Verifying Sales

[hastalavista]

Let's say for the sake of argument that two appraisers were defending a report on the same subject. Both had the public record info. One called the agents and noted their "verbal" comments. The other reviewed interior photos of the comps and the seller's disclosures in addition to the public data. When it came to defending their reports. . .which would have the better case? The one with the copies of the seller's disclosures in their workfiles and could produce interior pics from MLS? Or the one that "verbally" confirmed details with the realtor but had no actual proof of those statements?

You are kidding, right?
Who, if they are taking the time to interview an agent, isn't also reviewing the MLS detail printout, photos, etc., and retaining all in their work file?

It isn't one or the other.
It isn't blindly listening to an agent.
It is researching and collecting data... and then reconciling what is collected to make a conclusion...and then using that conclusion in the analysis....all while communicating in the report (to the level appropriate) of what was done and why.

Like I said, I call every agent for each comp I use. My response back is about 80% or better; so if I'm calling two agents for the same sale, chances are really good I get in touch with one of them.
Sure, when I talk to both agents, their stories don't always jive; I then have to decide how I'm going to handle that conflict. And however I handle it, I explain what I learned and what I decided to do with what I learned.

But for a fact, in your example, the best situation would be to rely on public records/MLS, and interview the the agents. Maybe it works different in the market where you work, but in my market, if I want to find out who the listing and selling agents are, I have to first look-up the listing on MLS. And if I want to ask intelligent questions, I will first read the MLS completely and review the photos.
And to another poster who said (in another thread), "why would I pull the plat maps for a comp when I can look at them on Google?"
I pull the plat maps for each comp. I look at them on Google (I have the Google Pro version which will actually show the parcel boundaries for most of my markets). I've yet to see easements on Google; but I see a lot of them on larger acreage properties which reduce the utility of the site and explain why a 2-acre parcel is selling for the same as a half-acre parcel.

Interviewing live sources is a basic fundamental of real estate appraisal research. It is one of the reasons why our work product is far superior to any automated system: because we can actually speak with parties to the transaction and market participants, and we can evaluate and analyze their feedback, and then synthesize it into the larger data and come to a sound conclusion.

If an appraiser doesn't feel like they have the time or get paid enough to do that level of research, then I guess they don't do it. I wouldn't want to be producing reports like that, but that's a risk-decision.
I do get paid enough and I do have enough time for an assignment so that I can practice what I preach.

But who can credibly argue that interviewing market participants isn't a better process than not interviewing them?

 

[ockyappraiser]

agreed it is not either or. But why actual phone call? Why not an email "survey" that can be send to the realtors? What if as soon as you had your comps determined you automatically sent an email asking about comp conditions, improvemnts, sales concessions? You would then have an actual email back to put in your work file. Not "he said she said". I have even stopped calling realtors for appointments as I have found that they respond far more quickly to an email or text message.

My point is that simply saying that there are not other solutions to verification then trying several times to reach an agent, waiting for a call back, then waiting for them to check their files and call back again is simply not the case.

At the end of the day, "verbal" evidence is the least reliable or provable. Also is the most inefficient. The same verifications can be done by text or email and you have written backup.

 

[Peter LeQuire]

"But who can credibly argue that interviewing market participants isn't a better process than not interviewing them?" - Denis

Nobody. However, I question whether naming a broker or party to a sale in the report as a verification source is required. If it is, by whom is it required, and, if so, where those requirements can be found.

Assuming we're talking about the GSE forms, I (and I assume most appraisers) list MLS as the data source. Beyond the work I do trying to ferret out information about concessions, condition, room count and all of the other stuff that goes into making sure the MLS data I put in the report is reasonably accurate, I go to the court house (electronically for every sale, telephonically if that proves inconclusive, physically if necessary) to confirm that the transfer of the comp was recorded. I recite the records source ("CtHse" or "Register") AND the information reporting source (CRS, MPC, Comptroller) as the verification source.

Correct me if I'm wrong - I've recently been Borged about the another facet of appraising in GSE land and am always Duck Dynasty happy, happy, happy to be corrected,

 

[hastalavista]

agreed it is not either or. But why actual phone call? Why not an email "survey" that can be send to the realtors? What if as soon as you had your comps determined you automatically sent an email asking about comp conditions, improvemnts, sales concessions? You would then have an actual email back to put in your work file. Not "he said she said". I have even stopped calling realtors for appointments as I have found that they respond far more quickly to an email or text message.

I call first; if I get an answer, I'm good. If I don't get an answer, I leave a message and say I'll follow-up with an email. I typically don't make contact the first time, so I get more emails than personal interviews.
I can ask more questions on the phone then I can ask in an email.

My point is that simply saying that there are not other solutions to verification then trying several times to reach an agent, waiting for a call back, then waiting for them to check their files and call back again is simply not the case.

No argument. I call and email when I don't get an answer on the phone (and advocate both in my comments when this topic comes up).

At the end of the day, "verbal" evidence is the least reliable or provable. Also is the most inefficient. The same verifications can be done by text or email and you have written backup.

