Appraisal Statistics

[George Hatch]

IIRC it was 1986 and there was supposedly a collaboration effort between several entities, hence their use of the term "uniform". Now the caveat on my recollection is that I was just a form monkey back then and wasn't paying a lot of attention to the underlying structures and politics and theory and applications. I was still trying to figure out how to hack out an SFR appraisals on subdivision homes well enough to get them past the reviewers and underwriters.

Anyways, when the 2005 form came out and was so specific to Fannie's program to the exclusion of everyone else I was sniveling about that but, those complaints (obviously) fell of deaf ears.

That's about the time the GPAR and other variants showed up, as the alternative to the GSE-only URAR. That was no longer "U".

 

[timd354]

Were the URAR forms just developed by bankers or was some appraiser input there too?

There are part of the form that are terrific, other parts that are mediocre and others outright stink...

It could be the bankers put "accurate" as a benchmark for the opinion of MV as a peremptory legal ground they can employ if they want to pursue a lawsuit/damages against an appraiser for the appraisal...Makes it easier for them to go after appraiser since all they need to do is show some reasoning or dig up an error why the value was not "accurate" ... While we agree an opinion can not be " accurate" ,, an appraiser signed it was on URAR ...gives them ammunition if they want to use it

There may have been some input from appraisers, but in the end, all of the major decisions at both GSE's are made by people who are not appraisers and who may or may not bother listening to appraisers.

 

[George Hatch]

You can't hardly criticize bankers for acting like bankers. The problem is when bankers are interfering with their own appraisers in designing forms without possessing the requisite competency. They know what THEY want, but they don't know everything else the appraisers need to do in addition to those user-defined extras.

Look at the AI forms (designed by expert appraisers for general usage) compared to the GSE forms designed primarily for GSE usage. There's enough difference between the two to notice. An appraiser who is actually letting the form dictate their process at least has a better shot at hitting all the high points when using the better form that doesn't have the holes; and then they can add the user-defined extras to that as necessary.

There's no need to clarify something that was expressed well to begin with.

 

[RCA]

I have no idea what you mean by bad news, unless you are talking about how you continue to fail to see the flaws in your analysis, and how I might not like that. I'll say it real simple, your analysis drowns in the number of assumptions made. If you want to keep on keepin' on making all those assumptions and calling it credible, fine. How about I come to your house, throw a can of paint on the wall and call it painted? Can't argue I painted your house right? Now pay me. LOL. Peace out dude.

You haven't stated what assumptions you are talking about and I don't want to assume I know what you are talking about.

 

[Carnivore]

Why did Fannie ignore many of the other criticisms of the URAR

How much of the addenda people put into their reports are aimed squarely at mitigating the problems that the forms either gloss over or create for the appraiser? Fannie is not your appraisal buddy and they never were..

ANSWER: Almost all of them! FNMA Report formats are not living documents. Maybe more accurately I should say they are a living document that travels at pace of an old snail with its foot partly in a grave when it comes to adapting. You once pointed out that a Typical Narrative report Format Reads like a Book. My bet is that that your past statement holds true today. FNMA report is a very difficult read because of the constant Page flipping a SERIOUS reader has to do to understand it. The average residential property owner only wants to know that Value. So page one for civilian homeowner should be where you opine that market value. This is only true if your stated market value agrees with the homeowner perception or is higher. OTH all HE dbl hockey sticks breaks loose if your lower.

So I am Monkey in the Middle. The only way I can mitigate this is demand a higher fee and/or be allowed to extend a delivery date or just live with it.

 

[George Hatch]

I haven't used the Fannie forms on more than a rare occasion in the last 11 years, ever since I switched over to my own forms. I use one basic format for all the variants of that form so 7 of those pages are always the same (except for how I revise them) regardless of the property type. I just got finished with a land appraisal, and without the pics and maps the "report" portion only goes 9 pages. A typical SFR report will start at 11 pages in total unless there are complications or I'm adding more elements like an Insurable value opinion to them.

They're not especially cluttered or busy looking, either. The AI forms are formatted at about 66 lines per page, whereas my letter sized pages are formatted for a maximum of 57 lines, and that's only if it's all text with no paragraphs of section dividers. With paragraphs and section dividers I couldn't get more than 50 lines due to the spacing I use.

I include a summary field at the bottom of page 1 that recaps the size/age/condition of the property, the gross/net/cap rate if it's an income property, the value indicators from each approach to value, and the final value conclusion - this is for people who don't want to read the report.

The point is that if a reader got 4 of my reports, each on a different property type, they'd find the same (or equivalent) things in the same places and in the same layout in all of them. Since I use separate pages for neighborhood, site and improvements I (usually) have plenty of room to write whatever I need to get my point across. And if I don't I just expand that section by adding another text page there. It's a modular approach. They're not any faster for me to write but they're way easier for the readers to read. All my readers seem to really like them.

Moreover, since I know what I'm doing with USPAP, if a form monkey used a format like this they wouldn't leave any holes. They *could* just follow the form.

 

[Deleted member 130081]

All modes of RE analyses will have to include assumptions. By itself, that's not necessarily a problem. Some assignments and modes of analyses simply employ more assumptions that others.

