Collateral Valuation Report

[J Grant]

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

Will you be all for it, if in order to do them fast enough to make money, you can't verify, and then the value is challenged later and you are sued and can't defend your report because you didn't verify?

Re, the carrot being dangled to recapture the BPO market...I know a number of realtors and office managers and have tracked BPO compensation. It started off as $50-$75 to the agent, now the agent doing a BPO gets between $15-$25.

To do a BPO properly takes 2 hours. The reason most agents do them is to get the REO listings, that is where they make money.

CVR might start off paying $50-$75, which seems good for 1 or 2 hours. But the compensation will go the way of BPO's, with appraisers pressued to lower fees to be "competitive".

The fee to appraisers will be driven down to $20-$25 a report. To do one well will take at least 2 hours. And you won't get a listing from it the way a Realtor agent does.

 

[markjp99]

Thank you, Jon!

I understand the concerns about AMCs as these are universal across the appraising community. As you know the CVR can be a form used directly with lenders and does not need to be regulated/issued by AMCs. Bradford Technologies elected to go after the top 5 lenders initially with their AMCs to capture volume and market awareness. Securing the largest lenders in the U.S. gives viability to the CVR and drives orders to appraisers. I challenge appraisers to look closely at the orders they receive from AMCs as perceptions are not always the reality. If the fee generates $70 in your pocket for 60 minutes worth of work for an AMC, that's more than most get from a full appraisal. If this equation isn't your reality then look at it closely and if not profitable, decline the work. Hourly wage must be appropriate and I agree with appraisers to stand up and unify to drive appropriate wages. Remember that appraisers don't typically have to do anything to receive AMC work and CVRs should be completed in less than 60 minutes. AMCs bring volume and the majority of the work is very profitable.

Remember that you do not have to just "wait" for AMC orders. Lenders have a choice to use AMCs or not for CVRs. You can capture your local market lenders without going through AMCs for CVRs. Our most successful CVR specialists have been proactive in marketing CVR to their existing or past relationships driving incomes of $140 per hour minimum. These are the wages appraisers deserve and these are the wages CVR can bring by leveraging the high volume business through your local market.

Our AMC partners have adopted CVRs and the fight to bring valuations back to appraisers. Rather than promoting BPO's, Bradford Technologies is determined to bring as much valuation business back to the appraising industry as possible. We need to unite to fight this fight together, drive appropriate wages both through the AMCs (they control 80% of appraisals still) and direct through lenders.

To answer J Grant's question: "...why not compile a panel of CVR appraisers and have lenders order direct?" J...we are doing just that....stay tuned....Bradford Technologies will drive high volume AMC business and state by state lending business direct to you, the appraiser. We started with the top 5 lenders and their in the U.S. and none of these will do business direct with the appraiser for their BPO/AVM transition business to CVR. Our phase two initiative has a direct pipeline to the appraiser for those local lenders that don't utilize AMC's. We support our AMC partners to drive volume CVR business to our specialist panel, we support national lenders to go direct to our panel where appropriate and we support our CVR specialists in fighting to bring all valuation business to the appraising industry.

J Grant...I appreciate your feedback as I can sense your passion for our industry. I would enjoy a discussion with you to work through your perceptions as some are true and others are not. Please feel free to contact me by calling our 800# through our web site or I believe I've posted my contact information here before.

Thank you to everyone that posts on this subject as it shows the passion we all have to make changes in our industry. We can't affect change unless we take action. CVR is only one step in the big picture and it will require all of us to show a unified front.

Mark Patenaude

 

[23Degrees]

J Grant

Just to clarify - and I know you know this so please don't see this as condescending but the CVR and other related products as I see them are desktop appraisals - it is a "real" appraisal. And for what its worth I view the addition of the statistical component as beneficial, particularly if the appraiser can evaluate the results and over ride with their own adjustment figures that were based on the statistics. I don't know if this ability is available with CVR but it definitely is with another competing program. And with these products the appraiser has the responsibility of selecting and gridding the best comparables to solve the problem at hand. Again, I don't know if CVR has this option but the other program does.