Here, I'll disagree somewhat.
A phone call is very efficient when you make the connection; again, most agents are fine with spending 5-minutes with me on the phone.
Spending 5-minutes answering an email, they are not too fine with.

As to provable, yes, you are correct. But I'm not worried about someone calling me a liar. I interview people all the time, and write down what they say (tenants, owners, the neighbor, agents, planning/zoning, etc.). It is a standard procedure with me, so any review of my work files will show the same process. I'm confident I can hold my own if ever accused of fabricating something.

 

[Chandler]

As long as you guys realize you are costing yourselves hundreds of thousands and more likely over a million dollars in lost productivity over the course of a career due to unnecessary paranoia that one day you will need to answer to someone in regards to a report and they won't accept MLS and tax records as verification. As you said, it's your business decision.

 

[stefan olafson]

The level of compensation received should not limit the professionalism and due diligence on each appraisal assignment.

 

[hastalavista]

As long as you guys realize you are costing yourselves hundreds of thousands and more likely over a million dollars in lost productivity over the course of a career due to unnecessary paranoia that one day you will need to answer to someone in regards to a report and they won't accept MLS and tax records as verification. As you said, it's your business decision.

You make a great point which I will use as a segue into what I've said numerous times.

The appraisal profession is continuing to go through a bifurcation process, and there are emerging two types of appraisers, which I call "The Technician" and "The Analyst". Both are necessary, and both can be profitable.

The Technician is where most of the GSE-type mortgage lending is beginning to migrate to. Minimum requirements as far as inspection and verification, relatively simple or easy homes (tracts), relatively good credit scores (low credit risk).
For these types of loans, one doesn't need significant analysis; the loan risk is relatively low, there is a lot of alternative data (AVMs) to use in conjunction with the appraisal, and the collateral value decision is relatively easy to make.
The Technician will have a high volume, and lower fee-per-job. Technology is a significant productivity booster for the Technician, as automated tools can quicken the form-filling function.
More assignments at a lower rate of pay, with the expectation that the turn times are relatively quick.
This is a necessary function, and one, if managed correctly, can be profitable.

The Analyst will focus more on the problem or complex assignments, or non-GSE lending assignments. These assignments require more than just a check-box. They more than just a routine data-collection process, and the client needs more than just a short summary and check-boxes to communicate the results.
These assignments are relatively few compared to the Technician's assignment-pool, but they pay more.

Right now, there is still a lot of cross-over between the two types. What I mean by that is there are appraisers who are functioning as Technicians but certainly have the competence and expertise to do an assignment the requires the Analyst... and vice versa. As this bifurcation continues, I predict we will see less and less cross-over: Technicians will have to concentrate on their market-segment to be competitive and Analysts, if they achieve business success, will make the conscious decision not to compete in the Technician space.

Neither type of appraiser is "better" then the other.
Both are needed.
But both satisfy a different need.

In the last year, I've been able to transition almost exclusively out of residential mortgage finance appraisals. I still get some, but I do them a couple of clients I like (or, I have some clients who give me a portfolio: 10-20 properties, at a time).
I also do some upper-end properties that require a certain level of competence... but are certainly within the purview of a Certified Residential Appraiser.
These assignments pay 3 to 6 times or more vs. a typical GSE appraisal (I just received one yesterday; complex, I quoted a fee range of $2,000 to $2,800 and told them 4-weeks starting from next week. No problem was the response).

So, Chandler, we definitely agree on one thing: Deciding which model to pursue is a business decision.
But it looks like we disagree on this part:

As long as you guys realize you are costing yourselves hundreds of thousands and more likely over a million dollars in lost productivity...

No. I (and others like me) are not losing anything. :new_smile-l:

 

[Peter LeQuire]

Denis - Re: your #67.

I agree with your observations. I look forward to the day when the regulatory framework recognizes - and responds to - the bifurcation you describe. The myriad responses in this thread are testimony to the necessity of developing a greater degree of clarity in that framework and uniformity of its application than we now suffer.

 

[Michigan CG]

As long as you guys realize you are costing yourselves hundreds of thousands and more likely over a million dollars in lost productivity over the course of a career due to unnecessary paranoia that one day you will need to answer to someone in regards to a report and they won't accept MLS and tax records as verification. As you said, it's your business decision.

In addition to what Denis said (which I completely agree with) we don't have to deal with AMCs that ask absolutely stupid questions, the frustration of dealing with mostly idiots and the high blood pressure that comes with it.

We enjoy turn times that are at the least 7 days and typically 10 days to a couple weeks and not 24 hours. Our fees are many times double the typical AMC fees without the headache.

There are no daily e-mails and annoying phone calls.

I can spend 10 hours on a report paying $750 with no frustration or I can spend 12 hours on two AMC reports that will have stupid stips from Muhumba....er....Fred.

And then there is that waiting 60 days to get paid by the AMC, if they don't "forget".

 

[hastalavista]

I look forward to the day when the regulatory framework recognizes - and responds to - the bifurcation you describe. The myriad responses in this thread are testimony to the necessity of developing a greater degree of clarity in that framework and uniformity of its application than we now suffer.

Amen to that, brother!