Future of appraising and USPAP

[TruJa]

I'm just thinking about things since there has been more time to do so lately, and had a few questions related to the future of appraising and the industry, and was hoping someone smarter than me might have some insight...

In the future, what is to prevent mortgage origination from being based off of principles generally more similar to standard 5/6 appraising than how we've done it in the past? Isn't that sort of the online systems that Freddie and Fannie have created with our data? It seems to me that the biggest exception is that mass appraising is supposed to be (to some extent) testable and accountable, whereas currently the AVMs are a black box, and the data can be really, really bad. However, if they can be audited and they are constantly calibrating their model with real sales, and it works well enough for most properties, then what is really the difference, and why couldn't the powers-that-be go to this type of model? It seems that you could have a handful of large "appraisal" companies (or GSEs) which maintain a constantly evolving database of verified sales, and which only need an appraiser to gather and certify data, and the bulk of appraising would be computerized.

This would leave Standard 1/2 appraising to complex properties or special uses but generally not run of the mill mortgage origination.

I probably have 20 years or so before retirement, so do you think I should move on to something different, or do you think this is just a cyclical ebb and that loan origination work will still be needed in a significant manner in the future?

 

[Terrel L. Shields]

This would leave Standard 1/2 appraising to complex properties or special uses but generally not run of the mill mortgage origination.

My brother died 18 years ago. He was a banker until 2 years before his death. He believed (circa 2000) that eventually they would divide appraising into cheap AVMs and the complex properties would be valued by the pros. And they would be paid premium prices for their services...and by necessity that would require far fewer appraisers.

And, yes, if I had 20 more years in the biz, I'd change careers.

 

[sputnam]

USPAP doesn't apply to Lenders. It never has. USPAP applies to appraisals and appraisal reports. Banking/Lending regulations dictate that lenders get appraisals but.... not always. Like every well managed business... Lenders will seek to reduce costs. That may mean fewer appraisals. It may not. Some lenders would have elimnated residential appraisals from their lending process already except there are some congressmen and some regulators who believe that the collateral is as important as the credit worthiness of the borrower.

 

[Tom D]

yes, they will still need some human appraisers. you can't have 100% avm, in case of a bug, or some wrong programming imput that certainly could throw off the numbers. appraisers would be a test sample against the avm to see if there are any wide variances. and then there are the outlier sales in the bell curve that the avm couldn't figure out. but i almost think that appraisers could be hired by fannie in each area. not sure that the avn could catch sudden adjustments in market conditions.
of course if was lending loosening rules that caused every crash to normal people's mortgage problems, not appraisers.

 

[chad hampton]

And, yes, if I had 20 more years in the biz, I'd change careers.

What careers are left? We are heading towards UBI at a crazy pace.

Damn near everyone I know is struggling now. Not just those in real estate. The only people I know that thinks things are great are either the very wealthiest friends of mine or those that live/work in the DC swamp. Swamp jobs are very good. They are stealing money hand over fist.

 

[BRCJR]

I still see things changing, how soon, no clue.

Go to a car dealership and a couple of hours later you drive off with a $100,000 depreciating asset.

Go to a regulated lender and 30 days later you may be able to close a $100,000 loan on a dwelling that, generally, appreciates.

I see things changing, how soon, no clue.

 

[Terrel L. Shields]

What careers are left?

Therein lies the rub as Shakespeare said. To me, the logical choice for an old person unskilled in a trade, is a paper shuffler, perhaps at a bank (I've known several appraisers who went to work for a bank (if you can't beat 'em, join 'em.) I know my skills can translate into ROW acquisition, insurance underwriting, or even selling. Food processors need testers, truck drivers, quality control, USDA inspectors, and I'd think an appraiser could transition into a paralegal rather easily. There are still jobs.

Personally, with my background, I'd probably go back to lab work for a civil engineer. It's easy. I am skilled at chasing small drill rigs, taking samples and penetration tests. I can run a perk test or soil morph test. I can run all sorts of compaction and tests, including cracking concrete cylinders, Proctor, etc. In fact, I have a cousin whose daughter does this sort of testing for a company. She runs the nuclear density gauge that tests the density of dirt or asphalt. I used to run that too. And she has a simple high school degree. It's not hard work. It is not complex.

 

[chad hampton]

Therein lies the rub as Shakespeare said. To me, the logical choice for an old person unskilled in a trade, is a paper shuffler, perhaps at a bank (I've known several appraisers who went to work for a bank (if you can't beat 'em, join 'em.) I know my skills can translate into ROW acquisition, insurance underwriting, or even selling. Food processors need testers, truck drivers, quality control, USDA inspectors, and I'd think an appraiser could transition into a paralegal rather easily. There are still jobs.

Personally, with my background, I'd probably go back to lab work for a civil engineer. It's easy. I am skilled at chasing small drill rigs, taking samples and penetration tests. I can run a perk test or soil morph test. I can run all sorts of compaction and tests, including cracking concrete cylinders, Proctor, etc. In fact, I have a cousin whose daughter does this sort of testing for a company. She runs the nuclear density gauge that tests the density of dirt or asphalt. I used to run that too. And she has a simple high school degree. It's not hard work. It is not complex.

We are similar, I’m a civil engineer as well, I just couldn’t stand that field after working in it 10+ years. I worked along side a drill rig for a little while, but I’m not a geologist.

I have a friend who is making a killing in the grocery store/seafood/meat business. Upper 6 figures a year. I may see if he needs some help. Most people get jobs today by knowing someone. Hell, look at the appraisal profession and you see that everywhere with the folks higher up.

 

[Terrel L. Shields]

I’m a civil engineer as well,

I actually loved the business, but it simply did not pay well. I went from less than $3 an hour to $350 a week when I changed jobs to chasing oil rigs.

 

[chad hampton]

I actually loved the business, but it simply did not pay well. I went from less than $3 an hour to $350 a week when I changed jobs to chasing oil rigs.

That’s true. I had to get into a higher paying profession. Some engineering disciplines pay better, but civil is mostly govt (state/local) or private where your clients are still state/local govt. most of my friends still in the field are near 100k (with good benefits), but I don’t considered that a great income by any means. It’s ok. Now if you have a wife that makes the same, then you’re good.