Can an Appraisal Committee of a Realtor Board be Successful?

[Thomas N. Morgan]

Our local Association of Realtors, has had an Appraisal Committee since 1991, or before. There has been only one or possibly two called meeting during that time. The only that was well attended was one called to discuss ways to combat the new AMC's. That was several years ago. Not even once since then have I heard of any other action taken by this committee.

I'd appreciate seeing positive and negative comments about your impressions or experience with local Realtor Board Appraisal Committees. I'd especially like to hear about any that were successful, even in a limited way.

Thomas N. Morgan
Ocala, Florida

 

[Austin]

Thomas:
I bet you I don’t do five appraisals a year involving Realtors, and that is no accident. I planned my practice that way. Twice in the last ten years local appraisers got together and sent a representative to the Board of Realtors meeting to discuss the proper method of measuring dwellings. May as well have been talking to a stop sign. Each time it got worse instead of better. I honestly believe they don’t want accurate data in the MLS because accurate data will blow their ruse. Realtors giving accurate data is like a magician giving away his/her tricks. How these people have kept from getting sued is beyond my comprehension.
On another thread on this same subject some one mentioned cap COD dwellings. I bet you there is not a Realtor in the country that can measure a cape COD accurately. The local tax assessor, who is pretty good, measures GLA as 1.6-story or 1.6 times the first floor GLA. In most modern capes you can count on an error of 200 to 400 sf of GLA. My favorites are tri-levels and raised ranchers with finished below grade space. Realtors count below grade space as GLA and raised ranchers with finished areas below grade as two story some times and always include the below grade area as total GLA. Then they use this data to do CMA’s on ranchers and two story dwellings. Every time I see a Realtor they always ax: “Hey Austin, how much per square foot are new houses selling for these days?” To me that is like running around with a sign on your back saying “I am an incompetent idiot.” That is like asking how much a cheap Chevy Tracker cost per pound (they weigh about 2,400 pounds and cost around $15,000) and then taking that figure to price a BMW by multiplying the weight per pound by the weight of the BMW. How the real estate industry has survived this long can only be attributed to the grace of God. I don't even call them any more. I gave up years ago.

PS: And the regulators think they can cure this problem by changing USPAP to include a three year sale history and more explanation under reconciliation or making a maze of intended use and purpose of appraisal? When you live in a world full of this kind of crap, what is the point of USPAP anyway?

 

[Blue1]

So......Austin.......Tell us what you REALLY think! :lol: I'm with you brother....I'm fed up with realtors trying to "shove" their UNcomparables down my throat, calling my clients and bashing me, not measuring homes, not even doing CMA's, and basically not caring about anything..... but their commission......I've had realtors try to convince me that I really didn't see a missing shingle, I've had realtors tell me I can go 8 miles away for "comparables" when I already have comparables within one mile. I've had realtors tell me the I don't need to see a sales contract or a transfer disclosure statement....and on, and on, and on. I think most of them (realtors) outta be selling used cars......(O.K. so I'm ranting again, just getting ready for the "onslaught" tommorrow)....

 

[jtrotta]

Tom

I don't base my practice on Realtors, but do a lot of work for Realtors; and as I have explained to many, they have "ethics" they need to address in their end of the business and so do I - therefore, we may not be able to view properties in the same fashion.

During my practice in Real Estate I served on several committee's and they are very much like ours, a lot of talk and a very slow process in which to make improvements, it's the political way. Non of the boards that I know of provide anything for Appraiser's, they just want their money for being a member. Perhaps this would be a good area to broaden into, but it's very much like our business, some Realtors are excellent and some bend the rules to their liking. I think it's human
nature 8O

Here's a recent ( I haven't done it yet); Realtor calls and says; I have a property under contract, but it won't close until next April, we have a deal, but my Buyer wants to make sure the property is worth what he's paying. I stated directly, I did not want to know the result of the negotiations or I wouldn't be able to do the appraisal; she never revealed the negotiated price; we also discussed the ramifications that could take place over time & distance and that I would be basing the estimate, as of the date of inspection and that I could not base any future value on "snowglobe economics". I believe you have to discuss the many variations that could possibly alter the outcome, this way everyone is aware, and she agreed. Our Fee has already been discussed and will be at the inspection waiting for me; so there are no further negotiations on my part, they can discuss the end result when the job is completed, but will get nothing in advance of the completed work.

