Future Of The Industry

[Elliott]

I'm all for positive reinforcement and the 'like' button. I think it would be similarly helpful for the forum to have "unlike" buttons.

 

[Eli]

Oh well.................sometimes silence speaks louder than words.

 

[Eli]

Telling truth isn't always flattering . Don't ask the question " do I look fat in these jeans" if you don't want a real answer.

When is the last time you saw an appraisal that reported any less than 30 years? CU has been quite revealing.

Still waiting for the last time you saw one? I told you not long ago for me.

You are usually hard to stump on a question. Is the kitchen getting too hot? What's the deal?

Those are prolly not fair questions. Don't worry about it.

 

[Deleted member 130081]

$20 a pop human walk throughs with GoPro documentation will suffice.

Who is going to inspect a property for $20? I don't think you have added all the costs up.

 

[TRESinc]

Sometime homes built 80 years ago were built with quality construction and if well maintained, better condition than a 20 years old home. But sometimes an 80 year old home not maintained is a dump.

one of my favorite responses to borrowers who had old houses and would say "they don't build 'em like this anymore!" was "you are right, they don't. we have code now".

Oh well.................sometimes silence speaks louder than words.

too bad you don't subscribe to this philosophy.

 

[GWISC]

Just was at an appointment on Monday. The borrower told me that her tax assessment was reduced recently whcich was great, however the new assessment did not jive with the lenders AVM. She told me, I was called in to break the tie. Makes you wonder how many cookie cutters (our profitable properties) are being automated (could be all of them for refi's).

This would also mean, possibly, any dispute between the customer and the AVM could mean an appraisal. In those cases it is usually a no-win situation. If my report agrees with the AVM, then the borrower will be on the phone complaining.

I long for the days when we were the harbengers of all of the data and we were the only source they could rely on for research and ultimately our expertise. As for the OP. I see a future where, at least on the residential side, not much of a future. If the data is reliable enough, then one day we will be relics. I wish buyers and reatlors luck during those times when it's a feeding frenzy for properties and the past history shows stable, but the current climate is a shortage. How will the computere reconcile that I wonder.

 

[Deleted member 130081]

A machine can't verify a sale. MLS is a sales brochure . It isn't a database of facts. But from what I hear appraisers don't always do such a great job of this task.

Not sure I entirely agree with all that. I agree a computer is not going to do a better job of "verifying" a sale. But frankly, is the "verification" really that important? Wow, did I just say that? Yes I did. Gotta take it all in context of the big picture.

What I find interesting about this business is how a small point of order can grow into something so entirely large. Verification of sale terms is a good example. First of all, there is no way to verify sales 100%, 100% of the time. This is due to the human element involved. At some point, all parties will have to agree that the verification is as good as it gets. So what is good enough? Well, FNMA has outlined what they expect. Turns out, my MLS, as many others, requires brokers to input all of the FNMA required elements of sale verification. So, to say that the MLS is nothing more than a brochure, is lacking in facts and can not verify a sale, is not exactly an accurate assessment in my view. Is the MLS data 100% accurate 100% of the time, well no it isn't. Nor is any other method. The question then becomes is it good enough for the purposes at hand? I think in most cases it is. This is but one of the reasons why users have asked appraisers to present at least 3 sales in a report, not just one. On that score, good appraisers present 3 sales in a report, but analyze many, many more in the development of an appraisal. I just did a simple urban ranch and intimately analyzed about 75, after taking a macro look at about 150; my report presented 3. The AMC then had a computer run an AVM of sorts that brought up all sorts of sales I did not use and I was to comment on why I didn't use each one of them, specifically. The computer isolated certain features, but had no way to reconcile each of the sales relevance to subject value. I don't see how the use of computers is going to eliminate the need for human reconciliation. On that score the use of computers is not cheaper, considering a human ends up reconciling the computer data anyways. The only way I see computers taking over is if lenders decide they are more concerned with a neat looking document than they are with the most accurate valuation possible. Considering banks have received taxpayer bail-outs, I'd say that's everyone's business.

