Collateral Valuation Report

[DTB]

http://www.forsytheappraisals.com/story/bios.aspx

I could vomit. (if I wanted to remain in this biz)

 

[Fargo1]

I think I just eliminated Bradford Tech as an option for my appraisal forms suite! I have no desire to work with a company that has this CVR thing as their main focus. And I can see from comments elsewhere about their buggy software that it is.

How can appraisers do these things for $175. Talk about doing appraisals for nothing. People remember anytime you put a value on something you have completed an appraisal. You need to have a complete workfile and are liable for everything in USPAP. If I was an AMC or a Real Estate agent that wasn't bound by USPAP I would be doing these things left and right. But as appraisers, we are held accountable to higher standards. I don't care what you call it, if you put your name on it, and it has a value or a range of values, it is an appraisal.

I can definitely see a damand for this product though. If I understand things correctly, an appraisal is not required for 'Federally Related Mortgage Transactions' under $250,000. So I can see where banks would be all over this cheap appraisal for $175. The problem is that we are still liable for everything in that report. It is an appraisal.

With this product Bradford is just feeding a market that wants cheap valuation products. If Bradford is successful, other software companies will create similar software. And guess what. They will sell it to Realtors, AMCs, or anyone that will spend $500 for the software. So now you will be directly competing against Realtors, AMCs and anyone that thinks they know something about Real Estate using the same software and the same data base. Hence you will get roughly the same results. And since no one else is required to maintain a workfile and adhere to USPAP, they will be able to do it even faster and cheaper than you can. So you will be fighting a loosing battle for $175.

Now I know Bradford will say that the banks will only want them done by appraisers. Why do you think that is? I'll tell you why. Because you just did an appraisal and you take full liability. Not the client. The lender needs the appraisers name on the report so they have a scapegoat. If that liability was not present, the lenders would just hire a Realtor or the next lowest bidder to provide the CVR. Or even more likely, the lender would just purchase the software for themselves and run all the CVRs they want for as many properties as they want. No need for an appraiser.

The more I think this through, the more I see nothing but bad news for the appraiser. Yep, I no longer feel like I need to even consider Bradford for my new forms software. Bradford appears more concerned about appeasing big banks and AMC than they do about the appraiser or the appraisal industry.

 

[Fritz in NY]

I'm with you Fargo. Sick and tired of paying for software EVERY year. Fast and cheap, can afford the Bradford model. No E&O, no certification, no liability, no USPAP issues involving a license etc. I've paid ACI $ 395. a year for 12 years + my initial hit of $ 695. to get a disk. Now I pay for signatures, flood maps, graphs et al. and anything they thing of that they can sell us.
With a decline of nearly 8% of all appraisers in the past two years, they need to find a way to keep the cash flow, BUT now it's at the EXPENCE of the appraiser.

 

[susandenbow]

CVR - tablets

I agree that the appraisal marketplace is changing and the CVR type products are good ideas for an alternative product. I'm not under an hour yet on completing a CVR but getting faster. Can the Bradford CF software or CVR be completed on one of the newer tablets? Does it have to be a Windows 7 compatible tablet?, many are Android based.

 

[J Grant]

Ken,

Then my advice to you is don't participate. Appraisers have a choice to make. They can sit still, do nothing, and accept the results. OR, they can take a proactive stance on driving income for themselves that is being taken away by agents and brokers. There is a $2 billion dollar market of valuations out there that appraisers aren't getting. You can't get it without a different form, a different tool that is faster and less expensive for the lenders but puts money in the pockets of appraisers. The lowest AMC order that has come in so far generates $140 per hour for those most proficient with CVR and that's after Bradford's fee. The Bradford fee by the way pays for the data used and the software maintenance, which eliminates an annual renewal fee. You don't make money you don't pay money.

Mark Patenaude
markp@bradfordsoftware.com

If you were serious about appraisers having an opportunity to make money, you would not shop the product to lenders through Forsythe and Valocity. By doing that, you are cutting the income to appraisers in half. Forstyhe gets the $175, they farm it out to the appraisers for $75, and the appraiser pays the $25 for comp cruncher/data and makes $50. ( and these things never take an hour, it takes a half hour to upload it to a website to a company like Valocity and they always ask for "revisions".

