Appraisal industry in disarray

[casper]

I understand that the topic of my post may be unpopular but I feel compelled to vent my frustration.

I have the opinion that the residential real estate appraisal industry is in an state of disarray. The reasons for my opinion are too numerous and extensive to reasonably quantify in this post. Suffice it say, my experience on a national level has led me to despair about the future of this profession. The appraisal ranks are filled with incompetent, poorly trained, angry, and arrogant individuals who relish the opportunity to "punish" or berate their customers. The industry has created a system of self-perpetuating incompetence, whereby one incompetent appraiser trains another. Rather than teaching and developing the analytical skills and interpretive techniques necessary to properly develop and understand the appraisal process, the industry churns out an endless stream of "form fillers" that seem incapable of handling the most basic of appraisal challenges. No wonder why AVM's and BPO's have taken a foothold in the industry. Rather than train with purpose to develop a competent appraiser, the industry has trained others for the sole purpose of short-term financial gain. I spend a bulk of my day attempting to explain and educate veteran appraisers on basic appraisal methodology and technique. Let me assure you that the engagement an appraiser at full fee does not ensure or substantially increase the odds that the appraiser will be competent.

In all fairness, competent and professional appraisers do exist in the industry. However, they are few. Unless the industry changes direction and attempts to find significant relevance in the future of mortgage lending, the ranks of the residential appraisal industry will be limited to a small group of specialized appraisers completing consultation, litigation, and condemnation appraisal. I believe the industry will lose most of the mortgage work. Although some may jump for joy at the prospect of a world without mortgage work, be forewarned that most of you will be digging ditches for a living. Thanks for listening. Please act appropriately in making revisions that will enhance and ensure the healthy survival of the appraisal industry. The future is in your hands.

 

[Randy Beigh]

Outside of this, things are in pretty good shape, right.

Seriously, you sound a little depressed. For myself, I have found peace with what I do and how I do it and I try not to solve all the problems of the world. I realize there are problems and much corruption within the entire real estate system, however, I can't deal with all that.

If you want to get into it, there are several political outlets to work within, including one on this forum. There are appraisal groups with lobbying groups, the AGA, and your state board, as well as others. If you have an interest, you need to get involved.

 

[wyecoyote]

Casper,

From your post you sound like a LO/Broker. If this is correct how do you know if the appraiser is just "filling" out a form or competent. Is the non competent appaisers the ones that don't "hit" the value. You state that there are to many reasons to list as to why you feel the way that you do. What are some of the reasons. If you ask me the real problem with the appraisal industry is that LO's who get a commision with the closing of the loans send the appraisal to the Appraiser that they now will "hit" the number. Since when do LO's/Broker's have any ethics they typically sell there first born if the price is right. If you are a LO/Broker have you ever called an appraiser a "low baller" and/or conservative. These types of appaisers are more than likely the honest ones. While the "make a deal" appraisers are often looked at as good. Yes and these ones are probably working with appraisal mills turning out poorly trained appraisers.

The way that I see it is if the LO/Broker was taken out of the Loop for ordering the appraisal. Ie.. Have the Underwriter order the appraisal. The underwriter could then just place no EOV, need, required, and/or hoped for value on the order form. This would also help by not allowing the lender to chose the appraiser and/or have any contact with the appraiser. That way no lender pressure to make a deal or don't get paid.

To address your statement of AVM's BPO's well there is one. The LO fill's in the AVM information or someone else fills this in and the value is magically there. A BPO prepared by a Real Estate Agent of course every property is in good to excellent condition and what value do you need. As I see it let the AVM's and BPO's take over how long will they last before we get massive foreclosures and a taxpayer bailout of FNMA and Freddie Mac. Not having an appraiser inspect the property, know the local market, and if there is any functional or external obs with the property. Of course a form filler wouldn't know about these. An AVM was tried with the stock market remember "fuzzy" logic. People utilizing these lost alot of money in the stock market. What will happen when FNMA and Freddie Mac use them? Are you prepared to pay an extra 5% in taxes for the bailout for the next 50 years?

