Summer 2012; Volume 30

ACI is a division of Verisk Analytics (NASDAQ: VRSK), a leading provider of risk assessment solutions to professionals in insurance, health care, mortgage lending, government, risk management, and human resources. Verisk Analytics includes the holdings of Insurance Services Offi ce, Inc. (ISO) and its subsidiaries, which provide essential solutions to the insurance, mortgage lending, and healthcare markets. For more information, visit www.verisk.com.

Richard Heyn, SRA and Dawn Molitor-Gennrich, SRA keep you in-the-know.

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Raising the Bar in Appraisal Technology

ACI is a division of Verisk Analytics (NASDAQ: VRSK), a leading provider of risk assessment solutions to professionals in insurance, health care, mortgage lending, government, risk management, and human resources. Verisk Analytics includes the holdings of Insurance Services Offi ce, Inc. (ISO) and its subsidiaries, which provide essential solutions to the insurance, mortgage lending, and healthcare markets. For more information, visit www.verisk.com.

Richard Heyn, SRA and Dawn Molitor-Gennrich, SRA keep you in-the-know.

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Raising the Bar in Appraisal Technology

Working RE Summer 20122

MissionWorking RE is published to help readers build their businesses, reduce their risk of liability and stay informed on important technology and industry issues.

Subscribe Today! Print, Premium Content, Savingswww.workingre.com (click subscribe) Subscription included with purchase of E&O insurance from OREP.

Your comments and letters are welcome! All stories without attribution are written by the editor.

Editor and PublisherDavid Brauner [email protected]

Assistant EditorCary Ryan

Associate EditorIsaac Peck

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WorkingREServing Real Estate Professionals

Working RE is published quarterly and mailed to real estate appraisers, home inspectors, agents and other real estate pro-fessionals nationwide. The ads and specific mention of any proprietary product contained within are a service to readers and do not imply endorsement by Working RE. No claims, representations or guarantees are made or implied by their publication. The contents of this publication may not be reproduced either whole or in part without written consent.

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Summer 2012 Volume 30

38

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From the PublisherReaders RespondLender’s Choice: Violate USPAP or BlacklistedBy David Brauner, Editor

Fighting Your Way Off a Blacklist By David Brauner, Editor

When Nice Guys Finish Last (AMC Complaints Rise) By T.J. McCarthy, SRA

How to Work Successfully with AMCsBy David Brauner, Editor

How Well Do You Know Your Rights? By David Brauner, Editor

Professional Appraiser Series: Other than Lender WorkBy David Brauner, Editor

Environmental Due Diligence by Francis Xavier (Rich) Finigan

How to Increase Volume AND Quality By Dustin Harris, “The Appraiser Coach”

Closer Look for Home Inspectors: Risk Management: Inspection Basics to Manage RiskBy Michael Casey & Una Lucey, Esq.

OREP Announces New Home Inspector Insurance ProgramLand Value: Extraction MethodBy Philip G. Spool, ASA

Industry NewsProfessional MarketplaceEffective Marketing: Going LocalBy Rick Bunzel, Pacific Crest Inspections

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Fighting Your Way off Blacklist

After reading your article, I am in the process of trying to make the same com-plaint to see if it gets me anywhere. They (large bank) don’t give you a chance to rebut or even threaten you first. They simply send you a letter stating you have been placed on their ineligible list. In my case, they cited two appraisal reports. One of the reports was on MY OWN house, which I built myself a few years back and have NEVER appraised. The other was in a rural area made up of 40 acre parcels and they did not like my comp selection. I responded with the facts about my own house and asked to see a review of the rural property as yes, the comps were not great, but they were all I had available and I wondered what sales were found that were considered to be better than what I provided. I was answered with a letter indicating that their decision was final and that the issue is over. The most disturbing part is that because an appraisal was cited that I did not complete, one might assume that the reason this report was chosen was due to my name simply being placed into a computer which pulled up any reports that are not perfect reports. Further, this leaves the question of whether my report was even reviewed or just selected because it had comps over one mile or adjustments that exceeded rec-ommended lending guidelines. Surely an intelligent person would catch the fact that the report was not even mine if they were conducting a review of my report, right? After all of this, I tried to look at things from their perspective, a business perspective. I understand the reason for blacklisting. However, a blacklist should not be a career death sentence. There should be something in place which

According to our OREP/Working RE How’s Business? survey (pg. 37), most appraisers are as busy or busier than last year. There’s still a lot of discontent but the silent majority seem to be back to work. Most appraisers we talk to at OREP, to place their insurance, tell us they are scrambling to keep up. One caveat—this is being written in the spring when times are good; you are reading this in summer, which tends to be a slower time. We hear AMC fees are rising in general, espe-cially for those who refuse to work for less. Many are diversifying into non-lender work which is more satisfying and provides more security and stability. Many are learning how to fire clients who are more trouble than they are worth, or refuse to pay what the job is worth. AMC ranks are thinning too, but as appraisers get savvier and more sure-footed, those AMCs that want the best appraisers will have to compete for them. When the banks care about using the best appraisers, AMCs will care. Many appraisers are learning their rights and responsibilities in this post real-estate-collapse world of increased state and federal regulation. It is a double-edged sword: appraisers have more protections and rights than they realize but they also are under closer scrutiny to do creditable work. It’s important that everyone knows what is expected of them as there are severe consequences for anyone who runs afoul of the rules. Many appraisers are taking this time to reorganize, hire help or increase their technology know-how: “going mobile.” In a recent OREP/Working RE webinar, 39 percent of the attendees polled did not have a website! This issue, we take you inside all these topics in the hope that some of you will explore a new idea, exercise a new protection or pursue an opportunity when the little voice inside you says “go for it.” The profession has suffered an unprecedented assault; most apprais-ers lost something, some lost everything. But today most are still stand-ing—a few are stronger than ever. The ranks are thinning but as a result, fees and opportunities are growing. No matter what happens with cus-tomary and reasonable fees or other changes which may or may not restore fairness to the profession, it feels like we’ve turned a corner and are moving ahead. WRE

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gives the appraisers a chance to correct the problem if there is indeed an issue with their work. I spoke to the person from (the very large bank) who wrote my letters of denial. I asked if there was any-thing that I could do to be removed from this “do not use” list. She informed me that there are no options—that once you are on the blacklist, you are on forever. I informed her that this decision affects ALL work for an appraiser, as indicated in your article, since AMCs cannot take the chance that it may go to one of the big four and that these decisions should be weighed carefully as this has a huge effect on a person’s livelihood. She did not seem to have any remorse and actually seemed irritated that she had answered the phone. I live in an area made up of many smaller towns, many being quite rural. Most are of second home, resort towns, made up of all custom built houses on differing sized par-cels/lots. As you might imagine, apprais-als completed in this area are often not great-looking reports but we are limited to the data that is available. I wish it were all cookie-cutter tract housing but this is simply not the case. I do honest work to the best of my ability which I think is also true for the majority of appraisers. Blacklisting should be reserved for cases of potential fraud, dishonesty or just plain incompetency, but only after corrective action has been attempted and an indi-vidual’s work is still lacking. – JS

When nice guys Finish Last

Thanks to this article I probably avoided becoming a victim. An AMC told me they did an internal review on a report I completed and felt I came in conser-vative on my value. They asked me to consider raising the value $5,000. I said no way Jose.” —Raul Leon

Editor’s Note: See story pg. (14). Story reprinted from Working RE’s Online News Edition.

AMC Rater

You would provide a good service to appraisers if you would actually rate the AMCs and provide alerts to their finan-cial ability to pay us. I have to worry about that every month. In my area there is no work unless you go through an AMC. I am not getting good fees but fair fees—at least sufficient to keep me in business so far. —Dennis Geist, Geist Real Estate Appraisal

Editor’s Note: OREP/Working RE’s AMC Rater Blog (at WorkingRE.com) is set up as an information exchange on AMCs. There were warning signs about AppraiserLoft, for instance, in this blog and in other forums. Also, the 2012 AMC Guide separates the good from the bad AMCs (see pg. 38), based on the expe-riences of the author Bryan Knowlton.

Appraisers, Bullies, AMCs and Banks

Are you hearing out there that many appraisers are giving up doing review work? I used to do quite a bit but I am giving it up entirely because of Dodd-Frank. With the new regulations it is too much of a risk for a $375 review to get fined $10,000 if you don’t turn someone in. I do not believe it is our responsibility to be policemen. Our job is to give opinions. And if the lender and client have a beef, that is their responsibility. —Doug Quenzer, Wisconsin Certified Residential Appraiser

Suspension Merry-go-Round

After 25 years of appraising, I can only say that if I were to pick a profession today, it would not be appraising. I have 18-year-old kids asking for things that are ridiculous. It would make for a nice article to print stories about what is asked to give the lender. I was asked to explain the damaged car parked near the property. It was a result of a hit and run the night before and belonged to the neighbor and it happened to be shown partially in one of my front pictures! And the best part, I had to find out whose car it was! Get a police report as an attachment! Now you understand why I do not like appraising anymore!

page 6 8

I once again love appraising. I found other appraisal work for non-mortgage clients. I have taken back the control of my business. I say no to low fees, I say no to AMCs that treat me badly.

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How Well Do You know Your Rights?

I appreciate what you are stating in your article but in real life it is not going to work. I have stood my ground with AMCs and refused or put up a fight on some of their requests only to be black-listed. I have called after 90 days of no payment and requested payment, only to be blacklisted. I have requested fee increases for complex properties, only to be blacklisted. I have scheduled appoint-ments within 24 hours, greeted the homeowners with glee, wore slippers in their house, showed up 10 minutes early, worked weekends and holidays, only to be blacklisted for doing my job. This, after all of the tears I have shed over how poorly I have been treated and the position I have been forced into—to beg for work and just take the order because I need to put food on the table. To hate

my job that I once loved, but at the end of the day, I am the only one who can make a change. And just like all of the articles we read, that say you can do it, just say no to the low fees and go after other appraisal work—well they are right. I once again love appraising. I found other appraisal work for non-mortgage clients. I have taken back the control of my business. I say no to low fees, I say no to AMCs that treat me badly. I say yes to my independence and to you I say take your business back and take control of your future. —Cindy Sizemore

good news

Good news for appraisers! It is so busy during the first four months of 2012 you do not have to accept low-fee work. I have successfully raised my price with the couple of AMCs that allow you to set your own and I have aligned myself with two new AMCs that pay higher. I take private party assignments. I called a local appraiser after seeing a copy of his recent appraisal, made

for an AMC: $225 for seven comps. I could not believe my eyes. I called him and told him I am in the middle of an FHA condo for $370—five comps. You appraisers who are complaining about low-fee work and are setting the fee at $225, are you kidding me? I told this appraiser all he needs to do is call the AMC and raise his price. Leaving $100 on the table for every appraisal is stupid-ity. You’re not going to undercut anyone but yourself. I am happy to report that life is good; I will make over $100k this year and I ride my bicycle a minimum of three-four days a week to my assign-ments. I’m going green. Yes, the home-owners are somewhat puzzled by this but are happy to know that they at least have a LOCAL appraiser. By the way, we are fortunate enough to have enough requests to focus on the local work and turn down the more distant orders. I have denied more than five appraisals this week alone. Good luck out there and love what you do. WRE

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Lender’s Choice: Violate USPAP or Blacklisted By David Brauner, Editor

Faced with violating

USPAP or the loss

of business, Dingeman

chose a third option:

fighting back.

