Buying a new house and I was there for the house inspection. Even though it was not planned the appraiser showed up during the same time period. The inspector found a floor that was not level and said we need to get an engineer to look at it. The engineer came a few days later and told the seller how to fix it.
The problem is that nobody told the appraiser about this issue - he just overheard it being talked about. So he runs back to the credit union and tells them about it. And they make me fix it before I can get the loan.
Is it legal/ethical for an appraiser to listen in on a private conversation and use that in his report? I know state laws vary , this is NC.
Is it ethical for an appraiser to be aware of a situation and fail to report it? You knew he was there, if you did not want him to know, you could have taken the conversation outside. the appraiser is paid to make his employer aware of the issues that affect the value of the property.
If he came around and eavesdropped, his bad. If you said things and he could not help overhearing, your bad.
He reported on the value of the house at the time he saw it. I don’t think it’s a matter of ethics, and not sure what kind of ethics an appraiser is bound to, but it is sloppy to add something to a report based on hearsay without some followup on the matter. An off level floor may or may not have any effect on the value of a house depending on the reason for it, and how it could be repaired.
The housing bubble that resulted in the current stagnated market was largely due to the failure of appraisers to do more than add 1% per month to the value of a house based on recent sales. Perhaps they’ve received heat for this and are attempting to be more diligent in their appraisals now.
An appraiser is hired by the bank (or whoever) to give an appraisal. Any outstanding repair issues figure into that appraisal. Probably does not have to be as detailed as a full engineering house inspection, but a out-of-level floor is not a sales plus, and may indicate significant problems. An appraiser is ethically obliged to report such to his employer.
Appraisers do have a legal/ethical requirement to disclose relevant information that they are aware of. I’m not sure of the details in the laws, but I would be outraged if the appraiser didn’t report this conversation to the person who paid for the appraisal.
(On the other, it would seem appropriate to have asked a few questions directly of the engineer to be sure they had complete information.)
I don’t understand what duty you think the appraiser had? He works for the person who paid for the appraisal, and has an ethical duty to that person (bank?). Did you follow him around and review all of his notes to make sure he only knew about it from overhearing it?
The actions and duties of appraisers are generally a part of state law, and since the housing crisis, they have been held and scrutinized far more than before.
It sounds like you’re just pissed that you couldn’t get away with selling a house with a shitty floor.
I’m in the real estate business (commercial more than residential), and it’s very very common for people to complain about an appraiser. It primarily happens in situations where “the appraiser did something that negatively impacted me”, but it’s rarely the case that the appraiser’s actions are improper. Appraisers get bitched at regularly by people that don’t like what they’re doing, and I’m not aware of it very often resulting in any real problem for them.
An appraiser isn’t an investigative court officer who has to follow “rules of admissibility”, and I’m not aware of anything in any guidelines that govern the behavior of appraisers that would require them to not report on something they overheard. You had no legal confidentiality entitlement in your relationship with an appraiser whose client is not you.
At a minimum this guy is going to have to answer to the local appraisal board for what he did. If they say it’s OK well I guess that’s it.
From what I’ve seen of appraisers in the past they are way overpaid for what they do. And they are lazy too. One time I had one come to my house and they were going to go in the attic which was fine by me. Instead they asked me “any problems up there?” so of course I said no, which was the truth. I don’t think they are paid to ask me , they are supposed to look on their own.
I should add my real estate agent who has 20 years experience is upset about this too. She said she has never seen an appraiser show up during an inspection.
Appraisers do a lot of work you don’t see. For example, the trip time out and back, research on comps, and the time spent formally writing up the results. Even if they only spent 15 minutes at your house, they probably spent 4 hours on the appraisal. Appraisers’ fees seem pretty reasonable for the total time spent.
I’m missing something. Your inspector found a problem. You told the seller and they presumably agreed to fix it. Why does it bother you that the credit union also wants the problem fixed?
My ex-wife wanted to try to re-finance her house that I had moved in to with her. I figured there was no way it would happen, since we pretty much already owed what it was worth because she had already refinanced it twice.
Well, magically, it refinanced for what we owed plus the cost of the refinance. What coincidence!
What’s crazy is that the place had serious structural issues…like, the back of the house is falling off. The block foundation walls have sunk so that they are no longer supporting the back 1/3 house, which was an addition in the 70’s; it’s held up by jack posts resting on the (cracking) concrete floor. In the last year, a ton of new cracks appeared in the walls upstairs.
So, the cost to shore up that part of the house is probably a large percentage of the actual cost of the house.
On top of that, two years later when it was reverting to the bank after we divorced, it appraised for approximately HALF of what it ‘appraised’ for when we refinanced.
So no. While taking responsibility for my stupidity, I don’t trust appraisers. Or banks, for that matter.
Maybe you can get the seller to agree to use your contractor. Since they’re moving out and you’ll be moving in, perhaps they don’t care which contractor is used.
I truly don’t understand what you’re claiming as unethical here. Yes, the appraiser showed up unexpectedly. That’s mildly unprofessional, but then the owner of the house (or was it you?) invited him in. Had he seen a plumber unclogging a toilet, after the owner invited him in, would you expect that to have been secret information that he couldn’t use in his report? If the plumber instead was telling you that he had to go unclog the toilet, after the owner invited him in, why would that conversation be entitled to secrecy?
I get that you’re ticked off that this might hit you in the pocketbook, or at least cause a significant hassle. But if a conversation is supposed to be private, secret, or privileged, it’s incumbent upon people to use discretion – as opposed to getting upset that someone overheard the conversation.
If the appraiser was better at his job he would have discovered the fault with the floor on his own. He unfortunately had to overhear someone discussing it to discover it. But then he is aware of it and it would be unethical for him at that point to ignore it. Maybe he’s not the most competent appraiser around, but he didn’t do anything unethical.
The unethical part here is that you tried to keep something hidden from the appraiser and failed at it, and now you’re mad at getting caught. Ethically speaking, you are the one in the wrong here, not the appraiser.
You and the seller had come to an arrangement on it, but the guys actually paying for the house weren’t involved in that. The CU is fronting the money. They have every right to protect their investment. I am wondering if you are violating any disclosure laws by trying to keep them unaware of the faulty floor.
Based on your posts, the appraiser was hired by the bank. Presumably, the bank that will hold your mortgage.
You do realize the reason for the appraisal by the lender, right? They need to make sure that the value of the house will cover the amount you’re going to borrow from them. If something goes sideways and you can’t pay, they’ll sell the house to pay down the mortgage. So they need to make sure the house will be worth at least the amount of the mortgage.
You say the deal was done, but I think you’re missing the biggest player in the deal - the one who’s putting up the money for the transaction to take place. That’s the bank, and they have every right to protect their interests. I feel bad for an appraiser who’s going to have to deal with such bullshit from a buyer who would be happy to scam the bank.