website at Mismo.org fulfillment ice serv and g automated underwritin effort is to create and promote is implethis that Now . rting repo investor through loan administration and to that lar simi es station of small business mented, we will see further deva wing follo ers rais app fee t den ers and indepen experienced by mortgage brok t). This duc Con of e Cod n atio valu e (Hom HVCC the GSE’s implementation of the ter degree by and income will be felt to a grea time, however, the loss of jobs r-staff loan nde d-le k-an ban GSE specifically other real estate professionals, real estate ly, rs and underwriters. Eventual originators, loan officers, processo ty to mine abili the as cted iders will be affe agents and real estate service prov appraisal from tion rma info te esta real and MLS (Multiple Listing Service) data with real te icipa lenders and investors to part reports will minimize the need for MLS services. estate associations and pay for
requireand implementation of these new Any investment into the creation funds ayer taxp of than a misappropriation ments by the GSEs is nothing less for time the NOT is this at, repe the FHFA. To and a further lack of oversight by the GSEs llow To a . ents irem requ al rais app dramatic changes in lending and ents is to lending and appraisal requirem to mandate the use of these new on, when nati our of s rest inte best t is in the agree that the GSEs know wha ble for onsi resp stors, banks and lenders are in fact, they, along with the inve ker Trac out Bail s om’ ey.c ording to CNNMon the current financial crisis. Acc t on or spen n bee have rs dolla ayer on taxp website, approximately 1.3 trilli it be time to s (Money.cnn.com). When will are earmarked to save the GSE ges? chan sary and for unneces stop supporting the GSEs’ dem r and insist . It is time to educate the consume bility unta acco for time is It orting the supp lly ncia financial crisis by fina our government stop fueling the r to use ume cons the e urag enco to It is time GSEs, major banks and lenders. petent com and unions that will use ethical local banks, lenders and credit real the in grity inte for time quality control. It is professionals for much needed estate professions. n citizen, a erson is a taxpaying America About the Author: Andy And er. He is an ran and independent fee apprais Vietnam-era Marine Corps vete grity—An Inte of der instructor and the foun appraisal education author and grassroots a g), p.or -are grity (Inte ls essiona Association for Real Estate Prof ethical est, hon of lic trust through the use effort created to promote the pub read To . tices prac ness busi onals and sound and reliable real estate professi kingRE. Wor to go , own your e leav to or story the scores of comment on this y UAD: Road to (left column) then click the stor com, click WRE News Editions clicking Opt-in by om RE.c king RE Online at Wor Ruin. You can opt in to Working . Working RE Online (left column)
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Do You Need General Liability Insurance? Do you need general liability insurance? You just might. Business Owner’s/General Liability Policy has been compared to a homeowner’s policy for your business. Coverage includes but is not limited to Property Damage to others, Bodily Injury, Business Interruption and Loss of Income coverage, Personal Property Coverage (computers, client records, buildings) and employee dishonesty. Inspectors, appraisers and real estate agents/ brokers need this coverage. Minimum premium is $500. Workers Comp also available. Call OREP. org for details and a free quote (888) 347-5273 or email: email@example.com with your request.
Insurance: How Saving Money Can Really Cost You If you are considering letting your errors and omissions (E&O) insurance policy lapse (not renewing or canceling) to cut expenses or thinking about switching to a company that does not provide “prior acts” coverage for your past appraisals just to save money, you should think again. Appraisers are being sued in record numbers today—even the careful ones. No matter the merit, appraisers have to spend time and resources defending themselveseven if they did nothing wrong. As most claims involving appraisers take several years to surface, letting your Claims Made insurance policy lapse, cancelling midterm or willingly giving up your prior acts coverage to save a few dollars could be very costly indeed should a claim arise from the past and you have no coverage. Call your insurance agent to find out what is really at stake. For more on E&O insurance issues, see Insurance: Insight and Advice from the Inside, an interview with OREP.org Senior Broker David Brauner, who has been point of sale for appraiser E&O insurance for 20 years (Pg. 23).
