AI Connect

[Meandering]

Yup, because the ruse with the deminimus, is not the value of the property being $250k or less, it's the principal of the loan amount being $250k or less. So if you want to refi your McMansion to pull out $150k in equity, doesn't matter if the McMansion has a value of $10million dollars, the loan amount is still below the deminimus therefore, no appraisal required.

So there is no incentive to pay you xtra $ to appraise the $10million dollar property when they are only borrowing $150k.

.

 

[Eli]

Yup, because the ruse with the deminimus, is not the value of the property being $250k or less, it's the principal of the loan amount being $250k or less. So if you want to refi your McMansion to pull out $150k in equity, doesn't matter if the McMansion has a value of $10million dollars, the loan amount is still below the deminimus therefore, no appraisal required.

So there is no incentive to pay you xtra $ to appraise the $10million dollar property when they are only borrowing $150k.

.

It is not only that. I just appraised a ghetto lot where the house had been demolished. It took me longer than it would have on a McMansion. I did it for VA so I couldn't turn it down. But for anybody else, the fee would have been way up there.

 

[Ken B]

Yup, because the ruse with the deminimus, is not the value of the property being $250k or less, it's the principal of the loan amount being $250k or less. So if you want to refi your McMansion to pull out $150k in equity, doesn't matter if the McMansion has a value of $10million dollars, the loan amount is still below the deminimus therefore, no appraisal required.

So there is no incentive to pay you xtra $ to appraise the $10million dollar property when they are only borrowing $150k.

.

Why on the world would anyone need an appraisal when borrowing $150k on a $10MM property?

 

[Meandering]

Think of what a sad thing it is that you said.

You appraised a vacant lot in the ghetto,
For VA financing?
Some veteran is looking to live in the ghetto because??????????

Sad, very sad.

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[Meandering]

Why on the world would anyone need an appraisal when borrowing $150k on a $10MM property?

Maybe they owned MySpace and are trying to buy a plane ticket to get the heck out of here.

.

 

[Terrel L. Shields]

Maybe they owned MySpace and are trying to buy a plane ticket to get the heck out of here.

I have known quite a few "rich" folks who borrow money. It is a sort of hedge on a risky bet, or, they just have their money tied up in "better" assets. After all, who wants to cash a 3% CD and pay a penalty for early withdrawal when you can borrow money at 2 3/4%? One of those "free" credit card offers with a 3% interest rate a few years ago, and my CPA got one, drew the max $25,000 and placed it on interest at 3½%. Made the min payment and pocketed the half percent for two years before they caught on and demanded a payment on the principal. So he made a couple hundred bucks for zero risk. Paid the card off and sent it back.

 

[leasedfee]

How much public trust are you really building when you change your own rules every two year over the last +23-years?. The people evolved on this regulator side also see these flaws (more than any of us) because they had many speaking. . . . . It is a problem of other industries coming in to our industry and doing the work faster and cheaper because they are not accountable to USPAP.

I just appraised a $700 ghetto lot where the house had been demolished. It took me longer than it would have on a McMansion.

Stephen, they're damned if they loosen USPAP regs as even sloppier work will occur, and damned if they tighten it making it harder for appraisers and reviewers to obtain compliance yet make a living and garner respect. Instead USPAP is sufficiently vague to give everyone cognitive dissonance. Scary enough to keep Terrel awake at night, but loosey goosey enough that the skippies and hacks and know-nothing trainees pay no heed. Our board had the hardest time getting rid of a couple of nightmare appraisers, yet with a stamp and envelope any appraisal can get turned-in for any reason and will cost $5-7g's to defend. . . . . It's very upsetting or confusing to property owners and borrowers why a 2,000 sf office condo costs as much as and the report is as long as a 100,000 sf office appraisal, but what can I do? . . . . . It comes back to bureaucrats and lawyers and politicians thinking that regulation can control the universe. But as a commentator on slate.com brilliantly said, "Self-interest -- the bane of social engineering." If any from the Appraisal Foundation and their alphabet soup of bureaucracies is reading this, your model is flawed from the get-go, the appraisal profession needs an economic model such as I recommended in my above post, not a lawyer model.

 

[Meandering]

Actually,

Lawyers have been having as hard a time as appraisers.
There is a move for them to go the Uber model, on demand, on call, instead of on retainer.

Law schools hiring their graduates for a year, to make it look like there is demand for the profession within the economy.
http://taxprof.typepad.com/taxprof_blog/2014/03/how-law-schools.html
http://abovethelaw.com/2013/03/in-defense-of-law-schools-hiring-their-own-graduates/
http://blogs.wsj.com/law/2015/07/15/law-firm-imposes-ban-on-hiring-ivy-league-graduates/

You are correct in that we need a product that is not a mountain of paperwork, answering a bunch of questions that only regulators want the answer to when reading appraisals. But apparently regulators do not care about those answers when reading AVMs or BPOs. those reporting and research requirements costs time and money, and the only ones who appreciate that work, is a board that is going to look at ripping it apart. Meanwhile, buyers, sellers, lenders AND secondary market participants are just as content without all those development and reporting requirements while using AVMs and BPOs.

 

[Terrel L. Shields]

How can a "blood sucking" trainee survive if they pay that "magic" McDonald's wage of $15 an hour to a trainee that takes two days to do a report and then you spend another 4 hours or more vetting their work? So you have $240 in labor to the trainee, plus SS and workman's comp taxes. And now you have 4 more hours to do. If we had a fee of $800 for that SFR, perhaps you could. But with half that being a near max in many markets.. ?? You're not making anything. And remember your E & O literally doubles when you hire a trainee and that is not to cover the trainee, only you. The trainee will need their own E & O.

After maybe 3 months, you can expect the trainee to "do" only one day per report, but that isn't much of a consolation because you've already went "underwater" and then what happens if they trainee says, "I want a raise" or "This job sucks, I am going to work for McDonalds"...

I know a couple of appraisers who hired a really sharp trainee but after about 4 or 5 months, she told them that she "required" X dollars and mileage and etc etc. and they had to let her go. probably found a job that paid close to what she wanted.

 

[Eli]

Stephen, they're damned if they loosen USPAP regs as even sloppier work will occur, and damned if they tighten it making it harder for appraisers and reviewers to obtain compliance yet make a living and garner respect. Instead USPAP is sufficiently vague to give everyone cognitive dissonance. Scary enough to keep Terrel awake at night, but loosey goosey enough that the skippies and hacks and know-nothing trainees pay no heed. Our board had the hardest time getting rid of a couple of nightmare appraisers, yet with a stamp and envelope any appraisal can get turned-in for any reason and will cost $5-7g's to defend. . . . . It's very upsetting or confusing to property owners and borrowers why a 2,000 sf office condo costs as much as and the report is as long as a 100,000 sf office appraisal, but what can I do? . . . . . It comes back to bureaucrats and lawyers and politicians thinking that regulation can control the universe. But as a commentator on slate.com brilliantly said, "Self-interest -- the bane of social engineering." If any from the Appraisal Foundation and their alphabet soup of bureaucracies is reading this, your model is flawed from the get-go, the appraisal profession needs an economic model such as I recommended in my above post, not a lawyer model.

I am not going to swear it wouldn't work, but just paying the appraiser what the borrower pays would be an easy first step and maybe your system the next step. You may be on track in your earlier suggestion. I don't know. I know this current AMC system is bound to be doomed without significant change. Evidently, some authorities think C&R is still the answer, but I don't buy it being the best for the public with the market structure being the way it is where the middle man in most cases is taking a cut of the fee the borrower is paying. I think it is going to be worked out at the state level now, which may force more federal involvement eventually.