Hybrid Appraisals

[DWiley]

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The dirty secret was that also thousands of appraisers were 60 years or older who no longer wanted to drive comps or measure houses. Those old guy's will look you in the eye and swear on their mothers graves they would never do sub standard hybrids for $150 a pop but they were and are doing them.

I just pulled the last four 1004H/70H reports submitted for properties in Arizona. I pulled reports in AZ because the appraiser has to put the fee in the report there.
The average appraiser-reported fees for those four assignments is just over $400.

I have been concerned about the fee claims that are so prevalent when it comes to hybrids, and I have been spot checking this information for a while now, using reports in states like AZ, and I have yet to find one lower than $200. I want to emphasize that these are GSE hybrids on the 1004H/70H. They are not the proprietary hybrid products that are often used for servicing, HELOC, etc.

 

[Zoe]

I just pulled the last four 1004H/70H reports submitted for properties in Arizona. I pulled reports in AZ because the appraiser has to put the fee in the report there.
The average appraiser-reported fees for those four assignments is just over $400.

I have been concerned about the fee claims that are so prevalent when it comes to hybrids, and I have been spot checking this information for a while now, using reports in states like AZ, and I have yet to find one lower than $200. I want to emphasize that these are GSE hybrids on the 1004H/70H. They are not the proprietary hybrid products that are often used for servicing, HELOC, etc.

I thought you were not involved on appraisal fees.

 

[chad hampton]

Citation needed. In fact, don't even bother because there's no such reference in USPAP. You literally don't know what you're talking about.

If you want to argue it then put up. Or shut up.

sure there is.

Check out 2020-2021. Page 147. Lines 76-87.

“Assistance is related to the appraisal process and requires appraisal competency. Therefore, only those acting as an appraiser sign a certification, or are identified as providing significant appraisal assistance in a certification.

Examples of significant appraisal assistance may include:

research and selection of comparable properties and data; inspection of the subject property and comparable properties; estimating accrued depreciation; or forecasting income and expenses.


An appraiser often uses assistance that does not constitute significant appraisal assistance. Although it is the responsibility of the appraiser to determine the role of any individual providing assistance, tasks such as, but not limited to, writing down measurements the appraiser provides when measuring a structure, “

You are partially right though, if during the appraisal inspection, you’re only task is to write down the measurements that the certified appraiser gives you, then that does not constitute significant assistance. So the good news is, you are partially right. Being an USPAP instructor you should be proud of yourself for partial credit.

Don’t get me wrong, I’m 100% the snake oil folks will soon come to spin away and pick a word here and there to mean that anyone can do anything and it’s ok because an inspection isn’t even required. I know the game and it’s been going on forever. It’s why for the best appraisers I’ve ever known, this isn’t even a career anymore, just a side gig.

But even better news for you is I’m sure your friends have got that paragraph removed or revised. You don’t seem like a bad guy, but you’re always on the side of scumbags in this profession for some reason. I don’t see you in the Breakfast club photo. You aren’t getting an invitation, it’s ok to criticize the unethical stakeholders.

Being on the side of high ethics and morals is always difficult. There is evil everywhere you turn. I’m used to the fight.

And why is it acceptable for a professional to tell another professional to “shut up?” I’m being serious when I ask this, is there something wrong with you?

 

[DWiley]

I thought you were not involved on appraisal fees.

I'm not. I don't engage any appraisers directly, and I certainly don't set any fees.

Having said that, some of the posts about hybrid fees have caused me concern, so I have been assembling data from actual reports that have been delivered with fee disclosures in them. I prefer to rely on data rather than anonymous claims or speculation.

 

[chad hampton]

There’s a wealth of data that’s been accumulated by that ARCC group.

I think everyone here knows that when you pay an out of work real estate agent 50 bucks to get into their car and go perform an appraisal inspection, where they have no license on the line, and no financial reason to give a ****, you’re going to get garbage.

I don’t need much data to understand that.

I’d like to know why it was that from the start of this hybrid creation, there wasn’t a push to have certified appraisers hire trainees to go do the appraisal inspection instead of out of work, real estate agents, and Uber drivers? Appraisers would feel a lot more comfortable. If it was someone they trained going to do the appraisal inspection. As a former fee appraiser, I’m sure you can understand that.