Download Results Free: C&R Fee Survey 16,000+ Join over 16,000 appraisers who have participated in the Working RE/OREP.org Customary and Reasonable Fee Survey and download the results free. To learn what appraisers in your area consider customary and reasonable fees (CRFs) for a variety of reports, including FHA appraisals, visit WorkingRE.com and click View Survey Results (top center column). This Customary and Reasonable Fee Survey includes 365 Metropolitan Statistical Areas nationwide plus rural areas for each state; eight products/services, including reviews and FHA reports. You will also find turnaround times surveyed, which is unique to this report. It’s good business to know what other appraisers in your area are reporting. This report is free. One goal of the survey is to support appraisers when negotiating fees with appraisal management companies (AMCs), lenders and others. Fees paid by AMCs are fluid and negotiable. Knowledge is power and greater data
results are harder to dismiss. A number of AMCs have contacted Working RE requesting nationwide survey results in an effort to set fair fees. It’s your data, use it to your advantage!
Learn UAD with Approved Education Credit McKissock Education/OREP have a UAD course (online and onsite) called Introduction to the Uniform Appraisal Dataset. Go to OREP.org (click Benefits, OREP Education Network and search your state).
OREP.org/WorkingRE.com Blogs & Surveys Challenging Low Fees This blog is an information exchange by and for appraisers seeking help with the customary and reasonable fee appeal process. Visit WorkingRE. com and under Blogs click Challenging Low Fees (left column).
Business Opportunity: Energy Auditing Here is one way appraisers and home inspectors are diversifying their incomes: energy auditing. It’s a service people want. Real estate professionals are diversifying their incomes by adding energy auditing to their list of services. Jeff Patterson, an appraiser in Maine and the author of Real Estate Appraisers and Building Inspector’s Guide to the Energy Auditing Business ($30), has been doing energy auditing for some time and finds that appraisers are “naturals” at the work. “The service involves a thorough survey or audit of a home or property and assisting owners in lowering energy costs,” said Patterson. “Once a home is audited the ‘energy efficient’ improvements are eligible for many financial rewards such as tax deductions, grants and low-interest loans. The process requires accurate measurement of the property, calculating the return on investment, coupled with an appraiser’s expertise and knowledge of real estate markets—specifically how these improvements will effect operating cost and value. Who better than an appraiser?” For more, visit WorkingRE.com, click Appraiser’s Guide to Energy Auditing (left column).
GAO Report on Appraising Released The long-awaited report on appraising by the Government Accountability Office was released to the public in July, in accordance with Dodd-Frank. Many of the issues familiar to appraisers are acknowledged in the report but many appraisers are asking: now what? You can find the report at WorkingRE.com (click sidebars).
FHA Appraising Easier, More Efficient Excellent material—will help me get to the next level—well worth the money! Thanks, J Joslin FHA work is booming. Here’s an opportunity to make your FHA appraising faster and more efficient. The FHA Appraiser Inspection Checklist and eBook are designed to get you up to speed and more efficient at FHA appraising. The Checklist serves as a field guide for completing your reports. The eBook saves you time and money by summarizing and organizing the material you need to know. Author/appraiser Lore DeAstra says, “We reviewed more than 450 pages of HUD materials and spoke with several HUD officials to compile the FHA Appraiser Inspection Form, course materials, and eBook. It will save you time and money.” The guide is updated with the following: formatting updates for improved ease of use: more concise information in an easy-to-follow eBook searchable by topic; web links to topics for easy access; symbols and pictures included by topic for at-a-glance comprehension to FHA Checklist; FAQ from appraisers and lenders by topic with detailed index by page; over 10 new ways to access information and contact FHA to check competencies and get help fast! For more, go to WorkingRE.com and click FHA Checklist, and eBook (top left column). “Differentiating yourself from others improves your business and marketing efforts,” says author Lore DeAstra. “These revised materials will help you obtain additional avenues of income pertaining to your FHA expertise now and into the future.” OREP insureds enjoy a discount.
AMC Rater This blog is an information exchange by and for appraisers about working with the various AMCsread the good but mostly the bad and ugly about which AMCs to avoid, such as the following: “Boy, are you right! I had to chase (AMC name removed for publication) for months for a check. We have friends that had to chase them for 120 days for $3,000+. They are supposed to be run by an ‘ethical’ appraiser but I think not! I did an appraisal for them, busted my rear to get it in in their turn time and then I got an email back saying they had cancelled it and utilized one of the appraisers in the area that does most of their work. I never got a cancellation email. So, I was out two day’s work and $375. Nice!” Learn what you need to know about working with AMCs at this blog. Visit WorkingRE.com and under Blogs click AMC Rater (left column). WRE
More at WorkingRE.com
Fall 2011 Working RE 33
Professional Marketplace Continuing Education at Cost firstname.lastname@example.org (888) 347-5273 David Brauner/David Brauner Insurance Services
Appraisers minimum premium: $501 (certain states)
Individual Appraiser E&O Rates Per Claim/Annual Aggregate
$1,000,000 / $2,000,000
$500,000 / $1,000,000
$300,000 / $600,000
Please Note: Rates vary by state. Commercial rates are slightly higher. Please call or visit www.orep.org for more (888-347-5273). Zero deductible available in certain states. A standard deductible of $500 per claim/$1,000 aggregate is included with each policy. Prior acts coverage is provided free for qualified applicants (call for details). Beginning appraisers/trainees qualify. If you would like an application for this program or a quote for a multiple-appraiser firm or for sales/brokering, please call or visit OREP: (888) 347-5273 www.orep.org. Subscription to Working RE magazine included. Financing available.
