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AVM’s and the future of the Appraiser???

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Mr Johnson,

Thank you for your comments regarding my post.

Pertaining to your concern about data verification being ever so important and how that relates to the date of the article I linked;

I was aware of the fact that the content of the web page had changed since the article was written.

I thought this was not terribly crucial to the content of the article.

It is common practice for government agencies (of all levels) to audit the content of their sites every six months of the fiscal year. Generally this process takes place at the start of the fiscal year (July 1st) and mid-fiscal (January 1st).

Thanks for your observations,
Terry
 
<span style='color:darkblue'>Terry,

You write in part:

"...Pertaining to your concern about data
verification being ever so important and
how that relates to the date of the article
I linked..."

The date of the article stuff was not important at all, in fact, I almost removed that set of parenthesis prior to posting. I probably should have. It certainly had nothing to do with the verification bit. I included it almost as humor -- to show that you did, in my judgment, get something right (kinda). Get it? :)

The verification reference only had to do with the suggestion for verifying the motivations of the author regarding "his opinions." Half way through reading it, it occurred to me that the author was an MAI -- while not identified as such on the web page -- which is OK. (As an experienced appraiser, how did I know he was an MAI? Read the rest of this post.) Like of the participants in transactions, we would like to know where everyone is coming from when considering their points of view -- their actions and their words. We need to know "what's in it for them" that otherwise may not be obvious to us. Because we cannot afford to be wrong -- either on an appraisal assignment or for a career choice.

The point is, in my opinion, you were partly taken. Partly, you were intended to be taken. The piece is subtly and cleverly written for its partial purpose (in my opinion). And, in part, it is simply BS (in my opinion). There is an overtone. There is an agenda. And again, one that the reader was intended to miss (in my opinion). While there are several, here's an example:

While it might be less than obvious from a less than critical reading of the article, most of the few MAIs who will speak up on the subject of "appraiser education" discourage "the initiative" (while never overtly) for college requirements for future appraisers. Were you aware of this? Have you noticed this? Is this "discouragement" intended to be in the interests of the public and the appraisal profession, or simply the interests of that organization?

I do not know what the AI's official position is (i.e., that which is printed and/or said in public -- and my guess is there is no such stated position), but I can guarantee you this: I know what the more significant "unofficial position" is regardless of any potential official position or not, for why the AI (as a group) would rather other appraisers not be thought of as being college educated. I am going to ask you to consider why this is the case? Think about it, and please post your conclusion.

Another partial agenda with the article was as a recruitment effort for the AI (in my opinion). Also, it was a particular recruitment effort aimed at the residential appraiser (again, in my opinion). What does the author have to gain that is above and beyond what any other MAI member might have to gain by a slanted or spun (i.e., past tense of "spin"?) publication like this? None. Except for the appreciation of other MAIs. And that's important. Everyone needs to do their part -- and he's done his (in my opinion). They would like to have the yearly dues from more additions to the AI ranks, but also would like more "market share" of appraisers in their ranks. These two concepts are very related, and very important, but they are distinct -- two important goals for the AI to insure influence and survival.

I hope they do survive (no joke). But for their own good -- and even more so for the good of the profession and other appraisers, they need to be watched a bit. I will get into more of my rationale later on.

My intention was not to be offensive to you, Terry. I apologize if that post (or this one) was or is.

dcj</span>
 
I do work for a very large national lender, probably in the top 5. About half of their loans, both purchases and refi's, do not have a traditional (1004/2055) appraisal done as part of underwriting. They do an in house AVM, or a very limited inspection like a 2075. I think this trend will continue. If you look at the statistics, the number of loan originations has just exploded, yet the number of appraisals has not kept pace. Just look at the growth of loan activity compared with the number of appraisers in your own state.

From the banking industry's standpoint, the rise of AVM's is a no brainer. Most of the data we use is readily available to any one with a computer and modem. Also, the trend in underwriting seems to be less about the underlying value of the collateral and more about the credit worthiness of the borrower.

JimBob:

That's pretty much the whole thing in a nutshell. A lot of the "Oldtimers" are in denial, but that's the way things are going. Some Appraisers are located in small or rural market that dosen't allow for AVM's, but in fixed large markets where there is a lot of sales activity and contiguity of structures, AVM's will take over in a short period of time.

