FHFA Request opinions from Lenders & others on what the new version of an appraisal will be.

[George Hatch]

Appraisers can keep up with the current demand if they are not forced to use the existing forms and reporting requirements, and the scope of work ramrodded down their throats by the client/intended user. Changing the wording and certifications/scope on a 1004 is putting lipstick on a pig. Once the housing market crashes, the GSEs will be fully responsible.

The answer is never "No". It's "Sure, I can do that; what's the fee?"

Which is exactly what has appraisers up in arms over the "desktop appraisal w/3rd party inspection" situation. Appraisers may be complaining about liability but what they really mean is they don't like the fees that go with the time/effort involved in those assignments.

 

[glenn walker]

Please pu

You are assuming in am deficient in logic based on my statements. I assume you believe that your way of determining a basis for an adjustment is the only way.

Your statement are contradictory and in some ways prove my statements.
"That can be done objectively by using the residual, although it is done as a constraint on the value of all intangibles, and consequently the value of the adjustment for all intangibles. And, for the purposes of valuation, you can split or apply that adjustment anyway you want to the available intangibles and it will have no effect on the value conclusion. It is, to repeat, the total value of the value contributions of the intangibles, or resulting adjustments that is important." Right there you are making a subjective adjustment in how you assign those adjustments, how to split the intangibles. And you even recognize that. "there is some reasoning that goes into the developing their adjustments, it is rarely founded in objective data analysis, rather it is a reflection of years of practice doing more or less the same thing"

Throughout an appraisal you are making judgements based on the quality of your data. It is a judgement call on how much per square foot to adjust living area above and below grade, how to adjust for differences in amenities. Appraisals are subjective products based on interpretation of data. If it weren't, then anyone could plug data points into a program and have it spit out a number and that would be the price a typical market participant would pay for the property. But it doesn't work that way.

You say that you stood over the backs of other appraisers. well maybe you should have sat beside them and learned.

Macro vs micro market adjustments. What if your great big MARS program indicates and adjustment is warranted for a specific feature, however your particular submarket does not recognize any difference for that feature? Do you make it anyway? or realize that regressions analysis is not appropriate for everything all the time. Its nonsense to believe that all markets are the same and behave in the same manner.

You can think what you want of me, your opinion of me has no bearing on me at all. I will not even put in writing what I think of you and your posts.

The answer is never "No". It's "Sure, I can do that; what's the fee?"

Which is exactly what has appraisers up in arms over the "desktop appraisal w/3rd party inspection" situation. Appraisers may be complaining about liability but what they really mean is they don't like the fees that go with the time/effort involved in those assignments.

Exactly we saw that with the Covid-19 Profiteers-Ones who yelled for years they didn't to 2055 or exteriors BUT once they held some lenders hostage suddenly $600.00 Drive-Byes were a great product and no-more endless chatter about increased liability . The same with AMC's I will die and go to hell before I will ever work for an -AMC - Until suddenly AMC's were offering them full fees and now some getting over full fees and making money hand over fist and we even have Posters who praise their best AMC. The same with Hybrids and Desk Tops -pay these same appraisers what they want and suddenly it's a great product .

 

[RCA]

That is not true. I remember having to redo a proposed steak n shake restaurant for the largest bank in the nation at time because they wanted all dark comparables. That was their solution to removing business value from the property. I don't do fast food anymore or hotels, but you are still wrong for people who like doing them. Your just wrong period in your assumptions.

Maybe you are replying to the wrong post. Because this doesn't make any sense, I never said people who like doing hotels. Jeeez!

 

[RCA]

You are assuming in am deficient in logic based on my statements. I assume you believe that your way of determining a basis for an adjustment is the only way.