Talk about being between a rock and a hard place. The new normal for too many appraisers these days is being banished to a “do not use” list by a lender, without any opportunity for rebuttal or even know-ing why. Now here’s a new twist: at least one large lender is giving appraisers the chance to rebut a questionable review; the problem is that doing so may violate the Uniform Standards of Professional Appraisal Practice (USPAP). John Dingeman, a Certified Appraiser in Ariz., recently received a letter from Chase, citing “possible USPAP violations” and demanding a response within 21 days or else. The or else is exile to Chase’s Ineligible Appraiser List. Appraisers who have faced a similar fate say that orders from appraisal management companies (AMCs) dry up almost overnight as a result. Not only do orders stop that are associated with that particular lender but all orders cease. Here’s why: AMCs can’t take the chance that a loan, any loan, might end up at that lender someday—so they simply turn off the spigot and skip to the next appraiser on the call list. Since there are fewer (big box) lenders controlling a larger share of the business, running afoul of one can mean trouble.

Fighting Back

Faced with violating USPAP or the loss of business, Dingeman chose a third option: fighting back. He responded to

Chase with chapter and verse of vari-ous state and federal laws protecting appraiser independence. “Per USPAP’s Confidentiality section of the ETHICS RULE, I am not permitted to discuss the appraisal or the results with anyone other than my Client or Intended User, and Chase is neither,” Dingeman said. “Even if the Client is no longer in business (Per USPAP FAQ 69) the appraiser-client confidentiality is not terminated and the appraiser is still required to comply with the requirements set forth, regardless of the status of the client.” Because, in his words, he was threat-ened and intimidated with “placement on the Chase Ineligible Appraiser List” if he failed to respond within 21 days, Dingeman says he was compelled to send copies of the letter and his response to various state and federal regulatory agen-cies for action, as well as to the FBI and the Chase Appraisal Compliance Officer. “This type of intimidation placed upon appraisers is inexcusable and should not be tolerated. Chase should be account-able for knowing what USPAP requires,” Dingeman says. Other problems cited by Dingeman are that he was not furnished with a copy of the appraisal, so he has no idea whether the bank has a true and com-plete copy. He also was not provided any information on the reviewer, so he can-not be certain about his/her qualifications or geographic competency. It’s good to know one’s rights, Dingeman says. In his rebuttal letter to Chase, Dingeman writes, “Please be advised that Arizona Revised Statute

Editor’s Note: A large lender is giving appraisers an ultimatum, saying in effect, violate USPAP or be placed on a “do not use” list. John Dingeman is one such appraiser who finds himself between that rock and that hard place. But he understands his rights and is fighting back.

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. He has covered the appraisal profession for over 20 years. He can be contacted at [email protected] or (888) 347-5273. Calif. Insurance Lic. #0C89873.


32-3603 specifically states that all real estate appraisals and appraisal reviews performed in this state on a property in this state shall be performed only by indi-viduals licensed or certified in this state. Please note that if the review appraiser involved is not licensed or certified in the state of Arizona as a real estate appraiser, he/she are in violation of state law and subject to disciplinary proceedings from the Arizona Board of Appraisal.” Richard Hagar, SRA, who advised Dingeman on the Chase issue says, “Let’s be clear, Chase is asking the appraiser to violate USPAP and talk to them about an appraisal where they were not the client. If the appraiser won’t violate USPAP and talk to them, Chase says the appraiser is violating USPAP and will be blacklisted. Talk about twisting USPAP. How do you fight back? Know more than they do and fight back with the law, rules and regulations.” Hagar, the presenter for the OREP/Working RE webinar How to Limit Liability, Maintain Independence, and Fight Influence, says it is critical for appraisers to know and understand their rights. “John and I talked extensively about his problem including the ethics and privacy issues,” said Hagar. “He is correct. There is a dif-ference between a ‘client’ and ‘intended users.’ From my point of view, Chase was an intended user but not the client. While they may have obtained a copy of an appraisal from someone, it does not make them the client. Since Chase did not ‘communicate’ with the appraiser nor were they identified as the client when the report was created, Chase does not appear to be the client. Issues like these are exactly why we created the appraiser independence webinars.” Dingeman wonders what’s next. “The question now is what are the nine agencies that I sent a copy of this let-ter and my response to going to do about it,” said Dingeman. “They have a responsibility to the public and should be knocking on Chase’s door to find out just exactly how many of these

letters have been mailed out. If these large banks are allowed to continue to threaten and intimidate appraisers and send every report to a regulatory board for complaint, as they threatened to, there will be no appraisers left.” According to Dingeman, the sad-dest part is that banks do have a legal and fair remedy: order a retrospective appraisal with an effective date that’s the

same as the original appraisal. “This would engage the appraiser directly and make the bank the client,” he said. WRE___________________________________________

Learn more about the OREP/Working RE Webinar Series and Hagar’s webinar Limit Liability, Maintain Independence, and Fight Influence at WorkingRE.com.

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Fighting Your Way Off a Blacklist By David Brauner, Editor

After over two years and many tens of thousands of dollars in lost revenue, appraiser Bill Smith fought his way off Citibank’s infamous “do not use” list. Here’s how he did it. To begin with, Smith (not his real name), has a “can you top this” aspect of how he was blacklisted in the first place: it was not even his appraisal. Smith was blacklisted over two years ago in con-nection with an appraisal he completed a “market conditions update” for. Repeat: he did not do the appraisal. Smith’s story is more typical in other details: a form letter arrives announc-ing the blacklisting without any opportunity to provide feedback or comment; work from one or more appraisal management companies (AMC) dries up, and anger and frustration set in. Smith identified a contact at Citibank and submitted a

rebuttal. He says they have 30 days to respond and on about day 30 they did: he remained blacklisted with no further explanation—for the appraisal he didn’t do. Smith went higher up the chain at Citibank. This time, a change in status was granted: yes, his work would be accepted, as long as it was accompanied by a review. Most AMCs, no matter how much they like you, don’t like you enough to be willing to order (and pay for) a review on each order. The spigot

remained closed. The frustration deepened. About two months ago, Smith simultaneously submit-ted an online complaint to the Office of the Comptroller of the Currency (OCC) (see below) and his state Office of Real Estate Appraising

(OREA-Calif.)—after read-ing a story in Working RE

(Suspension Merry-Go-Round, Vol. 29 pg. 26). The OCC takes com-

plaints on banks directly from con-sumers, such as appraisers. Smith says one of these two levers did the trick—a few weeks ago he received a letter from Citibank confirming his removal from the blacklist. Smith says the OREA regulates the AMCs that operate in his state, but does not interact or communicate with banks. Smith confirmed that OREA sent an inquiry to the AMC that stopped sending him work (and who ordered the market conditions update in the first place). So, Smith deduces that either the OREA inquiry nudged the AMC to ask Citibank to resolve the issue or, more likely, the OCC complaint got Citibank to move.

“I’m pretty sure it was the OCC com-plaint that did it,” says Smith. “Reference to the OCC complaint was mentioned right in the letter from Citibank inform-ing me I was removed from the ‘do not use’ list.” Smith continues, “There has got to be some method for appraisers to pres-ent their side of the story. By the time we hear anything, a decision has already been made and we have no chance or recourse to defend ourselves. It’s not right. But if my response is an indica-tion, it looks like the Feds are taking complaints from appraisers seriously.” Smith says it pays to be persistent if you meet resistance dealing with fed-eral agencies in an effort to fight black-listing. He said he first contacted the agency over a year ago and was stone-walled. “Like many government agen-cies, they didn’t know what their own procedures are and sent me away, say-ing it was another agency’s job. You really have to get to the right person. I persisted and someone finally told me about the Consumer Assistance Group which is where I filed the complaint that worked.” (Here’s where to file a com-plaint: Helpwithmybank.gov. Or call 800-613-6743.) WRE

Editor’s Note: Here’s how one appraiser fought his way off a Citibank “do not use” list. By the time we hear anything, a decision has already been made and we have no chance or recourse to defend ourselves.

13Fall 2011 Working RE


TJ McCarthy, SRA, IFA is a member of the Illinois Appraisal Board.

Be very careful in

post-closing phone

calls from AMCs.

When Nice Guys Finish Last (AMC Complaints Rise) By T.J. McCarthy, SRA

You receive a call from a lender or an appraisal management company (AMC) who wants to talk to you about an appraisal assignment you recently com-pleted for them. The call usually comes from the quality control department at the post closing stage of the loan. They

start questioning you on your line item adjustments. All the compa-

rables are on smaller lots than the subject property and they

feel your adjustment for lot sizes seems a bit high. You want to be a “good” appraiser and not upset your client so you agree that perhaps they could have been a little lower. While they have you on the phone, they

also ask if you think your time adjustments are a little

aggressive. Again, not want-ing to upset a good client, you

tell them that maybe you were a little aggressive (even though you

really don’t think you were, you’re just trying to appease them), and you state

that you will try to find another public data source in the future that is more conservative. Your client thanks you and even tells

you to have a nice day. You hang up the phone thinking you handled

that rather well.

Fast ForwardTo continue our hypothetical situation: a month later you receive a letter from the Department of Professional Regulation— Appraisal Division, or the equivalent in your state. Your great client filed a com-plaint against you, stating that you openly admitted to them in a phone conversa-tion that you falsely inflated the value of your appraisal by using inappropriate site adjustments. You also stated that you often use non-traditional data sources to intentionally report market trends that are lower than normal to arrive at higher value conclusions. Yikes! This is really happening to apprais-ers. And since the Dodd-Frank Act, more and more lenders and AMCs are submit-ting complaints against appraisers. I serve on the Illinois Appraisal Board which is involved in all appraiser complaints. In past years, we used to say how we had never received a complaint from an AMC, which was true. We would receive complaints from lenders directly but never from their AMC. Now we receive complaints regularly from AMCs. There is no question that apprais-ers are getting slammed for trying to be a “stand up” guy/gal, attempting to clear up gray areas in their reports. They’re engaging in what they perceive to be an honest dialogue with the quality control department (long after the loan has been funded). Unfortunately, at the post-clos-ing stage, the lender isn’t looking for you to have a change of heart on your final opinion of value. There are no changes that should be made, but now you have

Editor’s Note: Author T.J. McCarthy, a member of the Illinois Appraisal Board, sees a growing problem regarding lenders and AMCs filing complaints against appraisers. He offers this advice: be very careful in post-closing phone calls from AMCs.


given the quality control department ammo for a state complaint.

no Changes

In addition to being careful about what you say and don’t say, you should never change parts of your appraisal because you think it will make your client happy. They don’t drive the process. Perhaps you don’t even realize that you are giv-ing someone a reason to file a com-plaint against you when you agree to the slightest alteration or allow the opinion of others to dictate how you will complete your assignment. In the meantime, they are on the other end of the phone writing down everything you say as they prepare to turn you and your report into the state. I am not saying that all lenders and AMCs support this type of prac-tice. I certainly am not telling you to

ignore errors and omissions on your reports when a client discovers them and asks for corrections. Nor am I telling you to be unethical. But by try-ing to be accommodating, you could be creating a problem for yourself where one never existed. I am a member of the Illinois Appraisal Board and I am involved in handling these complaints; I can assure you that the state of Illinois is receiving them. I can’t tell you which lenders or AMCs are filing these complaints, how-ever. Just assume everyone is. It’s getting pretty scary out there, folks. We don’t have to make it harder on ourselves by being overly accommo-dating every time an angry client calls. We are appraisers, not pacifiers! WRE

Saving YouTime and Money

For more information and current dates and times, go to WorkingRE.com

(click OREP/Working RE Webinar Series)

OREP members receive priority reservations and discount pricing.

The OREP/Working RE Webinar Series will help you increase your bottom line and professional expertise. By bringing together experts from across the industry, OREP/WRE provides you with the opportunity to increase your knowledge and earning power. Learn more and earn more, sign up today.

Macbook Air

Top 5 Questions Asked of an Appraiser and How to Answer Presenter: Richard Hagar, SRA

How to Limit Liability, Maintain Independence, and Fight Influence Presenter: Richard Hagar, SRA

Mobile Appraising: Saving Both Time and Money Presenter: Dustin Harris, “The Appraiser Coach”

Maximizing AMC Orders and IncomePresenter: Bryan Knowlton, Author of the 2012 AMC Guide


Now usPAP 7 Hour

How to Work Successfully with AMCsby David Brauner, Editor

if you work with AMCs or are willing to keep an open mind about it, here are several key points from the webinar Maximizing AMC Orders and Income on how to find the best companies to work for and how to make more money with less struggle, according to one appraiser who is doing just that. Bryan Knowlton, a Certified Appraiser in San Diego, Calif., and pre-senter of the webinar, has been apprais-ing over 10 years. He says he is having his best year ever—doing mostly AMC work. About 80 percent of his business comes from AMC work—the rest are private appraisals for estate purposes, date of death, divorce and bankruptcy. Contrary to what many apprais-ers believe, one of the keys to success for keeping well-paying orders flowing from AMCs is performing high-quality work on a consistent basis. According to Knowlton, this doesn’t mean working for sub-par fees, chasing your tail over quick turnaround times and succumb-ing to an endless stream of unnecessary stipulations and corrections. The oppo-site is true, which leads us to another key to success: find the right AMCs to work for and fire the others. If you’re making less than custom-ary and reasonable fees or working with AMCs who don’t seem to care about the quality of your appraisals or the com-petency of their staff, you’re working with the wrong companies. It’s all about choices, Knowlton says. “I don’t work for less than custom-ary and reasonable fees—I don’t have to

because there is so much work coming in these days,” Knowlton says. “I don’t work for companies who seem to want to find mistakes or who hire incompe-tent reviewers or overseas personnel. If a company comes back with endless cor-rections that I feel are unnecessary, I will ask to speak to a supervisor to explain how this is wasting everyone’s time. If it doesn’t stop, I keep raising my fees until they either stop using me or, as in some cases, they need me enough to pay the higher fees justified by all the extra time and work. Either result is okay with me.” The keys to working successfully with AMCs, Knowlton says, is finding the best of the bunch and weeding out the worst; producing quality reports all the time and having an efficient, stream-lined process.

Particulars

Knowlton lives and works in San Diego County, one of the most saturated markets for appraising in the nation—so it’s not that appraisers are scarce in his area. He says a customary and reasonable fee for a typical tract home is around $350. He sel-dom accepts less and frequently demands more, sometimes much more depending on the complexity of the property. He says he often requests fee increases and is paid more, over $1,000, for the more complex properties. He says he increases his fees for more complex properties rou-tinely—usually $100 or so more for each extra hour of work. “Many times you’ll get your fee increase,” he says. “Sometimes an AMC might move on but again, either

If you’re making less than

customary and reasonable

fees or working with

AMCs who don’t seem

to care about the quality

of your appraisals or the

competency of their staff,

you’re working with the

wrong companies.

Editor’s Note: The following was overheard in the OREP/Working RE webinar: Maximizing AMC Orders and Income, presented by appraiser Bryan Knowlton. Knowlton says it is possible to have a thriving and rewarding appraisal business working with AMCs.


way it’s okay. There is plenty of work at fair fees. The process allows you to weed out those you don’t want to work with and allows you to be a consistent producer for those you do. Just keep a cool head and don’t take it personally when you are offered low fees.” Which brings us to another key for success—negotiating fees: “You have to negotiate fees with the AMCs,” Knowlton says. You have to be able to show them why the order requires more time and effort and a higher fee. “Once they trust you, most of the time you will get what you deserve or close to it. If they move on or drop you, again, that’s fine, because that’s not who you want to work for. Remember, don’t take it personally.”

HVCC Crash

Like many appraisers, Knowlton was blindsided by HVCC and lost most of his business overnight. “I had a cou-ple of mortgages and a family to feed. There were some desperate moments when I worried about putting food on the table,” he says. Knowlton’s prior career in Internet marketing saved the day; he went to work doing one of the things he does best: scouring the web for every AMC he could find. He exchanged informa-tion freely with other appraisers around the country about the best AMCs to work for and how to work for each most efficiently. Slowly he began to build his business back up. Out of the struggle came the Appraisal Management Company

Resource Guide which he originally gave away to fellow appraisers. He now sells and updates the Guide regularly. (See below for details.) “The first 45 listed in the AMC Guide send me 95 percent of my work. They are national AMCs that are veri-fied and are sending orders,” he said. “I personally verify and sign up to each company listed. I call to find out where there is an immediate need for apprais-ers and let readers know.” He says there also are vendor specific errors to avoid so you make fewer mistakes from the beginning and get more repeat orders.” “In the new edition I removed dead-beat AMCs and all the companies that have gone out of business and lowered the number of AMCs to under 300—no need to waste your time applying to companies that don’t send work. I also updated the marketing information, tips and advice on my best techniques for getting more business and making more money in 2012.” This brings us to step one for suc-cess: finding the right AMCs to work for. “It starts with a good list,” he says. Next, he says, you must sign up with as many AMCs as possible, approaching it like a business. “I type over 100 words a minute but if you don’t, it pays to hire a family member or friend to fill out the AMC applica-tions. Don’t get frustrated, pay some-one to fill out the applications for you. Imagine the amount of work you will get if you sign up to almost 300 com-panies over a period of a couple weeks.”

In the webinar Maximizing AMC Orders and Income, Knowlton shares other tips for fostering relationships with AMCs—what to do and what not to do, how to streamline the submission pro-cess, improve your work product, nego-tiate fair fees and how to approach your vendor manager with problems before terminating the relationship. In short, how to nurture good relationships and pull the plug on the bad ones. “Now’s a great time to be an appraiser,” he says. “There are fewer appraisers and with the high hurdles now in place, fewer will be able to join our ranks.” It’s about taking action. “AMCs did serious damage to our profession, I’m not saying otherwise. And there are a lot of really bad ones out there,” Knowlton said. “I believe in advocacy to help appraisers consolidate power and speak with one voice. But at the same time, I’m not waiting around for the govern-ment to bail me out. I like appraising and am making a good living at it. With a good list you will never run out of work again, provided you use it. I just hope the webinars and AMC Guide help fel-low appraisers take action. No matter what change happens, AMCs are here to stay. Find the good ones to work for, weed out bad ones; do good work and demand what you’re worth.” WRE___________________________________________

For more on the OREP/Working RE Webinar Series and the webinar Maximizing AMC Orders and Income, visit WorkingRE.com or see page 36. WRE

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“If you’re only

focusing on USPAP,

you are in danger.”

How Well Do You Know Your Rights? By David Brauner, Editor

Editor’s Note: You’d be amazed at all you don’t know regarding your rights as an appraiser. The following was gleaned from the webinar series: How to Limit Liability, Maintain Independence, and Fight Influence by Richard Hagar, SRA.

Here are some questions for you—the answers might surprise you.

If a loan fails to close, is it within the law for an AMC to withhold payment?

Is the person “running” an AVM required to have the requisite experience, which means be “licensed” as an appraiser?

If you include three comps in a report, can an AMC/lender demand a fourth, fifth or six comp if the engagement letter only calls for the three?

Is it a good idea to “change” your report at the request of an AMC/lender after submission?

Is it legal for an AMC to choose an appraiser based on the lowest fee?

Is it okay for an appraiser to give a verbal “value estimate” over the phone just to verify whether there’s value?

Is it legal for the fee for an FHA appraisal to include a fee for management of the appraisal process?

Stand up for Your Rights

According to Richard Hagar, SRA, apprais-ers do not need to be pushed around—all they need to protect themselves is knowl-edge of their rights and responsibilities. “It’s like tooth decay,” says Hagar. “If you let it continue and put off action, it gets worse and worse until the tooth rots out and needs to be pulled. Standing up for your rights is the same. Early action avoids many future problems.” Hagar says that when he gets an out of bounds request from an AMC or lender, he just paraphrases the request

and sends it back to them in writing on his letterhead along with the chapter and verse of why it is not legal or appropriate. “That stops the issue right there,” Hagar says. “The banks are scared of the regu-lators. I don’t threaten or yell—I just try to educate. I put their (illegal) request in writing and it almost always ends there. I typically never hear about it again. This is a way to stand up for yourself and not lose future business.” Hagar says the key is to know your rights and be able to educate your lend-ers about their duties and responsibilities. Appraisers also need to know what can get them in trouble—what is and is not within bounds. “Complaints are a two-way street,” Hagar says, “and appraisers are being reported to their state boards/licensing agencies by AMCs and lenders in record numbers. This can end your career. Turning bad appraisers in is man-datory, under threat of penalty. So you need to know what you need to know to stay out of trouble.”

Answers

If a loan fails to close, is it within the law for an AMC to withhold payment? No.

Is the person “running” an AVM required to have the requisite experience, which means be “licensed” as an appraiser? Yes, if the valuation is to be used by a bank for lending purposes.

If you include three comps in a report, can an AMC/lender demand a fourth, fifth or six comp if the engagement let-ter only calls for the three? Yes, no and maybe. It depends on what has changed between


the engagement and completion of the report. A more definitive answer is included in Part 2 of the webinar.

Is it a good idea to “change” your report at an AMC’s/lender’s request after sub-mission? No.

Is it legal for an AMC to choose an appraiser based on the lowest fee? No. Selecting an appraiser based solely on the lowest fee is prohibited by numerous federal regulations.

Is it oksy for an appraiser to give a verbal “value estimate” over the phone just to verify whether there’s value? No. This is a prohibited practice if the verbal opinion is for a “lending purpose.”

Is it legal for the fee for an FHA appraisal to include a fee for management of the appraisal process? No.

Crossing the Line

According to Hagar, reviewers are cross-ing the line into influence routinely. “Think of it like a traffic cop. If you get pulled over for a traffic violation, the cop doesn’t tell you to go back and drive the road again, this time driving the speed limit,” Hagar said. “Why are reviewers doing that to appraisers? Lenders and AMCs have two options, review the work and A) accept it and fund the loan, or B) reject it based on a USPAP com-pliant review. Once rejected, they must turn bad appraisers in to the authorities and stop using that appraiser. But do not try to influence or instruct the appraiser! The ‘old’ banking ways are dead. Banks and appraisers better become educated on these changes, and FAST.”