There has always been a system in place to lessen the requirements with regards to the appraisal inspection, but there is a reason they don’t want appraisers being in control and allowing their trainees doing it. And it’s got everything to do with where the money goes. But like I’ve said many times, I’ve seen the inner workings and it’s a dirty business we’re in these days.

 

[CGinMN]

The problem is the GSEs don’t have much credibility with appraisers here because of the way they manipulate data to their benefit. Right now it is important for your modernization project to scale hybrid adoption. So is your concern low fees, or is it scaling hybrids?

Let me put it this way, had you randomly selected 4 appraisals and the average was $225, is that something you’d be sharing with us? I don’t think so. If lenders and their AMCs pull the rug on hybrid fees after they’ve scaled adoption, will you be concerned or will that just be the market? Maybe a more empirical, transparent, longitudinal study on appraisal fees is needed.

 

[DWiley]

The problem is the GSEs don’t have much credibility with appraisers here because of the way they manipulate data to their benefit. Right now it is important for your modernization project to scale hybrid adoption. So is your concern low fees, or is it scaling hybrids?

When data shows something that people don't like, the easiest response is to claim that the data was manipulated in some way to support a claim.

It is the market that will decide how much and at what pace hybrid appraisals will scale. Frankly, I do not expect it to scale quickly, given current loan volumes. I would prefer that it scaled quickly, but that has nothing to do with any personal view on hybrids or any agenda (other than risk management). The fact that hybrid appraisal reports produce more appropriate condition ratings and the fact that they result in necessary repairs/inspection being overlooked far less often was not an expected result. But given that result, yes, I would prefer hybrids as they are better for risk management.

My concern with fees is that they are at a level that supports continued viability for residential appraisers. The GSEs use residential appraisals in support of the vast majority of loans they purchase, and that seems unlikely to change any time soon. Hence, the viability of residential appraisers is also a risk management concern. Having said that, I still maintain the position I have held for 30+ years - it is the appraisers who set the fees.

 

[J Grant]

When data shows something that people don't like, the easiest response is to claim that the data was manipulated in some way to support a claim.

It is the market that will decide how much and at what pace hybrid appraisals will scale. Frankly, I do not expect it to scale quickly, given current loan volumes. I would prefer that it scaled quickly, but that has nothing to do with any personal view on hybrids or any agenda (other than risk management). The fact that hybrid appraisal reports produce more appropriate condition ratings and the fact that they result in necessary repairs/inspection being overlooked far less often was not an expected result. But given that result, yes, I would prefer hybrids as they are better for risk management.

My concern with fees is that they are at a level that supports continued viability for residential appraisers. The GSEs use residential appraisals in support of the vast majority of loans they purchase, and that seems unlikely to change any time soon. Hence, the viability of residential appraisers is also a risk management concern. Having said that, I still maintain the position I have held for 30+ years - it is the appraisers who set the fees.

It is hard to believe this assertion without seeing the reports. And of course, we will never see them, right, even though the personal info could be redacted.

YOU ( the folks at fannie or freddie ) determine that hybrids produce "more apprialte condiotn ratings?"" How ? The APPRAISER still determines the condion rating, on a hybrid and the appraiser never saw the house personally, so how do you know their hybrid condition rating is more "appropriate "- from some software program that rates condition? I mean, what is the metric for it?

The same goes for reporting repair issues that are overlooked far less often. It is simply hard to accept that on face value. Again, let us see the examples.

Of course, AMC;s will drive down appraisal fees as much as they can for hybids. If you want to see waultiy appraisal work, do studies of how AMC low fees impact appraisal sleecon and drive people out of the business and discourte new talent in coming in. Recomend that the compensation to AMC come 100% from the lender instead of how it comes now form a split of the consumer paid appraisal fee.

 

[Zoe]

I'm not. I don't engage any appraisers directly, and I certainly don't set any fees.

Having said that, some of the posts about hybrid fees have caused me concern, so I have been assembling data from actual reports that have been delivered with fee disclosures in them. I prefer to rely on data rather than anonymous claims or speculation.

Okay. Do you see any problems that concern you with commingling of fees?

I understand your role with GSE and you are not upper management.

However, does commingling of fees concern you?

 

[chad hampton]

No, fees are not of concern, and GSE employees cannot get involved. Even though every decision they make benefits and lines the pockets of the AMC‘s at the detriment of the independent working fee appraiser. But that’s just a coincidence.