I said NO this week to an appraisal and I wanted to share about it. This might seem like a random post, and maybe it’s just a reminder for me, but I hope there are some takeaways. Any thoughts? I’d love to hear your take.
Here’s a conversation I had:
Loan Officer: Can you appraise a triplex fixer and bring a screw gun to the boarded property so you can get in? We need an “as is” value (note: picture above is not the triplex).
Me: Sorry, but I’m not willing to take a screw gun. I’m handy with tools, but that’s too much liability for me.
Loan Officer: I understand. Can you do an “as is” drive-by appraisal instead?
Me: Honestly, it’s a huge liability to do a “drive-by” on a multi-unit property. I care about my license too. I wouldn’t know the size of each unit, condition, or even bed / bath count. Besides, you just told me it’s a fixer, which means it’s even more important to see how bad it is. I’d have to make big assumptions without knowing these things, and that’s not something I’m willing to do.
Loan Officer: Thanks. I don’t want to put you in a situation you’re not comfortable with.
I have conversations like this quite a bit. People don’t usually have ill-intentions, and I don’t think the loan officer did either. The truth is though despite someone’s innocent request, it doesn’t mean it’s a good situation for me.
THREE THINGS:
1) Saying NO is okay: Sometimes the most professional thing to do is say NO instead of taking on something with too much liability or embarking on a situation that might actually be unsafe. In this case I was concerned about safety because of squatters and not knowing what I might find inside a house like this. I’ve inspected quite a few boarded homes, but I don’t remove the boards or go alone to these properties. Also, what if I didn’t properly close things up? Would any future damage be my fault?
2) Developing a credible value: If we can’t get enough information to produce a credible value, it might be best to not render a value. Sometimes the most professional thing we can say is, “I’d love to help, but in order to serve you I’m going to need __________________. If that cannot happen, then I cannot give you a value.” There is nothing wrong with walking away when we don’t have enough information or a client is asking us to do something we’re not comfortable with. This happens not only to appraisers, but also to agents who are asked to do BPOs on custom homes on acreage (without seeing them or knowing anything about them). Or in other cases we get asked to give a value to something even though we don’t have any clue on the cost to cure a mold problem or some other major thing. Yes, there are times when we need to make assumptions and disclaimers. I understand that and I do it all the time in the right situations. I’m just saying if there are bigger unknowns that could radically sway value, then we might need more information instead of assumptions.
3) Be honest about limitations: There are times when we have to say, “I’m not qualified to take this on”, “I think my colleague might be a better fit (and I can partner with him/her),” or, “I’ve never worked on a property like this before, but here are the steps I’ll take to be sure I become competent.” I know, there are people who think they can value anything. I love the passion, but everyone has limitations, and being aware of that is an okay thing. And if you didn’t get the Liam Neeson quote, it’s from the movie Taken.
Well, that’s what’s on my mind today. I hope it was useful. Who knows, maybe you’ll be inspired this week or next to say NO to something that’s really not a good fit for you. And that’s okay. Heck, it’s actually a good thing.
Questions: When have you said NO to something? Why do you say NO to certain things? What advice would you give to someone who never says NO in real estate? I’d love to hear your take.
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Good post Ryan. One of my best clients asked me to do a driveby on a triplex two weeks ago and I asked to have it upgraded to a full appraisal. Order went to some other sucker.
p.s. Received this from RSS. Looks like the issue is fixed.
Thanks Joe. Yeah, I’d rather pass on that too. Being that they are a good client, I’m sure they understood too. Hopefully.
I had someone needing an appraisal for a duplex (2 houses on 1 lot) for a divorce, and they requested a drive-by. There are scenarios where a drive-by is really the only possibility (like with a retro estate appraisal where the owner no longer owns the property), but ideally I’d hate to be on the court stand after having performed a valuation with VERY little information on the actual property. Sometimes it’s best to walk away. In the case of the triplex the loan officer also said two other appraisers passed. I’m with them on this one.
Thanks for the heads-up on the RSS issue. Hopefully it is fully solved. I guess I’ll know come 9am if my post gets emailed out automatically or not. 🙂
Ryan, I don’t think this post is too random. It’s actually a great reminder to set boundaries in your profession. Speaking as a Realtor, it took a while before I got comfortable letting some opportunities go. In the early stages, we tend to want to take all comers, until we realize that not all opportunities are created equal. Some are a giant waste of time, or as you demonstrated, a potential liability issue. I believe “NO” is a powerful tool in any profession, and in most cases, it takes a few too many “YESes” before we realize this. Good post, thanks for sharing!