Sweating the Small Stuff

According to Hagar, Fannie Mae and Freddie Mac are recovering upwards of $1.5 billion each month, according to their financials, from lenders, mort-gage brokers, borrowers, and apprais-ers. Hagar says this is something every appraiser should know. And appraisers have much more to worry about than USPAP, says Hagar. “There are other issues that come into play in addition

to USPAP; Fannie Mae requirements, Interagency Guidelines, state and fed-eral laws, and the Certification appraisers include in every report,” Hagar says. “If you’re only focusing on USPAP, you are in danger.” Most appraisers are not fully aware of the high standards they are being held to now. “When any lender, including Fannie Mae, discovers a bad report, even if it’s years later, they have the right to sue the appraiser for the bad product,” says Hagar. “By the time our consulting firm is brought in, the bank has selected the bad loans/appraisals, filed the lawsuits, and determined how much money they have lost due to the bad loan. Whom do they blame? Well, they don’t blame them-selves. They blame the appraiser, and since the appraiser signs a Certification fully accepting liability for their work, they get sued for BIG BUCKS.”

Hagar says what matters is the quality of the appraisal, the information gathered, and the process and analysis utilized in its creation. The value con-clusion is NOT the only thing. “Yes, banks and AMCs have failed to follow the rules and should be held account-able. But appraisers are responsible for the quality and information contained in their work.” And Hagar says, please don’t “shoot the messenger.” “My goal is to warn appraisers, help them understand the system, their liability and the massive toll these lawsuits take on the profes-sional and personal lives of appraisers. All due to poor appraisal practices. The webinars convey the lessons I’ve learned over the last 30 plus years appraising and as an expert witness in dozens of lawsuits.” WRE

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We’re just getting warmed upThis summer’s TOTAL 2012 launch is just the beginning. Over the coming months, TOTAL will surpass all our previous versions in workflow, speed, and integrations. It’s an exciting start to the next evolution in appraisal workflow technology.

ADCODE: MAWRTOTAL0712 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice. Copyright ©2012 a la mode, inc.

1-800-ALAMODEwww.alamode.com/TOTAL

MAWRTOTAL0612.indd 1-2 6/11/12 9:41 AM

Come along for the rideCheck out the exciting additions in TOTAL, as well as what’s coming up, at www.alamode.com/TOTAL.

While you’re there, get a free trial, and use coupon code TOTALWRE to take $50 OFF. Remember, you’re always backed by our 100 day money back guarantee.

If you’ve never tried TOTAL, it’s time. You’re going to love it. Constantly evolving and improving, TOTAL is the platform you’ll rely on for years to come. The all new TOTAL 2012 has a lightning fast forms engine, an architecture designed for

open integration, and connections to our vast array of cloud-based services and client networks. And soon, TOTAL will even eclipse WinTOTAL Aurora — used by more than half the nation’s appraisers — in power, speed, and flexibility.

More power, more speed, more flexibility at your fingertips

Feel the need for speed

TOTAL 2012’s new forms engine, codenamed

Mako, is our fastest and most flexible yet. On

newer PCs, TOTAL can be over 500% faster

than previous versions. And text editing, text

selection, and forms navigation is silky smooth.

Picture this...

TOTAL has an all new Photos PowerView, which

makes getting photos from your camera and

onto forms incredibly simple. And the new

AutoBrowse feature will automatically browse

for, and load, your most recent photos, saving

you precious time and clicks.

Sketch with even greater certainty

We’ve revamped the Sketch PowerView entirely,

and integrated your favorite sketchers. Plus,

you can edit the sketch on a separate monitor

while referring back to your report, view salient

data about the subject, as well as view subject

photos and a rooftop aerial image.

The more monitors the merrier

TOTAL is optimized for two or more monitors.

Studies show multiple monitors boost

efficiency. That’s why many parts of TOTAL,

like your sketcher or the integrated Addenda

Writer, can be opened on separate screens.

Comply with UAD the easy way

TOTAL’s new Free Form UAD mode lets you type

directly into UAD fields, and using Real Time

Validation checks for UAD compliance on the

spot. You can even use short hand like “ss”, and

it’s automatically converted to Short Sale.

Research any kind of property geospatially

TOTAL’s new Properties Database is a quantum

leap beyond anything you’ve seen. Importing

from your MLS or other external sources,

searching geospatially by neighborhood,

seeing prior report usage, and much more, is

incredibly easy with the Properties Database.

Don’t just take our word for itTOTAL 2012 has been in the hands of our Beta testers for months. Here’s what just one has to say:

“As a long-time a la mode user, I’m VERY excited about TOTAL. Upgrades to forms scrolling, mapping, and the new Photos PowerView are exceptional time savers. TOTAL has added a new efficiency to my work life. And I love the new Addenda Writer, which I can open in a separate window, and even insert external docs right in the middle of my current addenda. TOTAL works great with dual monitors.” — Richard D. Ferris

We’re just getting warmed upThis summer’s TOTAL 2012 launch is just the beginning. Over the coming months, TOTAL will surpass all our previous versions in workflow, speed, and integrations. It’s an exciting start to the next evolution in appraisal workflow technology.

ADCODE: MAWRTOTAL0712 a la mode and its products are trademarks or registered trademarks of a la mode, inc. Other brand and product names are trademarks or registered trademarks of their respective owners. All prices, terms, policies, and other items are subject to change without notice. Copyright ©2012 a la mode, inc.

1-800-ALAMODEwww.alamode.com/TOTAL

MAWRTOTAL0612.indd 1-2 6/11/12 9:41 AM


Anderson says the key

to repeat business with

other-than-lender work is

producing quality reports

and not advocating for

or bending to the desired

results of the clients.

Professional Appraiser Series: Other than Lender WorkBy David Brauner, Editor

Funny thing about doing non-lender work: unlike what most appraisers are accustomed to when doing lending-based work, with non-lender work, the pres-sure is for accurate, independent reports. And these are the appraisers whose good work is rewarded with repeat orders—not those who are most compliant. “Making the appraisal assignment the focus, and uncompromised, unbiased conclusions the priority—before the wishes and desires of the client, typically results in more respect and repeat orders from other-than-lender clients—not the opposite,” said veteran appraiser and educator Andy Anderson in his webinar Other than Lender Work. Anderson, appraising 28 years in California, is author and presenter of the Professional Appraiser Series of webinars, hosted by OREP/Working RE maga-zine. Anderson says the key to repeat business with other-than-lender work is producing quality reports and not advo-cating for or bending to the desired results of the clients. You have to earn the respect and confidence of clients who in many cases do not know anything about the appraisal process. You can expect to spend more time in communication with other-than-lender clients than with AMC and lender clients, says Anderson, who does appraisals for insurance, divorce, litiga-tion, estate, probate, personal use, tax and assessment, eminent domain and personal property (mobile and manufac-tured homes). He says the work is more challenging and satisfying because the appraiser is responsible for truly iden-tifying the problem, determining the

scope of work necessary to produce credible results, establishing charges and setting turn times. But the work can also be emotionally draining, like inter-viewing a family member who just lost their home to fire during an insurance property inspection. “You tend to hear people’s personal stories when having to determine the size, quality and con-dition of the destroyed improvements. It can be tough and very emotional,” Anderson said. He says dealing with the public also comes with a higher risk of complaints. “Other-than-lender work has a greater potential to create headaches for the appraiser and possible complaints to the state regulatory office (OREA in Calif.), not to mention lawsuits; more so than with the typical lender assignments. The reality is that those who rely and depend on the assignment results will not neces-sarily understand the process of devel-opment, methodology and conclusions outlined in the report. Underwriters and reviewers are more familiar with the forms and reports they read, at least we hope so, and should not need as detailed an explanation of the appraisal process,” Anderson said. But non-lender work tends to broaden an appraiser’s abilities as well as sharpen their communication skills. “The ability to communicate effectively is very important. If the client does not under-stand what has transpired, you have not only lost the client but any referrals as well,” he said. “It helps if you have the ability to empathize with those you will have to interview in the course of collect-ing data. Sitting with a homeowner and

Editor’s Note: According to Andy Anderson, with other-than-lender appraising, the pressure is for accurate, independent reports instead of being compliant.


going through personal photo albums to determine condition and quality of a destroyed structure is not for everyone.” He says that breaking into this work is not always easy because clients look for expertise and knowledge, which require experience and education. Anderson says the fastest route to non-lender work is greater education and finding a good mentor willing to train you. It takes time to learn and develop the expertise and knowledge in any of these niches. “Appraisers who want to expand their businesses need to take classes on sub-jects and topics they are not familiar with. I can’t tell you how many times an appraiser will tell me ‘I don’t do mobile homes’ when I invite them to take the Appraising Manufactured Homes class I instruct. Then they call me for advice when they get an order for one and don’t want to turn down the assignment or lose the extra income,” Anderson said. The bottom line for Anderson is that this work puts the appraiser in control, not the AMC and not the

lender. “The underwriter or reviewer needs to be able to prove my appraisal is less than reliable or not accurate and support their reasoning to me—not the other way around. I inspect the prop-erty, research the market and complete the report. Having to provide addi-tional data to satisfy an uncontrollable desire for more information, not better information, is not productive. With lender work these days, the demands of many AMCs and lenders seem to have little to do with truly supporting the actual value conclusions. With non-lender work, you are in control of the process and results, and in many cases you can end up as an expert witness in defense and support of the value con-clusion. Separate charges apply! See you in class!” WRE___________________________________________

For more, visit WorkingRE.com (click Webinar Series and the webinar: Professional Appraiser Series: Other than Lender Work).

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Francis Xavier (Rich) Finigan is Educational Director for American Continuing Education Institute, doing busi-ness as Calypso Continuing Education (see ad inside back cover). Rich has decades of real estate appraisal, environmental science and construction experience in the residential and commercial fields. He specializes in the appraisal of contaminated properties and developed a unique methodology for calculating diminution. He shares this unique and court-tested methodology with appraisers at his Environmental Hazards Impact on Value seminar. Rich can be reached at [email protected].

There is an old sports adage

that it’s better to be lucky

than to be good. When

it comes to protecting

ourselves from the liability

associated with reporting

environmental conditions,

real estate appraisers have

been more lucky than good.

in 1994 Fannie Mae formally introduced environmental due diligence to the appraisal industry—so what has changed? The Appraisal Journal (January 1995), published by the Appraisal Institute, included an article that reviewed what was then new environmental report-ing requirements put in place by Fannie Mae and the new Uniform Residential Appraisal Report (URAR) form (effective January 1, 1994). It described the newly revised comment section that requires appraisers to report on “adverse environ-mental conditions such as, but not limited to, hazardous wastes, toxic substances, etc., present in the improvements, on the site, or in the immediate vicinity of the subject property.” The article says the section “clarifies an appraiser’s responsi-bility to report what he or she discovers during the inspection of the property and the normal research.” The article identifies an appraiser’s due diligence, stating it must be “more than answering ‘none noted’ and relying on a limiting condition.” It cites USPAP and the G9 provision for guidance, sounding a cautionary note: “There are tens of thousands of known hazardous sites. Don’t be the appraiser who over-looks the site next door, or worse, the subject property.” It is my opinion that when that story was written in 1994, before the digital rev-olution, it was nearly impossible to gather

the data necessary to meet the Fannie Mae guideline if interpreted literally. Almost two decades have gone by since that article was written. In 2011, Fannie Mae revised its appraisal reporting requirements with the UAD (Uniform Appraisal Datasets) but not much has changed in reporting environmental conditions; appraisers are still hoping that they have limited their liability with the Limiting Conditions in the URAR, regarding not being an envi-ronmental expert. Appraisers are still mak-ing comments like, “not apparent,” “none obvious,” or “not applicable.”