A program of this sort that autopopulates the final comparable selection in the grid without offering final say to the appraiser would be quit dangerous IMO. Barring that I'll go as far to say that when these editing options are in place these products, when completed properly, are far less risky than the 2055 - Far less risky. These are desktop appraisals with far less SOW and certification baggage than the Fannie forms. Don't get me wrong - I admire the thought and effort that went into these and if clients can be convinced to dump BPO's in favor of them - at a proper cost point - and not view them as a dollar for dollar replacement or given a slight premium then I object to this no more than I would object to a more conventional desktop appraisal.

I already discussed the end value of the statistics so no need to go back over that. The problem rests with the ability to compete on a price point basis with what it is trying to replace. As for appraisers making more per hour on this than standard products - I am sure there are people cranking out 1 or 2 or 3 of these per hour and able to make a killing on an hourly basis. While in some cases 1 would be possible I suppose, I find the prospect of 2 or 3 to be impressive to the point of having to ask if some people are actually producing compliant reports or living a fantasy. In addition to the consideration of hourly rate - honestly earned or not - the value of one's signature on a file needs to be given some consideration as well.

If I'm going to run a race and the rules say I have to carry a 50 lb dumb bell while most of my competitors don't have to, I might reconsider trying to run that race unless I get a considerably better prize for crossing the finish line - even if I cross it later than they do. Of course I'd also have to consider that the other competitors that have to follow the same rules as me might actually be carrying Styrofoam cutouts marked as being 50 lbs.

Bottom line - you want to compete against BPOs and have the ability to make a good hourly wage while producing a compliant product then fine. As an appraiser if you think your signature on a file that states compliance with Standards 1 and 2 to be worth $70 or less then I guess that is your call regardless of whatever anyone thinks - just be sure you are in compliance.

 

[J Grant]

23 Degrees, cases can be made on all sides. I have never done one of these so don't know how much is auto populated etc. The problem is statistics is how they separate out REO, non REO, diff subdivisions etc. A main issue, whether product be a CVR or 2055 form, if the only how to make $ is to complete it in an hour, how does one verify? And if one doesn't verify, how can one be USPAP compliant, or defend a value later?

The other issue, as you say , is should appraisers be "competing " with BPO's?

It seems like a good opportunity for appraisers to "compete" with BPO's. But think about it, why should a prof appraiser with years of experience who signs a report with full liablity, have to "compete" against a realtor with zero valuation experience, who doesn't sign their report and has no liablity?

Add to the fact that we are not really competing with these realtors...they are already ahead of us. They do BPO's as a loss leader to get listings. So they can afford to do them for low compensation, they will make $4000 when they sell the REO.

Instead of being pressured to "compete" with BPO....if banks now can't use them due to certain regs, then they have to replace them with appraiser signed products, and (gulp), they might have to pay more.

By using appraisals, banks will come out far ahead in profit due to more accurate valuations. Instead of paying $75 for a wrong value BPO and losing 5k on the sale of the wrong pirced REO house, they can pay $150-$200 for a 2055 or desktop appraisal, get a credible value the on their REO and recoup thousands on sale of property.

It is in this manner, proving the value of their work even if it costs more, that appraiser should compete, not by lowering their fee to compete with a realtor, who in effect is giving the BPO work almost gratis, in order to get listings.

PS-the compensation of $70 might look good now for an hour or two of work, but if appraisers jump on board and the product gains traction, the fees will be lowered and lowered and my prediciton is within six months the fee will be $35, not $70.

 

[23Degrees]

I think we are generally in agreement on this subject. My only question to you would be with regard to increasing the number of transactions where an appraisal is required. What would you change about the current regulations in terms of when an appraisal is required? There was a thread started by PE I think that not too long ago that addressed that question.

My view is that any changes need to be focused entirely on protection of public funds and benefit of the public. They cannot be based on what is good for the appraisal industry. If public funds are not involved at any level and all investors are informed then they can lend based on how high their pet cricket jumps when they slam the table - I don't care. As for what I'd consider changing I think De Minimus might need to be looked at but I'm not sure I'd go much further than that.