The right way to do it to promote appraisers, would be for you to offer the lender client a roation list of qualified CVR appraisers who have taken and have the lenders pay the appraisers direct.

Instead, you have cut deals withmiddlemen such as Forstyhe or Valocity, who may even start out paying okay, but per their historic business model will soon pit appraisers against each other to bid the lowest fees to get any CVR work.

Our own software offers desktop appraisals and other low cost/fast produce prodcuts. To ask appraisers to pay for expensive training and software only to have the work channeled through a fee mill shop and an AMC...if response is underwhelming, that is why.

 

[Carl Pylant]

My biggest issue with the whole thing is lack of data in my market. Sure regression is a great toll if you have enough data points. However, most of the rural areas in this market have very few sales and more often than not, sales that are not comparable. That is when we appraisers earn our money. We have to do some digging in other rural areas for adequate sales for analysis. This is not something a CVR can do accurately. Without a good sample of accurate data, a regression analysis isn't worth the paper it is printed on. Sure this might work in a good market with plenty of sales of similar properties but how many of us have those right now? A regression analysis using arm's length sales, foreclosure sales, relocation sales, short sales, divorce sales, etc., like we have now, will yield a scatter plot that resembles a shotgun blast on a poster board. Not very reliable.

 

[J Grant]

I doubt the "accuracy" of the value as well. Furthermore, an opinion of value is supposed to be credible and supported, as well as accurate. Accurate is a buzz word...the accuracy is proven by the loop of the software and regression analysis, so it seems like a supported value, but is it suppored out there in the real market ? If it is not, and I doubt it is, #1), it will cause immense problems down the road for users depending on it to be as credible as an appraisal #2) all the appraisers who did these will be liable for the values.

Whether E & O providers will even stand behind this product as appraisal is another issue as well. If a claim comes in, they may very well deny it, they have attorneys that are expert in USPAP. If the E and O attorneys, let alone the opposing side, claim that it is negligant for an appraiser to rely on a software program to filter data and the appraiser did not perform due diligence in manually checking the data and verifying with market particpants (and verifying/checking takes hours, the appraiser at that point might as well do a "tradtional" appraisal.). In any event, I don't think this product will stand up to reviews for value later of claims against it and doubt even an apprasier's own E & O would stand behind it, even though they push CVR as "USPAP compliant"

I think appraisers falling for this whole, "the market is changing, you have to be as fast and cheap to compete" is wrong. Part of the housing meltdown was caused by faulty AVM's. Borrowers took out huge equity lines of credit based on AVM's and are now defaulting. When I owned my prior home and applied for an equity line of credit, the bank ordered an AVM and it was 100k over the real value of my home. I even called the bank and told them I was an appraiser and their AVM was 100k off and the loan officer laughed. Wonder how much they are laughing now with all the homeowners defaulting who borrowed over what their homes were worth.

When I first trained in appraisal, appraisals took a week to 10 days to finish. There was a low default rate and solid values from the appraisals. Now, the turn time is pressured to be 48-72 hours ( from the AMC's ). Loans take on average 30-60 days to close, with average closing of 6 weeks. The underwriter has to check employment, a title search made, survey, home inspection etc. Hundreds of thousand of dollars are at stake and loans are made for 30 years. Is one more day to deliver an appraisal really going to make a differnce? If the difference means able to verify and support and arrive at a credible value, is 24 hours worth risking so much for?

I don't expect bankers to wait 10 days for an appraisal ( though it wouldn't kill them). 3-5 days ,is average to deliver a report. Most appraisals sit in the file for 2-4 weeks while the underwriter waits for other docs to come in anyway.

$175 for a CVR, where did that come from? It comes from what Forysthe charges their AMC clients, and then Forsythe turns around and pays their staff appraisers between $90-$110 a report. Companies like Forsythe are parasites. They don't have direct lender clients ( or they have very few). What they do is contract in bulk to AMC's for orders at prices from $150-$175 a report, thus undercutting even local indpendent fee appraisers that the AMC would at least pay $200-$225 to. Supporting companies like Forsythe in any way shape or form is the fastest way to kill the profession.

JVI, who is a pretty decent company to work with, contacted me to train for CVR (I'd have to pay $499 or course). I refused, but before I refused asked them what they would pay for a CVR report. They said $80, but it would only take an hour or two to complete. Here we go again. If it takes an hour or two, I am not verifying. If I don't verify, I doubt my E & O will back me up on a claim. If I do the report so fast, I doubt there is any way for me to back check and see if the value is credible. And if I do the report in 4 hours, I am losing money. If I take two days to verify, the client will drop me for being too slow.

If appraisers refuse to go along with this nonsense and the lenders need appraisals with a signature and everything that comes along with the signature, the ability to devleop a value the appraiser has to stand behind for 5 years, the E and O, etc, then the lenders should pay for it.

If lenders don't want to pay for appraisals, then the profession will die out. But at least we don't have to help kill our own profession.

But, truly, if we don't fall for keep doing it faster and cheaper, lenders will pay for appraisals. They make thousands on each loan in origination fees and points, and hundreds of thousand over the life of the loan in intrest.

Think about the scale.. a bank balks at paying $100 more for an appraisal, compared to the $4000-$8000 in points and origination fees a bank makes at closing, then add in the $150,000 in intrest payments the bank or whoever they sell the paper to will earn. AND NONE OF IT HAPPENS WITHOUT THE APPRAISAL, WHETHER A TRAIDTIONAL APPRAISAL OR A CVR APPRAISAL. Our appraisals allow banks to make hundreds of thousands per loan.

The threat to replace us with faster/cheaper because of products like AVM's is a bluff. A bank can't go after anyone for a faulty AVM, as they are discovering, as they eat the loans the bad AVMS' made. And they can't pad the fees for unsigned "evaluations". Thus, even though AVM's are plenty fast and cheap, they are of limited use (plus the values are not accurate, credible, or supported.)

What to do, how to get all the liablity and crediblity of an appraisal while saving a few bucks and shaving off 24 hours...ta da! The CVR. A fast, cheap report with the signature of the dummy appraiser who pays all that high cost E and O and bears liability for five years.

A CVR is cheaper than a trad appraisal, so the banks will want it. Yet it is expensive enough that the fees can be split with managment companies and $25 taken as a backend data fee to the software provider. It is being sold to banks as being as reliable as a tradiitonal appraisal ( with no proof of that)

Re, the CVR as a product to replace BPO's is being touted as a new opportunity to appraisers. BPO's are being outlawed in many states for lending collateral. Appraisals can be used, but we don't need a CVR. If the lenders want a less costly product instead of a BPO, they can order a desktop appraisal. If a lender wants a lower cost, stop ordering through middlemen and AMC's and order from appraisers direct. That will save 40-60% on each report.

 

[Lee Lansford]

...

...don't fall for keep doing it faster and cheaper...

...

Though there was much in your post that I found myself nodding my head in agreement, the above is something for everyone to take note of.

 

[J Grant]

...

Though there was much in your post that I found myself nodding my head in agreement, the above is something for everyone to take note of.

Thank you. People us "faster and cheaper" as a scare tactic. But the truth is, an appraiser can never be as fast and cheap as an AVM, nor should they try to be. There exists a need for AVM's, and a need for appraisals, due to the fact that AVM's are of limited reliability, plus nobody is personally accountable or liable for them.

If one day lenders or the regulators decide that the collateral assesement should only be AVM's, then yes, appraisers will be out of business. But trying to stave that off by offering ever more faster and cheaper products to "compete" is not the way to do it.

The way to do it, is hold our ground and show the consumers and secondary market the value of appraisals. Despite the supposed threat of "fast and cheap", regulators have been bolstering use of appraisals by banning BPO's as collateral in certain states, making appraisals mandatory for qualified loans.

And if an appraiser wants to accomodate a lender on some of their needs for less costly appraisals, they can do a desktop appraisal, and charge a fair fee.

When McDonalds franchises exploded, did fine restaurants suddenly install drive through windows and offer fast /cheap food? No, because they could never be as fast and cheap as McDonalds. The fine restuarants or restaurants offering ethinic dining experience stayed as they were, realizing they serve a different market need from McDonalds.

I may reprint this in a diff thread as well.

 

[Noreen]

The last local seminar ( HUD/ Manchester, NH ) I attended, they stated at that time that "HUD will always require a full appraisal". I don't know about other parts of the country but here the FHA roster appraisers are the ones working.