Hybrid Appraisals

[George Hatch]

I am not talking about getting hassled for the inspection

I am talking about the appraiser's perspective is different when they see a property and site and neighborhood vs when they do not, and that can throw the entire appraisal off in value or other conclusions- and we may not realize it at the time.-

The 2055, again, was for a specific reason - either lack of entry to a subject or a limited HELOC or the like. I received a limited amount of 2055 orders over the years in res lending -

I use the 2055 example to demonstrate that the "additional risk" allegation is grossly overblown if not a red herring to begin with. And of course the appraiser's perspectives are less when doing these. Nobody has suggested otherwise. I personally wrote an article to that effect a few years back so I'm especially not ignoring that facet of the issue.

I notice nobody is talking about their exposure to additional risk as a result of the other reduction in the appraiser's observations when operating off their desktop. By which I am referring to how nobody is driving the comps that are being used in these appraisals. The appraisers aren't doing that and neither are the PDCs. Apparently nobody has yet thought to get emotionally distraught over that added-risk factor.

There is no question that the net reduction in full-fee 1004s for the fee appraisers is going to hurt them. These desktops assignments might enable a disabled appraiser to keep working instead of being forced out of the business altogether, though. So not everyone is going to lose.

 

[shrubberyvaluation]

I am not expecting to see hybrid's scale in today's market. I think some lenders will use them in a targeted fashion like rural areas where they could pick up some efficiency. I think they could scale if/when the market picks up. A few years ago in testing when volume was high, we observed a ~5-6 day average turn time savings for hybrids. Weeks in some areas. High volume is when it really works for the appraiser too because they are not flipping back and forth between the traditional and hybrid process. Appraisers could sit at their desk with a queue of PDCs ready to go and complete 3-6 hybrids a day. At $350-$450 per, they were making good money and we had many say they didn't want anything but hybrids. It takes volume for this to happen, but we all know the market is cyclical and there will be high volume periods again.

It's important to remember, we do not dictate what valuation option a lender and consumer use. We present options based on our calculated risk of the loan.

You don't dictate, but you put your hand on the scale based on who you partner with. I can see the appeal of rural area appraisers not wanting to drive around, but other options would have similar appeal such as not driving comps (no one is driving them during a hybrid) or having a trainee inspect.

You show your support for a hybrid model, but not a 1004 with a trainee inspecting, so the purpose is not to speed things up.

If someone is completing 3-6 hybrids a day I question the credibility of those reports.

 

[shrubberyvaluation]

If you didn't do the inspection then you are not exposed to inspection-related complaints. You still have access to other data sources about your subject. If you check your other sources and everything lines up then its clearly reasonable to proceed "in lieu of information to the contrary I assume this info is accurate enough for this use". The same as when you are doing a 2055. Really, same as you're doing when you inspect, too. You're seeing it if/when your measurements are showing different from the other sources and you're taking steps to reconcile.

Your clients are the ones who ordered the appraisal and are using it to make a decision. Not the borrowers. These clients know what they're getting and that includes the additional limitations that are involved. They can't say they were misled when it was their decision in the first place.

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If the strategy only economically scales when the demand is higher than the supply then it actually takes the stress off the supply side. Less expansion/contraction during the RE cycle.

If there's no demand for trainees when its slow, and no demand for trainees when its busy-but-handled via leveraging the incumbents' productivity then there will be fewer supervisors taking on trainees when it's busy. With that said, I would also expect the fees to drop when it's slow and more appraisers are doing these but that's going to happen anyway.

Sure you are, oh you should of seen that in the back of that one photo the information is wrong that you were given. You can still be blanketed in a lawsuit.

 

[J Grant]

I use the 2055 example to demonstrate that the "additional risk" allegation is grossly overblown if not a red herring to begin with.

I notice nobody is talking about their exposure to additional risk as a result of the other reduction in the appraiser's observations when operating off their desktop. By which I am referring to how nobody is driving the comps that are being used in these appraisals. The appraisers aren't doing that and neither are the PDCs. Apparently nobody has thought to make that argument yet.

? Desktops are another product used typically for limited purposes like a loan protiflo review

BTW I do not believe a desktop is much of a credible product FWIW. The fact that it is dragged in to make an argument for hybrids - I guess something has to be dragged in for comparison.

It is about developing a credible product and confidence in our value and conclusions. Risk is alsays present whether we inspect or not - I just know that I feel a lot more confident when I inspect vs the few times during Covid I had to rely on photos and thrid party info when an owner did not want to let anyone in - there are certain observations and justments made in person vs third hand.

It's like eating a meal and tasting the entire meal vs. getting a photo of the meal and a list of ingredients.

 

[glenn walker]

they have divided appraisers from their clients, fees, independence, and now inspections...what's left?

What's left ? A data inspector and a Artificial Intelligence robot sitting in a cubicle next to 1 licensed appraiser to review and make any corrections then sign it and attach his $10 million E & O policy to it and forward tp the funding department. Lol

 

[ucbruin]

"This is how the homeowners should treat the unlicensed, uninsured, PDC and not invite them in."

Are you sure, no license or insurance required....

 

[J Grant]

You don't dictate, but you put your hand on the scale based on who you partner with. I can see the appeal of rural area appraisers not wanting to drive around, but other options would have similar appeal such as not driving comps (no one is driving them during a hybrid) or having a trainee inspect.

You show your support for a hybrid model, but not a 1004 with a trainee inspecting, so the purpose is not to speed things up.

If someone is completing 3-6 hybrids a day I question the credibility of those reports.

It should be up to the appraiser which comps to drive when MLS has good recent photos available. With plat maps, etc, one can decide when it is needed to drive a comp depending on the property type and area - that would save a lot of time on reports that the clients complain about and give appraisers more freedom to choose alternate choices later in report development.

 

[George Hatch]

? Desktops are another product used typically for limited purposes like a loan protiflo review

BTW I do not believe a desktop is much of a credible product FWIW. The fact that it is dragged in to make an argument for hybrids - I guess something has to be dragged in for comparison.

It is about developing a credible product and confidence in our value and conclusions. Risk is alsays present whether we inspect or not - I just know that I feel a lot more confident when I inspect vs the few times during Covid I had to rely on photos and thrid party info when an owner did not want to let anyone in - there are certain observations and justments made in person vs third hand.

It's like eating a meal and tasting the entire meal vs. getting a photo of the meal and a list of ingredients.

The appraiser's SOW on those is a desktop appraisal. Not a conventional 1004 appraisal where they're not inspecting and are not driving any of their comps. I don't know why you would take exception to the "desktop" characterization when it's 100% accurate.

IMO the GSEs should have used a visibly different format form and form number for them so that appraisers would stop conflating them with the conventional 1004 as if any of the users would think they're the same thing.

 

[Surf Cat]

Appraisers could sit at their desk with a queue of PDCs ready to go and complete 3-6 hybrids a day. At $350-$450 per

See? Justinjla is a vampire.....promises of glamour & easy money.....

Dude, the hybrid is a full 1004 and it's harder to complete. Especially since you didn't inspect the subject or delineate the neighborhood. Now throw in the PDC's data collecting that doesn't match public records..... 3 to 6 a day my a**....

 

[George Hatch]

Sure you are, oh you should of seen that in the back of that one photo the information is wrong that you were given. You can still be blanketed in a lawsuit.

On the balance of probabilities an appraiser will get sued for missing something during a personal inspection 150x more often than they'll get sued for "not seeing something in a photo". (yes, the 150# may or may not be a little hyperbolic; it might be even more rare than that)