Appraisers Don't Understand

[Joe Flacco]

insulation is a double-edged sword. I agree that being insulated from pressure to 'hit a value' is integral to being able to produce truly unbiased opinions. However, insulation also creates laziness, which could explain at least part of the phenomenon that VA appraisers garner high fees, yet there appears to be little to no gain in quality for said higher fees.

I get what you are saying. But what is quality anyway?

 

[alebrewer]

I get what you are saying. But what is quality anyway?

There are several ways to measure quality - you can measure it by SLA's, you can measure it by comparing the value opinion to a subsequent sale of the property, you can measure it by the number of errors in a report, etc. But you already knew that...

 

[Joe Flacco]

There are several ways to measure quality - you can measure it by SLA's, you can measure it by comparing the value opinion to a subsequent sale of the property, you can measure it by the number of errors in a report, etc. But you already knew that...

At the end of the day, the only thing that really matters is getting an unbiased and honest opinion of value from somebody that knows the market well.

 

[George Hatch]

The question I always used throw out for people to consider.....

If it was a decision that really mattered and you had the choice of two appraisers:

• One is well qualified and highly proficient at the technical application but their honest and impartiality was questionable

vs​

• The other being minimally qualified or even a little incompetent, but rock solid WRT honesty and impartiality

Which would you feel more confident in using?

 

[shrubberyvaluation]

At the end of the day, the only thing that really matters is getting an unbiased and honest opinion of value from somebody that knows the market well.

Well I've heard some appraisers never made adjustments for increasing prices even at the height of increasing prices.

 

[alebrewer]

It's a flawed question - neither choice results in a satisfactory solution. Choose the first - and you've no idea whether the opinion proffered is correct. Choose the second - and you've no idea whether the opinion proffered is correct. The result is the same - neither opinion provides the user confidence in the results.

 

[alebrewer]

At the end of the day, the only thing that really matters is getting an unbiased and honest opinion of value from somebody that knows the market well.

Almost - at the end of the day the only thing that really matters is getting a report that meets the (very low) expectations set by the GSE's/FHA/VA.

 

[George Hatch]

It's a flawed question - neither choice results in a satisfactory solution. Choose the first - and you've no idea whether the opinion proffered is correct. Choose the second - and you've no idea whether the opinion proffered is correct. The result is the same - neither opinion provides the user confidence in the results.

Assume it's a house. Not an oil refinery or a marina.

In any case the follow up question applies. Do you consider each risk to be equally grievous? If you're doing reviews do you cut the less-qualified appraiser off for competency or do you attempt to remediate? Do you cut the appraiser off who lies to you or do you give them a 2nd chance?

 

[Non Sequitur]

Almost - at the end of the day the only thing that really matters is getting a report that meets the (very low) expectations set by the GSE's/FHA/VA.

Which circles back to the OP (see below). I agree with the low expectations, it's the reality of the space we're in and it's why I think the GSEs should drop the charade and copy the VA system.

From the OP:

"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"

 

[alebrewer]

Assume it's a house. Not an oil refinery or a marina.

In any case the follow up question applies. Do you consider each risk to be equally grievous? If you're doing reviews do you cut the less-qualified appraiser off for competency or do you attempt to remediate? Do you cut the appraiser off who lies to you or do you give them a 2nd chance?

It would depend on how you define 'risk'. If you define risk as the potential loss in value from a flawed appraisal - both pose equal risk IMO.

What you're really asking is: Which appraiser is immoral and which appraiser is ignorant. And, from a judgmental perspective, most would see the first appraiser as immoral and the second as ignorant. And again, most would be willing to give the ignorant appraiser a second chance and not the first.

But to your first question: assuming the user knew the first appraiser was immoral and the 2nd ignorant - the logical person would not be confident using either report.