BPO's

[JM2187]

Just to throw my 2 cents into the mix here, I just got through looking at more than 100 reports completed for a portfolio analysis of manufactured homes in NC, SC, KY, TN, and PA.

Our client had first asked us to have independent exterior inspection appraisals done and then upon completion provided copies of prior full appraisals that had been ordered by local banks and brokers on these same properties. All of this work was done by licensed/certified appraisers. The results were very disturbing. Again and again I noted value variances almost consistently around 35-40% (the prior full appraisal being the higher number) with the reason for the discrepancy painfully obvious, even without the second independent report. Invariably the prior report had superior acreage comparables with minimal adjustment, stick built homes for comparison, and/or worse "new" package sales (sales price of lot plus sales price of new mobile home added together) used as comparables. This wasn't just one report, or ten reports, it was more than 2/3 of the sample, all inflated by design or out of ignorance.

It got to the point that it actually made me pretty angry, as this work was from all over the east coast, not just one appraiser and one broker, but instead I didn't see the same client or appraiser name twice. Were all of these appraisers focused on inflating the value? There's no way for me to know, but the alternative isn't much better. Considering the recent Fannie Mae statement about this same issue (effective at the end of this month by the way), obviously Fannie believes many appraisers are under the impression that using stick built homes or "package" sales is perfectly acceptable.

So how does this tie into the BPO question? Well how much protection (in terms of accurate values being reported) did this client get from the fact that licensed/certified appraisers initially evaluated these properties with full inspections? Did USPAP make a difference? So from the client's perspective, why pay $300-$350 for a service when you can get two or three different opinions for less money, and then make your own decision, as obviously it's hard to trust anyone?

I see more fraud/incompetence today on a national scale than I ever have on the part of appraisers. I'm continually forwarded prior appraisals in an attempt to dispute value where it's obvious the original appraiser was either pressured or simply thought it was his job to "make the number." While I do agree that a broker should logically not be better at providing a value on a property, I've seen enough work from both sides, brokers and appraisers, to recognize today that the distinction is very gray. Considering the obvious number of appraisers willing to "make the value," and the lack of enforcement in this area in most states, it should be no surprise that the pieces of the valuation business are being cut into by other professionals who are willing to do the job, if not significantly better, at least cheaper, and with less inclination towards bias.

Joe Moore
Senior Vice President
Nationwide Appraisal Services
jmoore@nascopgh.com

 

[Joe Birrell (NY)]

"...... produce some evidence the National Association of REALTORS (not a state association) is pushing state legislation". (quote taken from Frank G in response to post by Bill S above).


Frank:

Let's stop the spin cycle, we are all getting dizzy from it. Are you telling me that the state associations don't take their general marching orders from National ?

With all due respect to you and in all fairness to Bill S, what about the
rest of his posting. Please explain the apparent contradictions with NARs policy and what is going on at the state level ?

 

[Francois K. Gregoire]

"...... produce some evidence the National Association of REALTORS (not a state association) is pushing state legislation". (quote taken from Frank G in response to post by Bill S above).

Frank:

Let's stop the spin cycle, we are all getting dizzy from it. Are you telling me that the state associations don't take their general marching orders from National ?

With all due respect to you and in all fairness to Bill S, what about the
rest of his posting. Please explain the apparent contradictions with NARs policy and what is going on at the state level ?

Hi Joe,

In all seriousness, the State Associations do not take marching orders from the National Association. NAR takes positions on issues, regulations and legislation at the Federal Level. They do not lobby state legislators nor do they initiate state legislation. That's not spin, it is fact.

You ask me to respond to Bill Senter's comments about what a state association is doing. If he would provide some facts and a specific situation I might just dig into it, find the story and tell you what I know. The problem is one of credibility. He has been throwing the same USPAP rock at NAR for eighteen months in spite of facts he has been provided showing otherwise. He continues to allege of NAR's complicity in increasing the deminimus, depsite being provided a black and white, plain English, Policy Statement on the NAR website which states the opposite.

Joe, if you have something specific, by all means lay it on me. Hopefully, over the past couple of years it's been demonstrated I will not duck a question or blur the truth. If a State Association deserves a black eye, I've got no problem pointing it out. My own Florida Association of REALTORS has done some pretty stupid things. In most cases, rather than lamblasting them in this or other forums, it was a better tactic to find out the full story, the motivation, the decision makers and get to work on them. I like to ===== about things as much as the next guy, but I'd rather expend my energy getting something changed. How about you?

