Appraisal With No Inspection By Appraiser?

[gregb]

We haven't addressed the biggest question yet, what legal authority will make sure these "property inspectors" don't pee in the bushes (sorry, had to bring up an old forum joke).

Silly, the background check covers "the biggest question yet."

 

[J Grant]

I have been tap dancing around this, but I am just going to say it. Any argument that appraisers' inspections are inherently superior would be quickly defeated by any "power user" that wanted to. Anyone who does any volume could almost certainly produce appraisal reports discrediting the inspection process being performed today by the so-called "trained" appraisers you refer to. Just think about the reports you personally review. How many times does the sketch not even match the photos?

Or, look at state board complaints. See how many examples you find of homes not being measured correctly, critical items being omitted, condition being misreported, external factors being ignored, etc. When FHA reports appraisers a huge percentage of the time it is due to inspection-related matters.

You have to remember that not all in the appraisal pool are as good as you.

I am not raising these issues to pave the way for anything. I just want to show the logical fallacy so appraisers with valid concerns don't get shot down as simply trying to protect their own incomes. My views on "hybrids" are certainly not a driving factor to those who are pushing this now.

Clearly AMCs esp with staff appraises and lenders want hybrids for their profit potential, so they will argue that appraisal inspections are not "superior"

In fact, if you read my posts, I did not say appraiser inspections are superior, I said the results of appraisers doing their own inspections can be superior since the appraiser can "see a property differently than the other party inspecting.

The fact is, since having a different party than appraiser inspecting has not been done in any large scale with interior inspection/1004 loan origination work non appraiser inspecting, we wont know outcome till a volume of these reports work their way through the system, (could take a few years plus ) regardless of what the Fannie test pilot shows.

I am not aware of any large inspection related problems with state boards and appraisers...if there are issues, it shows how important the inspection process is to the appraisal.

Will see, it's unknown territory esp if clients influence the process with faster turn times and expectation of the desk appraisers covering wider areas .

If it turns out to be a mess will provide future review work lol. brave new world as you say

 

[Mr Rex]

Silly, the background check covers "the biggest question yet."

Did you pay Joan to play?

 

[DWiley]

Clearly AMCs esp with staff appraises and lenders want hybrids for their profit potential, ....
I am not aware of any large scale inspection related problems with state boards and appraisers.

That isn't clear to me. As I have said several times now, any speculation on fees and costs associated with a program with an unknown SOW and unknown report content are......ready for it..... unknown. I know what my current costs are, but I also no that the odds of Fannie adopting exactly what we do are the same as me winning the 2018 World Series of Poker.

If you are not aware of such you could make yourself aware by examining a few state web sites. Or, just look in the recent USPAP classes that report states' most common issues.

 

[Evincere]

We haven't addressed the biggest question yet, what legal authority will make sure these "property inspectors" don't pee in the bushes (sorry, had to bring up an old forum joke).

OMGosh. An entirely new stream of income?

 

[hastalavista]

Clearly AMCs esp with staff appraises and lenders want hybrids for their profit potential, so they will argue that appraisal inspections are not "superior"

That's possible. But I don't see how the hybrid is more profitable for an AMC vs. a traditional 1004.
At a minimum, it would appear to require more coordination (to different components, two different entities to complete the component). And am I really going to take this in-house vs. continue to manage it through contractors? Only in those markets (high density) where there are enough transactions to support the staff.

Everyone believes staff appraisers get paid peanuts. But there are employment costs that go above and beyond the per-job fee. And, more and more scrutiny is being applied to staff appraisers in terms of overtime pay, etc.
I don't believe it is a given that an AMC will earn more profit by rotating to hybrids or substituting hybrids for traditional 1004s, all other things being the same.

 

[Terrel L. Shields]

When they're a one-trick pony who only has to learn how to do the one thing they're going to become pretty proficient at it pretty quickly.

And become cheaper too, just like appraisers. Actually there are tricks to inspections that we were taught long ago but pressure from AMC and low fees has led to appraisers cutting corners. The efficiency created by digital cameras and automated inputs is pretty much maxed out. So the inspections became shorter and less thorough. Appraisers simply cut out everything not an underwriting touchstone. Attic checks, etc went south. Walk into each room take a pix and get out. MLS comps. I found a comp stuck between two rural auto salvages. Do you think the MLS mentioned that? Do you think an inspector will note externalities like landfills, quarries, high traffic, etc? If the inspection is by a licensed home inspector, yes, I can trust that but what inspector worth their salt is not going to charge at less than appraisal fee level? In fact, a home inspection, my driven comps, and a reasoned appraisal fee would serve lending well. That isn't what they want. They want a glorified comp check. Nothing more and free is the fee they prefer to pay....not that the borrower isn't whacked a huge origination fee.

 

[J Grant]

That's possible. But I don't see how the hybrid is more profitable for an AMC vs. a traditional 1004.
At a minimum, it would appear to require more coordination (to different components, two different entities to complete the component). And am I really going to take this in-house vs. continue to manage it through contractors? Only in those markets (high density) where there are enough transactions to support the staff.

Everyone believes staff appraisers get paid peanuts. But there are employment costs that go above and beyond the per-job fee. And, more and more scrutiny is being applied to staff appraisers in terms of overtime pay, etc.
I don't believe it is a given that an AMC will earn more profit by rotating to hybrids or substituting hybrids for traditional 1004s, all other things being the same.

The hybrids per Dannie appeals to lenders because they can close a day or 2 sooner. Imo a normal AMC may not profit more but an AMC ( or lender division )using large scale staff appraisers would...if now a staff appraiser who has to inspect can output 10 a week, staying at desktop ( and possibly exnapnding coverage area ) the same appraiser can output 30 a week..which means they can fire half their staff appraisers since their production is up.

How many hybrids or bifurcated will replace traditonal or who will choose to use them....will see! Whether there will be substantial expansion of hybrids to replace former BOO's and AVM;s also is not seen yet in the market ...a change to them due to regulations

 

[Mr Rex]

Umm, do you realize the effect on DW's bottom line if hybrids become the new norm? I don't see that he is promoting them but he is a realist. FWIW, i recently changed my AF signature. It's worth a look for those wit a lack of balance in their day to day thought processes...

 

[timd354]

And proficient or not they will make mistakes, same as some appraisers do.

So what? Unless they make mistakes at a greater rate than appraisers, then there is no reason not to use them.