There will also be increases in AVM's for small commercial type structures in markets where there is an availability of data.

There will always be a need for Residential Appraisers for the "highrisk" type work (Community Reinvestment), but with the decline in small structure commercial appraisal work, many of the General Appraisers will gravitate toward "Nitch" type Residential Appraisals.

I think the need for the Residential (Licensed or Certified) will sharply decline in the coming years, it's a given. I think the licensing agencies will eventually go to a "one" License System like many other professions, CPA's, etc., and with no meaning or weight given for appraisal organizational designations since all licensee's will have to meet the same qualifications.

Leon
 
dcj,

Understood. I have been 'conditioned' recently to 'fend' off posts that are concurrent with mine.
I read your response with prejudice at the forefront and my eyes shut.
I will respond to your statements and opinions. For me, it is a subject of great interest. (I am a member of AI 'self-designated'). But it will be this evening before I get back to it. Got dues to pay.
Thanks for your keen observation and level-headed response.

terry
 
"I think the need for the Residential (Licensed or Certified) will sharply decline in the coming years, it's a given. "

Leon

Have been hearing this kind of talk since the late 1980's. Even remember reading an article about the fall of appraising in Forms & Worms magazine. Didn't happen and I have yet to see any evidence that it will happen.

Sure business will change and there will be good and bad months and years. Further, there may be to many appraisers for the future. Who knows, but it is not a given. That 5 year thing appears to be like the oil is running out scenario and that has been going on since the 50's. Everytime, we get close to the end, it gets stretched out again.

My opinion is that times will change, but appraisers will be needed in the future. The customer base may change or it may not, but appraisals will be needed. The AVM's will take over the world stuff has no basis in reality.

What is really funny is that this discussion is taking place at a time when most appraisers in the country are buried in work. My response to the pessismists is where is the evidence?
 
Jay you are going to have to learn as much about AVMs as possible. At some point in time you are going to have to explain why your value estimate is different than the AVM. A lender can submit a spreadsheet of hundreds of properties and get a number real fast. How accurate depends alot on the clean data they get (ha ha) and the market area. But will they replace the appraiser? No Way. This is a glorified pencil search with no one to blame for being inaccurate. Someone has to be responsible and when is the last time the Bank or the Govt taken any responsibility for anything. Except for Janet Reno ( the next gov of FL) of course. So why use them other than being fast? Is close enough ok. Is a value range ok?
Here is where they work. You can get a value range of a neighborhood. Therefore if your $90,000 house is in a $50,000 neighborhood some explaining is needed. And they only work in homogeneous neighborhoods or PUDs of similar units and Condos where the view is not a factor. How much weight can you give a blind appraisal based on data alone? I have tested and read many AVMs from several companies and will be testing a new company in the coming weeks. But dont worry about AVMs taking away your job in the next 5 years its going to be the BPO.
 
I've been in the business just short of 10 years. I'm 33 years old. While I was training, a licensed appraiser with around 20 years experience told me to get my *** back in school and to get a real profession. Of course I was in my early 20's and this would have been practical. Anyway, I wish I had taken his advice. In the past, it has been a good profession, and if I had my way, it would remain one with everyone being mandated to order appraisals for anything that my have a potential negative effect on the public. However, you can bet the powers that be, those who use our services, really don't care whether honest appraisers exist or not, for the most part, IMHO. Take the old appraisers advice. I didn't.
 
William

You are 33 years old and you sound like an old man. If you don't like doing what you are doing and for people you don't like doing it for, change your job and your life. It is, after all, just a job. There are 1000's more where this job came from. You have over 3 decades to go before retirement and I can't imagine you wanting to live your life in a living hell. Change your career and you will feel better about yourself.

I have seen other people that spent their lives doing jobs they felt obliged to do, even if they hated it. Man, nobody has to live like that. It's your choice.
 
Like a lot of you, I'm too busy to worry about what MIGHT happen. Since 1993, I've only had 4 days of vacation on Thanksgiving weekend (Thursday through Sunday) 5 times. When I say "vacation" I mean "get out of town vacation", and they all were driving trips south. I'm not complaining. I love what I do or I wouldn't do it! Why worry, why talk about it? Worry about today and tomorrow will take care of itself! This is a great profession for me. I've never made more money and I've never had such independence. ..just my 2 cents.. and I'm making hay while the sun shines!
 
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