Policy Regarding Payment of Appraisal / Consulting / Review Fees

Appraisals used for loan underwriting

The practice of allowing the borrower to pay the appraiser directly dilutes the appraiser-client relationship.  If a borrower refuses to pay the fee, for whatever reason, the appraiser has no recourse to collect since the borrower is not the client.  Therefore, it is preferable to have the client pay the appraiser directly for appraisal or consulting fees.

Our fees are due upon receipt.  It would be a violation of the Ethics Rule of USPAP for us to accept an assignment where payment of our fee is contingent upon the closing of a financial transaction.  Every appraisal or appraisal review that we prepare includes a signed Certification that states: “My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.”  The closing of a loan is considered to be a subsequent event.

We concur with the Appraisal Regulations and the Interagency Statement on Independent Appraisal and Evaluation Functions released on March 22, 2005 by: Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, and the National Credit Union Administration

More specifically, we reference Question No. 14 of this document, which states:

“ Can a borrower pay the appraiser directly for an appraisal that is ordered by the lender?

 Answer: Since the regulated institution has engaged the appraiser for its services, the regulated institution should be the party to remit payment to the appraiser. The regulated institution may seek reimbursement from the borrower for the cost of the appraisal. However, the borrower may not recommend an appraiser to the institution or select the appraiser. “ 

Appraisals used for cases involving litigation or condemnation

In general, we prefer a signed agreement for assignments that involve litigation or condemnation. 

Appraisals for New Clients

In general, we prefer advanced payment or partial payment.  We also require a signed agreement.  The content of our agreements for services adhere to Guide Note 9: Use and Applicability of Engagement Letters