Great stuff Nikolas. I really appreciate your thoughts here. Thank you. I like how you said “not all opportunities are created equal.” That is so true. I think in any profession we have had experiences where making money just isn’t worth it when it comes to working with certain clients. Not everyone is a good fit to work together.
I’ve said no to so many properties over the years – I often get asked for drive bys often in the foothills for equity lines and either decline or encourage an upgrade to full appraisal. I often say that too many variables with acreage props for a credible value conclusion. Some clients do upgrade after discussing.
Very smart Bryan. Thanks for your take. I think you’re right that some clients end up seeing the need for what we ask for. Furthermore, a prospective client might also call around and find others are saying the same thing too. Right now I actually have a divorce appraisal on my desk and there was very substantial wood damage. Normally I wouldn’t call for a pest report or repair bid, but in this case a guess at the cost to cure could be significantly wrong because of the extent of the damage. I asked my client for reports, so hopefully I get them.
Yes, I had that occur on a divorce appraisal as well. I put on hold for owner to obtain bids. There was possible structural issues. The estimates to cure were significant more than what I would have guessed. Good call- get the bid to confirm.
Leave this one to the new guy desperate for a job… you’re well-above this sort of request and the money isn’t worth the hassle or the liability.
I think far too often in real estate we get asked to offer professional opinions in other related fields that we have no expertise in.
Estimates for Repairs are the perfect example. As an appraiser or an agent, we probably have no idea what some repair costs, and even if we can ballpark it there’s far too high of a probability we’re wrong, so they should seek an answer from a contractor.
I think it’s a good reminder for everyone that you don’t have to take every single job that comes your way, because some certainly won’t be worth the time and effort involved.
Exactly. I couldn’t agree more. We have to stick to our expertise and defer to others who are qualified to make the call on repairs or other issues. We need to definitely do this with cracks, structural integrity, mold, and a host of other issues. The irony is FHA asks appraisers to give a cost-to-cure for anything that does not meet FHA minimum property standards. There is some wiggle room to not mention a specific cost to repair, but I find it interesting that lenders ask appraisers (who are not contractors and don’t bid repair jobs) to list out repairs. Granted, appraisers might be familiar with things like the cost of paint and such, but still giving an estimate is really not within the scope of expertise an appraiser tends to have.
I get being hungry too and taking less than ideal jobs. I don’t pass judgment either, but anyone doing that needs to still be sure he/she is competent to handle the assignment. Moreover, it’s probably a good idea to begin diversifying clientele by slowly getting better clients and saying goodbye to the bad ones.
As always, thanks Wes.
Great post, Ryan. Made me think of this scene by Clint Eastwood:
https://www.youtube.com/watch?v=_VrFV5r8cs0
I do think that a bank or any other lender may try to get away with the cheapest appraisal they can to save money but that is not always the best choice, especially for the appraiser. I will not do drive-by appraisals unless I have reliable square footage information and can talk to the owner or have recent MLS information. Of course, I think we should inform the lender when it would be in their best interests to upgrade the appraisal to a full inspection and sometimes they will agree.
So good Tom. Thanks for the Clint quote. By the way, Eastwood is a fantastic director. I’ve enjoyed some of his movies through the years like Million Dollar Baby and Gran Torino. Anyway, I agree. There is a time and place for exterior-only appraisals, but we have to weigh liability and be real about whether we can produce a credible value or not without seeing the inside. If there are too many unknowns, it’s probably not a good idea.
Great post Ryan. You know me, I’m always trying to protect myself and my appraisers from personal harm and professional liability. What I want to add to the conversation is the importance of the business factor. Some of my best paying jobs are the ones that get me to the edge of my comfort zone. Gotta bring a screw gun? Just make sure that you’re the one doing the screwing. Ok, maybe that pun went too far 🙂 Just make sure when liability is high, fees are also high enough to offset any perceived liability.
Thanks Gary. I appreciate you pitching that thought into the mix. It’s definitely an important one. I can relate to the edge too. In this case my edge would not allow me to take on this assignment in light of safety. To be fair there could be other instances where I might be okay with bringing a screw gun. Not in this case though for a number of reasons. I think if someone is hungry, right or wrong, that can also change things.
Thanks for sharing this.
Please keep on sharing !!
Sure thing. Thanks so much. 🙂