Blind Squirrel and Acorns

[Renee Healion]

Please none of your cartoon "rap", it is embarrassing. Just read the thing. To yourself.

If clients want a review, they get a review. If they want the FORM 2000 filled out without any reflection, then that is different. Most clients do want a review and never has one returned a review because I amended "accurate" to read "credible".

 

[DTB]

If clients want a review, they get a review. If they want the FORM 2000 filled out without any reflection, then that is different. Most clients do want a review and never has one returned a review because I amended "accurate" to read "credible".

I agree that credible is the standard and accurate is used as in comparison to what the reviewer would opine the value to be.

Therefore a review could not be credible while inaccurate as to value.

 

[Scott Kibler]

Having read the Cookie Man all these years I have some sense of the wry and lucid style of his replies. I think Scotty sums up a whole lot of the issues in this business. And my take away, misreading him or not, is this:

A - An apparently reasonable value can be assigned with a minimum of information.
B - The trigger for a review is usually a factual error, not a value
C - The (administrative) review can spot the factual errors but is uncertain as to the value errors
D - The (technical) reviewer, picked by the same system as the appraiser, is likely to conclude the same thing for a lack of actual local knowledge. Thus, the review is oft meaningless
E - Eliminate the obvious flawed appraiser who makes basic factual mistakes (zoning, etc.) and use only those who, at least, are factually accurate.
F - Doing this winnows the crowd down to basically a local experienced and conscientious appraiser.

My final conclusion is that the value - seemingly the gist of the whole appraisal - is rarely as "accurate" as we think. The range of value is often much wider than we normally admit or accept. Therein lies the rub. On some properties a dart board has the same accuracy.

You can always count on a geology guy to find gold in a pile of rubble. I tend to the sarcastic in these online threads, sorry to anybody reading it.

But yeah although the "D" reviewer I was referring to was an AMC's administrative person.

I guess what I am clumsily trying to say is for someone like the OP, working in a centralized office trying to make sense of appraisal reports in remote markets, stop concentrating on the unknowable (value opinions) and focus on the knowable (facts and reported analysis). If the facts are not accurate then the credibility of the opinion is diminished. As to analysis; if there is no connecting logic between the facts presented and the conclusion reported, the conclusion is not credible. Stop accepting appraisal reports that are not credible no matter what that final number might be.

 

[Noreen]

I concur with everything you say. I have been here three weeks, so right now I am just gathering enough of a sample to make sure that I have a full grasp of what we are getting and what to expect. I have spoken with our AMC partners, and will be establishing appraiser requirements and appraisal guidelines.

One reality I must face in my position is the business issue of my employer. We compete with a variety of lenders for the same borrower. Borrower fees are a sensitive part of the business. So while it would be great to increase fees to the fee appraiser anticipating that I will get a better report and a better grade of appraiser, I have to fight the battle with the Sales side of our business. I have to prove that spending extra money of the borrower's will actually decrease our time to close and provide them the best customer service.

No, you have to look at your AMC and question how much of the fee THEY ARE SKIMMING, and how much they are paying the appraiser. If they are paying Walmart prices for your reports, you are going to get Walmart quality workmanship... the more experienced appraisers worked too hard for too many years in this PROFESSION and have taken way too many courses and seminars to work for any unprofessional entity where there is no respect for the quality they are asking for in their reports. IF they start paying respectable fees in the areas you are lending in, you will be amazed at the quality of the workmanship that will cross your desk. It comes down to professional workmanship requires more effort and mutual respect.

 

[George Hatch]

If by "the system" you're referring to Fannie then I would like to point out their appraisal policies fall under the category of "assignment conditions" and as such are subordinate to the hardwired content of USPAP. Fannie is not an appraisal entity and they don't have anyone over there who's qualified to instruct appraisers on appraisal standards, much less overrule the ASB on what those standards are and how they work.

So no, when there's a conflict between the form monkeys at Fannie and the ASB I don't see any reason to allow their stupidity to interfere with your obligations as an appraiser or a reviewer. These are the same morons who said the appraisal process follows the forms and who stacked the deck against appraisers (in bad faith) on the URAR as well as their C#23.

Moreover, if you ever get around to working with non-residential datasets you'll be in for a rude awakening on what is and isn't possible in terms of "accuracy" in an appraisal.

The operative benchmark for assignment results in SR3-3 is "credible", not "accurate". And credible is not measured as an absolute, either; it's measured within the context of the intended use. That means there's a sliding scale.

 

[Terrel L. Shields]

The operative benchmark for assignment results in SR3-3 is "credible", not "accurate". And credible is not measured as an absolute, either; it's measured within the context of the intended use. That means there's a sliding scale.

The fact that Fannie and USPAP talk past each other does not negate the responsibility to provide a credible report.

 

[Scott Kibler]

No worries George, I'm very certain I've never written the term "accurate" to pertain to any opinion I've opined about in any appraisal report I've prepared, review or otherwise. Facts are accurate or inaccurate; opinions are either supported and credible or not. I obviously touched a hot button with a poorly worded post, probably this one.

Reasonable is easy, at least as viewed from a distance; accurate not so much. The OP obviously is dealing with reasonable. Checking accuracy would require so much local competency and work that he'd be better off just doing the appraisals himself, an unrealistic expectation.

The reporting format of choice for user of residential review reports add to the confusion.

My hot button as it relates to this thread is inaccurate data and unsupported opinion in an appraisal report in which the reported market value is reasonable based on independent analysis of available market data. In this post the accuracy checking I was referring to was of facts, not of the market value opinion itself. In my opinion, the acceptance of such reports based solely on the apparent reasonableness of the final market value is a big problem that effects all appraisers and users of appraisal services.

Finally, like or not, if one works in the residential arena with financial institutions, one is working within the system of Fannieforms with the unfortunate language which are used by folks who largely take that verbiage as gospel. My narrative may not use the word "accurate" pertaining to any opinion, mine or another's, but it is still hardcoded in the report.

 

[Terrel L. Shields]

The truth be known, a reasonable value is a heuristic judgment and all the facts in the world cannot actually "support" what is a judgment call. But we present them to appear to support our opinion. I am afraid that is the way the world is. "Rule of Thumb" is a verboten term...but reality is our value estimates are often just that. Intuition, sixth sense, educated guess...It applies a lot more than we want to either admit or recognize.

 

[J Grant]

Facts are accurate or inaccurate; opinions are either supported and credible or not.

Well Said Scott!

From USPAP:
Credible: worthy belief

comment: Credible assignment results require support, by relevant evidence and logic to the degree necessary for the intended use.

Is the intended use (mortgage lending) so superfluous to excuse illogic, or no logic and scant or no evidence ,of how value opinion was developed ( even if the value opinion was agreed with per OP on review)

 

[Lee Lansford]

...

I guess what I am clumsily trying to say is for someone like the OP, working in a centralized office trying to make sense of appraisal reports in remote markets, stop concentrating on the unknowable (value opinions) and focus on the knowable (facts and reported analysis). If the facts are not accurate then the credibility of the opinion is diminished. As to analysis; if there is no connecting logic between the facts presented and the conclusion reported, the conclusion is not credible. Stop accepting appraisal reports that are not credible no matter what that final number might be.

Yes.

It really is all about the process--good development followed by effective communication.