That is probably a subject for another thread and I don't want to end up being accused of a Hijack so we can leave it as something to think about. Statistics or No if desktop products like these are used in situations where there would be public benefit relative to the use of a BPO or AVM, if there are such cases, then that would be a good thing . As long as everybody does not go - "Yippee - they need to use our "appraisal" product now" and proceed to charge what the BPO people were charging per file for a limited scope appraisal whatever form it may take.

 

[J Grant]

I think we are generally in agreement on this subject. My only question to you would be with regard to increasing the number of transactions where an appraisal is required. What would you change about the current regulations in terms of when an appraisal is required?

Another thread topic, not relevant here sorry bout that!

Statistics or No if desktop products like these are used in situations where there would be public benefit relative to the use of a BPO or AVM, if there are such cases, then that would be a good thing . As long as everybody does not go - "Yippee - they need to use our "appraisal" product now" and proceed to charge what the BPO people were charging per file for a limited scope appraisal whatever form it may take.

Exactly. That is the problem with CVR, the estimated start fee of $70 per report will go down rapidly to $35. Then appraisers will be known for doing really cheap work and dig our own graves. Remember, that realtors do this cheap work with no liability and they do it in order to get REO listings.

If (some) banks can't use BPO's now due to regs, then let them pay us fairly for our expertise and liability. As to their whining about cost, all they have to do is order from us direct and costs go wa down.

It is a false argument that it is our "fault" for not supplying a low price product...the AMC's add 40-60% to each report. It's the amount they add that leads lenders to complain that appraisal fees are too "high".

Attention lenders: order from us direct and the "high" fee problem is solved.

 

[Terrel L. Shields]

Sorry, I don't have time to do them. The compensation is too small. The risk is way too large and from court cases over the years, I am convinced that the average judge views one appraisal like all other appraisals and does not understand the concept that perhaps there are levels of quality. The judge is going to expect the top notch quality under any standard of "due diligence". I don't see how anyone can write a "tight enough" SOW and certification that allows an arm wave appraisal. And outside a few coookie cutter subdivision locations, this format is what we used to call a "windshield" appraisal....without the windshield.

 

[Bedrock]

Thank you, Jon!

We support our AMC partners to drive volume CVR business to our specialist panel, we support national lenders to go direct to our panel where appropriate and we support our CVR specialists in fighting to bring all valuation business to the appraising industry.

Mark Patenaude

That's the problem, you support AMC Partners. You are not for appriasers, you are for making money any way you can even if that means helping to take money out of appraiser's pockets. Sad.

 

[Meandering]

Look,

All of these products are $* it,
They are produced for one reason. To estimate a resale price for the real estate.

No consideration or research is performed to establish if there is a fee simple interest, if there is a life estate, if there is a valid lease, nothing, these products are not designed to estimate value, which impacts sale prices and can most definately impact what can be sold and by who.

These products throw property rights under the bus. This country was founded on property rights for individuals and these large corporations keep snowing over the fact that resale prices must be estimated based on the interests in the real estate, not the size and age of the house.

It does not matter if they tell you they are only doing them for REOs, there are now federal studies that many REOs were illegally performed and some homeowners did not even have a mortgage to start with, but got foreclosed.

The liability game is being played, look at all the major lawsuits happening now. How long before those BPOs start hitting the courts? There is nothing in USPAP that relieves your liability from USPAP because the computer picked your comps, AND because you have the option of selection of that part of the data set, you are absolutely bound by USPAP.

Mortgage brokers on the net aptly state that Appraisers are the GateKeepers of equity and values.

It will come bite your backside, not this year, maybe not next year, but those that pushed numbers in 2005-6-7-8 are now being hauled into court.

Think about it.
.

 

[Couch Potato]

Marion's final point cannot be overemphasized. Appraisers do not get sued by lenders because a deal was closed, but they do get sued years later if a problem develops and the appraisal was questionable. As much, or more than anyone else in real estate appraisers need to take a long-term view in their business practices.