Geographic competency

[Terrel L. Shields]

e could be dropped off anywhere in America and within 48 hours be competent.

I cannot think of many places where you couldn't do a passable job within a few days of research...it just requires the right kind of research. The micro may be more important than the macro. A house nearby was purchased and torn down to the bare walls, and will be rebuilt on the same foundation slab. Someone coming along this winter looking for that comp might be somewhat confused when they see a much better looking house selling so cheap (apparently) and it's not in the MLS. SO...the pix on Zillow will be what??? I will be surprised if someone doesn't try to call the 10 acres $20,000 and the contributory value of the house at $50,000 when the total investment of the buyer is closer to $200,000.

And I have flagged a number of houses around that have had fire and been "fixed" more or less. Not many appraisers will know that if they use as comps...or don't look in the attic space. No one should expect any appraiser to be that knowledgeable...there is a limit to what is practical.

The biggest failing I see in appraisers is not to fully describe WHAT they did and the quality and quantity of that DATA. I did inspect the interior. I did not inspect the attic. I did not inspect a storage shed. I got information on the comps from the MLS and a copy of the property tax card. I did not confirm the.... blah blah blah.

it is common to see appraisers basically just ignore cert 11.

Half never read the cert. The other half don't care....unless caught and like so many things catching them in their equivocation is problematic.

 

[RCA]

If you plan to do any GSE work in a new area, be aware that when one signs a GSE report one is certifying that, among other things:

11. I have knowledge and experience in appraising the type of property in this market area.

So, basically, one cannot (truthfully) do GSE work in an area until one has prior experience with similar properties in that area.

While USPAP would allow one to gain the competency during the assignment (assuming one followed the prescribed protocols in the COMPETENCY RULE), that flexibility does not exist for GSE work.

I did a lot of work for an appraiser who has appraised most counties in California as a Chief Appraiser for a Savings and Loan in the 80's, then a couple of banks and then his own company - and he sent me out to about 15 different counties in Northern California when I worked for him. I was willing to invest in all the time and driving. In fact, I enjoyed the work - after many years being couped up in a cubicle as a software engineer.. - Although, to be honest, it made me poor. So, if you are a trainee, I can recommend covering a larger area, if that is possible. But, you really need something else to pay the bills, like a wife and/or savings - and that is not going to last forever. When I worked for CBRE in commercial - they sent me from Sacramento to San Jose, so again, that was a fairly large area. The big companies are capable of that. And then I worked for other appraisers who occasionally sent be into the boondocks. So, I have appraised in the following counties: Monterey, San Benito, Santa Clara, San Mateo, San Francisco, Marin, Sonoma, Mendocino, Lake, Napa, Solano, Contra Costa, Alameda, Merced Stanislaus, San Joaquin, Sacramento, Yolo, Colusa, El Dorado, Placer and Nevada. (But notice, NOT Santa Cruz.)

I will also submit to you, that that the GSE requirement does allow an appraiser to appraise properties for himself or some arbitrary real estate agent willing to cooperate. Yes, although I have never "officially" done this, you can assign yourself an order, and execute an appraisal for whatever area you want. Find a Real Estate Agent with a home for sale, and you can do one for the agent. So, of course, you have to create a workfile and comply with USPAP. The main point is that you do have to spend time studying the subject area and develop expertise. You won't get paid for the time you spend. But, I may drop down into Santa Cruz someday and do my own appraisal study of some property down there - as I consider it a problem area and I think it would be interesting. Although, quite frankly, I already have more on my plate than I can handle.

 

[Mark K]

... The instructor stated he could be dropped off anywhere in America and within 48 hours be competent..

I don't see that being a problem...for a %, maybe 75%, of the properties, especially in areas that consist primarily of cookie-cutters.

Its the other 25% of non-cookie-cutters that can take a long time to adequately understand. Those are the ones that will come back to haunt you.

 

[Hudojni4ka]

???? GSE work is Fannie/Freddie work, not FHA. Most (though certainly not all) "conventional" work is GSE work.

To Terrel's prior post, it is common to see appraisers basically just ignore cert 11. Not saying you did that, just saying it is quite common when appraisers relocate.

I know, but the requirement for FHA loans is much more stricter, which is why I mentioned this. For FHA/USDA you have to be competent in a geographic area at time of acceptance, but otherwise you could disclose lack of competency and acquire it as you go along. It definitely is a Catch 22 as they say here: http://appraisersblogs.com/appraisal/FHA-vs-USPAP-appraisers-caught-in-catch-22/

 

[RCA]

I don't see that being a problem...for a %, maybe 75%, of the properties, especially in areas that consist primarily of cookie-cutters.

Its the other 25% of non-cookie-cutters that can take a long time to adequately understand. Those are the ones that will come back to haunt you.

That is very true. And it seems like for "certain" appraisers, about all they ever get is that 25%. As if somebody has a list of appraisers to send the unprofitable assignments off to.

 

[Mark K]

That is very true. And it seems like for "certain" appraisers, about all they ever get is that 25%. As if somebody has a list of appraisers to send the unprofitable assignments off to.

They are only unprofitable because the appraisers allow it. I don't mind the oddball properties as long as the client accepts my quoted fee.

 

[DWiley]

I know, but the requirement for FHA loans is much more stricter, which is why I mentioned this. For FHA/USDA you have to be competent in a geographic area at time of acceptance, but otherwise you could disclose lack of competency and acquire it as you go along. It definitely is a Catch 22 as they say here: http://appraisersblogs.com/appraisal/FHA-vs-USPAP-appraisers-caught-in-catch-22/

No, FHA work is NOT stricter. For Fannie/Freddie you MUST have prior experience in the area (if you want to be honest when you sign the certification). That was the whole point of my post.

See the cert that I posted. It comes right off the Fannie/Freddie form 1004/70

 

[Terrel L. Shields]

I don't mind the oddball properties as long as the client accepts my quoted fee.

That's a huge problem (pricing appropriately) for the inexperienced. And for rural properties, AMCs are loathe to pay more for rural than city properties. So the experienced rural appraiser is competing against a hungry appraiser who may take the assignment even though the return is also low...and the chances of botching the report high. I saw lousy rural reports with some regularity in the past and if I were doing full time work, likely see quite a few even now.

 

[Terrel L. Shields]

FHA work is NOT stricter.

I would agree that FHA inspections may take longer in general, but otherwise, the reporting options were pretty much equal FHA or Fannie Mae. But, "back in the day", we actually had FHA employee review appraisers in Little Rock drive all the way to the corner of the state to do a field review and thus they saw things the typical desktop review from Fannie rarely gets an opportunity to see. FHA caught more than one appraiser with a photo that clearly was not the comparable. Those reviews were a far cry from the kind of contracted reviews we saw from Fannie Mae, which were not too detailed unless it was an REO.

 

[Hudojni4ka]

No, FHA work is NOT stricter. For Fannie/Freddie you MUST have prior experience in the area (if you want to be honest when you sign the certification). That was the whole point of my post.

See the cert that I posted. It comes right off the Fannie/Freddie form 1004/70

I understand what you mean, but you are far more likely to get in trouble with FHA over competency than otherwise. There is no way to be totally compliant with the Appraiser's certification when you move to another geographical area unless you find a supervisor to sign your reports and this is highly unlikely to happen.