Appraiser E&O Options • Combine Appraising, RE Sales and Brokering: One low premium covers both appraising/sales & brokering. • Appraisal Firm Coverage: If you are experiencing an increase in rates, a decrease in coverage or new exclusions that seem unreasonable, it pays to shop OREP when your firm’s E&O policy is expiring. Many firms are switching to OREP. Many appraisal firms are surprised to learn how much they can save by shopping OREP. • AMCs: Many appraisal management companies are forming in the wake of HVCC. If you need this coverage, OREP can help. • Retiring: If you are retiring from appraising, ask your insurance agent about purchasing Extended Reporting Period or “tail” coverage. Without it, you are exposed for any liability that may arise from past appraisals. Premiums range from one to one-and-one-half times (100%–160%) your last year’s premium and can provide coverage forever into the future for past appraisals. Each program is unique. Call your agent for details if you are planning to retire.
Learn UAD: Approved CE 3 hours McKissock Education has created a continuing education course on the UAD, called Introduction to the Uniform Appraisal Dataset, for both online and onsite delivery (3 hrs). The course provides an overview of the UMDP and specific information on the requirements of the UAD. The reasons behind the creation of UMDP are explored, and the benefits to appraisers are enumerated. Key terms will be defined, including the many acronyms that are associated with the UMDP. General information about the UAD will be addressed, including its implementation date, types of loans that require UAD compliance, report form types included in the initiative, and USPAP obligations related to intended users and report content. Finally, the specific requirements of UAD are addressed in depth, with reference to specific Fannie Mae and Freddie Mac publications and guidance. Examples of compliant and non-compliant language in reports will be provided. The course is offered at a discount to OREP insureds and others at OREP.org (Click Benefits and follow link to Mckissock/OREP website for description.)
34 Working RE Fall 2011
“The class was great and the price was even better. Please let me know if you have any other discounted classes.” Thanks, Eric (OREP Member) Appraisers and Agents: The online McKissock course, Essential Elements of Disclosures and Disclaimers ($79/5 hrs. approved continuing education in most states), is available to OREP Members/Affiliates for administrative costs ($15.64). The purpose of the course is to provide appraisers with the tools to meet their disclosure obligations, while at the same time protecting them from unintended liability through the use of appropriate disclaimers. How and where must an appraiser disclose prior services provided on the subject property within the prior three years? How should repair items be disclosed in an FHA appraisal report? How should significant real property appraisal assistance be disclosed? How can an appraiser protect himself or herself when there appears to be mold in the basement? This course provides the essential elements of disclosures and disclaimers in appraisal reports. Every appraiser will benefit from this course. (Visit OREP.org, click Benefits and OREP Education Network.) Inspectors: Online Mckissock course Home Inspection Safety ($45/3 hrs. ASHI, NAHI, NACHI approved and also by 15 states), is available at administrative costs to OREP Members and Affiliates (ASHI, NAHI, NACHI: $5.74; varies by state). The objectives of the course are to: identify protective clothing that should be worn, recognize safety equipment used, understand limitations and exclusions, discuss general safety issues, recognize lead paint, asbestos, etc., discuss electrical safety, understand, heating and air conditioning precautions, recognize un-permitted additions and more. (Visit OREP.org, click Benefits and OREP Education Network.)
Mortgage Field/Property Preservation Many appraisers and home inspectors are now providing mortgage field and property preservation services for bank-owned properties. OREP has provided E&O and GL insurance to this industry for over 8 years and is a leader in the field. If you’d like a quote, please call or visit OREP.org, (888) 347-5273.
