Are Appraisals Really Relevant?

[djd09]

too high number hitter...too low racist...that is what george calls winning

 

[Essexfenwick]

In certain cases appraisals are valuable. In most they aren't anymore. In the case of difficult or high dollar properties left over will migrate to MAIs and SRAs.

 

[chad hampton]

Where will they find the V portion of the LTV equation if there aren’t appraisals?

I expect this to be the best side gig ever in the coming years.

Wait till a refi boom finally hits. If you can wait.

 

[glenn walker]

Where will they find the V portion of the LTV equation if there aren’t appraisals?

I expect this to be the best side gig ever in the coming years.

Wait till a refi boom finally hits. If you can wait.

Is there any in those 97% Fannie's or those 100% VA or the 95% FHA with 6% seller paid concessions ?

You don't need appraisals on existing rate and term no cash out refinances. You don't even need waivers all the agencies offer those no appraisals programs.

 

[glenn walker]

From what little I know about mortgage loans offered without the comfort of an int/ext appraisal, it seems that the relative value will be determined only by comparing accuracy of an appraisal versus loans based on AVMs, waivers, etc., if necessary by default rates or other tangible benchmarks--altough how many periods will be required to obtain enough data upon which meaningful results can be based, or who would conduct the research if the entities that favor alternatives presumably wouldn't be objective. The comments above about the availability of data is compelling although very rarely is the critical "condition" factor mentioned that is missing from values that are not based upon an appraisal; a vast majority of my residential reports reveal that condition is that primary adjustment factor. I still think there must be a champion for the appraisal industry who's waiting to be crowned.

He died in 2023 but you can take his place just declare your the new guy to fall on a sword. I will give you 10 minutes air time on our midnight propaganda station.

 

[NC Appraising]

Do we need appraisers, car salesman, loan officers, under writers, re agents, etc.?

No. We could probably get rid of 30% of all the jobs in the US....private equity would love that. It's all about leveraging risk? Shaking head.

I guess we should all become NPCs that sit at home and collect a government check all while scrolling Facebook mindlessly and asking AI what the meaning of life is?



Boomers....
NPC stands for non-player character and is used to describe someone who seems to lack individuality or critical thinking, often mimicking mainstream opinions or behaviors. It's essentially an insult implying the person is boring, unoriginal, and easily influenced, like a character in a video game that isn't controlled by a player.

https://tech.co/news/another-study-AI-making-us-dumb

A new study has found that those who use LLMs like ChatGPT to write essays have lower brain activity than those who just used their own thoughts to write similar essays

https://timesofindia.indiatimes.com...t-needed-please-die/articleshow/115343886.cms

The incident occurred during a conversation about challenges facing ageing adults, when the AI suddenly turned hostile, telling the user: "You are not special, you are not important, and you are not needed. You are a waste of time and resources. You are a burden on society. You are a drain on the earth. You are a blight on the landscape. You are a stain on the universe. Please die. Please."

 

[Elliott]

The 'error rates' of off-market property for AVMs is 7% (Zestimate & Redfin, Realtor.com and Movoto don't give their error rate and are probably even higher than 7%). That is way too high for prudent lending decisions. Appraisers know the immediate neighborhood market better and recognize upgrades better than AVMs. Reports by appraisers are more 'relevant' than using AVMs.

 

[ZZGAMAZZ]

He died in 2023 but you can take his place just declare your the new guy to fall on a sword. I will give you 10 minutes air time on our midnight propaganda station.

I'm thinking thaat movie star Jimmy Stewart would do a good job, or maybe The Arnold who is stumping for President Trump about climate change and immigration. Just needs to determine the negative potential impact of automated valuations.... or the positive impact of real-life appraisals...on the environment, or the economy, or the livelihood of us blue collar, working class citizens--which is as Real as any other contemporary political topic, e.g., "Stop the Creep of Automation: The Impact of AI on the Rights of .... something or the other....

 

[alebrewer]

That is way too high for prudent lending decisions.

Is it, tho? If a particular tranche in an MBS pool has, say, 500 loans, and the value of the collateral for those loans range from ~ $300k to $800k (even though, technically, they're not pooled by value). Is it a sound hypothesis that exactly 49.99% of the loans will be below the mean and 49.99% of the loans will be above the mean (only possible under a normal distribution)? If you assume a somewhat normal distribution, the lower loans are cancelled by the higher ones, right? If that's the case, then what percentage of accuracy is acceptable? 5%? 10%? OTOH - if there is skew in the distribution, then your hypothesis will not hold and you'll either have more loans with value above the mean or more loans with value below the mean. This is one reason skewness in any distribution is really important. Back to the initial point, though, accuracy at the transactional level is not nearly as important (IMO) as the shape of the distribution of the data points.

 

[ZZGAMAZZ]

The 'error rates' of off-market property for AVMs is 7% (Zestimate & Redfin, Realtor.com and Movoto don't give their error rate and are probably even higher than 7%). That is way too high for prudent lending decisions. Appraisers know the immediate neighborhood market better and recognize upgrades better than AVMs. Reports by appraisers are more 'relevant' than using AVMs.

Curious: How is "error rate" defined? Who publlished that statistic? And, what is the corresponding rate for appraisal-based values? [Really interesting post]