As Appraisers, the disgust for the behavior within our own industry is reaching all time highs. You can see it in related blogs, forums and the news. Everyone is in an uproar over those who commit act's of selfish greed or practice every day production of unethical incompetence. If you look deeply enough, I think that most would agree that a majority of the Appraisal industry problems stem from Ethics.
Foremost, we have an obligation to USPAP. Things can be quite simple sometimes when viewed from a different perspective, so as an example here is something to think about. (The following situations are only stated as fiction).
Situation 1: If I accepted an assignment, but halfway through (in the process of discovery) I run into an appraisal problem that makes me incompetent to finish and I decide that I need to call the client to issue a refund (full or partial) and turn down the assignment. Ethical?
Situation 2: If I accepted an assignment, but halfway through I realize that the Appraisal is not going to meet the bench-mark for the value that is needed for the refinance. I call the Mortgage Broker and cancel the appraisal because I do not want to waist the borrowers money. I then issue a partial refund to the borrower, because after all I did "partially" complete the assignment. If this were to happen, who did I just consider? USPAP or the borrowers money?
If you think about the two scenarios, there is a distinct difference in reasons why I canceled the assignments. One was canceled because I was obligated by USPAP to cancel the assignment, or to inform the client (and of course with permission, I could get competent with extra help) and continue.
In the second scenario, the appraisal was canceled with the consideration of the ethical consequences of waisting the borrowers money (knowing that the loan would NOT be attained), but the borrower is not USPAP or the client.
USPAP clearly states that the amount of pay should not be based on the outcome of the Appraisal. But, isn't that just what happened in situation 2?
Appraiser's fool themselves by thinking they are being ethical by saving borrowers money and that they are good people by doing so. In fact, the client's and the borrower's in these situations might think so too. But are they really being "good", ethical people by breaking their oath to the state that licensed them to appraise (not to mention an oath that's required by signature, before licenses are even issued) that they would in fact abide by USPAP?
It is my hope that Appraiser's will read this and start to realize that being ethical is abiding by USPAP first, not second. Because, in the end; breaking an oath is not being ethical, no matter how different something is phrased over the phone or what things are added to an addendum.
Author: Aaron O. Thomas, Certified Residential Appraiser. Aaron is owner of San Diego Appraisers, a real estate appraisal service provider specializing in residential properties located in the greater San Diego County area. San Diego Appraisers service mortgage brokers, CPAs, lawyers, businesses and homeowners.
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