Hybrid Appraisals

[djd09]

The Importance of Getting Hybrid Appraisals Right​

April 3, 2023
Appraisal & Valuation
By: Rebecca Jones

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

What in the world is a hybrid appraisal? It’s a newish approach to appraisal in which a third party performs the property inspection and provides the information to the licensed or certified appraiser, who uses this information, as well as other data, to complete the appraisal. Hybrid appraisals could present new revenue opportunities for qualified real estate salespeople, reduce delays, and offer greater flexibility to appraisers. But work needs to be done to ensure this approach doesn’t jeopardize the quality of our work and the soundness of our financial system.

I first heard the term “hybrid appraisal” at a meeting of the National Association of REALTORS® Real Property Valuation Committee. This is where appraisers hang out. I’ve learned in my real estate career that it’s important to be in room full of people smarter than me, and that’s where I learned about a workshop hosted by the Federal Housing Financing Agency on how to modernize the appraisal process. Conclusions from the workshop:

1. There are appraiser shortages in rural and high-volume areas.
2. It’s difficult to become an appraiser because of all the Appraisal Foundation requirements.
3. Emerging technologies are improving the appraisal process and reducing delays.

I was not drinking the Kool-Aid on the first item. I work in a rural area of upstate New York, where there are plenty of appraisers. However, it’s true that many competent appraisers in the area won’t accept work from appraisal management companies. That’s another story. On the second point, I agreed that entrance into the appraisal business is challenging. Changes are in the works; again, that’s a subject for another day. And regarding the final point, yes, I was excited for modernization of the appraisal process. (Bring it on! How about sharing the data that has been used for Fannie Mae’s Collateral Underwriter on my appraisal reports? That would be great!)

Disappointment Quickly Sets In​

However, as I began a process of discovery, which included accepting hybrid assignments while they were being tested, I had more and more concerns. The first hybrid assignment I accepted was in 2019. It was for the purchase of a two-family property; I received a report with photos and data points. However, I did not have the name of the data collector, so I had no way to gauge the person’s credibility. If I am taking responsibility in this appraisal process, I need to know the source is reliable and credible and not biased.

I communicated with the appraisal management company’s client, asking for the name of the data collector. That simple request turned into a mountain of problems, explanations and arguments—with me needing to educate my client on the Uniform Standards of Professional Appraisal Practice. The result: I discovered the listing agent for the subject property was the data collector. Wait, what?! The listing agent is an advocate for the seller. How can I rely on data collected by a party who isn’t acting independently? If I were to do so, I would not be producing a USPAP-compliant appraisal report. I thought my client would understand. I stood my ground and mandated a third-party data collector. I even offered to have someone in my office complete the data collection. The AMC declined.

The Importance of Getting Hybrid Appraisals Right

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

www.nar.realtor

if you ever trained someone then you would understand the communications between appraiser and the home inspector are imperative...

 

[DWiley]

The Importance of Getting Hybrid Appraisals Right​

April 3, 2023
Appraisal & Valuation
By: Rebecca Jones

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

What in the world is a hybrid appraisal? It’s a newish approach to appraisal in which a third party performs the property inspection and provides the information to the licensed or certified appraiser, who uses this information, as well as other data, to complete the appraisal. Hybrid appraisals could present new revenue opportunities for qualified real estate salespeople, reduce delays, and offer greater flexibility to appraisers. But work needs to be done to ensure this approach doesn’t jeopardize the quality of our work and the soundness of our financial system.

I first heard the term “hybrid appraisal” at a meeting of the National Association of REALTORS® Real Property Valuation Committee. This is where appraisers hang out. I’ve learned in my real estate career that it’s important to be in room full of people smarter than me, and that’s where I learned about a workshop hosted by the Federal Housing Financing Agency on how to modernize the appraisal process. Conclusions from the workshop:

1. There are appraiser shortages in rural and high-volume areas.
2. It’s difficult to become an appraiser because of all the Appraisal Foundation requirements.
3. Emerging technologies are improving the appraisal process and reducing delays.

I was not drinking the Kool-Aid on the first item. I work in a rural area of upstate New York, where there are plenty of appraisers. However, it’s true that many competent appraisers in the area won’t accept work from appraisal management companies. That’s another story. On the second point, I agreed that entrance into the appraisal business is challenging. Changes are in the works; again, that’s a subject for another day. And regarding the final point, yes, I was excited for modernization of the appraisal process. (Bring it on! How about sharing the data that has been used for Fannie Mae’s Collateral Underwriter on my appraisal reports? That would be great!)

Disappointment Quickly Sets In​

However, as I began a process of discovery, which included accepting hybrid assignments while they were being tested, I had more and more concerns. The first hybrid assignment I accepted was in 2019. It was for the purchase of a two-family property; I received a report with photos and data points. However, I did not have the name of the data collector, so I had no way to gauge the person’s credibility. If I am taking responsibility in this appraisal process, I need to know the source is reliable and credible and not biased.

I communicated with the appraisal management company’s client, asking for the name of the data collector. That simple request turned into a mountain of problems, explanations and arguments—with me needing to educate my client on the Uniform Standards of Professional Appraisal Practice. The result: I discovered the listing agent for the subject property was the data collector. Wait, what?! The listing agent is an advocate for the seller. How can I rely on data collected by a party who isn’t acting independently? If I were to do so, I would not be producing a USPAP-compliant appraisal report. I thought my client would understand. I stood my ground and mandated a third-party data collector. I even offered to have someone in my office complete the data collection. The AMC declined.