Working RE/OREP.org Webinar Series OREP.org and WRE introduce a new webinar series hosted by experts and designed to expand your knowledge and increase your productivity and bottom line—at prices that make sense. Tentative fall lineup includes: Making FHA Appraising Faster and Easier, Jump Start Guide to AMC Appraising; Better Appraising with Regression; Diversifying into Expert Witness Work. Schedules will be announced in Working RE’s Online Edition (Opt in at WorkingRE.com). You can also visit WorkingRE.com (click Webinar Schedule) or email email@example.com with “webinar schedule” in subject.
Group Health Care—No Application/Limitations for Pre-Existing Conditions California residents qualify for programs offered through Kaiser Permanente, Allied National and United Healthcare. These plans are available to real estate professionals on a guaranteed issue basis. Eligibility is accomplished by being a member/affiliate member of a real estate association/board. Kaiser Permanente offers eleven plans including the new Tax Advantaged Health Savings Account Plans. United Healthcare offers three HMO and four PPO plans, including a Tax Advantaged Health Savings Account. Allied National offers four Limited Benefit PPO Plans that offer highly affordable first dollar coverage including doctor office and emergency room visits and prescription drugs. These plans are available to California residents only through OREP (OREP membership not required). Please visit OREP.org, click Benefits or email firstname.lastname@example.org with medical benefits in the subject. A qualified agent will call to go over the options.
Professional Marketplace: Insurance, Education, Information and More. Home Inspectors E&O Insurance: $1,250 Covers One or Multiple Inspectors “Thank you very much for your very efficient and professional service. I can not believe how quickly you put this together. It has been a pleasure working with you.” —Joel Kunkel, Home Star Inspection Services If you haven’t shopped OREP, chances are you are paying too much for E&O insurance. The policy is offered by an “A” Rated carrier and covers all inspectors in your company, including independent contractors. Save money and time with OREP! Coverage Includes: Additional Insured Endorsement for Agents and other referring parties, termite and radon coverage, coverage for commercial inspections, pool, septic and new construction/code compliance! Includes coverage for energy auditing. Financing is available. Prior acts for qualified applicants; low-cost Premises Liability is available. Before you write your check for E&O this year, you owe it to yourself to shop OREP. Join the hundreds of inspectors who have switched to OREP. Call or visit for details and a quote: (888) 347-5273 or www.orep.org. Agent David Brauner, Calif. Insurance Lic. #0C89873.
2011 Appraisal Management Company Resource Guide Updated Guide authored by an appraiser for appraisers and marketed through Working RE/OREP.org. Over 300 Verified AMCs; the first 40 listed send 90 percent of the author’s work; national management companies; verified companies that send orders. The author personally verifies and signs up to each company listed and calls to verify immediate need for appraisers. Vendor specific errors to avoid are listed so you make fewer mistakes from the beginning and get more repeat orders. Author emails customers with new companies when added. Top techniques to generate more revenue included. Appraiser Marketing Guide included: Guide lays out all the details on how to get signed up with the appraisal management companies and information on creating top ranking websites. Order the Guide today and receive a free search engine optimized website built by Internet marketing specialists. For more and to order, see WorkingRE. com, top left column (click: AMC Resource Guide) or email email@example.com with AMC guide info in the body or subject.
Do You Need General Liability Insurance? A Business Owner’s/General Liability Policy has been compared to a homeowner’s policy for your business. Coverage includes but is not limited to Property Damage to others, Bodily Injury, Business Interruption and Loss of Income coverage, Personal Property Coverage (computers, client records, buildings) and employee dishonesty. Appraisers and real estate agents/brokers need this coverage. Minimum premium is $500. Workers Comp also available (appraisers/ agent/brokers). Call OREP.org for details and a free quote (888) 347-5273 or email: firstname.lastname@example.org with your request.
Looking for More Appraisal Orders? This week, three recruiting offers went out to readers of Working RE’s Online edition (via email). You can opt in at Working RE.com. This week we also ran a story about Understanding State Board Enforcement in our News Edition. If you’re not reading it, you’re only getting half the story.
Still Like Ink on your Fingers? If you value holding this magazine in your hands and would like to guarantee the delivery of every print issue, you can subscribe at WorkingRE.com (click subscribe) or send an email to email@example.com with subscribe in the subject. With the subscription comes many money-saving offers, such as approved education at cost (save $60) and goods and services: FHA Guide ($9 off), AMC Guide ($10 off), OREP/Working RE Webinar Series (discount pricing/free access) plus hundreds of premium content stories. For more, go to WorkingRE.com and click “subscribe.” Note: If you’re an OREP member, the subscription/benefits are included free (see page 3). WRE
Low E&O Rates, New Policy Servicing Department…and Yes, We Still Answer the Phone! Appraisers E&O Min. Prem. $501 (varies by state) Inspectors E&O Min. Prem. $1,250 Real Estate Agents/Brokers Min. Prem. $429 (varies by state) OREP has a new policy servicing department to streamline insurance requests from our clients, including renewals. Simply email your policy-servicing request to firstname.lastname@example.org to get the assistance you need, usually same day. Whether you’re an existing client or someone calling for the first time, you can reach us by phone anytime during business hours (8–5 M–F Pacific Time).
