UAD 3.6 discussion

[RCA]

All of those new required data points, yet they ignore those that are important to buyers when deciding which neighborhoods to live or invest in. Number of homeless within 1000 feet of the subject, shootings or violent crime, presence of graffiti, chicken bones and empty Fireball bottles, multiple un-mowed or dead lawns, and number of abandoned junk cars on the street.

Well "number of homeless" is not a good statistic, because that number can be changed in an instant. Just change the leadership of the City in question. - However, you are free to give neighborhoods a negative impact on Market Value, if your objective methods indicate that.

It is, to repeat, just that you are not free to state the cause in your appraisal report if it is not allowed by law, regulation or guidelines. And so you don't state the reasons, even though you are free to ascribe negative value to certain neighborhoods.

 

[DWiley]

If GSEs really wanted a better form, they would have asked AI to improve the current 1004 and still keep it to two main pages.

I just pulled the last 4 1004/70 reports that we got - 32 pages, 30 pages, 38 pages, 26 pages. Reports that are more than 50 pages in length are not uncommon.

There is a lot of talk about the number of new data points. Anyone who wants to see a breakdown of new data/reporting requirements can refer to this:

https://sf.freddiemac.com/docs/pdf/uad-inspection-and-reporting-tips.pdf

 

[alebrewer]

What technology do you mean? I use a computer, a laser, the internet, a cell phone. Zillow used all the technologies and they lost money buying in the hottest markets during COVID.

Technology is a broad term, but generally 'not keeping up with the advancement of analysis tools' might suffice, yes? RE actually performing analysis: (1) remember the study done on how many appraisals still use $20/foot for GLA adjustments? (2) or how 'bout the recent requirement that appraisers 'show' their market analysis. These are what I'm talking about WRT appraisers not actually doing analysis, but rather using their 'experience' (which in most cases is little more than applying adjustments the way their supervisory appraiser told them to). This is why (IMO) the GSE's have moved toward alternative valuations sooner than later.

 

[J Grant]

Technology is a broad term, but generally 'not keeping up with the advancement of analysis tools' might suffice, yes? RE actually performing analysis: (1) remember the study done on how many appraisals still use $20/foot for GLA adjustments? (2) or how 'bout the recent requirement that appraisers 'show' their market analysis. These are what I'm talking about WRT appraisers not actually doing analysis, but rather using their 'experience' (which in most cases is little more than applying adjustments the way their supervisory appraiser told them to). This is why (IMO) the GSE's have moved toward alternative valuations sooner than later.

Very few appraisers use $20 a sf any longer or say "based on my experience " as the only support of adjustments. Wrt the failure to do analysis, yet your statements in posts such as a point value is not a real value, and can be a guess of any number in a range since any number in a range is as good as another, shows a lack of understanding of, or belief in , the fundamental principle behind the appraisal. The most important skill an appraiser can have, along with identifying the property type and any problems at hand, is using good comps. If the wrong comps are chosen, even well-supported adjustments can create a misleading or off-value opinion.

Hybrids are not an alternative valuation. They are an appraisal cut in half, allowing a third-party non-appraiser to do the inspection portion. WAIVER/value acceptance uses an AVM for a value range - and then....drumroll....lets the loan officer who is untrained in valutation, who is a vested interest agenda driven party who performs no analysis, to decide the market value opinion based on what will make the deal LTV% is the propery value ( or the SC price is the property value in a purchase ). Having untrained, agenda-driven people decide the value for a property is as low-tech as it gets.

An AVM only or any computer-driven value estimate can be used, with mixed results - if the results were consistently excellent, no other form of valuation would be used. The problem is that RE marks being so complex and variable, and market value being a concept and not just a mathematical number, that no system of valuation is foolproof - any of them will need human interaction to make them credible and catch errors, whether conceptual or factual.. An integration of ( when it develops,) AI tools and well-trained, independent appraisers is the best bet.

Any failures on the appraiser's part is due in part to the reason low-skilled appraisers are hired when better-skilled ones are passed over due to fee issues wrt AMC split fee system, which would be the first step to correct if stakeholders were serious about attracting and maintaining quality-minded appraisers.

 

[J Grant]

I just pulled the last 4 1004/70 reports that we got - 32 pages, 30 pages, 38 pages, 26 pages. Reports that are more than 50 pages in length are not uncommon.

There is a lot of talk about the number of new data points. Anyone who wants to see a breakdown of new data/reporting requirements can refer to this:

https://sf.freddiemac.com/docs/pdf/uad-inspection-and-reporting-tips.pdf

He said two main pages, not just two pages. Many pages of the report are now taken up with the form boilerplate, certs and photo exhibits. That will continue to be the case with 3.6.

It is not about page length; it is about the number of and kind of data points being asked for that creates an additional burden, and in some cases, can detract from the time needed to perform analysis and verify information. If the client's end expectation for turn time is the same as now ( usually two days after an inspection ), yet there is a substantial number of exacting data points that need addressing ( many of them not value-related), then the finite number of hours an appraiser can spend on a report will have a disproportionate amount spent chasing down minutiae.

 

[alebrewer]

Very few appraisers use $20 a sf any longer or say "based on my experience " as the only support of adjustments.

