Appraisers Don't Understand

[chad hampton]

I saw this yesterday. The comments on LinkedIn regarding the appraisal profession are becoming a hobby of mine to read. Some are pure gold.

Reminds me of the expo, a handful of tech Bros, who wouldn’t know how to do an appraisal if their life depended on it, educating us on what we have to do better. Use their cool app being the most important thing.

It’s amazing how many of these people don’t hold an appraisal certification.

All Brian did we say the quiet part out loud. None of these companies are too concerned with quality. What they are concerned with is the appearance of quality.

 

[Mejappz]

Does there at least need to be a facade that they want a quality appraisal? Don't think they will want to directly communicate in writing that they want a speedy checkbox appraisal that hits the number, screw USPAP.

Remember, the regulatory system was designed to create the 'appearance' of safety. That's why I've recommended eliminating USPAP for secondary market and FHA/VA appraisals, along with removing E&O insurance requirements and state boards. By doing so, we can level the playing field for everyone.

 

[George Hatch]

Disagree if you want, but

Just because some of them do what they do in their own operations doesn't give us the moral right to lie, cheat and steal with impunity. If you think otherwise then you should be selling loans or selling solar or whatever else it takes for you to get ahead.

 

[RCA]

A post today by the CEO of a national tech platform company. At least someone is saying out loud what has been known for years, but he forgot add one thing-they want it cheap too. Anyway, read below:


A lot of the disagreements on public forums between appraisers and the rest of the industry boils down to the following misconception:

Appraisers believe lenders should care mostly about the quality of the report and using the appraisal as a tool to accurately understand the value of a property

What many fail to recognize though is that the way the industry is set up, the vast majority of mortgage lenders do not retain the risk of a loan (and therefore the risk of the collateral value) because they are selling the loans to the GSEs or other investors

So the incentive for the lender is to meet the minimum quality thresholds and get the appraisal done as efficiently as possible so they can sell the loan and turn around and move onto the next, while providing a good experience for their customer (the borrower)

That's why appraisers who prioritize their service levels are rewarded and those that are difficult to work with (even if their reports are amazing quality) are punished

For appraisers this is an unfortunate reality, but understanding why your customers care about what they do is extremely important to actually solving their problems

I like to watch YouTube. Indeed, I know so many people who say that is about all they watch nowadays.

YouTube, is always suggesting new things for me to watch, I am not sure where they get their ideas. Anyway, I've been getting a slew of new olld videos on the military history of the Germans in World War I and World War II.

It's interesting that most of the top German generals at the end of World War II, knew they were going to lose the war, but at the same time, Heinrich Himmler and other top generals insisted that Hitler's order be followed to take offensive action along all fronts, rather than pull back and build up their defensive lines. - At least up to near the very end. The generals followed orders, even though they were highly unwise.

The point is we have essentially the same thing with our current ****ed up guidelines and appraisal infrastructure. We have the same quality of idiots at the highest level making ****ed-up decisions with the ****ed-up regulations. Anybody with intelligence can see that it is a gigantic structure built on sand. [Do you know why the foundation is built on sand? ]. It will fail. But worse, it will lead to a collapse of the economy - in many vital sectors.

So, ... where does this all lead?

 

[George Hatch]

I think it all leads to wherever the various participants in the market for services decide to go. Capitalism is funny that way.

We even have a truism for that

Build a better mousetrap, and the world will beat a path to your door​

The caveat for that being that it is usually the consumers who decide what they want to buy.

 

[Mark K]

I think it all leads to wherever the various participants in the market for services decide to go. Capitalism is funny that way.

We even have a truism for that

Build a better mousetrap, and the world will beat a path to your door​

The caveat for that being that it is usually the consumers who decide what they want to buy.

Too often some appraisers have been the tail trying to wag the dog. They think they are the pit bull on the porch when, in reality, they're the yappy little Chihuahua in the window.

 

[Non Sequitur]

All Brian did we say the quiet part out loud. None of these companies are too concerned with quality. What they are concerned with is the appearance of quality.

He did, and credit for not removing the post and taking the heat. Another thing I noticed, the few hear-hear posts are from other supposed innovators just looking to brown nose. What a mess this industry is in. If there wasn't a crap ton of stupid VC and hedge fund money flowing into our industry most of those innovators would be selling ShamWows at home shows.

 

[RCA]

A post today by the CEO of a national tech platform company. At least someone is saying out loud what has been known for years, but he forgot add one thing-they want it cheap too. Anyway, read below:


A lot of the disagreements on public forums between appraisers and the rest of the industry boils down to the following misconception:

Appraisers believe lenders should care mostly about the quality of the report and using the appraisal as a tool to accurately understand the value of a property

What many fail to recognize though is that the way the industry is set up, the vast majority of mortgage lenders do not retain the risk of a loan (and therefore the risk of the collateral value) because they are selling the loans to the GSEs or other investors

So the incentive for the lender is to meet the minimum quality thresholds and get the appraisal done as efficiently as possible so they can sell the loan and turn around and move onto the next, while providing a good experience for their customer (the borrower)

That's why appraisers who prioritize their service levels are rewarded and those that are difficult to work with (even if their reports are amazing quality) are punished

For appraisers this is an unfortunate reality, but understanding why your customers care about what they do is extremely important to actually solving their problems

Yes, of course. One good case is the insistence that reports be done within three days, -even when the application process takes 1-2 months. A good advanced report on a complex property can often require 5-10 business days. Another case is the requirement that reports cost less than some threshold - because potential borrowers always want to know upfront what it will cost them to apply for a loan, assuming the appraisal is below the necessary value for it to make sense for them to proceed with a loan. - They will gravitate towards loans that have lower fee estimates.

To solve this problem, the appraiser selection must be completely removed from the lender's influence. That means the AMCs have to go because they have to compete against each other to win business from the lenders, which winds up causing exactly the same problem. That probably means a new government entity to handle ALL appraisal orders. Like it or NOT.

 

[Non Sequitur]

To solve this problem, the appraiser selection must be completely removed from the lender's influence. That means the AMCs have to go because they have to compete against each other to win business from the lenders, which winds up causing exactly the same problem. That probably means a new government entity to handle ALL appraisal orders. Like it or NOT.

I agree 100%. The GSEs/FHA/USDA should copy the VA appraisal system.

 

[Mejappz]

Yes, of course. One good case is the insistence that reports be done within three days, -even when the application process takes 1-2 months.

More like 24 hours. Where do the GSEs fit into all of this? They know of the situation but are allowing it to proceed. And what about TAF and the ASC? Oh, that's right—they're collaborating with the same groups pushing these directives.