 

[P.Johnson]

Isn't interesting to note that someone at an AMC or 'appraisal broker' is now admitting that the kind of appraisals they receive border on "fraud/incompetence". I think everyone at this forum has known that for years, THAT IS WHY THERE IS SO MUCH RESISTANCE TO THEM BY APPRAISERS. They are bringing the appraisal profession down while increasing the overall cost to the consumer. On one hand they complain about the quality of work they receive, while on the other hand, they continually look for the lowest possible cost appraiser, including those who will sign off for inexperienced trainees. A note to all AMCs: YOU GET WHAT YOU PAY FOR!!!!!!!

 

[bradellis]

Frank,

I fully agree with your statement. The State realtor organizations do NOT take their marching orders from NAR. If only it were not the case!

As a member of NAR, it frankly irks me that this is the case. I had a battle with the IAR over legislation in which I cited NAR's position to them. Their respoinse: "Who cares?"

But, it is still clear that the state realtors orgs can and frequently do take positions contrary to NAR's official position.

Kinda like 3 Arab leaders screaming for a peace treaty and cease fire while, at the same time, virtually every cleric/newspaper publisher/diplomat calling suicide bombers martyrs.

I know it is a stretch, but it is not dissimilar. NAR says a $100K threshold is as high as we should go and then the state orgs ty to get the law to allow them to do appraisals without so much as having taken a basic course in appraising over the usually required minor component needed for salesperson licensing.

Brad Ellis, IFA,RAA

 

[JM2187]

Mr. Johnson,

You obviously misread my post. My company was asked to REVIEW work that was obvious fraud. It was originated outside of the management industry, most likely by brokers or small finance companies.

We did not originate these bad appraisals in any way, but instead were asked to have our field appraisers provide independent reports on the same properties, and then analyze these new appraisals in conjunction with the prior work when significant differences were noted. It was the second, unbiased, reports which highlighted the problems Our company was selected to do this analysis based on our proven high quality standard, and certainly we would never accept, for example, "package" sales, or superior stick built homes for comparision with manufactured housing.



Joe Moore
Nationwide Appraisal Services Corp.

 

[Joe Birrell (NY)]

"That's not spin, it is fact". (quote from Frank G - re: NAR does not give marching orders to state associations).

Frank:

Thanks for setting me straight on that. I'm amazed why such a large organization would be administered in such a fashion, but, as Brad Ellis indicated, we should only wish that NAR did give marching orders
to state level associations - it would make a whole lot more sense. How
does national feel about this ? Arn't they frustrated by the actions of the
state boards ? Seems pretty Machiavellian to me. Any chance that will
ever change ?

 

[Francois K. Gregoire]

"That's not spin, it is fact". (quote from Frank G - re: NAR does not give marching orders to state associations).

Frank:

Thanks for setting me straight on that. I'm amazed why such a large organization would be administered in such a fashion, but, as Brad Ellis indicated, we should only wish that NAR did give marching orders
to state level associations - it would make a whole lot more sense. How
does national feel about this ? Arn't they frustrated by the actions of the
state boards ? Seems pretty Machiavellian to me. Any chance that will
ever change ?

Joe,

You made me look up "Machiavellian"!

"using clever but often dishonest methods which deceive people so that you get what you want, esp. power or control"

Based on that definition, it appears as though NAR governance is the exact opposite. There are three tiers; the National Association, State Associations and Local Boards/Associations. Although there are standards like the Code of Ethics, membership and MLS policy which apply at all three levels, the state and local associations have autonomy in the area of Public Policy positions.

In addition, all the NAR affiliates, CCIMs (Commercial Investment Brokers), CMPs (Certified Property Managers), SIOR (Industrial and Office Brokers), CREs (Counselors), which are national groups, can take a Public Policy Position separate from the NAR. There are cases when a specialty group believes the NAR position is not in their best interest. NAR permits them to disagree.

I can't quote chapter and verse from the NAR Constitution and Bylaws, but there is a statement in the Florida Association of REALTORS policy which suggests that local associations not take a Public Policy Position on a statewide issue contrary to the State Association. It is not a commandment, but a suggestion.

Local associations in Florida have taken positions in opposition on several occasions.

Should NAR give marching orders? To me it's one of those "you'd better be careful of what you wish" situations. I'd rather have the opportunity to build support for an issue important to my specialty at a local or state level, rather than try to sway the big supertanker. Once it has momentum, it's tough to turn in around. The task is more manageable if it's done in smaller increments.

Will it change? Who knows? How long is a piece of string?