But I got off track there. Verification of sale. Yup, its a good idea, no argument there, just pointing out the significance in the big picture. The 1004 form has a field for sale source and sale verification. Why? So many people have made the assumption that because there are two fields on the form, that at least two sources are required for sale verification for FNMA. One AMC I know of, even goes so far as to misinterpret a FNMA guidance letter stating "FNMA Announcement SEL-2010-09 requires: At least one Data source and one Verification source for Each comparable sale". That is not what the letter says, nor was it the point of the letter. The letter simply asks appraisers to cite sources specifically, for instance instead of "public records" to cite "assessor card", etc. No where does the letter state that a sale MUST have two separate sources to verify a sale. Nor does it say that in any FNMA documents anywhere (of which I am a moderate expert). This is the sort of misinformation that leads to mass misunderstandings. The 1004 form has a second field for sale verification for one very practical reason, the initial source may have been insufficient. For instance, a sale sourced from a deed copy would only have the sale price, date and parties. In this case, an additional source would be needed to meet FNMA verification requirements. The form in this case is designed to accommodate multiple scenarios, not create additional requirements. All of us know that this one simple piece of the appraisal process has turned into a massive "issue". You yourself Joan implied appraisers fall short, as if it may be something that might discredit the entire appraisal industry and lead users to find an alternative to appraisers. Now be honest, isn't that going a little over-board? The question ought to be, if an accurate valuation is really the end goal, what is truly essential to an accurate valuation? I don't see anyone taking the conversation in that direction. Rather, the direction is more focused on compliance. I'm not saying compliance is not important, just saying that if the focus is on compliance, compliance is what the users will get. The thing is, real estate markets are imperfect. An appraiser who develops an appraisal in the context of what they can "prove" to their client, rather than what their over-all experience in their market suggests, will often develop an appraisal that is less than it could have been in terms of accuracy. That is hard to explain to people who are not familiar with the available data and the analysis of it. The best example I can give is the AVM itself. An AVM can prove its valuation all day long, but the value determined is rarely as accurate as what an appraiser can come up with.

Real estate markets are influenced by human interaction, human judgement. Therefore humans are the best possible resource a lender could hope for to analyze it. I think anyone who attempts to influence the lenders otherwise disservices lenders, borrowers and in todays world taxpayers.

I think a better solution would be to scale down the current appraisal report requirements. Trim the fat so to speak. Let underwriters and loan staff do their jobs and stop asking appraisers to do it for them. Leave only an opinion of value and a simple way to offer reasonable support. I could develop an appraisal report with every bit as much valuation "meat" as the 1004, but could be done for half the price. Lenders should then remove the "only one" appraisal requirement and spend their money on two, or three appraisals. They could get multiple opinions for the same amount of money and not have to reinvent the entire industry. Gotta say, the folks who advocate for a "better appraisal" rather than a "better loan underwriting process" all seem to have ulterior motives as far as I have observed.

 

[bnmappraisal]

one of my favorite responses to borrowers who had old houses and would say "they don't build 'em like this anymore!" was "you are right, they don't. we have code now".

Love it!

 

[J Grant]

The main value appraisers offer is that we can perform a multitude of different tasks and organize them into a whole and synthesize the many diverse aspects that go into an appraisal.

Yes, one person can be hired to measure and take photos and another person can verify sales and a programmer can feed data in run an AVM and another person can fact check it and integrate it with the information of MLS and another person can provide the E and O insurance..all these different people or systems would cost more money, take more time, and be more chaotic and at the end, one trained person would still need to organize it into a whole (aside from who does the the analysis, who is responsible for the point value from the value range of an AVM , who fact checks all the wrong information on MLS, who is supposed to report repair issues etc).

An appraiser is a point person who takes responsibility for their judgments and conclusions, and who after completion of appraisal can be consulted with or questioned or challenged , who can respond to concerns as well as be able to show what information was relied on and attest to the quality of that information. A terrific bargain, what would it cost to delegate/hire/coordinate all the various people needed to perform the disparate tasks to produce an equivalent product?

 

[Frederick Thomas French]

Doing appraisals now compared to 20 years ago is different. I like using google and look at the subject prior to accepting the assignment. I have easy access on the internet to research subject property - public records, permits, etc.
However, compared to 20 years ago, there are more pages to fill out, more reviews, and CU to worry about. Overall, I don't feel I'm making as much money as I did 20 years ago especially with a middle man involved. Unless you love appraising, there are more potential income benefits in other fields.

And those other fields are?