Freddie Mac vs Appraiser Bias

[Bob Ipock]

Danny Wiley, senior director, property valuation for Freddie Mac, brought up the use of inspection technology to help eliminate bias.

“The data tells us we actually get more accurate condition ratings with a third party inspection,” said Wiley. “I don’t think people see that as potentially something to help with the bias but the data clearly shows that that is a contributor to improving our results and getting less bias in those condition ratings.”

“We came to the conclusion that the percentage of undervaluation in each one of those markets didn’t vary according to the race or the demographics of that area,” said Hogan. “Now, obviously, that would make sense because AVM doesn’t know the race, it’s pretty much blind to those things.”

https://www.nationalmortgagenews.com/news/fhfa-to-make-fannie-freddie-appraisal-data-public



I’d really like Danny to reveal the data he referenced revealing real life examples of appraiser bias versus non-bias with a third party. I’m a little confused with DW these days.

I consider Danny to be an appraisal genius but The last 10 years or so it appears he has sold his soul to the people considered to be folks who want to destroy the appraisal profession. What makes a third party inspector better, more accurate or less biased than a seasoned appraiser? That is like saying American are superior to non-Americans.....which would be bias. Saying the third party inspector is superior to a seasoned appraiser is pure bias. Let's see the data.

 

[Joe Flacco]

I consider Danny to be an appraisal genius but The last 10 years or so it appears he has sold his soul to the people considered to be folks who want to destroy the appraisal profession. What makes a third party inspector better, more accurate or less biased than a seasoned appraiser? That is like saying American are superior to non-Americans.....which would be bias. Saying the third party inspector is superior to a seasoned appraiser is pure bias. Let's see the data.

I don't think he has changed. He has always been about fast and cheap. He talks about how he ran the Wiley Firm and he says he had different people doing different parts of the assignment there. So he is just basically doing what he did at his firm and is now trying to roll it out nationally.

Nothing has changed.

 

[DWiley]

What makes a third party inspector better, more accurate or less biased than a seasoned appraiser?

As far as I know, no one has made such an assertion.

The comments I made were about appraisers' analysis only. The inspector does not provide the condition rating. The appraiser does that. And, when the appraisers do that based on third party data they tend to more closely follow the actual definitions of the ratings.

 

[glenn walker]

I consider Danny to be an appraisal genius but The last 10 years or so it appears he has sold his soul to the people considered to be folks who want to destroy the appraisal profession. What makes a third party inspector better, more accurate or less biased than a seasoned appraiser? That is like saying American are superior to non-Americans.....which would be bias. Saying the third party inspector is superior to a seasoned appraiser is pure bias. Let's see the data.

I have never seen him sell his-soul to anyone, but what bothers many is often he is just the messenger delivering news they don't want to here or believe. Its also not fair because as a employee of a GSE he cant tell you to go F-Off or even defend himself. I have watched him over the years and probably one of the best in the industry when it comes to good factual information as he is not caught up in emotions.

 

[George Hatch]

It is more objective because the third party inspector doesn't have to be concerned with how does the rating impact the comparison with the other properties.

Does that lack of interest or concern with the appraisal and sales comparison result in more reliable valuations? No.

I think this is the simplest explanation. A 3rd party inspector doesn't care what their observations do to the value conclusion or the pending sale or refi deal. Their process doesn't include comparing this property to any other specific property in the same report. The resulting sale prices can't be easily interpreted as feedback to whether they were right or wrong in their observations.

It's easy to imagine appraisers being *inconsistent* with their ratings, and doing so primarily on the basis of expediency. They're not just making the ratings, they're making the ratings with the intention of using those ratings. The 3rd party inspectors aren't doing that - they're not users of their own observations.

The level of inconsistency among the appraisers doesn't even have to be significant in amount or frequency to translate into different outcomes.

 

[Zoe]

I disagree. That removes no possible bias from the equation. I am purely speculating bias is the target. Where is Joan? LOL

There is no way on God's green earth that removes any bias.

 

[Zoe]

At the risk of being obtuse, it is very offensive to me and appraisal profession. It sounds like Joan. Is she paying ya'll? Getting a nice Christmas or birthday gift? LOL

 

[J Grant]

I think this is the simplest explanation. A 3rd party inspector doesn't care what their observations do to the value conclusion or the pending sale or refi deal. Their process doesn't include comparing this property to any other specific property in the same report. The resulting sale prices can't be easily interpreted as feedback to whether they were right or wrong in their observations.

It's easy to imagine appraisers being *inconsistent* with their ratings, and doing so primarily on the basis of expediency. They're not just making the ratings, they're making the ratings with the intention of using those ratings. The 3rd party inspectors aren't doing that - they're not users of their own observations.

The level of inconsistency among the appraisers doesn't even have to be significant in amount or frequency to translate into different outcomes.

The third party inspectors are not making observations or ratings. They are supposed to take photos and report "data" they compile at the inspection

 

[glenn walker]

At the risk of being obtuse, it is very offensive to me and appraisal profession. It sounds like Joan. Is she paying ya'll? Getting a nice Christmas or birthday gift? LOL

Joan was attacked by people who disagree with her business model but she built a successful business model and is doing real good and much better than many appraisers so whats wrong with that.

 

[Zoe]

It seems to me that somehow an Inspector is not biased? Yet, Appraisers are biased(at least some) How is that possible?

FTR I have immense Respect for DW. He is often the voice of reason at this forum.

I do recall DW posing the Question: What if the Inspector was Highly Trained? That's a very legitimate question. I know in the military aviation we have very highly trained Aircraft Mechanics. It works well. BUT we also have Highly Trained Tech Inspectors. The Tech Inspectors signed off on the Aircraft Mechanic's work. When I was assigned to Bell Textron as a Test Pilot First, I also could sign off on mechanics work , but rarely did that. I relied on the TI signature. Reason I was limited is because I inspected that aircraft AFTER it was assembled. So I could only see so much. I trusted the TI's because they were involved all along the process.

So if Home Inspector/data collectors are on salary, I can see that as being very good data. If they are paid per Inspection , I can see that as prone to errors or omissions.

I agree here. Give appraiser copy of their license, bond, report, etc. I have depended on engineer's reports many times on commercial property appraisals.