AQB's latest dumbing down by 'Stakeholders' Dropping the College Degree Requirement

[Zoe]

We may need to include that to CFPB (Chopra).

Separation of fees also on TIL disclosures.

 

[Zoe]

Chopra and supercomputers soon will know how much AMC got and APPRAISER got.

You may not realize the implications and importance of that.

I, however do realize how important that fact is to public trust and transparency to the public.

 

[Tiffany Gibbons]

They have evaluators - which are anything from the village idiot to Realtor to college student - for properties under what? $400k? I mean in most of flyover America that takes up about 90% of property. One local bank switched to an evaluator system and has virtually no appraisals in file according to one of their employees. And as she said, "I take 'em with a grain of salt."

Yes, my old supervisor is a Chief Review Appraiser at a big bank based in AR. He told me I should start doing commercial evaluations. Well, if my CG is not needed, why did I go through all that training and education?

 

[George Hatch]

Do you even know what can you do in an evaluation that you can't do in an appraisal? Because I don't know.

 

[Tiffany Gibbons]

Do you even know what can you do in an evaluation that you can't do in an appraisal? Because I don't know.

I have no idea. I didn't ask him. I Googled it and several :examples" of "Desktop CRE" examples come up "using public records". Clear Capital Commercial and First American offer the Product. A sample was in Lightbox format separately. I figure it's like those auto generated reports in Costar, kind of a Zestimate. I won't be doing them or working as a staff appraiser. But that is how come Terrell isn't getting poultry farms any more, I bet.

 

[BRCJR]

Do you even know what can you do in an evaluation that you can't do in an appraisal? Because I don't know.

The level of discovery should be the same for an Evaluation Report as an Appraisal Report.

The Evaluation reporting content may be as comprehensive as a narrative Appraisal Report or very limited similar to a Restricted Appraisal Report.

The FRB allows anyone "with proper competence" to do an Evaluation for loans up to 500,000 for commercial and 400,000 for residential.

Liability is much different.

There could be some states that regulate Evaluations done by Appraisers. I do not which that may be.

For example, Virginia allows an Appraiser (State regulated hat) to do Evaluations, but the Evaluator (FRB regulated hat) is not regulated by the Appraisal Board.

An Evaluation must clearly state it is not an Appraisal and cannot be used where one is required.

An Appraisal Report is portable, and an Evaluation is not, not supposed to be used by any other lender.

"An institution generally should not rely on an evaluation prepared by or for another financial services institution because it will not have sufficient information relative to the other institution’s risk management practices for developing evaluations."

Evaluation Development
An evaluation must be consistent with safe and sound banking practices and should support the
institution’s decision to engage in the transaction. An institution should be able to demonstrate
that an evaluation, whether prepared by an individual or supported by an analytical method or a
technological tool, provides a reliable estimate of the collateral’s market value as of a stated
effective date prior to the decision to enter into a transaction. (Refer to Appendix B,
Evaluations Based on Analytical Methods or Technological Tools.)

A valuation method that does not provide a property’s market value or sufficient information and
analysis to support the value conclusion is not acceptable as an evaluation. For example, a
valuation method that provides a sales or list price, such as a broker price opinion, cannot be
used as an evaluation because, among other things, it does not provide a property’s market value.
Further, the Dodd-Frank Act provides “n conjunction with the purchase of a consumer’s principal
dwelling, broker price opinions may not be used as the primary basis to determine the value of a
piece of property for the purpose of loan origination of a residential mortgage loan secured by
such piece of property.” Likewise, information on local housing conditions and trends, such as a
competitive market analysis, does not contain sufficient information on a specific property that is
needed, and therefore, would not be acceptable as an evaluation. The information obtained from
such sources, while insufficient as an evaluation, may be useful to develop an evaluation or
appraisal.

An institution should establish policies and procedures for determining an appropriate collateral
valuation method for a given transaction considering associated risks. These policies and
procedures should address the process for selecting the appropriate valuation method for a
transaction rather than using the method that renders the highest value, lowest cost, or fastest
turnaround time.

A valuation method should address the property’s actual physical condition and characteristics as well as the economic and market conditions that affect the estimate of the collateral’s market value. It would not be acceptable for an institution to base an evaluation on unsupported assumptions, such as a property is in “average” condition, the zoning will change, or the property is not affected by adverse market conditions. Therefore, an institution should establish criteria for determining the level and extent of research or inspection necessary to ascertain the property’s actual physical condition, and the economic and market factors that should be considered in developing an evaluation. An institution should consider performing an inspection to ascertain the actual physical condition of the property and market factors that affect its market value. When an inspection is not performed, an institution should be able to demonstrate how these property and market factors were determined.