So Tom, perhaps this is an area of the business that needs some work; past experience in my area would lead me to believe that perhaps a Q & A session would be appropriate, only if the Realtors wanted it.

8)

 

[Austin]

I believe in balance and was pretty rough on Realtors in an above post so I will balance things out a little. I have done a lot of appraisal work for other appraisers and could tell you some stories you wouldn't believe but somebody may read this stuff and know who I am talking about. Let me put it this way: The biggest under-sold and over-sold & over-appraised properties I have ever encountered involved appraiser/Realtors. There is an office building in town that has been vacant for 5 years. Above average quality, excellent location, etc. Why vacant? A Realtor/appraiser and his partners owned the building and needed some cash. So, they get another local appraiser to appraise it for $300,000 and refinance at $250,000 cash out. They had a good insurance company tenant whom the special purpose building was designed for. At the time of refinance about two years left on the lease. Tenant moves out and building is worth $175,000 but they still owe $245,000 on the loan. Can't sell for obvious reasons, can't rent because it is special purpose, and can't renovate to highest and best use because can't borrow any more money. Source of this information: Realtor in building next door.
Directly across the street is a similar office building but with three rentable areas. Very functional and competitive. Sold recently for $135,000. I did the appraisal for the bank. Seller's daughter-in-law is Realtor/appraiser. She set the price. Ample data put the price at a minimum of $165,000. Purchaser told me he stole the building.
Did a commercial appraisal recently for an appraiser. New fast foods restaurant just leased. Lowest yield rate and highest price building I have ever run into. Also worse road assess of any fast foods reataurant in town. These are not isolated stories. These guys are batting a 1000.

 

[John Hassler]

Thomas

Our board has never had an Appraisers Committee but I like the concept. I think I will propose that idea at the next meeting. Maybe have the various county appraiser groups send in someone with peeves/suggestions once a year.
I am the lone appraiser on the MLS committee. I can tell you that it has been an education for me as to how little agents understand what we do. I am getting some things pushed through like a one-page Appraiser's comp sheet (it's was two pages long per linting), mandatory listing of individual room counts for 2-4's, and a completely new tax service (more info AND plat maps!). I also pushed for fines for agents who do not report a sale in a timely manner - I even offered to be the Sheriff but MLS staff decided to do it.

The hardest thing to do at the meetings is keep my mouth shut. But I've learned. If an issue isn't appraiser related I don't care how goof-ball the agents want to handle it.

John Hassler

 

[Joe Birrell (NY)]

I chaired such a committee for a couple of years. It is a totally useless exercise. Realtors could care less about appraisal issues. I wasted time
with other committees at the board like the MLS, trying to get them to
do accruate and professional listings based on GLA, etc. We have about 1800 Realtors on our board and all but a handful are professional, it is
an incredible situation. The "last straw" came when a student (I also taught
for 12 years at the board), stated in class "my broker told me this is all
bull**** and I don't need to know any of this to sell a house". The caliber of people becoming Realtors is sad. I find it disgusting.

Since 1998 I have a policy of avoiding Realtors whenever possible, and will not take any referrals from them, their idea of a "good appraiser"
is somebody who hits their numbers. I can't remember the last time I saw an accurate CMA.

 

[Tom Hildebrandt]

Tom Morgan et al

This thread is speaking to two very different issues. The question Tom Morgan posed is "Can an appraisal committe within a local Realtors group be effective?" The answer almost every poster has provided is a response to the question "are all Realtors competent or crooks or incompetent?"

