Do you provide COMP searches?

No. Requests for appraisal services commonly known as: comp checks, value checks, pencil searches, look-ups, preliminary evaluations, study, analysis, etc. are in fact “appraisals”. Any time that a licensed, or certified appraiser expresses an opinion of value, a value range, a relationship such as more than or less than, or even selects a range of comparables, it is an “appraisal”.

Appraisers must fully comply with Standard 1 of the Uniform Standards of Professional Appraisal Practice (USPAP) in developing any appraisal (including comp checks, etc.) and Standard 2 in reporting that appraisal. The Advisory Opinion #19 addresses this in detail. At a minimum, the appraiser’s report must comply with the Restricted Use Report format including a signed and dated certification. Should the results be conveyed by phone, that constitutes an oral report, which would require at a minimum, placement of a Summary Appraisal Report in the work file. Lenders should receive a “report” and that report must be in compliance with USPAP, not just a brief form the client may have created. Some lenders erroneously call these a consulting function to circumvent the issue, but if a value opinion is expressed, IT IS AN APPRAISAL. The USPAP prohibits accepting assignments that include reporting of predetermined opinions and conclusions or those that involve a direction in value that favors the cause of the client, attainment of a stipulated result, etc. These service requests often include the promise of work, which in effect, can create an illegal contingent compensation issue. Requests from lenders such as “we need comps that support ——” or “if it will not appraise at ——, stop and call” or even “borrower’s/owner’s estimate of value —–“, etc. are unacceptable assignment conditions if intended to impact in any way the assignment conclusions.

Should the client request “research” only, that would not be an appraisal, if the request states for example: “Please search (a specific area) for sold single family houses in, the past 6 months that are three bedrooms, between 1500 and 2000 sq. ft. with pool etc., that would not have an appraisal provided: 1) The appraiser makes absolutely none of the search parameter decisions – the client must provide them all, and 2) The appraiser does no interpretation of the data collected, and provides absolutely no opinion of value, range in values, and confirmation of more than or less than a value benchmark.


Image credit flickr - Jon Seidman