Your statement are contradictory and in some ways prove my statements.
"That can be done objectively by using the residual, although it is done as a constraint on the value of all intangibles, and consequently the value of the adjustment for all intangibles. And, for the purposes of valuation, you can split or apply that adjustment anyway you want to the available intangibles and it will have no effect on the value conclusion. It is, to repeat, the total value of the value contributions of the intangibles, or resulting adjustments that is important." Right there you are making a subjective adjustment in how you assign those adjustments, how to split the intangibles. And you even recognize that. "there is some reasoning that goes into the developing their adjustments, it is rarely founded in objective data analysis, rather it is a reflection of years of practice doing more or less the same thing"

Throughout an appraisal you are making judgements based on the quality of your data. It is a judgement call on how much per square foot to adjust living area above and below grade, how to adjust for differences in amenities. Appraisals are subjective products based on interpretation of data. If it weren't, then anyone could plug data points into a program and have it spit out a number and that would be the price a typical market participant would pay for the property. But it doesn't work that way.

You say that you stood over the backs of other appraisers. well maybe you should have sat beside them and learned.

Macro vs micro market adjustments. What if your great big MARS program indicates and adjustment is warranted for a specific feature, however your particular submarket does not recognize any difference for that feature? Do you make it anyway? or realize that regressions analysis is not appropriate for everything all the time. Its nonsense to believe that all markets are the same and behave in the same manner.

You can think what you want of me, your opinion of me has no bearing on me at all. I will not even put in writing what I think of you and your posts.

Good grief, what a lot of nonsense.

I would say that it is now accepted, since many years, that they only way to objectively get reliable adjustments for quantifiable features such as GLA is through regression on a large number of sales comparables, if they are available. If you do not have a sufficient number of sales comparables, your regression will approach matched pairs analysis in terms of reliability. You can always run regression on two sales just by duplicating the sales enough number of times that the regression program will accept them. Of course the result is probably not going to be that useful in predicting the outcome of a new sale.

Where's the beef? Yea. All you have to do here Sadie is give us your exact procedure for determining a value for Quality and Condition. Although, if you can't find any good procedures in the major Appraisal books on the Sales Comparison Approach, I'm guessing you are going to come up empty handed.

 

[Mejappz]

The answer is never "No". It's "Sure, I can do that; what's the fee?"

Which is exactly what has appraisers up in arms over the "desktop appraisal w/3rd party inspection" situation. Appraisers may be complaining about liability but what they really mean is they don't like the fees that go with the time/effort involved in those assignments.

The problem is more the reporting format and lack of flexibility than the fee. Of course, I would not do them for $50.00 to $75.00. I mean, I can complete one on a simple property in about an hour using my reporting format. Not a big deal; it is a matter of ranking the comps. Or I can just run my statistical model and make a USPAP compliant report very quickly.

The problem is that the client then starts to pile in on other stuff(i.e., scope creep), or they start dictating what they want in the report; then it is not worth doing. If they wish to have value, it can be done quickly by an appraiser.

The COVID flexibilities or 1004P are all non-starters because they take too much time to complete and ask for too much information; thus, the appraiser must charge more. There is also the problem of not being able to apply an extraordinary assumption for the GSE work.

 

[Sadie]

Good grief, what a lot of nonsense.

I would say that it is now accepted, since many years, that they only way to objectively get reliable adjustments for quantifiable features such as GLA is through regression on a large number of sales comparables, if they are available. If you do not have a sufficient number of sales comparables, your regression will approach matched pairs analysis in terms of reliability. You can always run regression on two sales just by duplicating the sales enough number of times that the regression program will accept them. Of course the result is probably not going to be that useful in predicting the outcome of a new sale.

Where's the beef? Yea. All you have to do here Sadie is give us your exact procedure for determining a value for Quality and Condition. Although, if you can't find any good procedures in the major Appraisal books on the Sales Comparison Approach, I'm guessing you are going to come up empty handed.

I am so sorry IVCA, you have siloed yourself with regression analysis and the MARS program. MARS is just one of the tools in the appraisal tool box. It may be akin to a multipurpose tool, but it is still just one tool; other tools are still needed for a complete set. I am not going to tell you how I arrive at my adjustments because you have already looked over the shoulders of your fellow appraisers and presumably know all there is to know about all things in the appraisal world. You have twisted yourself into a pretzel to prove me wrong and there is no proof, because there is no right or wrong, just an opinion. If you de-silo yourself, you may find there are other equally suitable approaches to determining an adjustment, or not. But don't criticize or demean your fellow appraisers who do not walk in lock step with you.

