Illinois Board Issues Warning On Hybrid Appraisals

[Carnivore]

"Analysis
Craig Capilla, an Illinois trial lawyer with the Franklin Law Group who concentrates in real estate appraiser cases, warned appraisers in 2018 about state disciplinary complaints from the IDFPR (See Navigating Hybrid Appraisals). Capilla says that the Illinois Appraiser newsletter offers important takeaways for both appraisers and AMCs. “For the individual appraiser, it is important for them to understand that they are ultimately responsible for any data they include and choose to rely on in an appraisal report. If an appraiser is uncertain of the accuracy of the data provided to them, they must either verify that the data is correct or they may not rely upon that data. A client cannot insist that an appraiser rely on data that the appraiser does not reasonably believe to be accurate,” says Capilla."

no scoping away responsibility, finally, common sense.

Once again let me remind everyone the above is clearly stated in USPAP. Page 24 Line 759 to Page 25 Line 771.

Another area that is troubling to me is about Comparable Selection. Apparently there are some who are providing Pre-selected comparable in the Grid of their cute little desk-toppie with tiny pre-printed certifications and limitations section.. As if this reduces your time on station(aka lower price) developing the appraisal and assembling a report. Really Slick, how possibly could you have a better or more comprehensive Sale data base than me? I use MLS and GIS. Verified by actual Deeds.

New construction Sales office data is often difficult to figure out how they screwed over the buyer. How often have you drove by the comparable and to your surprise MLS printout failed to mention utility easements, detached garages, multiple parcels etc etc.

 

[chad hampton]

I still haven't heard 1 legitimate answer as to why the folks that are pushing these things don't want an appraiser to be the one that inspects the property.

Other than more company profit. This is a pretty big step in having a handful of companies be the ones that appraise every property in this country. They can't accomplish this without having a system of unlicensed runners all over the country sending them field inspection reports. They want fee appraisers out of the equation. Don't think for a second that they want fee appraisers doing these hybrids.

Field inspections and geo competency are the only things standing in their way. You are seeing an attack on both now - de-legitimize the importance of both.

 

[Mark K]

I still haven't heard 1 legitimate answer as to why the folks that are pushing these things don't want an appraiser to be the one that inspects the property.

Other than more company profit.

You mention one, the most important to them, profit. The other is speed, i.e., turnaround time.

On a side note, over the weekend I had a conversation with a friend whose daughter is buying a house. He said that they could close quickly (less than 2 weeks) 'because the lender said they didn't need an appraisal'. The lender was satisfied with the realtor-provided comps (no conflict of interest there ) and no appraisal was necessary.

The borrower is putting down 25% and has 800+ FICO and good job. Looks like they're basing the loan on the borrower more than on the collateral.

 

[Evincere]

Uncertain of the accuracy of the data
Appraiser must rely on data that the appraiser reasonable believes to be accurate.

Which one is it? Does reasonably believe mean certainty of the data?

So if the appraiser reasonably believes the data provided is accurate, they're good to go. Seems like a nice sized truck could drive right through that one.

All the carping about how Appraisers have relied on ancillary data sources such as engineering (licensed) tax assessors, surveys, because we always have regarding “comparable” data as good cause to do hybrids is getting old. Comp value is a given - Appraisers “consider” them - they aren’t inspecting or providing a value for them.

We get nailed on the subject property and /or Unless there was outright fraud or intentional misrepresentation of a comparable I would venture to say unless proven otherwise, there’s nary a board in the country who would rake an appraiser over the coals for using comparable data that proved in some way to be inaccurate.

Appraisers are left holding the bag - by being compelled to Decide on what or who is “reliable” or “Unreliable” on these hybrids is another story.

 

[ucbruin]

You mention one, the most important to them, profit. The other is speed, i.e., turnaround time.

On a side note, over the weekend I had a conversation with a friend whose daughter is buying a house. He said that they could close quickly (less than 2 weeks) 'because the lender said they didn't need an appraisal'. The lender was satisfied with the realtor-provided comps (no conflict of interest there ) and no appraisal was necessary.

The borrower is putting down 25% and has 800+ FICO and good job. Looks like they're basing the loan on the borrower more than on the collateral.

Makes sense under the circumstances you provide....

 

[Mark K]

Makes sense under the circumstances you provide....

If the lender wasn't getting comps from a party with a financial interest in insuring the deal closes, I'd be inclined to agree. This girl is not a risk; I probably would have loaned here the money if she'd asked.

 

[Evincere]

You mention one, the most important to them, profit. The other is speed, i.e., turnaround time.

On a side note, over the weekend I had a conversation with a friend whose daughter is buying a house. He said that they could close quickly (less than 2 weeks) 'because the lender said they didn't need an appraisal'. The lender was satisfied with the realtor-provided comps (no conflict of interest there ) and no appraisal was necessary.

The borrower is putting down 25% and has 800+ FICO and good job. Looks like they're basing the loan on the borrower more than on the collateral.

They closed on 2 factors not Appraisal related. They didn't close quickly because the Lender didn’t need an Appraisal but that’s the way it will be couched and presented. As if the Appraisal itself was a roadblock, inconvenient delay or impediment to getting a loan.

 

[Evincere]

Once again let me remind everyone the above is clearly stated in USPAP. Page 24 Line 759 to Page 25 Line 771.

Another area that is troubling to me is about Comparable Selection. Apparently there are some who are providing Pre-selected comparable in the Grid of their cute little desk-toppie with tiny pre-printed certifications and limitations section.. As if this reduces your time on station(aka lower price) developing the appraisal and assembling a report. Really Slick, how possibly could you have a better or more comprehensive Sale data base than me? I use MLS and GIS. Verified by actual Deeds.

View attachment 40323

Yes, tongues are now talking about how these desktops companies are providing pre selected comps to populate the grid. Modernization of comp checks with the bullseye already built in. Lol

 

[Eli]

I have been in arguments with several real estate agents lately. Even the association of realtors employees get upset with them. I cannot imagine trusting them on an inspection on a universal basis. They are heavily biased to selling a property. Their compensation is based on selling a property.

That’s it. No if, ands or butts. “Market Value” does not enter the equation.

 

[Eli]

I see what AMC’s are trying to do. Get Joan to call a meeting with TAC. I’ll be there.