Ask Henry

Tax Appeal Appraisal Fees

Dear Henry,
At one time, courses suggested appraising a property for the purpose of proving it was being assessed — and thus taxed — too high. If the result was a lowering of taxes, the agreed fee was often one year's tax saving. Can this still be done or have advocacy rules stopped this practice.


Dear Donald,
The Ethics Section (Management) of USPAP specifically prohibits an appraiser's fee being based on the outcome of the appraisal. Assessment appeals would be a great source of income to appraisers if they were allowed to do them with their fee based on the outcome of the appeal. Unfortunately, the USPAP is very clear that it is prohibited. Ironically, lawyers are permitted to be paid this way, and most often are.



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Ask Henry

Scope of Work - Special Requirements

Dear H2,

I have a client that is asking for an enormous amount of data research for review assignments and they are very specific about the order in which these items are to be placed in the report. I am concerned about data mining from my reports but wanted to get your thoughts.

Some of the items that they are requesting are a 0-6 month CMA of all applicable sales in a marketing area and a 6-12 month CMA of all applicable sales in a marketing area. I am okay about providing some of these items but then they also want both the MLS sheets and County records of all of the sales from the CMA. In some neighborhoods, we may be talking upwards of 50 or more sales in both CMAs -- which then may add upwards of 200 additional pages to the report. They want each one on an individual page and labeled very specifically as to what they are, so the additional amount of work that is being asked for each Review Assignment is extensive.

Any thoughts on how I can appropriately address these additional requests?

Thank you.
Cathy Putegnat
Homestead Appraisals

Dear Cathy,

The USPAP requires that appraisals be reported in one of three different types of appraisal reports. Most residential appraisals are Summary Appraisal Reports but it sounds like from your question that your client may be asking for a Self Contained Appraisal Report in their scope of work requirements. The first step in the required scope of work dialogue between the appraiser and the client is to agree upon which type of report is required. The USPAP specifies the minimum that is required for each report type, but the client and the appraiser can agree on any additional material the lender/client requests.

I once did a 25 mile pipeline right-of-way "taking" appraisal where we were asked to provide information about every sale in the past 10 years that took place within a mile of the proposed right-of-way. It was a great assignment because our fee was in the six figures and the client agreed to pay half of it 'up front' so that we could pay for the additional appraisers used to do the extensive research. By the way, this client also had a standard format for reporting each sale. The only problem I can see here is whether you are going to be adequately paid for all of the extra work involved, assuming you are willing to do what they request.



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The Appraiser Qualifications Board (AQB) has issued the following Exposure Draft:

Fourth Exposure Draft of Proposed Revisions
to the Future
Real Property Appraiser Qualification Criteria


Issued on June 17, 2011; Written comments requested by September 30, 2011

Send Comments to


Economics: How to Solve Housing Market Chaos
& Help Relieve Unemployment

It is easy to become depressed when you follow the news these days.Unemployment seems to be stuck at a rate near 10%, millions of people are about to lose their homes by foreclosure, and the American dream of owning a home has turned into a nightmare for many Americans.

I keep hoping that I will hear that President Obama and the Congress are taking steps to solve the problem but so far not much is happening.

Many of us lived through the market crash and accompanying collapse of the housing market in the middle 1980s. If they think like I do, these folks feel that history is repeating itself. Back then, about 1,000 Savings and Loans went out of business and the press predicted that bailout would cost taxpayers $500 billion dollars.

What actually happened was that Congress passed the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) enacted in 1989. Appraisers remember FIRREA because it required that real estate appraisers be licensed or certified. Prior to the Act, this was not the case. Each state had its own rules. FIRREA legislation was also responsible for the creation of the Appraisal Foundation and the Appraisal Subcommittee.

Far more importantly, it established the Resolution Trust Corporation which was given the responsibility to solve the housing mess. The RTC did so at far less than the predicted $500 billion dollar figure.

The glut of foreclosed houses is depressing the housing market and at the same time, there are legions of unemployed contraction workers who lost their jobs when the construction of new houses basically ground to a halt in 2008 and 2009.