Business by the Golden Rule Our mission at OREP is pretty simple: “Business by the Golden Rule.” It means we treat you the way we want to be treated: with honesty, courtesy and efficiency. This is David Brauner, Senior Broker and Principal of David Brauner Insurance Services/OREP.org. Call us to see what you’re missing if you’re missing great rates, great service and business by the Golden Rule. Yes, with OREP you can have all three. Call toll free today: (888) 347-5273 or visit OREP. org. Policy servicing: email@example.com. OREP publishes Working RE magazine. WRE
OREP now in our 10th year! back: (L-R) Kevin, Ashley, David, Clark, Michael front: Lori, Maria, Mary, Carolynn, Cary, Chantel
“WOW! Thank you very much. You are the fastest and most efficient insurance agent I have ever done business with !!!” —Aloha, James
David Brauner Insurance Services: Calif. Lic. #0C89873
Fall 2011 Working RE 35
Home Inspectors Closer Look
H o me I n specto rs
S p e cial for
spec n I e m o
How Old Is That Water Heater? by Mike O’Handley, LHI
Editor’s Note: Though water heaters are relatively inexpensive compared to the price of a house, repairs for the damage caused when one suddenly has a catastrophic failure is likely to be expensive. This is the reason many inspectors want to be able to give their clients some idea of how old the device is and
How old is that water heater and what is the maximum ser-
vice life an owner can expect? Your clients need to know the answers to these questions and others. Service life varies from place to place and is affected by the quality of the product, minerals/chemicals in water, the amount of maintenance the water heater receives and usage. In other words, there is no set maximum expected service life. In fact, two neighbors with exactly the same brand water heater installed on exactly the same day on the same street in identical houses can have completely different experiences. In some parts of the country it is normal to expect between 10 and 15 years, while in others a homeowner is lucky if the water heater lasts 10 years. The manufacturing date is coded into the serial number of water heaters and, since there are more than 100 different brands of water heaters in this country, trying to memorize every single serial number code at first seems impossible. Impossible until one realizes that until just a few years ago only six manufacturers produced those 100+ brands and some shared the same basic method for coding. This makes the task of memorizing the coding methods far less formidable. In this article I’ll explain the coding method used by each of the six major manufacturers. At the end of the article, there are links to a handy decoding chart at the website Inspectorsjournal.com. The chart helps to decode about 95 percent of the water heaters currently in homes in this country and it is periodically updated*. American Water Heater Company American Water Heater Company, manufacturer of 52 separate brands of water heaters, uses a 10-digit serial number with a year/week code in the first four digits of the serial number. The “year of” is the first two digits followed by the two digit week of the year. For example, the serial number 0602****** indicates that the water heater was manufactured the second week of 2006. A complete list of brands manufactured by American is *This story is reprinted with permission from Inspectorsjournal.com. For a link to download the most recent versions of the decoder chart, visit WorkingRE.com, click sidebars and then Water heater decoder. If you are not a forum member at The Inspectors Journal (TIJ), you’ll need to register. Registration is free, only takes a couple of minutes and TIJ doesn’t spam anyone or transfer members’ information to others.
36 Fall 2011 Home Inspectors Closer Look
contained in the decoder chart linked to this article. A.O. Smith Corporation Until 2008, A.O. Smith Corporation manufactured only three brands of water heaters—A.O. Smith, Glascote and PermaGlas, and used a 10-digit serial number with a letter-month/ year code in the second third and fourth digits of the serial number. With this system, the letters A to M, excluding the letter I, are used to designate the months. The letter A for January, B for February etc., followed by the two digit year. For example,*H06****** indicates that the water heater was manufactured in August 2006. In 2008, A.O. Smith acquired State Industries, a manufacturer of about two dozen different water heater brands, and moved all manufacturing of residential water heaters under the A.O. Smith umbrella to the State facility. When looking at an A.O. Smith, Glascote or PermaGlas water heater, if the decoding procedure above doesn’t work, the water heater might have been manufactured in the State facility after 2008, in which case one should try using the State Industries procedure outlined later in this article and refer to the State portion of the decoding chart. Bradford-White Corporation Bradford-White manufactures two brands of water heaterBradford-White and Jetglas, and uses a 9-digit letter/number code with two letters signifying the year and month of manufacturer. The letters I, O, Q, R, U, and V are skipped to produce 20-year cycles. These cycles began in 1964 with the letter A, therefore the letter A in the first position of a B-W serial number can represent the years 1964, 1984 or 2004. B-W’s second letter corresponds to the month of the year as with the A.O. Smith example above. Prior to 1973, the month letter was placed at the end of the 9-digit serial number but from 1973 on it has been in the second position. For example, the serial number B********D indicates the water heater was manufactured in April of 1965 but the serial number BD******* can indicate that it was
manufactured in April of 1985 or 2005. The trick is being able to distinguish the age of water heaters with the same date codes manufactured after 1973. Fortunately, most home inspectors can do this easily by checking the large yellow energy usage tag on the unit to see which ANSI date is posted there. There is one exception to B-W’s serial number code that was caused by a computer glitch when some units were manufactured with a serial number beginning with OA—O being one of the letters that is not used. Any found with a serial number beginning with OA will have been manufactured in January of 1997. Lochinvar Corporation
There are other brands of water heaters being sold in this country that are not made by one of these six manufacturers; however, these 100+ brands comprise the overwhelming majority of residential water heaters that inspectors will encounter. Once one understands how these serial numbers work and learns to recognize each of the manufacturer’s patterns, it’s much easier to feel confident that one is providing the customer the correct information about the age of the appliance. WRE firstname.lastname@example.org
Lochinvar Corporation was acquired by A.O. Smith in July of 2011, so most Lochinvar numbers in the chart are accurate as of this writing. Lochinvar only manufactured four brands of water heater—Lochinvar, Energy Saver, Golden Knight and Knight, and used the identical dating code system used by Bradford-White Corporation. Rheem Corporation Rheem Corporation manufactures 20 different brands of water heaters and uses two different serial number series, one that is all numbers and the other which is both letters and numbers. However, the date code is based on the first four digits of the serial number, which signify the month followed by the year, the letter, which is in the fifth position, doesn’t need to be considered. For example, any Rheem manufactured product bearing the serial number 0794****** or 0794F***** will have been manufactured in July of 1994. State Industries State Industries was acquired by A.O. Smith in 2008. State manufactures 23 separate brands of water heaters, including the Kenmore (Sears) brand, and uses a letter-month/year serial number code similar to the A.O. Smith model with the letter signifying the month, followed by a number for the year. The difference is that the code is in the first three positions of the serial number, therefore a serial number C05******* indicates that the water heater was manufactured in March of 2005.
49 hours of CE Required for Appraiser Licensing
Continuing Education Bundled Packages 3 Convenient (online) 3 Group discount through OREP/Mckissock 3 Open to all appraisers, agents and inspectors in 49 states For course information, visit OREP.org (click Benefits, Education) email@example.com Fall 2011 Home Inspectors Closer Look 37
Home Inspectors Closer Look
Three Minute Marketing by David Brauner, Editor
Editor’s Note: The following marketing advice works, according to appraisers and home inspectors.
Appraisers Good advice is to go after clients who really need your services and who are truly depending on your work product. Create a professional image and work product: website, business cards. Pay attention to how you present yourself—create and polish a 30-second introduction speech that can be used to sell yourself and your services. Concentrate on how to target the business you want and the people you want to meet. Get to know your clients personally—keep on the radar. Diversify: eminent domain (both sides), estate planning, federal tax filing (upon death), litigation—divorces, disputes, damages, tax protest—valuation, consultation, trial assistance, mediation/ arbitration on real estate value. Develop skills to help clients in disputes.
Other professionals are a good source of assignments and referrals—architects, consultants of all kinds, contractors. Develop a mindset and image to match that you are the one to send referrals to because you will take care of their customers, friends, family, etc. more than the guys who do mass production. Network to find these individuals—networking groups, civic organizations (Lions, Kiwanis, etc.), non-profits, volunteering, participating in local committees, boards, religious affiliations/organizations, etc., doing pro bono work. Be prepared to help out other professionals first. Check out the story Back to School: Marketing to Agents & Brokers (WorkingRE.com, under Didn’t Make It to Print).
