Geographic Competence

[George Hatch]

BTW, I kinda hate the term "geographic competence" anyway - it's just "competence".

 

[TRESinc]

If the homeowner doesn't know, how is the appraiser. Only when you have a recently performed survey will you know. The only fix on that lake is to evoke an E. A. and suggest a survey.

research. it's your job as the appraiser to know what is happening in the markets you cover, even in the one-off scenarios you like to propose. you really are that old guy in the back of my CE classes who has a story to rebuke whatever the instructor is telling the class.

 

[J Grant]

Sometimes one only knows what something "is" by it's opposite. We appreciate health because sometimes we've been sick. We know what short is because we see it contrasted to tall. We know a lousy singer because we've heard good singers.

We recognize a competent appraisal because its conclusions/ opinions make sense and are credibly supported by relevant market data.. Appraisers who have reviewed a lot can spot an incompetent appraisal because they've seen so many incompetent appraisals. Granted we all have to learn and work our way through mistakes and problems as we gather experience.


Geo competence is part of overall competence. In any profession, competence is the integration of accumulated experience with training and one assumes the accumulated experience makes the professional more competent ( probably because they've already learned from mistakes, and have a knowledge base of comparison.

A type of "geo competence" can also be "property type competence". An appraiser who has appraised for years many mansions, or horse farms, or manufactured homes, or office buildings, (fill in the blank) will be better at those kind of assignments because of their accumulated knowledge from working out problems in prior reports and having inspected a volume of those properties..

 

[Terrel L. Shields]

research.

See if you can find it hotshot, there are lots of things appraisers cannot know. We are not mind readers. That's why EA's exist.

 

[TRESinc]

See if you can find it hotshot, there are lots of things appraisers cannot know. We are not mind readers. That's why EA's exist.

not my market. i know how to discover things that happen here, not in chicken farm land. if one is going to claim to be a local expert then one should be a local expert.

 

[NC Appraising]

Lets flip this around, since USPAP and public trust is a important issue:

The concept of “public trust” within USPAP involves relationships between the appraiser and the “public”. These relationships are based on the confidence or belief that the appraiser will provide a service with independence and objectivity and that the appraiser’s opinions and conclusions will be competently developed, credible and meaningful to the users of that service.

1. If one would ask a home owner or buyer, what would there answer be (geographic competence? Is it a coincidence that 70% of the time the owner, borrower or the agent asks "where are you from"?, "how long have you been appraising"?, "are you familiar with the area"?

Kinda like asking a lawyer that specializes in one field, say DWI, to represent you on a claim that was sent to the state board. Or a home inspector that is located on the coast to inspect a house in the mountains. Sure they can do it, but why would you hire them?

2. Why did Fannie Mae change their stance?

3. Why do real estate agents raise the same concerns and ask the same above questions?

They know it is a issue, lenders know this is a issue and the public knows this is a issue.

Sure, give me MLS access and I can probably get pretty close appraising a tract home in most areas of the USA.

But is that all we are? No.

Yeah, I know, appraisers can gain the knowledge and become competent. But does the typical residential appraiser for mortgage lending do this? Again, how can an appraiser keep up with what is happening in every town, city, school district, etc. for 4+ counties? Sure, they can pill three sales, make adjustments, go to Realist for the zoning and prior sales....done.

 

[George Hatch]

Sure, they can pill three sales, make adjustments, go to Realist for the zoning and prior sales....done.

The "local" appraiser who does that is cutting almost as many corners as the out of town appraiser who does that.

 

[J Grant]

The "local" appraiser who does that is cutting almost as many corners as the out of town appraiser who does that.

So a local appraiser who does a crap job cutting corners means therefore it is okay to hire out of area appraisers to also do a crappy job?

I'm pretty tired of the it's just a cookie cutter tract house excuse for it...that tract house is a buyer's life savings/equity and even a moderate price tract house home can be 200k, 300k, 400k , more, Owners, buyers of these homes consider them very impotant which they are, and ask the same question a high end party asks "Do you know the area?" That is THE question I run into, on all kinds of properties.

Consider this, a moderately busy res appraiser working in moderate price range can appraise 100 million or so total a year worth of properties. ( which can be more $ total worth than some st gens do). So hiring crappy appraisers who cut corners and letting them do even worse work in a wider area just because it is a "tract house"...they can end up appraising 100 million a year...more or less.

 

[George Hatch]

I think I'm coming at it from a different perspective than many of you.

I'm *constantly* working in neighborhoods I haven't been to recently, and some of these situations get pretty involved. But I still need to know what I'm talking about by the time I complete the assignment.

When I appraise an SFR I approach that appraisal problem the same way I do with my non-res assignments - I start from the outside and work my way in. The comp selection comes at the end of the market analysis, not at the beginning.

 

[J Grant]

While many tract houses are not that hard to do, drilling down on their value can still bring up issues...and some of the hardest appraisals I end up doing are the low price FHA or starter homes...I sweat over them more than the million dollar waterfront sometimes. An appraiser can not tell what issues with a property or lack of comps/data may be present until into the assignment. Not knowing a geographical area nuances will only compound problems.