Geographic Competence

[TRESinc]

But going forward, these companies can also go after the E and O of the appraiser who did the desktop, since it was the desktop that was used to UW this second or additional loan.

Whether they will or not is unknown, but hard to think why they would't, it would be just another source of collection for them if they believe the desktop was deficient - esp if they can get nothing or reduced amount from a BK or destitute borrower.)

it's already happened and the same company, under two names, has not been successful in going after appraisers. peter christensen posted about it on his blog.

They PAID, even at personal hardship ( one liquidated a pension fund) because these companies are not constrained the way lenders are, they use every avenue of the law to collect and are relentless.

My post 28 has link to an article about it.

they may not like it but no wrong doing was present. they borrowed money and for whatever reason they were unable to fulfill their obligation to pay it back at the time, so the company went after them. it's no different than not paying for cable or electricity - don't pay and it will go into collections.

 

[Terrel L. Shields]

What is your opinion of the importance of geographic competence as it relates to residential appraising?

Limiting solely to residential I would say you should be able to go anywhere but Fannie Mae, requires you to be competent prior to acceptance of an assignment. So, in the case of desktops the question is how to do these remote assignments. Lie? Quickly study the on line market, then accept the assignment? As a practical matter we are paid so little I would limit myself to my MSA and coverage of the MLS(s) in that MSA except I get a large premium. Non-residential, pay me enough, I will get competent and do an adequate job. I doubt there is any place in America so opaque, that someone with a normal amount of moxie cannot do a decent job given adequate time and compensation.

 

[Terrel L. Shields]

he ODNR decided they wanted to make all bodies of water (lakes, ponds, streams, rivers, etc) have public access at all points so they assumed ownership of all land up to the high water mark

Local nuances are oft not even known by owners or local appraisers. Grand Lake O' the Cherokees had a lake perimeter survey bust that left some lots subject to flooding when the lake is in the flood pool. Flood insurance required and potential liability for flood damage. Flood maps no help.

 

[NC Appraising]

Do you want the rear answer or the appraiser wink answer. Ok, I've you both.

Real Answer:
If the appraiser knows the same or more about the neighborhood than the owner or agent, they have competence.
My county just had a school redistricting. Huge impact on values and appeal. What are the drivers for value and market appeal? Local economy? What makes one school more popular than the other? Why does that subdivision sell for much more than the one down the street? How about the By-pass? Homes uptown that are in the floodzone and the 50% rule?

Wink, wink appraiser answer:
If they have MLS access, they are competent.
Pull three comps, put a value on it, and collect that check!!

Not trying to shame anyone here, but lets be honest. Most appraisers cover 4-5 counties. I have been appraising in the two counties that I cover for more 15 years. I was also born and raised here. I still have a hard time knowing and keeping up with all of the changes.

So, if we are being honest, most appraisers are not competent per my the Real Answer. Most are competent for the area or the count they live in. They may have appraised in the other 3-4 counties, but the only thing they are doing are pulling three sales and copying most of the data from Realist.

It's funny that the re agent and the borrower grills me upon arrival more than the lender or AMC. They are not stupid, they have been burnt by out of the area appraisers before.

So the answer to your question is Wink, wink answer. Who knows, maybe that is all they want for hybrid products?

 

[TRESinc]

Local nuances are oft not even known by owners or local appraisers. Grand Lake O' the Cherokees had a lake perimeter survey bust that left some lots subject to flooding when the lake is in the flood pool. Flood insurance required and potential liability for flood damage. Flood maps no help.

ignorance is no excuse. the home owners knew of it based on the lawsuit and any appraiser who knows their coverage area should have as well. when a house and lot are bought for $300,000 to over $1,000,000 just to be torn down and a new mansion built the value of the land is extremely important. you change the lot from lake front to lake view, which is what ODNR did, and you can chop the value down by as much as 80%. go across the street where you have lake views, not lake front, and the sales in the same areas are $100,000 to $350,000.

 

[Overimprovement]

OP- but relying on their personal subjective feelings created during a site visit- change that to relying on their judgement and opinions of the property created during a site visit ( and what you call a personal subjective feeling is their market expeirence creating a reaction in them to the property , site, neighborhood ). The OP might want to consider that the very definition of an appraisal is AN OPINION, that is literally the USPAP definition of what an appraisal is. An appraisal is not defined as "data analysis"....though data analysis can be part of an appraisal.

That wasn't my quote. You are confusing this poster with me...

 

[Terrel L. Shields]

ignorance is no excuse.

In the case I cite, few people know it, and I only know because a banker who owned lots along the lake knew and told me. Not a problem for steep lakeshores, only the lots along a peninsula that are only a few feet above normal pool are affected. The survey bust is about six foot or so, flood pool is 10'.

The actual ownership line varies too and some people pay an encroachment lease to the dam authority.

 

[TRESinc]

In the case I cite, few people know it, and I only know because a banker who owned lots along the lake knew and told me. Not a problem for steep lakeshores, only the lots along a peninsula that are only a few feet above normal pool are affected. The survey bust is about six foot or so, flood pool is 10'.

The actual ownership line varies too and some people pay an encroachment lease to the dam authority.

doesn't change the fact that an appraiser should know what is going on in their market, especially when it comes to waterfront properties and flood insurance/problem. ignorance is still no excuse.

 

[Terrel L. Shields]

ignorance is still no excuse.

If the homeowner doesn't know, how is the appraiser. Only when you have a recently performed survey will you know. The only fix on that lake is to evoke an E. A. and suggest a survey.

 

[George Hatch]

Exactly what is it that makes someone competent to complete an assignment?

- Does the appraiser need to know in advance exactly what the measurements are of the house prior accepting the assignment?

- Does the appraiser need to know in advance what the interior floorplan or the quality and condition of the buildout and all of the features - prior to accepting the assignment?

- Does the appraiser need to know in advance exactly where lie the neighborhood boundaries or what the neighborhood composition is like or what the value trends have been in that neighborhood for the last 10 years - Prior to accepting the assignment?

Does the appraiser need to already know everything about the subject property and its neighborhood and market segment prior to accepting an assignment to appraise the property? Is that the minimum it takes in order to be competent to accept that assignment and then complete it competently?

Of course not. The dividing line between competent and incompetent appraisal practice is not what you already know of the assignment, but rather the ability to work the process AND then actually working that process in an effective manner.

Just because you're appraising the property down the street from where you live doesn't make you "geo-competent" if you haven't completed an assignment on your street in the last 10 days. Nor will you become "geo-competent" until after you work the process of filling whatever gaps - large or small - there are between what you already know of the current market conditions vs what those conditions actually are as of your effective date.

And we have an app for that - it's called the appraisal process. Some appraisers are better at working that process than others. Ability aside, some appraisers are more willing to effectively work that process than others.


IRL some assignment include more work than others in order to fill in the gaps between what you already know vs what you need to know about it in order to complete it competently.