The Inspector's Journal Forums
Username:
Password:
Save Password


Join TIJ Forums
Lost Password?
Subscribe to TIJ's Newsletter

All Forums > TIJ's News You Can Use > News Around The Net >

Appraiser: I'm No Home Inspector

Previous Topic: Home Inspector Dies Mysteriously in Hot Tub - Topic - Next Topic: TIJers! Get Superior Business Coaching! New TopicReply to TopicShare Topic
Posted By  
View Profile
Kenmore, WA
Posts: 15718
Joined: Dec, 2003
Currently offline offline
  
Thread Start First Page
[#1] Posted: 12/09/2009 - 11:27:49 AM
Reply with Quote
By Michael Antoniak

Appraiser Tony Bamert, Bamert & Associates, Champaign, IL, feels he’s been asked to assume some new and unwanted responsibilities on recent appraisal orders and wonders if his are isolated concerns or issues other appraisers are grappling with as well.

“Traditionally, with any conventional appraisal, I’m not asked to touch the mechanical systems in a home in any way,” he explains. “But over the last year or so, since the market meltdown, I’m being asked to do things I’m not comfortable with as an appraiser.”

Specifically, Bamert is referring to appraisal orders on foreclosed homes with guidelines requesting he “include commentary within the body of your appraisal report which indicates whether the utilities (water, electric, gas) were turned on and operational or turned off at the point of the appraisal inspection.” Another’s guidelines stipulate, “....Appraisers must state within the appraisal that all utilities including water are on and working...”

With 17 years experience, five as the head of his own firm, Bamert is fully familiar with standard procedures, and feels these requests are pushing him beyond that norm. “As an appraiser, my job is to go through the house, take notes and use comparables to come up with a value for that property,” he explains. “That’s completely different than the role of a home inspector. Now they are asking the appraiser to test some of the mechanical systems and give a statement if they are in working condition.”

Bamert says he’s not comfortable with such requests, nor does he have the expertise to make such an evaluation. “On an FHA inspection, our job is not to make a determination on whether something is in good working condition or not.” he notes. “When something doesn’t look right, we advise to hire a home inspector to take a look.”

Bamert’s core concern is the potential legal liability he could expose himself to by offering a professional judgment on matters beyond the scope of his experience and qualifications. He also wonders- were a worst case scenario to occur and a homeowner suffer financial loss or personal harm due to misplaced faith in his opinion on the “working condition” of a utility- whether he would be protected by his errors and omissions insurance.

Several contacts at mortgage companies and AMCs, who routinely request such judgment calls from appraisers, dismiss Bamert’s worries as much ado about nothing. Speaking off the record, and requesting anonymity, one maintains, “FHA requests have asked appraisers to make sure the utilities are functioning for years. Due to the number of foreclosures and bank-owned properties, other lenders have glommed onto that.” He says that nothing in an appraisal request is mandatory and appraisers are encouraged to raise any concerns as soon as an order is received. “If an appraiser feels a request is outside the scope of their knowledge and experience, they should refuse that order or advise when a home inspection is warranted.”

Leslie Seller MAI, SRA, 2009 president-elect of the Appraisal Institute, advises appraisers to be aware of the concerns raised by Bamert and take proactive steps to protect themselves. “The bottom line is everyone is more concerned about their collateral these days, and they are just looking to get more out of their appraisals,” he says. “Some want to save money, some want another set of eyes to look at the property and a few simply don’t understand the difference between an appraiser and a home inspector.”

His best advice: use language which limits exposure and potential liability. “To protect themselves, appraisers should state in their report the scope of their work. Include a qualifier which states ‘I am not an engineer, and I am not a home inspector.’ Make it clear where you do not have expertise, what you did or did not do,” said Seller.

That’s a strategy Bamert arrived at on his own. When asked to evaluate the working order of household systems, he’ll include statements like, “I turned on the light and the light came on,” or that he turned on the faucet and water came out. “Beyond that, I don’t know how to determine if a system is working properly,” he reiterates. “I’m not trained for it, and it’s something I don’t like being asked to do.”

Taken with permission from Working RE Magazine – Home Inspector’s Edition (www.workingre.com). WRE is published by OREP (www.orep.org), specializing in E&O insurance for home inspectors, appraisers and other real estate professionals. OREP is one of TIJ's sponsors.


View Profile
Seattle, WA
Posts: 2547
Joined: Dec, 2003
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#2] Posted: 12/09/2009 - 11:40:49 AM
Reply with Quote
Ha...I just finished reading that at Working RE Magazine, came over here and here it is again. Honestly, I don't know what the problem is if that is all he has to complain about. “....Appraisers must state within the appraisal that all utilities including water are on and working...” I don't see that they are being asked to do any more than determine the utilities aren't locked off and do have "juice" flowing. Surely they can simply state that without claiming they "inspected" the associated systems?