Citation, please.

Wrt the failure to do analysis, yet your statements in posts such as a point value is not a real value, and can be a guess of any number in a range since any number in a range is as good as another, shows a lack of understanding of, or belief in , the fundamental principle behind the appraisal.

On the contrary, this statement shows a lack of understanding in fundamental appraisal practice. I've never - even once - said anything is a 'guess'. Again - citation, please?

Hybrids are not an alternative valuation.

You're only deepening the argument that you don't have a basic understanding of valuation. From Claude (highlighting added by me):

"Common Alternative Valuation Methods​

Cost Approach - Calculating the cost to replace or reproduce the structure, plus land value, minus depreciation (often used for new construction or unique properties)


Income Approach - Capitalizing the rental income the property could generate (more common for investment properties but can apply to residential)


Automated Valuation Models (AVMs) - Computer-generated valuations using statistical modeling and property databases


Broker Price Opinions (BPOs) - Real estate agent's opinion of value based on market knowledge (less formal than a full appraisal)


Desktop or Drive-by Appraisals - Limited scope appraisals without full interior inspections


Appraisal waivers - In some lending scenarios, relying on existing data without a new appraisal"


Sometimes less is more, J.

 

[J Grant]

He said two main pages, not just two pages, but that was his post, not mine, relating to the present URAR. I believe there are more than two main pages, that the first page, the SCA pages and the addendum are all important pages. Thoug a number of additional pages of the report are form-generated boilerplate of the certs and photo exhibits. That will continue to add page lenthg, I assume with 3.6.

 

[J Grant]

Citation, please.


On the contrary, this statement shows a lack of understanding in fundamental appraisal practice. I've never - even once - said anything is a 'guess'. Again - citation, please?


You're only deepening the argument that you don't have a basic understanding of valuation. From Claude (highlighting added by me):

"Common Alternative Valuation Methods​

Cost Approach - Calculating the cost to replace or reproduce the structure, plus land value, minus depreciation (often used for new construction or unique properties)


Income Approach - Capitalizing the rental income the property could generate (more common for investment properties but can apply to residential)


Automated Valuation Models (AVMs) - Computer-generated valuations using statistical modeling and property databases


Broker Price Opinions (BPOs) - Real estate agent's opinion of value based on market knowledge (less formal than a full appraisal)


Desktop or Drive-by Appraisals - Limited scope appraisals without full interior inspections


Appraisal waivers - In some lending scenarios, relying on existing data without a new appraisal"


Sometimes less is more, J.

Your requests for a citation are ludicrous I'd have to stop working and spend hours or days combing through your back posts for verbiage of either a guess or similar, do you deny making statements along those lines? IT is the concept, not the exact word you used - though you may have used that word- or a proxy for it. You can comb through the years of our own posts if you like.-

Same goes for $20 a sf - I base it on the reports I reviewed over the years where I never saw a number that low.

I am aware there are additional alt valuation models - However, regarding the results from Claude, the cost approach and income approach are part of an appraisal!
A BPO is a price opinion, not a value estimate or opinion and it still uses a person ( a RE agent or broker, though what RE broker would waste their time doing a BPO for $45?) Yet it is called a Broker Price opinin, which is misleading- since the vast majority of those who fill it out are RE agents.

How is a desltip or drive-by appraisal an alternative valuation? IT is still an appraisal. I addressed the hybrid and I addressed the WAIVER.

 

[DWiley]

It is not about page length; it is about the number of and kind of data points being asked for....

That narrative is why I posted the recent job aid that highlights what is new. Take a look at that and tell me if the majority are value related items or not.

https://sf.freddiemac.com/docs/pdf/uad-inspection-and-reporting-tips.pdf

 

[alebrewer]

our requests for a citation are ludicrous I'd have to stop working and spend hours or days combing through your back posts for verbiage of either a guess or similar, do you deny making statements along those lines? IT is the concept, not the exact word you used - though you may have used that word- or a proxy for it. You can comb through the years of our own posts if you like.-

I ABSOLUTELY deny that I've EVER recommended anyone 'guess' at anything. That, my friend, is what is ludicrous.

Same goes for $20 a sf - I base it on the reports I reviewed over the years where I never saw a number that low.

It was an actual study - I think done by the St. Louis FED (although I can't find the study now). Here's another one to peruse in it's absence, though:

https://www.appraisalinstitute.org/...e-adjustment-research-contains-multiple-flaws

I am aware there are additional alt valuation models - However, regarding the results from Claude, the cost approach and income approach are part of an appraisal!

While that is true, they are also 'alternative valuation methods' when comparing them against the SCA. Hybrid appraisals and AVM's are also alternative valuation methods as compared to traditional appraisals. Not sure why that is such a difficult concept to grasp?

BPO is a price opinion, not a value estimate or opinion and it still uses a person

You really don't understand what a valuation is, do you? You state that a BPO is a 'price opinion', but in reality, it's a broker's estimation of the worth of a particular real property right (or bundle thereof). As is an AVM.

Look - you don't like the fact that the GSE's 'sped up the process' in light of their opinion that 'traditional valuations' were/are lacking. An opinion that has been demonstrated to be (in general) VERY accurate. Don't blame the messenger.