Adapt or Die?

[Mr Rex]

Some lenders do order Desk Top appraisals. In an area with good online data, takes 20 minutes, are USPAP compliant, and they pay about the same as a BPO. Have at it.

 

[PL1957]

This thread has a lot of possibilities for good discussion if we can keep the yelling to a minimum ...

"Adapt or Die" is a very apt description for the entire appraisal industry, residential and commercial. It is actually something that should be happening to every appraiser in every market on a constant basis.

Unlike the OP, I don't think we need any changes to USPAP in order to "adapt". All of the flexibility anybody ever wanted is available under SOW - the trick is figuring out a way of providing a product to the market at a price level that satisfies both the producer and the consumer.

If you cannot provide a value added service, you are just competing for the bottom.

This is probably the most astute statement I've seen on this Forum in a long, long time. You can't expect the consumer to pay more for a product than it's worth to them. If you are adding value, you can charge and charge very well for it. If you are providing a piece of paper that gets stuffed in a file to satisfy a regulatory requirement, you need to check OfficeMax for the price of paper and toner because that's all someone will be willing to pay.

If you do cheap appraisals, then its hard to sell yourself as above average quality and therefore you will not get the better assignments. They give them to "better" quality appraisers. Further, you put out a cheap product you have the same amount of liability and a WHOLE lot more chance of making a mistake. Since you are a PROFESSIONAL then the court holds you to a DUE DILIGENCE standard that no AVM has to bother with.

While this has some truth to it, I'm not sure I agree with it as a blanket statement. There is a whole menu of valuation needs out there, needs that are being filled, whether by certified appraisers or other practitioners. I don't think a "one price fits all" mentality is necessarily the best way of looking at things. I can provide a huge array of products to the consumer, at different price levels, depending on their needs. As long as there really is a difference in the product I'm providing, I haven't seen any real resistance in changing price levels for changing product. People generally do understand the maxim "you get what you pay for".

I think we are in the early stages of a major shake out in the industry. People with good skills and an understanding of our consumer will come out just fine. People who haven't taken the time to really think about and understand what they do for a living will soon be manning drive-thrus.

 

[George Hatch]

Here's an opinion that's sure to be unpopular...

The real problem here is that too many residential appraisers let in too many trainees and now the residential market is completely saturated. There is a gross oversupply of appraisers, which basically makes the residential appraisal business a buyers market. That means the buyers (your clients) can get pit you guys against each other to get the lowest prices and the fastest turn times and the most cooperation with stupid stips. When you compete, lenders win.

Remember this the next time business turns around. Stop thinking in terms of making hay while the sun shines. Take the longer view. It doesn't matter how much money you make when times are good if in doing so you contribute to your own demise when times get tough. When you take on a trainee that person will be with us for the next 20+ years, and they eventually WILL become your competition. If you've already trained 2 appraisers you've already passed your career quota for trainees.

 

[Mike Boyd]

Which scenario is more likely to happen since those that regulate appraisers can't control or regulate the realtors?
We would still have the ability to perform the quality appraisal products-offer them side by side and let the lenders decide which product to order. Let us give them what they want and let's quit trying to save the world because it obvious didn't work and won't ever work.

That is a defeatist attitude. How can anyone make a living on $50 BPOs? If you were the ONLY appraiser doing them, maybe you could do 20 each week. But, I'm sure you have competitors. Throw in the mass hordes of real estate agents and you "ain't gotta chance." Besides, if there is competition for $50 BPOs, in which direction do you think THAT price is going? $50 will become $10....in volume, two for $15. Broker incentives include the hope they will get the listing resulting in a much larger payday. I don't know of any broker doing BPOs only and hoping to make a living.

Doing BPOs is NOT the solution, and, if you are not part of the solution, you become part of the problem. We should ALL lobby our congress men and women to require complete appraisals performed by licensed appraisers on any real estate transaction.

Change or die? For me, changing would be to become politically active to save our industry. Not to give up to the greed and deception of a BPO or a drive-by inspection.

 

[ddnma]

Here's an opinion that's sure to be unpopular...

The real problem here is that too many residential appraisers let in too many trainees and now the residential market is completely saturated. There is a gross oversupply of appraisers, which basically makes the residential appraisal business a buyers market. That means the buyers (your clients) can get pit you guys against each other to get the lowest prices and the fastest turn times and the most cooperation with stupid stips. When you compete, lenders win.

Bravo George, an appraiser using basic economic principles! I couldn't agree more- only to say that these trainees didn't have to train for 5 years like the appraisers did before licensing. The users of a lot of appraisal services do not see the value in licensed appraisers.