The Importance of Getting Hybrid Appraisals Right

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

www.nar.realtor

if you ever trained someone then you would understand the communications between appraiser and the home inspector are imperative...

Two things:
1. The. GSEs never tested hybrid on 2 unit properties, and
2. The GSEs do not allow an interested party to be the data collector

 

[djd09]

Two things:
1. The. GSEs never tested hybrid on 2 unit properties, and
2. The GSEs do not allow an interested party to be the data collector

i am failing to see where gse's where mentioned in that article...

 

[Terrel L. Shields]

Many appraisers I talk with tell me that hardly ever talk to another appraiser at all.

Well... this week I visited 3 different appraisers in their offices for their opinion on a landlocked property. I spoke with another. Missed the appraiser group meeting last week due to doctor's appointment- usually about 20-25 in attendance. And Sunday will attend the funeral of one of my old appraiser buddies whom I drank a lot of coffee with. RIP LM. And I am only a part timer.

 

[Terrel L. Shields]

They'll probably decide appraisal are unnecessary expense....

Private or not, they are still regulated as a financial institution and a potential risk to the banking system.

GSEs do not allow an interested party to be the data collector

If a party is unregulated - has no license nor certification- then what is the consequence of someone lying about that? Can't take their license away if they have none. Can't sue their E & O if they are not insured. In fact, what if the AMC merely hired someone who made up the inspection and signed the report. Or if the inspector subbed it out to a friend or the village drunk and signed it. Who would know?

 

[TC]

The best appraisers do not have to work with the GSEs.

Don't break your arm.

 

[Terrel L. Shields]

Don't break your arm.

OK. The best Cert. Residential appraisers do not have to work for GSEs. I know several who never work for AMCs. They do use bid systems (RIMS) but the client is vetting their own vendors list. And I know 2 who refuse to do FNMA after they got turned into the state over vague USPAP violations which were promptly dismissed by the state investigator. They seem to keep busy with the local community banks and the larger regionals who still hire direct.

 

[shrubberyvaluation]

The Importance of Getting Hybrid Appraisals Right​

April 3, 2023
Appraisal & Valuation
By: Rebecca Jones

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

What in the world is a hybrid appraisal? It’s a newish approach to appraisal in which a third party performs the property inspection and provides the information to the licensed or certified appraiser, who uses this information, as well as other data, to complete the appraisal. Hybrid appraisals could present new revenue opportunities for qualified real estate salespeople, reduce delays, and offer greater flexibility to appraisers. But work needs to be done to ensure this approach doesn’t jeopardize the quality of our work and the soundness of our financial system.

I first heard the term “hybrid appraisal” at a meeting of the National Association of REALTORS® Real Property Valuation Committee. This is where appraisers hang out. I’ve learned in my real estate career that it’s important to be in room full of people smarter than me, and that’s where I learned about a workshop hosted by the Federal Housing Financing Agency on how to modernize the appraisal process. Conclusions from the workshop:

1. There are appraiser shortages in rural and high-volume areas.
2. It’s difficult to become an appraiser because of all the Appraisal Foundation requirements.
3. Emerging technologies are improving the appraisal process and reducing delays.

I was not drinking the Kool-Aid on the first item. I work in a rural area of upstate New York, where there are plenty of appraisers. However, it’s true that many competent appraisers in the area won’t accept work from appraisal management companies. That’s another story. On the second point, I agreed that entrance into the appraisal business is challenging. Changes are in the works; again, that’s a subject for another day. And regarding the final point, yes, I was excited for modernization of the appraisal process. (Bring it on! How about sharing the data that has been used for Fannie Mae’s Collateral Underwriter on my appraisal reports? That would be great!)

Disappointment Quickly Sets In​

However, as I began a process of discovery, which included accepting hybrid assignments while they were being tested, I had more and more concerns. The first hybrid assignment I accepted was in 2019. It was for the purchase of a two-family property; I received a report with photos and data points. However, I did not have the name of the data collector, so I had no way to gauge the person’s credibility. If I am taking responsibility in this appraisal process, I need to know the source is reliable and credible and not biased.

I communicated with the appraisal management company’s client, asking for the name of the data collector. That simple request turned into a mountain of problems, explanations and arguments—with me needing to educate my client on the Uniform Standards of Professional Appraisal Practice. The result: I discovered the listing agent for the subject property was the data collector. Wait, what?! The listing agent is an advocate for the seller. How can I rely on data collected by a party who isn’t acting independently? If I were to do so, I would not be producing a USPAP-compliant appraisal report. I thought my client would understand. I stood my ground and mandated a third-party data collector. I even offered to have someone in my office complete the data collection. The AMC declined.

The Importance of Getting Hybrid Appraisals Right

A more streamlined appraisal process won’t materialize until lenders and appraisal management companies understand the critical need for credible, independent data collection.

www.nar.realtor

if you ever trained someone then you would understand the communications between appraiser and the home inspector are imperative...

I wonder if it was FastApp.

 

[chad hampton]

Every agent within 100 miles is an interested party to making sure a home sells for as high as possible. Hard do perform an unbiased and impartial appraisal inspection under those conditions.

 

[Bobby Bucks]

The passionate argument in favor of hybrid products is eerily similar to the last stand of Zaio when we were told to get with the times or be left behind. Could there possibly be a comeback behind the scenes where hybrid/zones are being offered? If so, I’d love to know how to short this cutting edge product.