Non-Lender Work (marketing locally) Credit Unions: many appraisers say local credit unions are great clients who pay fairly and in a reasonable time frame. 38 Fall 2011 Home Inspectors Closer Look
We heard this online: “We changed our business model almost a year ago but it takes a plan and time. The quantity of orders from lawyers, accountants and homeowners don’t come in as often as mortgage appraisal requests and since I still have to pay the bills, we’re working towards achieving a good mix. I do different kinds of networking and have been getting referrals from existing attorney clients to their colleagues in other firms. I did an estate assignment yesterday. We are doing some name branding locally, too—make your company be part of the community. Sponsoring local baseball/football leagues for kids is a very cost effective method: hanging a sign on the outfield fence. With the sign we get free advertising on the league’s website. We are doing this for the first time this year. You never know who is sitting in the stands.” FHA work is booming. In order to qualify you must be a Licensed Certified appraiser and on the FHA Roster. If you do FHA appraising already, see FHA Appraising (pg. 33) on how to make FHA appraising easier and faster. AMC work: If you’re looking to jump start the process and use your time most efficiently, check out the 2011 AMC Guide (Inside back cover). This Guide is written by an appraiser from his own experience finding, evaluating and working with AMCs. In the Guide, he lists the AMCs that send orders and are the best to work for. If you want the inside scoop on which AMCs to avoid, check out the OREP/Working RE AMC Rater Blog (WorkingRE.com, under Blogs, left column.).
Appraisers & Inspectors Energy Audits: Many home inspectors and appraisers are adding this service to their business with good results (see Energy Guide page 33 for more.) Both appraisers and inspectors are naturals for this rapidly expanding service area. If you are a home inspector and have E&O insurance already, check with your provider as many programs, including OREP’s, include coverage for energy auditing in the home inspector’s insurance policy. OREP offers a low-cost package of E&O and general liability for appraisers and other professionals for under $1,000. Call OREP for specifics (888-347-5273). Mortgage Field/Property Preservation: These are check-list inspections and light cleanup of foreclosed homes, such as winterizing, boarding windows, securing, lawn and grounds maintenance. This field is booming currently with the unprecedented inventory of bank-owned properties. The work is
typically issued through large contractors who usually require their independents to carry insurance. OREP has a combined Errors & Omissions/General Liability policy that meets industry requirements for under $1,000 (not including taxes and fees). Call OREP/David Brauner Insurance services for more (888) 347-5273.
Home Inspectors Structural Inspections: Structural inspections for banks as part of the loan closing process (particular expertise required). These are typically partial inspections of the property performed to address specific concerns raised by an appraiser. Examples of these types of inspections would be to insure that manufactured homes comply with FHA tie-down standards or if an appraiser finds a bowed or cracked basement wall or termite damage or basement water seepage and the mortgage company then requests a structural inspection to insure that the home’s foundation is sound before funding the purchase. Bank Inspections (aka FHA/VA Certifications): These requests come from mortgage companies. They are typically partial inspections of the property performed to address specific concerns raised by an appraiser and provide opportunities for inspectors with the requisite expertise. Examples are a buyer purchasing a home with FHA financing—the appraiser expresses concerns about the roof’s ability to remain watertight. The mortgage company then requests a roof certification from a qualified inspector to insure that the home’s roof is capable of providing two or three years of watertight use before funding the purchase. Other examples: heating and/or cooling system, electrical and plumbing systems, etc.