So my thoughts are if you are a LO/Broker stop putting EOV's on your appraisal requests. See what happens. And when the appraiser sends you back an appraisal and you don't understand it call and ask all the questions.

Ryan

 

[Dan Leggett]

Your profile states you're a "Real Estate Analyst & Reviewer" from Ohio which means you're an "appraiser" right?

Unless the industry changes direction and attempts to find significant relevance in the future of mortgage lending ............

What are you doing to clean up your industry and return mortgage lending appraisal work to a level of respect and the relevance of making sure the collateral is secure? If your firm is the end user of an appraisal performed by an incompetant appraiser trained by another incompetant appraiser why are you bothering trying to make a junk appraisal pass muster? Why is that appraiser on your approved list anyway? Why not highlight the standards violations and forward it on to the state licensing board? How close is this to your answer "Because scrapping the orignal appraisal and calling for a new appraisal would hold up the loan process."?

be forewarned that most of you will be digging ditches for a living.

Seems if there's no appraisals for you to review you're going to be in the market for a shovel.

 

[Benjamen Brossette]

Usually a post like this will get me going. This time around I feel good to know that it is useless to argue. Knowing the history of an AVM, as Ryan stated above is fuzzy. Sometimes history repeats. History repeating itself will be sad for the ones that are hanging on to it.

This is called insane behavior :!:

 

[Tim Hicks (Texas)]

The future is in our hands? The past has never been in our hands. The lender controls the appraisal industry by selecting their "good ole boy" appraiser. I can assure you that there are highly ethical, highly trained appraisers out here. However, if the lenders really wanted to know what the property was worth and weren't really more concerned with making their deal work, this would not be a problem. I review a lot of junk, too. I am not talking about grammar and spelling errors, I am talking about fraud. These appraisers know better, but they know where their pay check comes from. I was just told by a borrower this week that two different lenders told her that I was too conservative and/or a lowball appraiser. I had to spend time translating their words into "honest". I just completed five field reviews for Freddie Mac that was obvious "fraud" with manufactured values. I have asked for permission twice to turn them into our state. Both times, I have received the "I will have to get back to you on that" response. Every time a lender receives one of these type reports, they should automatically impose sanctions (removal from their approved lists, etc) and turn them over to the respective state licensing boards. However, it is too easy to just ignore the problem and let somebody else worry about it. Don't you think that a significant amount of appraisers might fall in line if lenders actually took away their ability to appraise properties for them or actually pressed the state licensing offices to investigate improper appraisals they have received. This is a bigger problem than individual appraisers can control. Do you realize how hard it is for an honest appraiser to survive? Do you realize how few reports we see other than our own? Lenders could help us rid our industry of bad elements if they wanted to!

 

[jtrotta]

After reading your depressing words of wit, I went to the garage & shined up my shovel & wheelbarrow; lets see how long it will remain unchanged by the elements and that will tell me how accurate you are in your theory.

 

[Blue1]

Any profession has it's "bad eggs" :evil: The appraisal profession is certainly not immune. However, before you go and get that "broad brush" and paint most of us appraisers incompetent, etc. perhaps you'd better have some facts to back you up. I am an appraiser and what I see is that most appraisers try their best to do a good, competent job. I base this on my experience that most reviews I do are for jobs done by the same appraisers.....and they are very few.

I suppose one can predict anything....I heard that Planet X is supposed to pass by Earth in June and cause massive upheavals and destruction on Earth. Guy sounded about as credible as you.

Bruce M

 

[Mountain Man]

Don't fret! If it makes you feel better, the REO work is on it's way. 8)
Mell N.GA

 

[George Hatch]

I think Casper works for either an appraisal management company or an AVM. Sometimes knowing the origin of a post can put it in perspective. Unfortunately, Casper used an alias.

Since we can use nicknames now, I fear this board may very well degenerate into a free-for-all. I think I liked it better when we had to post under our own names.