Sounding Bored is my semi-regular column on the state of the appraisal profession. This week I vent a little on clients who are all about the money – in other words, the disconnect between the true appraiser function and managing client expectations. The problem is, some people can be in denial about being unethical. They don’t usually say, “Gee whiz, I’d love you to help me take advantage of my real estate partner.”
On occasion, we perform appraisal services for firms who, for some reason or another, decide they don’t wish to pay for our services. We get this on occasion when we don’t “make their number.” Their irrational creativity is quite amazing, but unfortunately, it is also quite selfish and unfair.
I think that sometimes we get so busy trying to generate business, that we leave out the part about getting paid for it.
We recently performed an appraisal for a doctor trying to buy out his partner, for an investor trying to flip an apartment and a broker who was trying to sell her apartment to someone in the same building where her apartment was. In all of these cases, we had been paid our fee before releasing their reports.
A barrage of phone calls and emails followed from each of the 3 clients without a shread of evidence to contradict the results of the reports. Why? Because the values were reasonable but the reports were not favorable to their effort to take advantage of the opposing parties in their transactions. They didn’t see us as providing an independent value, they saw us as a facilitator for their deal.
Recently we fired one of our long time clients. We had a long standing relationship with a particular New York area mortgage broker whom I had considered reputable and we had recommended to our clients on a regular basis. But then something happened. They got bigger and more successful and must have decided that paying their bills was not a priority. They only have a part time bookkeeper despite their growing size and used this as an excuse to be slow or miss payments.
Over the past several years, an appraisal here and there would not be paid for. When we complained, they would pay more current bills and not the old ones. The amount outstanding grew to be quite large, I am embarrassed to say: “Dangling the carrot worked with us.” We sent a bill every month and every month something would slip through the cracks.
This summer we put our foot down and after much resistance, they paid about 75% of the outstanding fees owed. However, they waited until all outstanding jobs with their company were delivered. Enclosed with the check they used the most childish amateur threats to us not to go public with this situation. Like a teacher to a child.
Hint: They owe us the fee for services rendered and yet are telling us to keep quiet about it.
They even had the chutzpah to try to order appraisal updates at a later date on work we had completed several months ago. We of course declined.
A few years ago, a real estate appraisal competitor of mine had a collection problem with this same mortgage broker. They warned me and I did not listen. My competitor ended up filing a complaint with the New York Department of State to get paid. Looks like I will be doing that shortly.
Apparently success does that to some people. They see themselves as above payment of their debts. Too bad, the employees that work for this particular company are actually very nice people and several even called us after we severed the relationship lamenting that they missed working with our firm.
The owner, who has a lot in common with me in terms of age, family, business, was someone who became disconnected from the reality of paying for services he ordered.
Care to guess who this New York area mortgage broker is?