Evaluation Content
An evaluation should contain sufficient information detailing the analysis, assumptions, and conclusions to support the credit decision. An evaluation’s content should be documented in the credit file or reproducible. The evaluation should, at a minimum:
•Identify the location of the property.
•Provide a description of the property and its current and projected use.
•Provide an estimate of the property’s market value in its actual physical condition, use and zoning designation as of the effective date of the evaluation (that is, the date that the analysis was completed), with any limiting conditions.
•Describe the method(s) the institution used to confirm the property’s actual physical condition and the extent to which an inspection was performed.
•Describe the analysis that was performed and the supporting information that was used in valuing the property.
•Describe the supplemental information that was considered when using an analytical method or technological tool.
•Indicate all source(s) of information used in the analysis, as applicable, to value the property, including:
external data sources (such as market sales databases and public tax and landrecords);
property-specific data (such as previous sales data for the subject property, tax assessment data, and comparable sales information);
evidence of a property inspection;
Photos of the property;
Description of the neighborhood; or
Local market conditions.
•Include information on the preparer when an evaluation is performed by a person, such as the name and contact information, and signature (electronic or other legally permissible signature) of the preparer.

 

[George Hatch]

"I have no idea. I didn't ask him. I Googled it and several :examples" of "Desktop CRE" examples come up "using public records". Clear Capital Commercial and First American offer the Product. A sample was in Lightbox format separately. I figure it's like those auto generated reports in Costar, kind of a Zestimate. I won't be doing them or working as a staff appraiser. But that is how come Terrell isn't getting poultry farms any more, I bet."​

Fair play. The reason I asked was rhetorical in nature because I already know that if a given SOW is sufficient for an intended user when a broker or other non-appraiser does it, that SOW doesn't suddenly become unusable just because an appraiser is doing it. Our advantage as appraisers is that we're far more practiced at valuing properties and writing reports, so we *should* be able to perform competently in a far more expedient and efficient manner.

TAF has actually published an appraisal report form for non-residential that is *far less detailed* than what is required for an Eval. This format is mostly boilerplated, so once someone has input the format it might take 5 minutes to fill in the blanks and do any edits to the boilerplate that might be necessary for a specific scenario. Anything else required by a user for an eval or other appraisal assignment type can be added by the appraiser. It's like a Lego set. Add blocks until you meet the requirements for the assignment.

ShareFile

appraisalfoundation.sharefile.com

This chart summarizes the types of assignments appraisers can perform in compliance with USPAP. Evals for lending is listed as being one of those assignment types.

ShareFile

appraisalfoundation.sharefile.com

 

[George Hatch]

As for the use of outside forms, appraisers are already attuned to what supplementals they need to add to a non-USPAP form because some of the forms we've been using predate USPAP, or otherwise predate the recent/current versions of USPAP. I daresay it's quicker and easier to supplement a 71b or the old Land appraisal forms than to contradict the older forms which operate off the previous versions of USPAP. So if using a proprietary "eval" form those can be remediated just as easily.

IMO, the big barrier to doing eval assignments for most CGs has been the fee, not the workload. There are a lot of CGs and underwriters who think the only legitimate report format is a narrative, which is simply not the case. I just had a new-to-me client ask me today if I was going to use a narrative for a 5-unit multi-family property. I don't recall EVER using a narrative for multi-family of less than 30 units, going back 30+ years.

I have no problems banging out 5000 words in a single pass for a forum post , but I don't do that in most of my appraisal reports. I generally don't even write narratives unless/until a valuation scenario gets real complicated, which isn't the case for most of the properties I appraise.

 

[Mejappz]

Yes, my old supervisor is a Chief Review Appraiser at a big bank based in AR. He told me I should start doing commercial evaluations. Well, if my CG is not needed, why did I go through all that training and education?

I know an SRA, MAI Certified USPAP instructor in Tennessee that 90 % of his business is Commercial and Residential Evaluations. These are like drive-byes but with much less work. Bankers usually have their forms for these, or you can create your own. I say **** USPAP and do them. I would do more my problem is few properties would qualify for an Evaluation because of the high-priced area I work in.

 

[DWiley]

There are a lot of CGs and underwriters who think the only legitimate report format is a narrative, which is simply not the case.

The residential corollary is that some think a GSE form is the only acceptable format

As TN has always allowed appraisers to do non-USPAP evaluations, I had a form that I created in Word for just such an assignment. It was modeled after the Restricted Report format with the addition of the items needed to comply with the IAEG requirements for an evaluation report.