Where's the beef?

Richard Moore

View Profile
Lafayette, Louisiana
Posts: 4793
Joined: Nov, 2009
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#3] Posted: 12/09/2009 - 12:39:17 PM
Reply with Quote
I don't see why the appraiser cannot simply turn on a faucet and light fixture and then state in the report that the water/electric were available or not. He should certainly not state the proper functioning of any of the systems or appliances.
As for FHA inspectors, it is his/her domain to disclose any systems, appliances or fixtures, whether plumbing or electrical, that appear to be non-functional. Since FHA inspections are done only on new construction, this isn't a big deal.
As an FHA inspector myself, I get an occasional request for something 'extra'. I screen these and do reject some of them. You have to keep in mind that lenders and underwriters don't give a hoot about your liabilities.

Marc

"If Guam gets too overpopulated, it might tip over."
Congressman Hank Johnson (D) GA
View Profile
Virginia Beach, VA
Posts: 551
Joined: Nov, 2007
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#4] Posted: 12/09/2009 - 3:15:07 PM
Reply with Quote
In the world of million dollar lawsuit because they didn't tell you the coffee was hot, I can see what he is implying. Appraiser comes in, does his thing and in his report states that all utilities work. That is a very vague statement that can easily be taken out of context. For example, the Agent reads the report, the client asks if a home inspector should be called and the RE says no need, the appraiser already said everything works.

We know where the true blame lies, but we also know, when that same client calls the agent 6 months later to complain about the ceiling that collapsed because of a leak in the bathroom, the first thing the agent will say is "Well you need to call the appraiser" then play stupid.

Personally I remember having to tell my clients what the difference between an appraiser and a home inspector is. It is a situation that can be exploited.

Remember a little while back, agents did nothing but complain about appraisers because they didn't value the house for enough money, then when the market turned those same agents turned on the appraisers blaming them for falsely overvaluing homes?

Yes, as written and to people with common sense and no lawyer friends it may sound ridiculous, but I've known since I was 5 that coffee was hot too.

View Profile
Virginia Beach, VA
Posts: 551
Joined: Nov, 2007
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#5] Posted: 12/09/2009 - 9:33:51 PM
Reply with Quote
LOL, case in point....


Gambler Sue casino because he lost

Atlanta, Ga
Posts: 2
Joined: Dec, 2008
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#6] Posted: 12/15/2009 - 06:59:22 AM
Reply with Quote
Toney,

I know what you are talking about. At the Ending of 08 FHA made everyone wanting to do FHA backed loans to go through their class for 350.00 to make sure of your code knowledge.It was a 40 hr class with a test that had to be passed with a 80 or above. Learning as well how to fill out their NSR 52580 form. I recently lost an inspection where the FHA Appraiser did the inspection as well. I do not know why the lending inst. are changing everthing in the middle of the game. It does leave alot of liability on the table. Appraiser do not carrier the required insurance, and by law are not qualified to perform inspections. This could land an appraiser loosing everthing he or she owns in one mistake. I had recently read a artical of the verything happened in Mississippi. To the tune of $750.000 settlement. The court rulings stated that the appraiser was operating out of he area of training and the he knew nothing about building codes. I would like to publish your artical on my Atlantainspectionnews.com Blog with your permission.


InspectorHolmes

Curtis E.Petty
View Profile
Kenmore, WA
Posts: 15718
Joined: Dec, 2003
Currently offline offline
  
Appraiser: I'm No Home Inspector
[#7] Posted: 12/15/2009 - 07:16:25 AM
Reply with Quote
For permission to use the article on another site, you need to contact Working R.E. Editor, David Brauner, at OREP.

ONE TEAM - ONE FIGHT!!!

Mike

   
Previous Topic: Home Inspector Dies Mysteriously in Hot Tub - Topic - Next Topic: TIJers! Get Superior Business Coaching! New TopicReply to TopicShare Topic
Jump To:
The Inspector's Journal Forums © 2002-2013 all topics or replies that are posted on The Inspector's Journal
are copyrighted material of the original author that posted the topic or reply.
Go To Top Of Page 
 
Pick an RSS Feed

The views expressed on this website are the views of the authors and
do not necessarily reflect the views or policies of the sponsors.
© 2002-2013 Copyright DevWave Software Inc.
Find a Home Inspector

Powered By: Snitz Forums 2000