Freddie Mac vs Appraiser Bias

[Carnivore]

Still waiting patiently how an appraiser can be biased and a Property Inspector for the purpose of a Desk top not be biased?

I think I can answer my own question. If the Property Inspector is only Describing the Property in Factual Terms. Then bias would not be a problem.

OTOH if he describing the property condition then that can be a problem. You could stretch this to Quality and its possible.

 

[ucbruin]

Inspector doesn't provide a value....

 

[George Hatch]

correct. So how is it possible that DW says appraisers make more "accurate" ratings when a third party inspects?
What percent out of the total does he believe this is true of ?

What is the basis for the certainty since he did not inspect the property, how can he know the appraiser was more "accurate" when someone else inspects?

If per his example an appraiser is either that incompetent or trying to push value to cite a 100 year old not updated in 40 years house as a C 3 , why would that change with the infor coming from a third party?


If it is not the egregious cases, but rather the grey area borderline judgement call, perhaps the in person feedback differs from the photos. I've had photos make properties look better and photos that made the property look worse,, wrt not fully able to transmit the actual condition and quality found at the site.

let's set aside the prospect of nefarious motivations by the appraiser and consider the expediency angle.

If I'm working with a small dataset then I'm trying to figure out how to make those datapoints cooperate with each other. It's really tempting to "make" them line up so that I don't have to get into the lengthy explanation or risk triggering a stip from the lender about an apparent disconnect. It's not so much a matter of trying to come up with a different value conclusion as to get the "clean" report with the minimum of hassle.

Add in a contract price and that multiplies the expediency factor. If I agree that the contract price is reasonable but I have some noise in my data my choices are to either take the long way around and provide the more detailed analysis and explanation or to take the shortcut and provide the sanitized version that expedites things for everyone involved. Akin to saying "the outcome is the same, so nobody is getting hurt". We don't get paid extra for putting the additional time/effort into it just to come up with the same value conclusion.

I'm not saying that taking the shortcut is right but we've all seen examples of appraisers doing exactly that, for exactly that reason and without any intention of benefitting anyone's interests beyond getting the deal done that would have gotten done in any case had they put in the additional time/effort.

IRL, an error or untruth that was motivated by expediency (or incompetency) isn't going to look any different to our critics than an error or untruth that was motivated by personal bias or animus. They will invariably see the error and - because they're working backwards from their predetermined moral judgement - will automatically attribute it to personal bias with zero consideration of the other possibilities.

 

[glenn walker]

correct. So how is it possible that DW says appraisers make more "accurate" ratings when a third party inspects?
What percent out of the total does he believe this is true of ?

What is the basis for the certainty since he did not inspect the property, how can he know the appraiser was more "accurate" when someone else inspects?

If per his example an appraiser is either that incompetent or trying to push value to cite a 100 year old not updated in 40 years house as a C 3 , why would that change with the infor coming from a third party?


If it is not the egregious cases, but rather the grey area borderline judgement call, perhaps the in person feedback differs from the photos. I've had photos make properties look better and photos that made the property look worse,, wrt not fully able to transmit the actual condition and quality found at the site.

in Review we were not allowed to tell the appraiser that his C-Ratings were bogus or to change them on a Subject property even though it was clear it wasn't a C-3. Another problem is a Appraisers perspective can be entirely different than another appraisers and he/she could always use the defense that I did not see it in person and the photos were not all that great. In some cases thats true. BUT since there is no way to discipline a guy or gal that Puffs up the conditions, they continue to continue doing it. A GSE could remove them from there approved list but we could not. So its a Cat & Mouse Game for a lender.

 

[glenn walker]

Still waiting patiently how an appraiser can be biased and a Property Inspector for the purpose of a Desk top not be biased?

I think Danny already answered this but many dont agree with him

 

[George Hatch]

I don't know if the inspectors can be assumed to be more unbiased than the appraisers but I do know it's going to be harder to accuse the appraiser of being personally biased against a borrower when they never interacted with anyone in the transaction or even drove into the neighborhood.

Where would the plaintiffs in the Marin City or Baltimore or Indianapolis complaints be if the appraisers had never even set eyes on them or the neighborhood?

 

[Carnivore]

When I first started in Appraising I had yet to own my own home. My exposure to homes was limited to the home a grew up in , my family, neighbors and friends homes.

In the Beginning of being a Realtor first and then as n appraiser if I went to a really nice house, I was quite surprised at how Rich People lived. Frankly I was impressed. The more experienced I became the less Impressed I was. It all came down to some people live much better than other people.

 

[J Grant]

I don't know if the inspectors can be assumed to be more unbiased than the appraisers but I do know it's going to be harder to accuse the appraiser of being personally biased against a borrower when they never interacted with anyone in the transaction or even drove into the neighborhood.

Where would the plaintiffs in the Marin City or Baltimore or Indianapolis complaints be if the appraisers had never even set eyes on them or the neighborhood?

They could say the third party inspector set eyes on them and transmitted it to the appraiser, in the form of coded comments and/or that the appraiser had prior bias about the neighborhood wrt comps.

There was never a supported conclusion any bias even occurred in the lawsuits cases wrt the "lower value" appraisal was due to bias, (or that the higher appraisal was not the problem) Which makes it unfair that Fannie/freddie are using those cases to indicate there is a "bias problem " in appraising.

If there is a bias problem, it is on the targeting of pushing values to make contract sales and refi target directions work.

 

[Carnivore]

I don't know if the inspectors can be assumed to be more unbiased than the appraisers but I do know it's going to be harder to accuse the appraiser of being personally biased against a borrower when they never interacted with anyone in the transaction or even drove into the neighborhood.

Where would the plaintiffs in the Marin City or Baltimore or Indianapolis complaints be if the appraisers had never even set eyes on them or the neighborhood?

Yes! I get it....it makes sense. Except the only complaint would be; "The Appraiser never set foot inside my house"

 

[J Grant]

When I first started in Appraising I had yet to own my own home. My exposure to homes was limited to the home a grew up in , my family, neighbors and friends homes.

In the Beginning of being a Realtor first and then as n appraiser if I went to a really nice house, I was quite surprised at how Rich People lived. Frankly I was impressed. The more experienced I became the less Impressed I was. It all came down to some people live much better than other people.

It all comes down to what is typical for the price range property type. The expectations of a buyer in the 3 million range differ from what the middle income buyer in a 500k range expects and that is different from what a first time or lower income buyer expects with 200k to spend.'

Some appraisers can not get out of their own head or their own comfort zone enough to appraise different income /area property types and might be better off avoiding either the high end or the low end. Most appraisers come from professional or middle class or working class bg so feel comfortable in these more familiar neighborhoods- which is understandable

I mean if any of us were trust fund babies would we be doing this schleppy job ? And to date , poverty stricken folks do not seem drawn to doing appraisals, either.