Better Lucky than good?

There is an old sports adage that it’s better to be lucky than to be good. When it comes to protecting ourselves from the liability associated with reporting environmental conditions, real estate appraisers have been more lucky than good. In an era where Fannie Mae and lending institutions are doing retro appraisals going back to 2005 and 2006, to recover money from apprais-ers and their insurance companies for errors made to value, can we continue to count on our luck? According to Environmental Data Resources (EDR), “Approximately 85 percent of the subject properties appraised in United States will have potentially sensi-tive environmental sites within a half mile.” Over the years there have been scores of court cases against real estate appraisers who have failed to effectively report envi-ronmental contamination that resulted in loss in value. There are several factors and orga-nizations that dictate the terms and con-ditions under which an appraiser must

Editor’s Note: Appraiser and educator Rich Finigan discusses liability issues connected to environmen-tal hazards.

Environmental Due Diligence by Francis Xavier (Rich) Finigan


report environmental contamination. They include regulations from HUD and ASB (Appraisal Standards Board). There are other “surrogate regulators” also, such as Freddie Mac and Fannie Mae. These big secondary mortgage market play-ers create guidelines that have the same influence as regulations. First and fore-most, we have USPAP and AO9 provi-sion (formerly G9). The AO9 provision is about five pages long, in comparison to its predecessor G9 provision, which was about three quarters of a page long. The ASB has done a good job in the AO9 provision providing guidance to appraisers regarding due diligence for environmental conditions including:

• Clarifying that the AdvisoryOpinions are issued to illustrate the applicability of appraisal standards in specific situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

• Citing that both the Ethics andCompetency rules are applicable.

• Stating that “an appraiser need notbe an expert on the scientific aspects of environmental contamination, and in most situations the appraiser will utilize scientific and other tech-nical data prepared by others, such as environmental engineers. In these situations, the appraiser should uti-lize an extraordinary assumption [see Standards Rule 1-2(f)] regarding the information obtained from other experts that is used in the appraisal.”

HUD has specific requirements regarding environmental condition described in the 4150.2 manual. They include the require-ment to report proximity to landfills or other potentially environmentally sensi-tive sites. In Freddie Mac Single Family/Single-Family Seller/Servicer Guide’s Property description and analysis section (44.15), the following directive appears: “Examples of matters about which the appraiser must note and comment include, but are not limited to: proximity of the

property and/or its neighborhood to a contaminated site; proximity of the prop-erty to ground water contamination, chemical or petroleum spills or other haz-ardous substances that are expected to impact the area for more than one year; proximity of the property to areas that may affect the value or marketability of the property including, but not limited to, the following: industrial sites; waste or water treatment facilities; commercial establishments (other than retail establish-ments that serve the residential neighbor-hood); airport approach paths; floodplains and landslide areas.”

Liability Concerns

Lending institutions have faced sizeable losses over the past several years and are now conducting industry wide retro-review appraisals in an attempt to recover some of their losses from appraisers and their insurance companies. Appraisers usually disclaim any environmental expertise to explain their lack of research; however, appraisers need not be an envi-ronmental expert to have access to data and include it in their reports. Almost all is publically available or can be accessed from several national data providers for just a few dollars per appraisal. If an appraiser doesn’t want to purchase infor-mation from a provider that distills and summarizes environmental information, they can visit their EPA region website and numerous state websites to obtain some of the same information. Adding an environmental report to your appraisal will supply the informa-tion that has been previously so hard to gather. The AO9 provision provides lan-guage to more clearly describe the envi-ronmental conditions and how they may

impact the subject property. You may consider replacing comments like “not applicable, none apparent, and none obvious” with something that more clearly identifies the limitations of your observations and reporting. Something similar to the following: “There is (not) sufficient data in the marketplace to indicate or calculate stigma, reduction, or other diminution in value, unless oth-erwise stated herein. The appraiser is not an environmental expert but has relied on information obtained from SOURCE (Public records, private reports, etc.), attached and included by reference. This appraiser has made extraordinary assumptions regarding subject property value based on data gathered from such environmental reports.” I have included environmental reports in my appraisal reports and lan-guage similar to that above and have not received complaints from under-writers. I do not work with AMCs so I cannot comment regarding what their reaction might be. By clearly identifying the limitations of your observations and reporting, while including summaries of environmental conditions in the com-munity, you will remove the burden of liability from your shoulders and place it squarely where it belongs—on the shoulders of a lending institution and secondary mortgage market. Other factors come into play when the site is actually contaminated. They include a determination whether or not the impact on value is solely cost to cure or is this stigma or other diminution because of highest and best use changes. I’ll explore these with you in a future article Calculating Stigma in a Contaminated Property. Good luck in doing good work. WRE

Appraisers are still hoping that they have limited their liability with the Limiting Conditions in the URAR, regarding not being an environmental expert.


How to Increase Volume AND Quality By Dustin Harris, “The Appraiser Coach”

one of my true joys in life is being for-tunate enough to spend a good deal of my time teaching and mentoring other appraisal business owners. In those con-sulting sessions, I speak often of the “three-legged stool” approach to success. Those legs consist of both the use of technology and the implementation of systems, but the sturdiest leg comes in the form of other people. In my world people are assets. A relationship properly forged and sustained on integrity is a win-win for both parties. In this economy, they are grateful to have a job and my life is enhanced to have them as an employee. I find it interesting that a large num-ber of appraisers still have some aversion to sharing the burden of their trade with others. Almost every other professional I can think of employs the use of help to assist in making their business a success. Doctors do it. Lawyers do it. Tax pre-parers do it. Real estate agents do it. But appraisers are somehow under the impres-sion that they must do everything on their own (despite the fact that USPAP and Fannie/Freddie both allow otherwise). Consequently, most appraisers con-tinue to get what they have always got-ten because they continue to do what they have always done. As many are finding out, in today’s economy, if you continue to do what you have always done, you are likely to find yourself slid-ing backwards away from profitability.

Working More and Making Less

As I meet with my clients I find a com-mon theme—most are working 60+

hours a week, are turning down work because they can’t keep up, and still cannot seem to pay their bills. Sound familiar? There is a better way. I often ask them to try an experiment—for one day, carry a stopwatch wherever you go. Try it. Every time you do something that is not necessary for the appraiser to do, time yourself. They are always sur-prised at how much time they actually spend doing things that could be dele-gated to others. And what could they be doing with that time if they could hire someone else to do it for them? More volume, of course (or just get your peace of mind back if you prefer). How much are you worth per hour? If you do not know, figure it out (as my mother always used to say). Are there things that you do for $XX per hour that you could delegate to someone for $YY per hour (a lot less than $XX)? Of course there are. Here is the cool thing...when you employ help the time you save often allows you to produce more which allows you to actually pay your new employee. What a concept! For most people, one of the big-gest aversions to hiring is the belief that allowing someone else to help them with their work will cause the quality to drop. The old adage, “if you want something done right, do it yourself.” Though this can be true, often the exact opposite is the case. Here’s why: if two eyes are bet-ter than one, four eyes are better than two. Having a properly trained assistant to help you with each of your appraisal reports is pure gold.

There is never an appraisal report that leaves my office that at least two people have not gone over with a fine-toothed comb first. Thus, since I began hiring and working with other profes-sionals, BOTH the quality of my work AND my volume have improved simul-taneously. See, you can have your cake and eat it too! “But Coach,” you say, “I cannot afford to hire anyone right now.” Listen, if you are working more than 40 hours a week, turning down work, or could be doing more if your turn times and quality were better, and still not paying your bills, you cannot afford NOT to employ some help!

Mobile Appraising

You can also save time and money by leveraging technology with mobile appraising. Appraisers who are truly “mobile” are using laser measurers, tab-let PCs or smartphones, and software to upload reports remotely to the office to be more competitive—to save time and money. As I travel the country men-toring various appraisal business own-ers, I am intrigued by the fact that so many appraisers are still using a tape measure and a clipboard to gather onsite data. When I show them the mobile technology that is available to us, they are typically hesitant to embrace it. Here are the “big three” justifications I hear for not moving forward and some food for thought about streamlining your busi-ness to be more competitive.

Too Expensive

Many say the “gadgets” are just too darn expensive. Is gas for your vehicle too expensive? Well, yes it is, but we need it to do our work. From MLS subscrip-tion fees to form-filling software, we invest heavily in many aspects of our businesses that are necessary. Investing in technology should be seen as a cost

Editor’s Note: “Appraiser Coach” Dustin Harris says cutting the time it takes to appraise does not necessarily mean cutting corners—in fact, he says, there are ways to save time and increase quality.

Dustin Harris is a multi-business owner but he has found most of his success as a self-employed, residential real estate appraiser. He has been appraising for nearly two decades. He is the owner and president of Appraisal Precision and Consulting Group, Inc., and is a popular author, speaker and consultant. He owns and operates TheAppraiserCoach.com, where he advises and mentors other appraisers helping them to also run successful appraisal companies and increase their net worth. He is also the founder and president of Your Appraisal Office (YourAppraisalOffice.com) which implements some of the systems he has developed.


of doing business that is required to stay competitive, rather than a choice that you can’t afford. When I first started using a laser measurer, I had the thing paid for in the first three months of ownership. My first Disto cost me $650. Sound expensive? It was but it cut my inspection time by an average of five minutes. No big deal you say? With the volume I was doing at the time, that meant one more appraisal per month that I could fit into my schedule. After overhead, it took 90 days to return my investment, with the time savings it provided. My most recent toy, an iPad 2, was paid for in even less time by speed-ing up the time it takes me to do reports. It saves me twice the time the laser did and cost me about half as much. Though there was a short transition period—I was used to using a smartphone with about 20 percent of the screen size as compared to the tablet—I quickly caught on. I find the iPad saves me twice the time but with a similar price tag to the laser. The fact is that the purpose of technology is to make our lives easier and more efficient. Efficiency in business equals increased productivity and higher profit. Not mov-ing forward results in no progress.

