Has the quality of appraisals gone up since the AMCs took over?

[Terrel L. Shields]

But, the reluctance of appraisers, as a group, to apply market condition adjustments is well documented. It seems that many still operate under the assumption that a report with such adjustments will be subject to extra scrutiny.

It did not help that FHA and FNMA classes in the 90s were telling appraisers to be very cautious of making market condition adjustments. And that was particularly difficult for rural appraisers where limited sales existed. Do urban or suburban sales translate 1 for 1 in rural areas? DOM used to be rather longer for rural properties here, but much of that has changed with the market conditions as farms are converted to smaller tracts.

 

[BRCJR]

It's been about 10 years since I did a mortgage appraisal, so I don't have a horse in the race. I still do private work and review appraisals for County Assessment appeals. I read a lot of comments on the Forum about appraisers taking 6-8 hours to complete a single family. But when I review appraisals they all seem to be boilerplate with standard canned comments. Looked at one yesterday and to start off, ALL CAPS, one line for reconciliation and TYPING errors. Is it that hard to spell qualitiy or similiar? At least use your spell check.

So to all you that take 6-8 hours, what are you putting into the report? Graphs, charts, linear regression?

I thought the AMCs were improving every aspect of the business.

HeeHee HaaHaa.........thought you would be slick----

 

[Tom D]

It did not help that FHA and FNMA classes in the 90s were telling appraisers to be very cautious of making market condition adjustments. And that was particularly difficult for rural appraisers where limited sales existed. Do urban or suburban sales translate 1 for 1 in rural areas? DOM used to be rather longer for rural properties here, but much of that has changed with the market conditions as farms are converted to smaller tracts.

at that 90's time if you did not personally see the interior of the comps, you were not allowed to make a condition adjustment on a FHA appraisal. that's when we had a tiny black and white photo of the sale with some wording about it in the MLS.

 

[Mark K]

I think another question is whether all of the changes since licensing including USPAP, required CE, AMCs, new forms, etc. have resulted in lowering the overall risk profile to the lenders/taxpayers? Wasn't this the intended purpose of the licensing requirement after the first S&L meltdown? And then the second meltdown of 08-09 ish occurred in spite of licensing.

I doubt that appraisals in general have gotten better or worse and long as humans are involved. Some people are diligent, competent, and want to turn out a good product whether its appraisals, legal work, doctors, etc. Others are marginally competent, lazy, and give the clients the bare minimum. Its human nature and its not going to change, no matter the amount of rules and regs forced upon them.

 

[J Grant]

When dealing with time adjustments, it’s much better to simply use very recent comparable sales, rather than older and then trying to apply a grouping adjustment to one sale. Doing so eliminates the concern of the fluctuations of time. Market changes aren’t as easy to support as DW stated, especially in non-urban environments.

If recent data is not available, then do what is necessary but be very cautious with blanket adjustments.

I agree. Using recent sales works well as does using listings and spending. The market in many areas has been stable this past year (overall). I feel, if anything, some appraisers overuse time/market condition adjustments. But we, of course, will and do apply them when indicated.

 

[J Grant]

All the real-world things that would make appraisal quality better have been struck down in the interest of profiteering. Things such as more turn time, not the inane 48 hour from inspection (within reason of course ), full fees, and not stripped down fees a chunk going to an AMC ( anyone saying fees do not impact quality invariably is connected to an AMC,), round robbin panels like FHA panel has been disbanded, and the education bar was lowered.

The argument is appraising is not rocket science Judging by the number of clueless and dense posts here, over and over, from people not understanding one simple thing, such as what is excess or surplus or how to apply a condition adjustment means in a sense, the appraisal is rocket science because to do it well means one has to reason well and that i snot a skill taught in appraisal classes, you can tale classes up the wazoo and still not have that ability. Some of it is innate, and others of it comes from an experience in a demanding job or military or college or higher education.

The humanities, which have fallen out of favor, are excellent at teaching how to think in broad terms and apply comparative concepts. It is lacking in the posts here and especially so in the recent crop of people new here, who reference they are working on an AMC assignment. Then consider how many are out there churning and burning for an AMC who don't even bother asking.

AMCs are good at spotting typos, form errors, and meeting guidelines. and turntimes. Imo that is about it. The problem is the payment structure now means they are incentivized to hire for a cash flow to them via a lower fee or charge from an appraiser, and that is a conflict of interest created with their appraiser selection for assignments.