I want to deal witht the second set of responses by saying that bashing Realtors as a group is like bashing the AI, or ASA or any trade organization as a group. There are good and bad Realtors just as there are good and bad members of the AI, ASA, etc. There are good or bad members of the total appraisal community.

I think a lot of the bashing of Realtors at large is not merited. First not all brokers are Realtors. Second you must note that brokers are acting as advocates for their client (buyer or seller). Their job is to get the client a good deal. Realtors do have a code of ethics, they must act reasonably and with a sense of fair play to all parties in a transaction, that does not mean that they can not try to sway others to a position advantageous to their client. There is nothing wrong with this for a person acting as a broker, as an advocate for their client.

Appraisers have an different mandate, we are not supposed to be advocates for anything but our opinions, we are not trying to sway someone in a direction that favors a particular posiition, but we are expected to be competent and to act impartially, objectively and independently. It would be wrong for us to be swayed by misleading data, such as the car sale example presented by Austin, but it is not improper for the broker to try to convince us otherwise. Should we explain to the advocate why we disagree with their position, sure, should they accept our explanation, sure, do they have to accept it, no they don't. Appraisers have no holy grail to value, brokers are entitled to their opinions, they are just framed in a different context.

Yeh, yeh, I know, they should not do them for any purpose other than listings, buying and selling, but that is not the point of this discussion. The fact remains that providing value opinions is part of their profession, and we appraisers need to come to grips with it and recognize the differences are usually in perspective which leads to different analysis and techniques. In almost all cases, the definition of value is different (most appraisal assignments are after the most probable price, most brokerage assignments are after the maximum/minimum price).

Appraisers, who are brokers (and who may or may not be Realtors), must be very careful in addressing which hat they are wearing to avoid misleading or confusing the client and the public.

The issue of whether appraisers and brokers can sit together and hammer out some guidelines to help smooth out some of the issues, like GLA and above grade/below grade S/F, was the basic question that Tom asked. My
answer is that we had very positive results from this in North Carolina. The NCAR Appraisal Section sponsored meetings with brokers and appraisers to prepare guidelines for measuring residential properties so that issues such as those previousy mentioned could be resolved. After several months of effort, we produced a set of guidelines that were acceptable to the NC Real Estate Commission, and while not adopted by the NC Appraisal Board, they were acknowledged.

I think great things can result from appraisers and brokers working together. The commercial appraisers and brokers in my home town meet regularly in a strucutre organization to share data and talk about industry trends (as well as where to go fishing and hunting). Brokers CE and appraisers CE often overlap, and that is good.

Joint meetings of aprpaisers and brokers to discuss substantive topics need inspired leadership to keep misunderstanding from becoming confrontational. It took a lot of effort by both sides to hammer out the S/F guidelines, a lot of discussion, because each side and each person had different perspectives. There were times when it would have been easy to resort to charges of incompetentcy, ingorance, and worse, but they were avoided by good leadership. Start with small issues, work up to the big issues in stages.

Leadership requires effort and expenditures of time well beyond the actual meetings. Be prepared to do it yourself in voluntary organizations. It is easy to sit outside and pick, but constructive criticism requires effort.

Tom, if you want to discuss what we did in NC, post me back.

Best regards

Tom Hildebrandt GAA

 

[Verne Hebert]

We have an appraisal committee here which has been in existence since 1993 or 1994. The appraisal community has a "voice" when needed. It meets occasionally. I have not seen any grand benefit. I think it was created as a communication vehicle for appraisers needs. Here we pay full fee, for basically, unclean data.

They have told me recently that they would entertain appraisal classe if the committee puts them together. I am not sure what sort of financial arrangement they are considering.

 

[Blue1]

Tom,

I guess I am one of the realtor "bashers." You're right, there are many ethical realtors doing a good job. I have met and worked with many. I didn't mean to paint them all with the same brush. In my market, prices are skyrocketing which, I believe, brings out the worst in some realtors. It seems that lately, I've met too many realtors willing to compromise their integrity for money.