Don’t Save Time

There is an argument to be made that inputting all the data on a tablet is actu-ally more time consuming. I will con-cede that this is true when discussing the time spent onsite. Where mobile tools really shine is not at the inspection but when you get back to the office. Most appraisers are inspecting every home twice: once onsite and a second time on their desktop. When you use mobile tools you input all of the data at the inspection and there is no need to reen-ter it back at the office. This includes the front page of the URAR, the sketch, and even inputting the pictures! Without mobile tools, I spend an average of 20 minutes at each inspection (when inspecting a vacant house and have no pressure to talk to the home

owner). I then spend another 20 minutes at the office redrawing the sketch, input-ting photos, and entering the data from the field into the subject sections of the major form. With these helpful gadgets, my time at the inspection may increase to 25 minutes but there is no re-entry at the office. In other words, I save an aver-age of 15 minutes per appraisal using mobile tools versus doing it the old way. Not a big enough time savings for you? If you average one or two apprais-als per day, you are saving up to 30 minutes a day. How many more apprais-als can you do per week by switching to mobile technology? You know you want an iPad anyway and I just solved the question: “How do I convince my spouse?” You can thank me later.

old Dog new Tricks

I’ll admit that when I attend appraiser con-ferences most of the heads are either grey or balding. Like I can talk! But, as a happy client I was mentoring recently told me, “You can teach old appraisers new tricks.” Here’s the deal: most appraisers make the common mistake of not giving new tech-nology enough of a fair shake. I sent my first laser measurer back to the distributor after only two days of use, complaining that it was just too complicated and it was easier for me to use my wheel. They sent it back to me with a note that read, “Please try our product for a full two weeks. If you are not convinced after that period of time, send it back for a full refund.” I did and I will never go back to a 100-foot tape or measuring wheel again. With a little instruction and a lot of patience, you too can learn new things that will dramatically enhance your effectiveness and your business. How hard is it? If my four-year-old can teach himself to play Angry Birds, you can surely learn how to sketch a house on a tablet. You must remember that the first few days of using almost any new technology will slow down your productivity until you get through the learning curve. But once you get the hang of it, watch out!

Warm Body Element

Here is the dirty little secret: the real time-saver with mobile tools is what happens between the inspection and the appraiser arriving back at the office. The mobile appraisal software programs that I am familiar with all include the ability to send your reports back to the office remotely from the field. At my appraisal office, that is where the magic happens. While I travel from the inspection to the office, my staff is busily tweaking and strategically preparing the report for my technical expertise. By the time I sit down at my desktop PC, the report is ready for comp inputs and adjustments. This is where the power of mobile tools shines brightest! Also, an appraiser with a laser mea-surer and a computer simply looks more professional to a homeowner than one with a tape and a piece of graph paper. It says something about your profes-sionalism. The fact that it keeps you in the home a few more minutes is not a bad thing either. How many times have you had a borrower complain about how little time you spent inspecting the property? As if the amount of time you spend walking through a home some-how affects the value!

Final Thoughts

Let me share one or two more items that may be helpful to those of you who may already be using mobile technology. First of all, by inputting all of my data onsite, I never leave the property having forgotten an important component. My pictures are always there. If I forget to take the front photo (hey, it happens), I know before I leave. If the west side of the home does not match the east, I do not have to wait till I get all the way back to the office to find that out. On a mobile device, you know in real time as you measure. For those who have an assistant back at the office, the ability to upload reports from the field is priceless. Once I am

page 29 8

Summer 2012 Home inspectors CLoSER Look28

Home Inspectors ClOser lOOkH o M E i n S P E C T o R S

Closer Look Risk Management: Inspection Basics to Manage RiskBy Michael Casey, Casey O’Malley Associates & Una Lucey, Esq. Of Counsel to Casey O’Malley Associates

Most of us consider ourselves to be technically astute when in the field performing inspections. We spend many hours each year learning through continuing education classes and meetings. But how often do we think about managing our risk each day? When is the last time you updated your contract? Do you think about what you do and say every day on the job with regard to risk management? Maybe not: the following are a few of the common missteps we often see when evaluating claims that could have been prevented, or at least the exposure could have been reduced.

1) The Inspection Agreement (or contract): Bottom line—get a signed contract from the client. It is not enough merely to include language in your report stating that “use thereof constitutes agreement with the policies herein and in the con-tract whether or not a signature has been obtained.” In these

days of modern electronic communication, it is easy to send an agreement to the client as soon as the inspection

is scheduled. Email the contract or send the client to your website to download a

contract to execute and return (fax, email scan, mail,

etc.). In some

states a simple return email acknowledging agreement with the contract will work, as will the checked box “I agree” such as we see with software and other agreements. However, the old fashioned convention of obtaining a real signature on the document is always best. Without a signed agreement you risk denial of coverage from E&O providers and possible non-enforcement of the agreement should the contract be ques-tioned in a legal proceeding.

2) Reporting Inaccessible Locations: National Standards of Practice by associations and those adopted by states all require the inspector to identify systems, components or locations that are to be inspected, but were not accessible for any rea-son. Inspectors are usually adept at noting these locations in their reports; however, we recommend that language similar to the following be added to the note: We recommend that this (location, system, component) be made accessible and inspected by a professional prior to expiration of the inspec-tion contingency period; hidden damage may exist. We have been seeing claims where the client indicates he/she was not alerted to this possibility.

3) Reporting Magnitude of Deficient Conditions: Be sure to alert your clients to the severity of conditions discovered AND the potential implications for not taking action prior to the end of the inspection contingency period; including but not limited to the potential for hidden damage and significant cost, life safety implications, and/or potential for continued damage. This is one of the most common claims—a lack of

understanding of the condition.

4) Deficient Conditions Not Cross-Referenced in Summary: Not much explanation needed here;

if you prepare an inspection summary or action items, be sure to include all sig-

nificant items (significant in mag-nitude by virtue of cost and/

or safety) in the report. Unfortunately, we see

Editor’s Note: Managing risk should be front and center for inspectors each day: here are eight tips to help keep you out of trouble.

speCIAl! for

Home Inspectors

29Summer 2012 Home inspectors CLoSER Look

many times that important items do not make it into report summaries.

5) Relying upon Verbal Disclosure: Always write what you say and say what you write. If you mention anything to the client, make sure it gets into the written report. At the end of the day, all that matters is what made it into the report.

6) Identifying Sewage Disposal as Public or Private: We have not seen any state codified or professional association promulgated Standards of Practice that require the inspec-tor to determine if sewage is handled by private disposal or municipal. Yet we see many reports identifying septic or municipal. Don’t do it. If you really must include such a determination, please identify where your information was obtained and include the proviso “verify with seller or municipality” with the public or private comment. Better yet “this information was obtained from ___ and was not verified. This information is considered reliable; however, client should verify all information provided by third par-ties” or a similar disclaimer.

7) Admitting Guilt: If a client calls or emails you with a complaint, never write or say “I guess I missed that” or anything similar. Handle the complaint immediately and make sure to notify your insurance agent to get it on the record. After reviewing your report, go to the site to evalu-ate the claim, taking photos whenever possible, before pro-viding a response to the claim. We’ll address the response in future stories.

8) Taking Photographs or Video: Many inspectors tell us they don’t take photos for fear of something being in the photograph they might have missed. Get some confidence, we have rarely, if ever, seen this occur! Visual documentation of the conditions at the time of the inspection has, much more often than not, immediately settled a dispute in favor of the inspector. We hope you enjoyed our risk management tips; more to come soon! WRE

Disclaimer: This article is designed to be informative only and is not to be considered legal advice. Consult an attorney knowledgeable about the laws in your state for review and approval of your PSA.

Michael Casey is past president of California Real Estate Inspection Association and the American Society of Home Inspectors (ASHI). He is partner in Casey, O’Malley Associates, a national A.M. Best recommended consulting and inspector training firm based in San Diego (HomeInspectorSupport.com). He can be reached at [email protected] or (866) 363-1330.

Una Lucey, Esq., is Of Counsel to Casey, O’Malley Associates. Ms. Lucey is a licensed attorney in CA and NY, is an accomplished insurance defense counsel and has been published in the “Pace International Law Review.” Una can be contacted at [email protected]. WWW.HOMEINSPECTORPRO.COM

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done with a report and have inserted the comp photos, I send the report directly to my office through the magic of the Internet. My assistant gets that report in a matter of minutes and begins working on tidying it up for me as I am driving back to the office. By the time I hit my desk, the pictures are all labeled, the sketch is perfected, the subject information has been transferred from page one to the grid, and I am ready to begin making adjustments. You cannot put a price on that! I have been using mobile tools in the field for almost 15 years now. Some are surprised at that statement, as most appraisers did not even know that these technologies existed in the late 1990s. They did and I increased my productivity and therefore my income by hundreds of thousands of dol-lars in these years just by employing them. As I look back on the antiquated instruments I used to use, they seem like rel-ics akin to eight-track tape machines and rotary-dial phones. Isn’t it time you look into mobile appraising for yourself? Now go create some value! WRE

For more, see Dustin’s OREP/Working RE webinar: Mobile Appraising: Saving Both Time and Money (WorkingRE.com, click Webinar Series).

7How to Increase from page 27

Summer 2012 Home inspectors CLoSER Look30

Home Inspectors ClOser lOOk

OREP Announces New Home Inspector Insurance ProgramComplete Coverage: New Lower Rates

OREP (Organization of Real Estate Professionals) is proud to announce a new insurance program that allows inspectors to have complete coverage and save money! David Brauner Insurance Services/OREP has been servicing the insurance needs of home inspectors for 11 years.

Program Highlights

• Includes Errors andOmissions (E&O) and Bodily Injury/Property Damage (BIPD)/Premises coverage, as well as most incidental coverages, such as termite, radon, and com-mercial coverage.

• “A”RatedCarrier,PriorActs,AdditionalInsuredforAgentsand other Referring Parties.

• Convenient:Fast,Self-Rating Application gets you quoted and back to work in minutes.

• Nopolicyfee,notaxes.

This new Home Inspector E&O program includes most coverages in the minimum premium, including Bodily Injury/Property Damage (BIPD) or Premises coverage, for when you

are onsite at the inspection. “Home inspectors who are paying extra for ‘add on’ cov-erages, or worse, going without the full coverage they need to save money, don’t need to any longer. Broad coverage is included in the minimum premium, including E&O and prem-ises coverage,” said David Brauner, Senior Broker at OREP. OREP’s new program also includes most incidental cover-ages, such as termite, radon, and commercial coverage. The Minimum Insurance Premium is $1,250, which provides a Coverage Limit of $300,000 Aggregate/$100,000 each Occurrence for E&O/BIPD. Choice of coverage limits and deductibles are available. Easy Financing. Find details at OREP.org (click home inspectors) or see page 31. Or call toll free (888) 347-5273. [email protected]. OREP is a leading provider of insurance for real estate inspectors, appraisers, agents/brokers and mortgage field pro-fessionals. WRE___________________________________________________________________

David Brauner/David Brauner Insurance Services: Calif. Insurance License: #0C89873

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page 348

Every December I make

a pilgrimage to Orlando,

Florida, to observe the

Florida Real Estate Appraisal

Board (FREAB) hearings.

This past year (2011)

something happened that

surprised even me.

