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Anyone Else Think We Are Gonna Be Extinct Soon?

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Ghost Rider

Senior Member
Joined
Apr 27, 2003
Professional Status
Banking/Mortgage Industry
State
Connecticut
Here is the logical progression of what lenders are trying to with appraisers, as far as I can see it....

Lender doesn't want to deal directly with appraisers any more, send their work through an AMC to eliminate the hassle of dealing with us. AMC moves all appraisers towards using various appraisal software choices, making sure that all the reports are submitted digitally (with a lot of them not even wanting to see something in a .PDF format, only wanting the raw data from ACI or Ala Mode, Day One, etc.). They can data mine the appraisal, and set up a nationwide database of sales quickly. They pump this into their AVM systems (which typically are pumping out comps that are 3 years old these days, at least the ones I've seen) and presto, they can fund loans using JUST their AVMs, without having to deal with us appraisers anymore. With the technology going the way it is, they will be able to figure out a way to get even more into the public records information which is online in more and more areas lately, so they can pick up new sales data, without having to deal with having us appraisers supply it to them where they have to extract the data, it'll just be there instantly.

I know there will always be a market for *good* appraisers, be it for attorneys, or other areas, but things are moving in a frightening direction, where computers will be deciding everything.

I can see it in 2-3 years, where you walk into your local bank/credit union with your tax returns for the last 2 years, your LO types in your name, address, and social security number, and the computer pumps out a FICO score and an AVM valuation of your home, and at the same time, they cut you a check for your refi.......I know that sounds a little far fetched, but is it??
 

Carnivore

Elite Member
Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
I agree with you in that I see it simply as a time/money = profit in the quest to be competitive.

Our goal should be to discredit AVM's. Thats would be relatively easy to do if we were organised. We are not, we will never be and so it will require something drastic to happen. Losses on defaulted loans because of inadequate equity as a result of flawed AVM's data would be a great start, but that takes time.

Public whining would be the next best change. I have come behind so many attempts for value by LO's after they failed to provide sufficient value using AVM's and Tax values in the search for equity. Customers are beginning to complain because of the extended time it takes. Many have told me that they wish the bank had just ordered an appraisal.


Any other ideas?
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
I think the AVM's have been doing a better job than appraiser's to discredit themselves. We just had this discussion yesterday in USPAP...lender's have actually recognized significant flaws (duh!) in AVM's and although utilizing them as a reviewing tool are moving away from their use (compartively speaking).

In regards to our future--I once had two partners (some 8 years ago now), who'd sit around and bellyache about the future of our business. "Ten years from now and they won't even need appraiser's," one of them said. I parted ways with these two as I realized our business philosophies & views of the future differed drastically (not to mention they'd never paid me my marketing fees). Last I heard--one lost his home & due to financial hardships they were forced to move into a 2 bedroom apartment together.

I saw a different future for our business. Granted, the environment has changed dramatically, but I'm still here doing better than ever. I've quadrupled my income since those days (they shoulda paid me my measly marketing fees), and look forward to a bright future. We're survivors and will adapt to whatever changes come down the pike.

"Failure to adapt leads to destruction"--Bruce Lee

-Mike
 

Ed Potrafke

Sophomore Member
Joined
Dec 17, 2002
I think the biggest challenge to our industry is ourselves. Unless the government starts to do somthing about all of these make it work appraisals. Fannie Mae stated that the main reason that they now allow an avm is that most appraisals come in at the asking price. But why is that so? Two reasons: Number one, the LO just keeps looking untill he finds an appraiser to "hit the value. Number two, the contract is renegotiated to the appraised value, if it is lower.
I've gotta tell you, with the amount of number hitters out there I would be tempted to use an avm if it was my money. I could have a crummy unreliable avm, from an ubiased computer, or I could have a crummy appraisal, from a number hitter. I don't see this going away untill the government steps up, and takes the appraisal process out of the hands of people who's commision depends on it. Or at the very least starts enforcing strict penalties for trying to coeirce an appraiser, and starts spanking the blow out appraisers hard.
I like the system that VA has, and that FHA used to have. You can't pick a pet appraiser to come up with some fictional number that will make the deal work.
If these could be all ironed out, and the people lending the money on wall street see that an appraisal is going to be more accurate than an avm 99.9% of the time, then I think that avms are going to take a long time to catch up.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
One thing that is needed is to somehow show the government that this Fannie Mae Statistic is so flawed. Simply by the fact that the only loans Fanie Mae see are rthose that get Approved.
 

Mike Simpson

Senior Member
Joined
Jan 30, 2002
Fannie Mae??? AVM's better than appraisers???

Where does everybody think the data for these AVM's come from...the number hitter appraisers that's who. C'mon, some of these AVM's are spin offs of the AMC's who pay low fees and will put anybody with a license and a heartbeat on their approved list.

I'm sorry to start making sense but, if Fannie's made this statement is ranks right up there with their brilliant 'increase the de minmus' decision, and the $50 fee in lieu of appraisal policy. I KNOW THAT LAST ONE WAS SUPPOSE TO BE A BIG SECRET, BUT DID ANYONE ELSE NOTICE THAT DECISION CAME COINCIDENTLY AT A TIME WHEN FANNIE'S STOCK WAS TANKING???

-Mike
 

Mike Garrett RAA

Elite Member
Gold Supporting Member
Joined
Jan 14, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Been hearing this same mantra since entering the business in 1980. I am still here!
 

Randy Beigh

Senior Member
Joined
Jan 16, 2002
No chance of that happening, despite all the negative talk.

However, I do remember meeting an executive at WaMu about 1994. I was at a mortgage bankers trade show. I met this guy and a guy from FreddieMac. After introducing myself, the guy from WaMu says, "Oh, you're one of the guys we are trying to eliminate". That tended to dull that conversation. ;)

Never happened and it won't. Like Mike G said, these dire warnings have been going on so long and without any sense of fruition that maybe we should just do our jobs and not worry about the naysayers. Besides, and for crying out loud, most of us are busier now than anytime in our history. If the lenders are doing away with us, they are doing a lousy job of it. :D

As others have said, we need to be able to change and adapt to the changing environments, but that doesn't mean the end is coming.
 
W

walt kirk

Guest
It seems to me that since we have been forced to get licenses and comply with USPAP we are in a position to exert some control on our market place. I believe that all states should be manditory states. Once that is accomplished all states should enforce their laws to require ANY estimate of value prepared for a fee, including AMC's AVM's, etc. be signed by a licensed appraiser who will take responsibility for the content of the report and USPAP compliance.

Of course this will require appraisers to work together for the good of all, which is like herding cats.
 

wyecoyote

Senior Member
Joined
Jan 15, 2002
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Washington
I agree with Mike G and Randy on this. I got into the business 6 years ago and have heard it since I started. I will belive it when I see it happen. IMHO our job may change over the years. AVM's may make a dent into our business in cookie cutter subdivisions. However, when/if the market tanks we will have REO properties to do and clients will go back to full appraisal reports. Simply being who can they blame with avm's the computer?

Ryan
 
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