 

[jturner01]

That is a defeatist attitude. How can anyone make a living on $50 BPOs? If you were the ONLY appraiser doing them, maybe you could do 20 each week. But, I'm sure you have competitors. Throw in the mass hordes of real estate agents and you "ain't gotta chance." Besides, if there is competition for $50 BPOs, in which direction do you think THAT price is going? $50 will become $10....in volume, two for $15. Broker incentives include the hope they will get the listing resulting in a much larger payday. I don't know of any broker doing BPOs only and hoping to make a living.

Doing BPOs is NOT the solution, and, if you are not part of the solution, you become part of the problem. We should ALL lobby our congress men and women to require complete appraisals performed by licensed appraisers on any real estate transaction.

Change or die? For me, changing would be to become politically active to save our industry. Not to give up to the greed and deception of a BPO or a drive-by inspection.

 

[The Warrior Monk]

The real problem here is that too many residential appraisers let in too many trainees and now the residential market is completely saturated. There is a gross oversupply of appraisers, which basically makes the residential appraisal business a buyers market. That means the buyers (your clients) can get pit you guys against each other to get the lowest prices and the fastest turn times and the most cooperation with stupid stips. When you compete, lenders win.

I'll agree to the extent that residential appraisal business means residential lending appraisal business.

Remember this the next time business turns around. Stop thinking in terms of making hay while the sun shines. Take the longer view. It doesn't matter how much money you make when times are good if in doing so you contribute to your own demise when times get tough. When you take on a trainee that person will be with us for the next 20+ years, and they eventually WILL become your competition. If you've already trained 2 appraisers you've already passed your career quota for trainees.

I'll disagree with this to an extent. There have been too many trainees that have come in the business that have been trained by low-skilled supervisors. In that case, those trainees are the competition of the supervisors. Many of those people, both trainee and supervisor, will be gone soon enough.

A competent supervisor trains his trainees appropriately, and that takes years. You can't pump them out if you train properly. Along with that training comes respect. The current situation is get the certificate and screw and compete with the supervisor, and that is doomed to failure. Others are trained properly and eventually view their supervisors with respect and professional peers. Many people that grew up in that situation are doing quite fine right now.

 

[Brad Ellis]

Sandy,

Your heading is apt- adapt or die. It is true.

However, you are already allowed to do all of this under USPAP- it provides the avenues.

For instance you can do a BPO as Greg suggested; it would just be called an appraisal. You can develop your own AVM if you like and know how and it will still be called an AVM per the ASB. You can do AVM assisted appraisals; you can do desk top appraisals, etc.

A few years ago I asked who would be interested in doing desktop appraisals and was roundly bad mouthed for even suggesting it- but they are being done all over the place. So, some of the business went to those who understood. Many made some good money at that.

As a group we tend to be fairly inflexible and I have always found it interesting that we, who are trained to recognize and measure change appear often to be unable to adapt to that very change.

Sometimes change is good and sometimes not. I always believed that change just for the sake of change is almost never good- but in some cases change can be helpful or hurtful.

I am glad that someone new to our profession understands that change will happen and that by adapting one can prosper. It will be those who do adapt that will ultimately succeed and will be those who refuse to acknowledge this who ultimately perish professionally.

Brad

 

[Ken B]

Here's an opinion that's sure to be unpopular...

The real problem here is that too many residential appraisers let in too many trainees and now the residential market is completely saturated. There is a gross oversupply of appraisers, which basically makes the residential appraisal business a buyers market. That means the buyers (your clients) can get pit you guys against each other to get the lowest prices and the fastest turn times and the most cooperation with stupid stips. When you compete, lenders win.

Remember this the next time business turns around. Stop thinking in terms of making hay while the sun shines. Take the longer view. It doesn't matter how much money you make when times are good if in doing so you contribute to your own demise when times get tough. When you take on a trainee that person will be with us for the next 20+ years, and they eventually WILL become your competition. If you've already trained 2 appraisers you've already passed your career quota for trainees.

Unpopular? Makes a lot of sense to me. And it could explain part of the reasoning for the 2008 qualification changes.

 

[Mike Boyd]

I am glad that someone new to our profession understands that change will happen and that by adapting one can prosper. It will be those who do adapt that will ultimately succeed and will be those who refuse to acknowledge this who ultimately perish professionally.

Brad

..............as written by a salaried member of the greed and deception team. (the industry, not necessarily you.)