Land Value: Extraction MethodBy Philip G. Spool, ASA

Every December I make a pilgrimage to Orlando, Florida to observe the Florida Real Estate Appraisal Board (FREAB) hearings. This past year (2011) some-thing happened that surprised even me. One appraiser who was brought up on various charges was asked a very simple question pertaining to the cost approach in the appraisal report. One of the FREAB panel members asked how the appraiser arrived at the site value. The appraiser hesitated and then replied that the land value was based on the cost new arrived at from Marshall & Swift, then deducted that from the market value of the subject property, arrived at from the sales comparison approach. As an instructor of real estate appraisal courses and con-tinuing education classes, I almost bolted from my seat to immediately correct the appraiser. Fortunately, one of the panel members politely corrected the appraiser. I was surprised that the FREAB panel did not require additional educational courses, beyond what the appraiser was required to do as a result of performing a faulty appraisal. I have reviewed many appraisal reports where the appraiser performs the cost approach just because the client requests it, even though it is not consid-ered a credible approach to the market value of the subject property. I see some of the same boilerplate statements in these reports, such as “due to the lack of land sales, the appraiser used the extrac-tion (or abstraction) method.” (By the way, both “extraction” and “abstraction”

are correct. For purposes of this article, I will call it the extraction method.) An extraction method is used if there are no land sales to arrive at the site (land) value. Again, land and site in this article are interchangeable, but technically land represents the undeveloped parcel, while site represents the parcel as if ready to be built on. Going back to the appraiser’s reply to the FREAB panel, two distinct state-ments the appraiser made are blatantly wrong. The first mistake is subtracting the replacement cost new and the second is subtracting the improvement cost from the value arrived by the sales comparison approach. How do you calculate the site value? The three most common methods to calculate site value are (1) sales com-parison method, (2) allocation method, and (3) extraction (abstraction) method. I will briefly discuss the first two methods then explain the subject of the article: the extraction method.

Sales Comparison Method

The sales comparison method is probably the most preferred and reliable method for estimating site value. This method is similar to valuing an existing house, comparing the subject to recently closed sales of vacant lots. As no two houses are the same typically, no two vacant lots are the same. The most common differences include the size, width and depth of lot, location, and if the compa-rable lot is cleared or in need of clearing trees, shrubs, and leveling the land. All of these differences must be taken into consideration. Once the sales price per square foot is determined for each comparable sale, the reconciliation process begins. Probably the most important comparison

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 protected].



is the lot size differential. Basic appraisal theory indicates that smaller lots tend to sell for a higher price per square foot than larger lots, just as larger lots tend to sell for a lower price per square foot than smaller lots. However, one should con-sider the most ideal lot size for the end use, in this case a single family residence. For example, if the average lot size is 15,000 sq. ft., would a 10,000 sq. ft. site cost or be worth more per square foot than the 15,000 site? Not in all cases. One has to consider the demand for the 10,000 site versus the 15,000, just as one has to consider the demand for a 20,000 site. If the ideal house size is best reflected on a 15,000 sq. ft. lot in the area, then perhaps a 10,000 would reflect an inferior designed house, representing less demand for the smaller lot. If the lot size is 20,000, then the extra 5,000 sq. ft. of land could represent surplus land. Many appraisers confuse the differ-ence between surplus land and excess land. Surplus land is land that cannot be sold off separately, while excess land can be. In many cases, a large lot that is consid-ered to have excess land is worth more than a large lot that has surplus land, due to the fact that two buildable lots are worth more than one buildable lot. The shape of the lot is also important. All of these situations have to be taken into consideration when reconciling the value of the subject’s lot.

Allocation Method

The allocation method is not commonly used, but if a newly constructed home is built on a site that was purchased recently, it can be effective. The alloca-tion method can be applied as a per-centage or proportion of the total value of an improved property. For a compa-rable improved sale, either the land or building portion must be determined. If the house is relatively new, estimating the cost of improvements and divid-ing the costs by the sales price of the house will give you the percentage

of the improvements to the purchase price of the comparable. The allocation method is not as reliable to apply on an older house because estimating accrued depreciation is too subjective. If new developments are being constructed nearby, consultation with the develop-ers is helpful if the developers can pro-vide the building costs associated with the houses being sold. This includes site improvements, such as landscaping, driveway, open patios, and swimming pools. For example, a relatively new house sells for $300,000 and you determine the cost of the building improvements and site improvements to be $200,000. The improvements represent 66.7 percent of the overall purchase price. That leaves 33.3 percent attributable to the land. If houses that are recently sold nearby the subject property range from $270,000 to $320,000 and are overall similar to the subject improvements (land-to-building ratio, age/condition and extra features), applying the 33 percent would indicate a land value ranging from $89,900 to $106,600, rounded. While an alloca-tion as a ratio of land to total sale price

indicates a ratio of one to three in this example (land portion is $100,000/total sale price $300,000), it is easier to apply the allocation method as a percentage of land to total sale price.

Extraction Method

In a nutshell, site value is the difference between the sale price of a property and the contributory value of its improve-ments. So how do you determine the contributory value of the improvements? There are several ways to do this. The contributory value of the improvements is the same as the depreciated value of the improvements as observed in the market. In other words, it can be con-strued as cost new, less the accrued depreciation. Accrued depreciation is calculated as the effective age divided by the total economic life of the improve-ments. If you still have your appraisal books from your basic appraising course, look up Accrued Depreciation. An excel-lent reference book you should always have is The Appraisal of Real Estate, cur-rently the Thirteenth Edition, by the Appraisal Institute. When valuing the subject property the appraiser calculates

7page 32

Property Address 100 Prospect Drive 230 Albondigas Ave.

Date of Sale August 2012 September 2012

Sale Price (A) $450,000 $375,000

Replacement Cost New $275,000 * $250,000 *

Less: Depreciation of Improvements $91,575 ** $83,250 ***

Depreciated Value of Improvements (B) $183,425 $166,750

Site Value (A less B) $266,575 $208,250

Site Size 15,000 sq.ft. 12,000 sq.ft.

Site Value per Sq. Ft. $17.77 $17.35

table 1

* Based on Building-Cost.net** Based on an Effective Age of 15 years and a Total Economic Life of 60 years

(15/60 = 25%)*** Based on an Effective Age of 20 years and a Total Economic Life of 60 years

(20/60 = 33.3)


the effective age by an onsite visit to the property and observes any physical deterioration in order to arrive at the effective age. However, the appraiser does not have the luxury of visiting the interior of a comparable sale or even walking around the outside of the com-parable sale that is a good candidate for the site value by the extraction method. But if the property is listed on the Multiple Listing Service, there is a possibility that there are photographs of the interior and exterior of the property. You can also contact the listing agent to get additional information regarding the physical condition of the improvements to arrive at a more supportable effective age. Remember, effective age of a prop-erty is based on the appraiser’s judgment and observation. Therefore, the proper procedure would be for the appraiser to calcu-late the replacement cost new of the

improvements first and then subtract the depreciated value (contributory value) of the improvements. But what about the site improvements such as the swimming pool, driveway, landscaping, etc.? Yes, that too has to be subtracted from the replacement cost new of the improvements. Where do you get your replacement cost figures? There are sev-eral sources. One is Marshall & Swift (also referred to as Marshall Valuation Service). Another is Building-Cost.net, which is free. Another method, though one that is not supportable, is to obtain the Property Assessor’s estimate of the depre-ciated value of the improvements of a recently closed sale. The land value would be the sales price less the prop-erty assessor’s estimate of the depre-ciated value of the improvements. I indicate that this is not support-able because an owner can have his/

her property assessment successfully appealed resulting in a reduction in the improvement portion of the assessment while another recently sold house may not have had its property assessment appealed, resulting in no reduction. Just remember assessments are based on the mass appraisal system and not looked at individually. You can prepare a chart to fill out and maintain in your workfile. A good example is found in table 1 (page 34). In conclusion, the next time you explain how you arrived at your site value in your appraisal report and you state that you used the extraction or abstraction method, be sure you use the correct procedure in addition to having your support in your workfile, or bet-ter yet, indicated in detail within the text addendum of your appraisal report. WRE

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Industry NEWS

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Lender Makes good on AppraiserLoft Bad DebtThe argument is unsettled to what degree lend-ers are responsible for the agents they hire to administrate valuation services—appraisal man-agement companies (AMCs). The case of the AMC AppraiserLoft kicked off a heated debate when it closed its doors last year, leaving an estimated three million dollars or more in unpaid appraiser fees. In the meantime, one major lender, Metlife Bank, made good on the bad debt created when its agent, AppraiserLoft, shut its doors. In the wake of the shutdown, Working RE reported that many appraisers believe lenders are responsible under federal law for bad debt left by their agents. (WorkingRE.com, click Library, Vol. 29 AMC Bad Debt-Lenders Responsible?) A follow-up story reported some appraisers actively pursuing the banks that hired AppraiserLoft in an effort to recover lost fees (WorkingRE.com, click Library, Vol. 29 Success Collecting AMC Debt from Lender). In the wake of this mess, MetLife Bank stepped up to pay appraisers for unpaid work com-pleted for AppraiserLoft. Specifically, any appraiser who completed work for AppraiserLoft on behalf of MetLife and was left with an unpaid invoice was given the chance to collect the fees owed. Sue Potteiger, Chief Appraiser at MetLife Bank, told Working RE, “We did this because we made the decision to work with AppraiserLoft. We did our due diligence on this vendor and engaged them to provide appraisal reports to mortgage brokers that we directed to them.” According to Potteiger, “It’s not the apprais-ers’ fault that AppraiserLoft didn’t pay them. If an appraiser did the work and we made a decision based on the appraisal provided—the appraiser should be paid. We did pay AppraiserLoft all mon-ies we were billed for. We paid the appraisers the money they would have been paid. These same appraisers are vendors that we might be working directly with on our fee panel. It’s important to us to maintain an open and respectful relationship with our appraisers,” Potteiger said. Potteiger explained that MetLife’s stance is a product of a pretty straight forward philosophy – “Treat people with respect and keep your word.” The offer to pay unpaid invoices ended March 30, 2012. How other lenders handle this issue, only time will tell.— By Isaac Peck, Associate Editor

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).

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insurance: How Saving Money Can Really Cost You If you are considering letting your errors and omis-sions (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 themselves— even if they did nothing wrong. As most claims involving appraisers take several years to surface, letting your Claims Made insurance policy lapse or willingly giving up your prior acts coverage to save

“That was a great seminar!!! I learned some new cool ways to save time and be more efficient. Keep up the great training!” —M. Maddox Don’t Miss Your opportunity to know More and Make More Industry leaders share their expertise with you at prices you can afford. The topics are useful, the costs are minimal. OREP members/Working RE paying subscribers always enjoy reduced fees. Recorded webinars also are available on demand for your convenience.

Top 5 Questions Asked of an Appraiser and How to AnswerPresenter: Richard Hagar, SRA

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Mobile Appraising: Saving Both Time and MoneyPresenter: Dustin Harris, “The Appraiser Coach”

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Maximizing AMC orders and income (two-part series)Presenter: Bryan Knowlton, Author of the 2012 AMC Guide

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Appraiser Bryan Knowlton is busy with well-paying AMC work. How does he do it? He knows the best AMCs to work for and the techniques for being profitable. Learn proven strategies for maximiz-ing orders and income when working with AMCs.

How to Limit Liability, Maintain independence, and Fight influence Presenter: Richard Hagar, SRA

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a few dollars could be very costly indeed should a claim arise from the past and you have no cover-age. 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. visit OREP.org.

AMC RaterThis blog is an information exchange by and for appraisers about working with the various AMCs— read 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 ‘ethi-cal’ 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 can-celled 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 days’ 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).