 

[RCA]

I am so sorry IVCA, you have siloed yourself with regression analysis and the MARS program. MARS is just one of the tools in the appraisal tool box. It may be akin to a multipurpose tool, but it is still just one tool; other tools are still needed for a complete set. I am not going to tell you how I arrive at my adjustments because you have already looked over the shoulders of your fellow appraisers and presumably know all there is to know about all things in the appraisal world. You have twisted yourself into a pretzel to prove me wrong and there is no proof, because there is no right or wrong, just an opinion. If you de-silo yourself, you may find there are other equally suitable approaches to determining an adjustment, or not. But don't criticize or demean your fellow appraisers who do not walk in lock step with you.

Well, there you go. The proof is in the pudding, as I very well expected.

With my method, I can tell you whether your adjustment for an intangibles is too high or too low, because of the very exact constraint on the sum of the intangible adjustments.

You really have no such method other than that, and I know that with 100% certainty. Thus, you are indeed "flying by the seat of your pants" on these adjustments, as are most likely 99+% of residential appraisers. Thus the animus towards appraisals by those specialists in the banks and lending institutions who study the accuracy of appraisals in large portfolios over many years.

 

[Sadie]

Well, there you go. The proof is in the pudding, as I very well expected.

With my method, I can tell you whether your adjustment for an intangibles is too high or too low, because of the very exact constraint on the sum of the intangible adjustments.

You really have no such method other than that, and I know that with 100% certainty. Thus, you are indeed "flying by the seat of your pants" on these adjustments, as are most likely 99+% of residential appraisers. Thus the animus towards appraisals by those specialists in the banks and lending institutions who study the accuracy of appraisals in large portfolios over many years.

You just proved my point. Enough said. Too bad you think so poorly of your peers.

 

[RCA]

You just proved my point. Enough said. Too bad you think so poorly of your peers.

Well, you have several "points", but you haven't supplied any substantive support in the form of logical arguments; just several assertions without any basis. And the phrase "think so poorly of your peers" implies something that is subjective judgement on your part. I would say, that other appraisers are locked into a system that was handed to them and there are an insufficient number of intelligent leaders in the appraisal world to set things right.

Much of the problem was the mentorship requirements for trainees. That itself, preselected lower IQ (or more correctly "not the brightest") and docile people into the profession who were willing to work at substandard wages for a number years and do what they were told. Yes, some trainees were smart college graduates who went to work for MAIs for a number of years, but eventually discovered the system for career advancement was extremely defective.

And, I am not saying that every appraiser has to be super smart. But every profession has to have a certain percentage of bright people brought on to serve as tomorrow's leaders. The supervisor-trainee mentorship requirement eliminates the really bright people from entering the profession. That is its slow but sure death.

Leaders in the profession, and I could name names, would tell trainees that they simply had to "pay their dues" to get to the top, i.e. attain MAI certification. Roadblocks were placed here and there that thwarted their progress. The carrot stick so visible at the beginning of their career disappeared slowly but surely. Would an MAI in an office doing reasonable amount of business on the backs of maybe 5 college graduate trainees were smarter than him, actually take the final step to get them their MAI, or would they be thrashed around unendlessly in clerical work and research at ultra-low pay until they quit?

The Appraisal Profession was architected to its modern day form, through both intention and incompetence. The incompetence in Appraisal is truly systemic and will be hard to correct, should there ever be a serious effort. .... Because there is no one around in the profession competent enough to rearchitect and rebuild it. Stupidity breeds stupidity and that is precisely where the profession is at.

Yes, there are a few around who could do something, but not enough to reach the required threshold to make things happen.

The profession will stagnate, and probably die. But there is some hope it may turn around in another 30 years or so.

 

[Zoe]

Maybe you are replying to the wrong post. Because this doesn't make any sense, I never said people who like doing hotels. Jeeez!

Your talking intangibles.

Here you go:

7 Examples of Intangible Value

The definition of intangible value with examples.

simplicable.com

Put that in your pipe and smoke it.