Coverage for Rate! w o L e Appraising & Sales On Combined Errors & Omissions Insurance Real Estate Agents/Brokers & Appraisers! ave! sify & S
Well Inspections: These consist of water sampling for bacteria analysis as part of the real estate purchase contract. Samples are taken and sent to a private lab that performs the bacteria tests. Other services: septic inspections: The septic system is inspected as part of the sale process. Relocation Inspections. Forensic Inspecting: According to inspector Joey Caballero, the best thing about forensic inspecting is the challenge. “It’s not like a typical report. These cases make you concentrate more and work harder. They make you a better inspector.” Caballero, inspecting 20 years, has handled cases where he’s been called in to give his expert opinion on the work of a contractor, trades person or fellow inspector. Sometimes it involves testifying in court at $200 an hour. While he doesn’t solicit the work, lawyers, real estate agents and homeowners in his area know him by reputation and credentials. Caballero is past president of the Florida Association of Building Inspectors and ASHI’s South Florida Chapter and a State Certified General Contractor. “Expert witness work is typically done by a select group; usually old-timers with a lot of experience. The key to getting the work is having the credentials,” said Caballero. “The key to being successful is being thorough and professional. I do my homework. I do the research, assemble my findings in an easy-to-understand binder and can back it up in a profession manner if I have to.” According to Caballero, he’s never lost a case. WRE
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7 Appraisal Insights from page 23
scrawl, ranting, incoherence, blaming others for everything, even if it’s true, works less well in persuading an underwriter that you are a good risk. It pays to put time and thought into your response, even if the complaint is frivolous. Ryan: What other advice do you have for those who find themselves with claims or disciplinary actions? Brauner: Report the event to your agent/carrier when it happens, for your own protection. If you fail to report a claim and let your insurance policy lapse, either intentionally or by forgetting to renew on time, and then try to obtain a defense from the carrier, you may very well be left without coverage, even if you were insured when you did the report. But if you get a claim or dispute on the record during the policy period by reporting it to your agent, it should be covered down the road even if you do let your insurance lapse and the policy is no longer in force. Also, most insurance policies require you to report claims and incidences in a timely manner. Therefore, a carrier can potentially refuse coverage if it feels the delay in reporting hurt the defense. It hardly ever happens, but you don’t want to be the exception. Ryan: So honesty is the best policy? Brauner: For many reasons. You should report claims or disciplinary actions on any and all insurance applications also. It may seem counterintuitive to disclose something that is easier to hide and maddening if the incident or complaint is frivolous. But disclosing is for your own protection. And not just to make sure that there is coverage when you need it. You also don’t want to report having “no claims or incidences” on an application and then have a claim surface that you clearly knew about prior to submission of the application. Underwriters are the opposite of insurance agents—underwriters look for any reason possible not to write your business. If they think you 40 Working RE Fall 2011
failed to disclose something intentionally, they may refuse coverage for what they consider to be dishonesty. If this happens, it makes it harder to get coverage elsewhere, as you might expect. Ryan: So claims and incidences should be reported by appraisers and inspectors for their own good? Brauner: Yes for the reasons stated. Also, receiving professional assistance early can often diffuse an issue and make it go away. If you are an appraiser and have a disciplinary action, we advise seeking the advice of counsel, which is covered in many cases. Ryan: Any other advice for those with claims/ incidences? Brauner: Yes, we advise clients to submit their renewal information, including claims documents, far in advance of expiration to allow adequate time for quoting. Renewals with claims are more complicated and take longer to underwrite. Beginning the process early can relieve the stress of uncertainty as your policy expiration date approaches. Ryan: Renewing ahead of time is a good idea for business reasons as well, right? Brauner: Yes. AMCs and lenders have begun asking appraisers for updated insurance documents well in advance of the policy expiration date, sometimes 30 and even 60 days ahead of time. I take these calls every day from appraisers. Some report being cut off from work until the new documents are furnished, even though the old documents are still current! New docs can usually be furnished in a day or so but no one wants to lose even one job these days. To avoid this scenario, we encourage OREP insureds to renew early. Because most AMCs and lenders require a minimum of $1 million in coverage, we also advise our clients to purchase this amount right off the bat for the same reason, so they don’t lose any work. Home inspectors in certain states also must show proof
of insurance to licensing boards to keep working, so it pays to renew early and avoid the stress. Ryan: What other insurance advice do you have? Brauner: When asked about the keys to longevity, I once heard a doctor offer this advice: don’t smoke and wear your seat belt. In the same spirit, the best advice I can offer about insurance is to make sure you have it when you need it. If you have insurance, renew before the policy expires to ensure continuous coverage for all past work. We contact our insureds through mailings, e-mail and phone calls, as their expiration date approaches, to make sure they know what’s at stake. If you’re retiring, consider Extended Reporting Period or “tail” coverage so you can sleep at night. This covers your old reports into the future. It can only be purchased from your current carrier and only for a limited time after the policy expires. Ryan: And if you don’t have insurance? Brauner: If you don’t have insurance, consider getting it because even good appraisers and inspectors get sued. Consider this: as expensive as E&O seems these days, the most recent “average cost of defending a claim” that I have seen is $25,000. If you have to defend yourself out of pocket, that is two to three decades’ worth of premium. Ryan: Any closing thoughts about year ten for OREP.org and Working RE? Brauner: I’d like to thank everyone who has entrusted their insurance to us over the years. Our mission at OREP is Business by the Golden Rule, which means treating everyone the way we want to be treated: with honesty, efficiency and courtesy. WRE
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