How’s Business? Survey ResultsOREP/WorkingRE conducted a How’s Business? sur-vey in early April with over 1,000 responses in the first few days. The results show 51% of appraisers reporting revenues increasing in the first quarter this year over the same period last year; 26% report the same revenue or less; 23% saw a decline in revenue greater than 20% this year over last. Additionally, 52% of appraisers taking the survey report they are more profitable this year than the same period last year, 48% say they are less profitable. Despite many obstacles, 80% of appraisers say they plan to con-tinue appraising, with 20% saying they plan to retire from the profession. To view the entire results, visit WorkingRE.com and click “How’s Business Survey Results” in the center column.

FHA Appraising Easier, More EfficientExcellent material—will help me get to the next level—well worth the money! Thanks, J JoslinFHA work is booming. Here’s an opportunity to make your FHA appraising faster and more effi-cient. 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 sum-marizing 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 com-pile 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 infor-mation 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 mate-rials will help you obtain additional avenues of income pertaining to your FHA expertise now and into the future.” OREP insureds enjoy a discount.

new 7-Hour uSPAP CE online: Convenient, AffordableEnjoy an OREP/Working RE discount on Mckissock’s new 7-Hour USPAP online continuing education course, approved in most states. Taking this man-datory continuing education coursework is now affordable and convenient with this new online course. Visit WorkingRE.com and click New 7-Hour USPAP CE (left column) to learn more.

Filing C&R Fee ComplaintsThis from the Appraisal subcommittee (AsC.gov): The appropriate agency to receive your con-cern about a creditor’s compliance with the Truth in Lending Act (TILA), including the creditor or the creditor’s agent paying an appraiser a customary and responsible fee, is the agency that enforces TILA for the creditor. If the agent or appraisal man-agement company (AMC) is affiliated with a feder-ally regulated creditor, the appropriate agency to receive complaints against the AMC is the affiliated creditor’s federal regulator. If the agent (or AMC) is not affiliated with a federally regulated creditor, the appropriate agency to receive the complaint is the Federal Trade Commission. There are two web-sites that you can use to find the federal regulator for a creditor: Federal Reserve System—National Information Center website: http://www.ffiec.gov/nicpubweb/nicweb/nichome.aspx; and FDIC web-site at the “Bank Find” webpage: http://www2.fdic.gov/idasp/main_bankfind.asp. Questions regard-ing the appropriate interpretation of the Truth in Lending Act, including those on customary and reasonable fees, should be directed to the Federal Reserve Board at http://www.federalreserve.gov/feedback.cfm. WRE

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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

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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.

new 7-Hour uSPAP CE online: Convenient, AffordableEnjoy an OREP/Working RE discount on Mckissock’s new 7-Hour USPAP online continuing education course, approved in most states. Taking this mandatory continuing education coursework is affordable and convenient with this new online course. Learn and earn (CE) on your schedule! Visit WorkingRE.com and click New 7-Hour USPAP CE (left column) to learn more.

Continuing Education at Cost“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 appro-priate 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 prop-erty 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 admin-istrative 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, under-stand limitations and exclusions, discuss general safety issues, recognize lead paint, asbestos, etc., discuss electrical safety, understand, heat-ing and air conditioning precautions, recognize un-permitted additions and more. (Visit OREP.org, click Benefits and OREP Education Network.)

2012 AMC 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 com-panies that send orders. The author personally verifies and signs up to each company listed and calls to verify immediate need for appraisers. Vendor spe-cific 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. For more and to order, see WorkingRE.com, top left column (click: AMC Resource Guide) or email [email protected] with AMC guide info in the body or subject. OREP Members/Working RE subscribers receive a discount.

David Brauner/David Brauner Insurance Services

[email protected](888) 347-5273

individual Appraiser E&o Ratesper Claim/Annual Aggregate Most states

$1,000,000 / $2,000,000 $650.00

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$300,000 / $600,000 $501.00

new Webinar Series: information You Can use from industry LeadersOREP/Working RE magazine introduces a new webinar series on important industry topics, pre-sented in webinar format by industry leaders. OREP members/Working RE-paying subscribers always enjoy reduced fees. Many appraisers are busy these days, so prerecorded webinars also are available on demand for your convenience. For the current schedule, including dates, rates and

times, please visit WorkingRE.com and click Webinar Series (left column) or scan the code at right with any QR Code Reader application.

“I really enjoyed the webinar. I have been in the appraisal business for a long time and it was refreshing to have a review. Thank you again for bringing the appraisal community an informative webinar.” —P. Dellomo

Top 5 Questions Asked of an Appraiser and How to Answer Presenter: Richard Hagar, SRA

Mobile Appraising: saving Both Time and Money Presenter: Dustin Harris, “The Appraiser Coach”

Maximizing AMC Orders and Income Presenter: Bryan Knowlton, Author of the 2012 AMC Guide


Professional Marketplace: insurance, Education, information and More.

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Online seminars integrate dynamic video presentations, high-resolution graph-ics, audio narration, and downloadable resource manuals creating a new standard for online appraisal seminars. Titles Include: Environmental Hazards and Impact on Value; FHA Site Inspection; UAD: What’s It Mean to You and Me?; Short Walk through America’s Architectural Styles; Construction Details: Concept to Completion. Coursework approved in approximately 30 states ($89/7 Hrs.). For states, approved education hours and OREP/Working RE discount, visit WorkingRE.com (click Calypso Education) or OREP.org (click Benefits).

Home inspectors Diversify with Additional TrainingComplete home study courses on New Construction/Code, Commercial Inspection and Manufactured Home Inspection created by a leading, nationwide education provider are now available through OREP. Save hundreds of dollars on training that will increase your learning and your earning. OREP insureds enjoy even greater discounts on these education packages. The packages are extensive and complete, coming with over a dozen DVDs that take you step by step through the processes and procedures and prepare you for certification. For more information, visit WorkingRE.com and click Home Inspector Discounts (left column).

group Health Care—no Application/Limitations for Pre-Existing ConditionsCalifornia 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 [email protected] with medical benefits in the subject. 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. $1,250Real Estate Agents/Brokers Min. Prem. $429 (varies by state)

OREP has a new policy servicing department to streamline insurance requests from our cli-ents, including renewals. Simply email your policy-servicing request to [email protected] 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 RuleOur 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 protected]. OREP publishes Working RE magazine. WRE

“WOW! Thank you very much. You are the fast-est and most efficient insurance agent I have ever done business with !!!” —Aloha, James

oREP now in our 10th year! back: (L-R) Kevin, Ashley, David, Clark, Michaelfront: Lori, Maria, Mary, Carolynn, Cary, Chantel

David Brauner Insurance Services: Calif. Lic. #0C89873

oREP Announces new Home inspector insurance ProgramCadillac Coverage: E&O + Premises Coverage (BIPD) $1,250 /$300k Limit

Home Inspectors no longer have to pay more for the complete coverage they need. A new program from OREP includes most coverages in the minimum pre-mium ($1,250), including Bodily Injury Property Damage (BIPD/Premises cover-age). The new insurance program allows inspectors to have complete coverage and save money! David Brauner Insurance Services/OREP has been servicing the insurance needs of home inspectors for 11 years.

program Highlights• Includes Errors and Omissions (E&O) and Bodily Injury/Property Damage

(BIPD)/Premises coverage, as well as most incidental coverages, such as termite, radon, and commercial coverage.

• “A” Rated Carrier, Prior Acts, Additional Insured for Agents and other Referring Parties.

• Convenient: Fast, Self-Rating Application gets you quoted and back to work in minutes.

• No policy fee, no taxes.

Home inspectors who are paying extra for ‘add on’ coverages, or worse, going without the full coverage they need just to save money, don’t need to any longer. Broad coverage is included in the minimum premium, including E&O and prem-ises coverage,” said David Brauner, Senior Broker at OREP. OREP’s new program also includes most incidental coverages, such as termite, radon and commercial coverage. The minimum insurance premium is $1,250, which provides a cover-age limit of $300,000 Aggregate/$100,000 each Occurrence for E&O/BIPD. Choice of coverage limits and deductibles are available. Find details pg. 31. Visit OREP.org for more or call toll free (888) 347-5273. [email protected]. David Brauner Calif. Insurance License: #0C89873

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.

Thank You! great Service...Easy, fast, affordable! —Patti Tai, Certified Residential Appraiser


Effective Marketing: Going LocalBy Rick Bunzel, Pacific Crest Inspections

The real estate business is evolving and starting to become Internet-centric. Ten years ago most clients didn’t touch the Internet before buying, today over 80 percent do. Today’s real estate professionals not only have to have a website, they need a website that ranks well on the search engines. If you’re still spending money on a Yellow Pages ad or the weekly newspaper, you need to update your marketing strategy. Google is part of our daily vocabulary and there is strong competition to be on page 1 of the search results. Google is now becoming location specific and a search term that includes a town and state will yield results that are local. Below are some techniques that anyone can use to get local listings, even if you don’t have a website. If you’re not familiar with search engine optimization you may want to “Google” it and find some tutorials. A little work on your part can make the difference between your site being on page 1 or page 5. Internet search websites are also getting more refined and are able to provide local information based on your search request. Companies such as Google and Yahoo allow busi-nesses to provide information to enhance local searches. Google allows you to build a profile (including a coupon if desired) at no charge. Here is an example: if you type in “your town,” “your state” and “home inspector” in the Google search bar you will get the following results: Arrow 1 (figure 1) shows you the organic search result which is Pacific Crest Inspections (my company). Arrow 2 is the local result and Pacific Crest Inspection also shows up because we signed up and filled out Google profile. If you click on the “Directions” and “More” tab you get this result: In figure 2 you can see that Google (and other local search sites) are giving your business another web page just for signing up. These results could just as well be for “Real Estate by Rick.” As long as there is a valid mailing address, Google, Bing or Yahoo will take your listing. Some local search sites purchase the data from third party database providers that source the information for the printed Yellow Pages directories. There are three primary database pro-viders of local listing information: InfoUSA, Localeze/Amacai, and Local.com, all of which provide the various search engines, directories, and vertical sites with local listing data. Each has its own process for validating business listings. You may have a listing based on your phone number (and your phone company providing the information), but it’s good to see if the listing is accurate and in the correct area. The great thing is that it is

easy to get local web presence by investing a few hours in front of your computer. Here is a list, including web addresses, of local listing pro-viders. By visiting these links directly, it can help simplify the process. Just click and go! The big dog is Google, as most people prefer it as a search site. But you don’t want to stop at Google, as having listings on a number of sites boosts your overall search ranking and enhances your web presence. • Google Local (http://www.google.com/local/add/lookup?

hl=en-US&gl=US)• BingLocal (https://ssl.bing.com/listings/ListingCenter.aspx)• YahooLocal(http://listings.local.yahoo.com/)• Localeze(http://webapp.localeze.com/bizreg/Index.aspx)• Appraisersandinspectorscanalsogetafreelistinginthe

online phone books so it worth spending a few minutes signing up. Yellowpages.com (http://listings.yellowpages.com/)YellowBook.com (http://corporate.yellowbook.com/contact-us/)

There are companies that will assist you with developing local listings for a fee. Most of the time, they will do things that you can do yourself and I don’t recommend them. WRE

Editor’s Note: It is not your father’s real estate business any longer.

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ACI and its products are trademarks or registered trademarks of ACI. | Copyright © 2012 ACI | Other brand and product names are trademarks or registered trademarks of their respective owners.

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Summer 2012; Volume 30