Sound Off!

Customary and Reasonable Fees? I Think NOT!

Dear H2 and REV:

Why are we not hearing about any law suits over the Customary and Reasonable Fee fiasco? It would seem that the very low fees that are currently being paid are both forcing appraisers out of the profession and helping to create a barrier for new trainees/apprentices from entering the profession. Combined with appraisers either retiring or dying off, the current available appraiser pool is dwindling and will continue to do so in the foreseeable future.

If there are going to be less and less residential appraisers in the coming years, why are those with a stake in having more appraisers being silent?

Won’t E & O Insurance companies feel the pain with fewer and fewer insureds?

Won’t software companies lose huge amounts of new sales and maintenance contracts with less and less appraisers buying their products?

Aren’t the continuing education and new licensee schools going to have to go out of business with no new pupils?

Wouldn’t the large appraisal organizations feel the pinch with not having robust membership?

The lack of anyone with deep pockets and a large stake in the game — maybe even a very large appraisal firm? — challenging the Customary and Reasonable Fees that did not change as they were supposed to on April 1st is mind-boggling. Those entities that depend on sheer numbers of working appraisers to stay in business should at least test the waters with a class action lawsuit. The specter of a $10,000 fine per occurrence and the potential liability for a fine
per appraisal should sharpen the mind and cause some lenders or AMC execs to rethink the flawed fee model.

Just a thought!

Fred Hankins

Sound Off!

Rebuttal to Complaint about Appraiser Honesty

Dear H2,

I would be glad to respond to the person who complained about over and under appraisals, and seemed to imply that all appraisers are dishonest. Performing residential appraisals daily with anguish and anxiety, trying to find the best comparables to fit the appraisal assignment in a market where more often than not, sales are infrequent or dated at best — I strive to provide the best possible product in a world of increasing competition for less than reasonable fees. My reports incorporate the latest statistical analysis (something we never did back in the old days) and I strive to stay educated and up to date on the latest analytical tools which have made my reports more credible than ever.

In an age, where good appraisers are dying off (like me!) and good new appraisers are becoming harder to find....I can only surmise that the writer, Austin Meredith, has not had the good fortune to run into any of the many good appraisers that still do exist, who do not blow their own horns, but go quietly about their days, still taking pride in their work and striving to produce the best possible product at all times. Happy appraising — honest and professional appraising — in not cookie cutter or boilerplate work!


Donna Gutierrez
Appraisals All Islands

Dear Donna,

I can understand your frustration with the current state of affairs in the appraisal profession. There are a lot of under-trained appraisers who turn out poor work, and some dishonest ones too, giving our profession a bad name. A big problem is the marketplace has many buyers of appraisals who are not interested in quality and integrity. I think things are slowly getting better. Time will tell.


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Just The Facts, Ma'am

You knew it was bad. But did you know just how bad?

As of June 30th, the data from the Lender Processing Services Mortgage Monitor Report shows the numbers behind the misery:

1) The number of mortgages that are 90 days or more delinquent, combined with the foreclosure inventory at the end of May, totaled 4,084,557!

2) The number of foreclosure sales reached 78,600 at the end of June.

3) In fact, LPS stated that there are "still significantly fewer foreclosure sales" than earlier this year, or last year, and the numbers are actually declining! That means more foreclosure market glut.

4) The May data shows the biggest drop in foreclosure sales is in the East Coast states, with a decline of 96 percent in Washington, D.C., 80 percent in Maryland, 79 percent in New York, and 75 percent in New Jersey.

5) The average time spent in foreclosure continues to extend, with more than 33 percent of borrowers in foreclosure not having made a payment in over two years.

6) Nearly 30% of "current loans" - those not in foreclosure - are "under water", i.e., the mortgage is higher than the value of the collateral property.

7) The loan delinquency rate for the entire country is nearing 8%!

8) Many Americans are just one uninsured illness or one job loss away from losing their homes.

For more details, click here: