Collateral Valuation Report

[Lloyd Bonafide]

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.

Even though I have no interest in the CVR or any other similar product, I really agree with this post.

(And as a Bradford customer, this whole topic is always guaranteed to honk me off.) :new_cussing:

 

[23Degrees]

No informed appraiser that complies with Standard 1 and Standard 2 and needs to deal with E and O implications can compete against the Brokers and AVM on a price point basis. I wish we could but I question whether it is even worth the effort. If you are chucking these out and making any less than $150 for your efforts and signature on a per file basis you are a fool. If you really want to compete with the brokers and AVM's dump your appraisal license along with the anchors known as Standard 1, Standard 2, Standard 3, E and O, and associated liabilities and join their party. Nothing wrong with going that route.

That being said I have worked with one of these products (not CVR) and the statistics behind it seem quite solid. The problem I have is that the end results have never ended up useful from a practical standpoint and I have worked with it in a major market with plenty of data. A bathroom adjustment that gives a suggested range of 80K to 160K for a home in a 900K market. Fireplace adjustments of over 100K with a suggested range of 66K to 140K in the same market? Maybe mathematically sound based on the data input but credible? - useful? In a sense it might be proving what some have been saying for quite a while - trying to put an exact number on these things is a fools effort. Perhaps in the end these well designed statistical models will provide substantial evidence that a qualitative approach makes far more sense.

Every file is a quirk fest that needs a human brain to sort through it and not something that can always be accomplished in an hour or less. I'd like to say can never be accomplished in an hour or less but I'll save that for another argument - I'll just say that I personally could never complete one of these and feel as though I had satisfied Standards 1 and 2 in an hour or less.

Please do not get me wrong, this is not a reflection on the technology or the products which seem excellent in terms of what they are trying to do. This is a reflection of the nature of the data which when utilized without serious and logical filtering by a human brain will often produce feeble, fuzzy, and possibly useless results. I've been attempting to utilize this type of program to assist in determining adjustments and frankly, it has been almost useless. Again, its a data problem, not a product problem - although it becomes a product problem if relied on in an irresponsible manner.

 

[J Grant]

Even in an area where banks might be justified in needing cheaper products, such as REO inventory, they still lose money when they rely on a product such as BPO's. A BPO mis prices or underprices REO homes, often deliberately. There is a conflict of interest with realtors who want to sell the listings or buy them for a friend or family member. The research is non existent or flawed. There is no standard as to who can do a BPO, ( it should be called a RPO, Realtor opinion of value), since a broker never does them. The fees to realtors now are between $15-$25 a report, since now AMC's keep half or more, realtors do BPO's to get the listings or control the prices. Or a newbie realtor who just got a license does them, with zero experience in the field.

The resulting product is worthtless and to save $50 on a BPO, the bank might lose betwee $2000 or $20,000 on the sale or listing price of the REO. If a bank contacted appraisers directly without AMC fee padding, they could get a desktop or limited scope appraisal for the price, or close to the price they are paying an AMC for a BPO.

When a bank makes a loan there is no excuse for whining about "high" appraisal fees. The thousands the bank makes on each loan aside, the appraisal fee C& R without an AMC adding to it would be among the lowest fees on the HUD. Try an $800 title search fee, or a $500 doc preparation fee, why aren't those fees "too high?"

 

[23Degrees]

Even in an area where banks might be justified in needing cheaper products, such as REO inventory, they still lose money when they rely on a product such as BPO's. A BPO mis prices or underprices REO homes, often deliberately. There is a conflict of interest with realtors who want to sell the listings or buy them for a friend or family member. The research is non existent or flawed. There is no standard as to who can do a BPO, ( it should be called a RPO, Realtor opinion of value), since a broker never does them. The fees to realtors now are between $15-$25 a report, since now AMC's keep half or more, realtors do BPO's to get the listings or control the prices. Or a newbie realtor who just got a license does them, with zero experience in the field.

The resulting product is worthtless and to save $50 on a BPO, the bank might lose betwee $2000 or $20,000 on the sale or listing price of the REO. If a bank contacted appraisers directly without AMC fee padding, they could get a desktop or limited scope appraisal for the price, or close to the price they are paying an AMC for a BPO.

When a bank makes a loan there is no excuse for whining about "high" appraisal fees. The thousands the bank makes on each loan aside, the appraisal fee C& R without an AMC adding to it would be among the lowest fees on the HUD. Try an $800 title search fee, or a $500 doc preparation fee, why aren't those fees "too high?"

All good points - I'd have to say that considering USPAP and E and O liability considerations, even the most limited scope appraisal that complies with Standard 1 and Standard 2 should reasonably command at least twice and possibly three times what the going rate of a BPO is but that might not be here nor there. Is it really in our interest to try and compete with these products? I don't think the users of these products are naive as to what they are.

The market for appraisal services consists of two categories -

1 - Those that require an appraisal due to regulations in place

2 - Those that desire an appraisal and are willing to pay 3 to 10 times more than the cost of the alternatives for the perceived or real benefits involved whether they be USPAP compliance, an insurance policy, or other tangible draw involved with using an appraiser.

Barring convincing those that do not require an appraisal for a particular file to now desire one at a proper cost, the option extends to changing the regulations and forcing more transactions into category 1. Beyond that, if they want BPO's let them get BPO's. We should have no interest at all in competing against those who do not need to comply with USPAP and if I've heard correctly, do not even sign the report.

 

[J Grant]

Good post, 23 degrees.

 

[markjp99]

The facts...Full appraisal orders are declining...BPO/AVM orders are increasing. BPO/AVMs aren't typically completed by appraisers even though they are valuations. Bradford Technologies goal is to allow appraisers to compete in this market with a new tool to help drive this $2 billion dollars worth of annual valuation business back to appraisers. There is a huge misconception on pricing that I suggest all appraisers look into more closely. CVR compensation is per hour, not per day. If you look at the lowest per hour rate for CVRs you will find it's higher than what we hear appraisers are making per hour for full appraisals. Take the time to investigate all the facts. Don't make assumptions on rumors or your perceptions. If you do your homework and still don't feel this initiative is for you, then don't participate. CVR is only for those looking to augment their income. It's designed to bring new business to the appraiser, not replace existing business. Bradford Technologies is looking for those appraisers that want to take a proactive approach towards changing their situation, not just complaining about it.

 

[jnordquist]

The facts...Full appraisal orders are declining...BPO/AVM orders are increasing. BPO/AVMs aren't typically completed by appraisers even though they are valuations. Bradford Technologies goal is to allow appraisers to compete in this market with a new tool to help drive this $2 billion dollars worth of annual valuation business back to appraisers. There is a huge misconception on pricing that I suggest all appraisers look into more closely. CVR compensation is per hour, not per day. If you look at the lowest per hour rate for CVRs you will find it's higher than what we hear appraisers are making per hour for full appraisals. Take the time to investigate all the facts. Don't make assumptions on rumors or your perceptions. If you do your homework and still don't feel this initiative is for you, then don't participate. CVR is only for those looking to augment their income. It's designed to bring new business to the appraiser, not replace existing business. Bradford Technologies is looking for those appraisers that want to take a proactive approach towards changing their situation, not just complaining about it.

Mark,

For the most part I agree with you. I'm all for taking back the BPO market. I'm a supporter of the CVR to replace BPO's, but the issue is the ordering platforms. No matter how you slice it, it leave a bad taste when an AMC is taking a large cut, especially when the CVR Appraiser is acknowledging and moving forward competing with low cost alternatives. I understand that AMC's give nationwide exposure, but the bottom line is they want a piece of every dollar possible. To make things worse, I can go to the Valocity/Foresythe website and order a BPO right now. Makes you wonder who is really fighting BPO's or who is really looking for the $$$. If I'm going to join the fight to kill the BPO shouldn't the AMC's offering the CVR stop offering the BPO? Just my thoughts, I'm still in the fight.

Jon N

 

[J Grant]

The facts...Full appraisal orders are declining...BPO/AVM orders are increasing. BPO/AVMs aren't typically completed by appraisers even though they are valuations. Bradford Technologies goal is to allow appraisers to compete in this market with a new tool to help drive this $2 billion dollars worth of annual valuation business back to appraisers.

If this is true, why not compile a panel of CVR appraisers and have lenders order direct? The appraisers are the ones paying $499-4699 for the software/training and $25 to download data each report.

Instead, Bradford has already shopped potential ordering through AMC's and an appraisal mill that will take most of the fee and demand appraisers lower fees soon to be "competitive". (this happened when BPO's were switched to ordering through AMC's, $ reaching a realtor doing a BPO is $15-$25, it started out as $50-$75)

There is a huge misconception on pricing that I suggest all appraisers look into more closely. CVR compensation is per hour, not per day.

Compensation will go down once the AMC's take control of ordering. And if an appraiser is fast enough to make a good hourly rate, that means they can't take time to verify and fact check, which puts them in violation of USPAP standards in developing a value.

If you look at the lowest per hour rate for CVRs you will find it's higher than what we hear appraisers are making per hour for full appraisals. Take the time to investigate all the facts. Don't make assumptions on rumors or your perceptions. If you do your homework and still don't feel this initiative is for you, then don't participate. CVR is only for those looking to augment their income.

Forysthe will train their staff appraisers if demand for CVR's takes off, and AMC's will cut compensation, so income future is limited.

It's designed to bring new business to the appraiser, not replace existing business. Bradford Technologies is looking for those appraisers that want to take a proactive approach towards changing their situation, not just complaining about it.[/quote]

Yes, it is an opportunity to augment income, but, if an appraiser choses to do CVR's, they should see the risks in completing them quickly, as well as the future picture of compensation .

Getting CVR's accepted runs the risk of lowering compensation for traditional appraisals.

There is little demand at present for this product. An AVM costs a lender $12-$20 and takes 10 minutes, no human input valuation or appraisal will ever be fast or cheap enough to replace an AVM, they are diff products for diff needs. Banks that use BPO's for listing purposes will continue to use BPO's because they want the relationship with the realtors to sell REO properties. The states where BPO use is being cut back due to regs, companies are already stepping in with appraisl general limited scope work.

 

[jnordquist]

One fact to refute, BPO orders were increasing, they are now decreasing, due to new regs in some states limiting use, other option for appraisers that want to compete with BPO's are desktop appraisals or general limited scope appraisals.

Agree, but in defense I have got phone calls letely from lenders/bloodsucking AMC's inquiring about the CVR to replace the BPO's due to the new regs. I'm not saying the CVR is the cure all, but if it replaces/recaptures the BPO market I'm for it.

Jon N

 

[J Grant]

but in defense I have got phone calls letely from lenders/bloodsucking AMC's inquiring about the CVR to replace the BPO's due to the new regs.

Why not tell them you don't do CVR's, but can offer them a desktop?

I'm not saying the CVR is the cure all, but if it replaces/recaptures the BPO market I'm for it.

If lenders/AMV'c can't get CVR's due to too few appraisers participating, and they can't use BPO's, then they will have to use some form of a real appraisal. Imo, a desktop appraisal is a better alternative than a CVR from an appraiser's point of view. I have gotten inquires from companies planning to use a general appraisal form to replace BPO's.