 

[Overimprovement]

To answer OP question, here are my thoughts:

So many appraisers have joined AMC panels, where the pressure to produce necessarily impacts work product. Not condoning them, they still sign, but we are all human (well most of us). It gets harder to 'dot every i' when you have 4 to complete by the weekend.
The other issue is that as the industry continues to allow things like runners, not inspecting comps, tons of boilerplate, etc to run rampant, it becomes increasingly hard for the one off truly independent appraiser to compete with that. So one by one, each res. mort. appraiser has to decide " can I compete with my ethics and report quality at this price point, or do I hang it up?"

I think the abundant workflow in recent years (certainly not anymore) also impacted quality in a bad way, moreso than any fee. When tons of possible work was coming in, some appraisers wanted it all. The only way to get it was to cut more and more corners...but alas, the reports continued to be accepted. Nice they all thought, lets push it a little more.

We talk about supply and demand a lot, I think that can be applied to appraisal report quality as well. If there is no DEMAND for good, well-written and supported reports, then the SUPPLY of them will necessarily decrease as a result.

The imminent saturation of the industry with PAREA grads, hybrids, etc, will only exacerbate the issue, IMHO.

I have entered what I think will be my final countdown for reports. I am thinking March or so will be it, unless something big time changes in my life. I will miss what it was, but not what it has become.

 

[George Hatch]

General quality has improved after licensing, particularly on the low end. People lose sight of the point that the whole intent of licensing was to improve the level of play among the lowest performers - including people who never even taken an appraisal 101 course or worked with any appraiser prior to going solo. Licensing wasn't intended to improve the level of performance among the best appraisers.

Back in the day it was not unheard of for reviewers to run into appraisals with fabricated comparables. Licensing made appraisers more loyal to their own license than their clients. Not completely so, but enough that the clients were starting to hear the word "no" more often than had previously been the case.

The other thing licensing did was level the playing field between the appraisers and the reviewers/underwriters. Appraisers these days don't often get directed to do something "because I said so" whereas that was common back in the day. Reviewers would prevail simply because of their job title and not because of their reasoning. It was also common for disputes to be settled by seniority or designation status, which is something we rarely see these days.

 

[J Grant]

To answer OP question, here are my thoughts:

So many appraisers have joined AMC panels, where the pressure to produce necessarily impacts work product. Not condoning them, they still sign, but we are all human (well most of us). It gets harder to 'dot every i' when you have 4 to complete by the weekend.
The other issue is that as the industry continues to allow things like runners, not inspecting comps, tons of boilerplate, etc to run rampant, it becomes increasingly hard for the one off truly independent appraiser to compete with that. So one by one, each res. mort. appraiser has to decide " can I compete with my ethics and report quality at this price point, or do I hang it up?"

I think the abundant workflow in recent years (certainly not anymore) also impacted quality in a bad way, moreso than any fee. When tons of possible work was coming in, some appraisers wanted it all. The only way to get it was to cut more and more corners...but alas, the reports continued to be accepted. Nice they all thought, lets push it a little more.

We talk about supply and demand a lot, I think that can be applied to appraisal report quality as well. If there is no DEMAND for good, well-written and supported reports, then the SUPPLY of them will necessarily decrease as a result.

The imminent saturation of the industry with PAREA grads, hybrids, etc, will only exacerbate the issue, IMHO.

I have entered what I think will be my final countdown for reports. I am thinking March or so will be it, unless something big time changes in my life. I will miss what it was, but not what it has become.

I agree with everything (great post ) except the idea that there will be a saturation of PAREA grads. It is still an arduous process to become an appraiser, even with PAREA, and toward what end? The profession is awful now ( generally speaking, with a few exceptions on the res lending side ) compared to what it was when most started here. Prospective appraisers can go on the Internet and read for themselves how bad the outlook and conditions for the field are. If they elect to continue it is on them, but they were warned. Those who finish the course may feel betrayed after spending so much time, effort, and, in some cases, money to enter a field with such bleak prospects. Unless and until AMC stop taking their payment from the appraisal fee this will be the case, and though there may be enough new appraiser grads to fill the rank, I hardly can see a massive influx - people want to make money or they want to have fun in a glam job if they are going to be low paid, or work in a field where it is rewarding, where they can make a difference, Appraisers offers none of those things now.

 

[J Grant]

Licensing was a whole different thing than AMC's.

I feel licensing improved the quality, or at least the accountability of their work of appraisers, But licensing was not profiteering to a third party. as