There's a reason we use a different level of data qualification when we are taking an appraisal report to court than we do when we're submitting it for use in a mortgage transaction. Or when the assignment conditions involve an exterior-only inspection with no measuring; or a desktop valuation with either no physical inspection by anyone or else a 3rd party inspection by a non-appraiser. This is one reason the SOWR explicitly states that credibility is always measured within the context of intended use. And not based on some arbitrary and fixed benchmark that is isolated from the context of the intended use.

This issue goes straight back to the question of whose expectations the appraiser is trying to meet, and how an appraiser would be able to identify what it takes to meet those expectations.

Exactly. And I would like to add that the expectation concerning adjustments is evolving. No one cared about adjustments prior to the buy-back. Now that originators actually read the Selling Guide which they are contractually bound to, they are asking for adjustment support, as the Selling Guide requires it in order for a loan to be eligible. The con here, is that originators act as if appraisers MUST provide support for adjustments, or the appraiser has done a bad job. Not true. If the appraisal can not show support for adjustments, the LOAN is not eligible for sale to FNMA. Chew on that for a second, if you did not instantly see what I am pointing out.

Appraisers who participate in fluffy explanations of adjustments, when credible adjustments are not possible, are IMO, colluding with originators in mortgage fraud.

 

[J Grant]

Actually, most clients ask for an explanation of adjustments, rather than "support" for adjustments. I have not seen outside of 2 requests over the years a demand of "support" for adjustments. When we develop an adjustment, the means by which we developed the adjustment is the support. There is nothing else...one can comment about it and explain it, but the adjustment was developed either from paired sales, depreciated cost approach, line item analysis, interviews with agents, reliance on prior appraisal developed adjustments, income approach....or by statistics/regression analysis . I assume a smaller amount of residential appraisers use RA and of those who do, how many understand it? USPAP addresses that in their section on AVM's and statistics .

At first I was enthusiastic about the O's program but then when he wrote further about his backward use of it ...enthusiasm waned. Nobody has shown RA to be "better" than any of the other methods , and it could be worse - because too many of the people who use it may be over invested in the math but tone deaf to the market, or used by the high volume fast crowd who see it as the next step to get reports out faster while at same time showing "support" for adjustments.

What RA does do is use an impressive amount of larger data and creates a numerical or chart or graph trail of proof , then populate it into the grid. Appraiser has no idea about credibility/relevance but instead feels secure because the results look slick and shows "support" for a client.

What RA does do is use larger sets of data, which imo can be credible for developing adjustments where more data is useful, such time/market conditions adjustment or superior vs inferior location/subdivision adjustment. But other than that I fail to see where it is better and may indeed be worse as a method for developing the other adjustments.

An adjustment has to be developed, correct? The development itself, explaining how it was done and if relevant what individual data was used is the support. But if all an appraiser does is download results from an RA, they show plenty of "Support", but they never developed the adjustment . The software did, and appraiser may have no idea if it is credible/relevant to results or if it holds up to actual market activity for the most important data (subject and best substitute comps). a

 

[RCA]

Exactly. And I would like to add that the expectation concerning adjustments is evolving. No one cared about adjustments prior to the buy-back. Now that originators actually read the Selling Guide which they are contractually bound to, they are asking for adjustment support, as the Selling Guide requires it in order for a loan to be eligible. The con here, is that originators act as if appraisers MUST provide support for adjustments, or the appraiser has done a bad job. Not true. If the appraisal can not show support for adjustments, the LOAN is not eligible for sale to FNMA. Chew on that for a second, if you did not instantly see what I am pointing out.

Appraisers who participate in fluffy explanations of adjustments, when credible adjustments are not possible, are IMO, colluding with originators in mortgage fraud.

It's just that sometimes, even with plenty of data, due to the complex relationships, it just about takes an advanced degree in statistics to extract the adjustments. There is a rhyme and reason to about everything. But, everything, as complex as it is, is made even messier by a bunch of assumptions that have been around for ages - like there is one and only one correct market area or neighborhood for a subject property. In reality it is often far more complex. People look far and wide to find what they want - which very often places a higher priority on features other than location. If you are narrowly focused on the traditional features of importance, you will often believe there is no way to extract credible adjustments. But who can argue with you without some details? - Some example cases. I like a 1.5 story home, where I can lock off the upstairs for my wife and myself and rent out part of the downstairs to help pay the mortgage, sharing the kitchen. I kind of know exactly the kind of house I want. My wife would prefer a condo to my large house and small farm concept - because she'd rather do other things than clean house all day long. We both together have to decide on something - somehow. Well, you'd be surprised how many people have the same kinds of problems. Yes, they have a preference for a certain location, for this or that, but they aren't necessarily going to find what they want. They settle on the closest thing - as they perceive closeness - which a talented sales agent can alter to his/her benefit, an appraiser can stomp on, a reviewer or underwriter can mitigate and so on. And don't forget the house inspector.

 

[Charles West]

I'm starting to warm up to your mindset Bert! I want to start my practice again (stopped in 2013) and want to expand my scope of work because after 30 plus years in the business I've always felt that the real estate market was much more complex than most people realize. Hopefully I will engage again at some point even though I am so damn busy with handling my own estate right now it looks hopeless (three single families rentals undergoing renovation at the same time) and I feel like barfing (pardon the reference). I'm in Sacramento, California, it's 90 degrees and I spent the entire day pulling carpet staples out of press board sub-flooring. The good news is that this rental market is banging. Look forward to studying MARS and hopefully I can master it.