Hybrid Appraisals

[shrubberyvaluation]

I don't make decisions based on my personal views or how something "smells" I analyze data and see what it indicates. Data often indicates exactly what I suspected, but at times it reveals things that are contrary to what I thought it would. In such cases, I look at the data and analysis again. In the end, it is what it is - regardless of what I thought it would be.

Well I'm not privy to that data. If someone told me homebuyers in a community prefer a house that has foundation problems and a leaky roof it doesn't pass the smell test. Sure I'd look into it, but I wouldn't just take the word of someone without the data to back it up. If I'm wrong after seeing the data then I will go with it.

Sometimes you think the data is contrary, but there is some other variable. There is no way for me to test this, and FNMA hasn't shown me the data, so I can only go on logic from my experience. Just like in my example, it doesn't seem right, but I will have an open mind with enough data.

Now its possible someone doing $100 full appraisals for a large AMC who does crap work might show a slight improvement with the data of a PDC over their 5 minute inspection of the property.

 

[DWiley]

Is that not as much an Appraiser problem as a lender problem?

Where does what the Appraiser has done, in your illustration, cross the line and become negligent, careless and misleading?

If I do my due diligence, I can inform the client before I deliver a report as a condo that is not a condo. If no need to start from scratch it may very well be best to do so. All verbiage will be non-condo. All comps, highly likely, will not be condos.

No different than the client saying it is a site built single-unit residential dwelling, I discover it is a doublewide manufactured product but still appraise it as site/stick built.

Should an Appraiser that does as you illustrated be sanctioned?

I don't think it is that simple. There is a complex a few miles east of me, and I hated doing appraisals there because the docs were so convoluted that there is no real agreement on whether it is a condo or a PUD. The attorneys for one lender would look at the docs and decide t is a condo; the attorneys for another lender would look at the same docs and conclude it is a PUD. If it is so convoluted that the attorneys cannot sort it out, what can we expect of the appraiser?

 

[J Grant]

I don't make decisions based on my personal views or how something "smells" I analyze data and see what it indicates. Data often indicates exactly what I suspected, but at times it reveals things that are contrary to what I thought it would. In such cases, I look at the data and analysis again. In the end, it is what it is - regardless of what I thought it would be.

But that is not how buyers for residential properties decide what to spend and what to buy.

The buyers do perform a "smell test" ( how a property appeals to them)) That is why they want to see a property if at all possible and explore the neighborhood

Yes, of course, appraisers use data in the appraisal. However, it is the integration of analyzing data coupled with hands-on field knowledge that makes appraisers what they are in gaining over the years a valuable market perspective. It worked well for decades, and now suddenly it doesn't?

 

[Justinjla]

Why do you want to collect more data points? You need PDCs and appraisal data in alignment because you want to expand the waiver program and automated review. You didn’t create new forms because you’re investing in appraiser relationships.

And just because you currently can’t do without appraisers doesn’t mean you’re not going to try your hardest to eliminate as much need for appraisals as you can going forward. That is the essence of modernization. Bifurcation and eliminating demand for appraisals through waivers = eliminating appraisers. It is your project, you don’t have to pretend otherwise. Soon you’ll say 70% get appraisals, then it’ll be 60%, and they’ll take it as far as they can go.

Even if you don’t think that will happen, it’s not in your hands. Someone will take the work you’ve done and throttle it up. It’s a matter of time and I think pretending otherwise is either disingenuous or it’s some major cope.

Because collateral risk is a top priority for us, and having more standardized, objective property data benefits everyone involved, including us. With technology advancing quickly, I think we will be able to capture even more in the future. I don't know what that looks like today, but I could see things like the total volume of a home, the volume of brick/siding, the size and number of windows, roof pitch, and other features to give us a clearer picture of property value.

The first step in our waiver process is whether we have a prior appraisal observation for that property in our database. If not, the property is automatically excluded from the waiver track, no matter the LTV or other loan details. This is why waiver rates drop in a purchase-driven market—fewer prior appraisal observations available.

Appraisers have been saying AVMs will put them out of business for the last 15+ years, yet here we are today with 80% of our acquisitions coming to us with an appraisal.

 

[alebrewer]

I can see it now in the next mass email from Joan & the Joanettes, “ Come to Vegas for the gala networking event & get your property data collector designation for 50% off, plus free background checks for the first 20 applicants.” .

Joan's retiring - she just handed the reins over to Jim Park...

 

[shrubberyvaluation]

I don't make decisions based on my personal views or how something "smells" I analyze data and see what it indicates. Data often indicates exactly what I suspected, but at times it reveals things that are contrary to what I thought it would. In such cases, I look at the data and analysis again. In the end, it is what it is - regardless of what I thought it would be.

But when something is very contrary to what makes sense it requires more research in my opinion. Say my example from my last post. Houses with foundation problems are selling higher than other houses in this community. I would look back in time, oh this isn't the case a year ago, did something change, is there some weird government program that was put in place? Then interview people involved in the transactions...oh wait I dont have time for that, need to meet my 24 hour turn time for big AMC and turn out 5 other reports in the same time period.

 

[Joe Flacco]

I don't think it is that simple. There is a complex a few miles east of me, and I hated doing appraisals there because the docs were so convoluted that there is no real agreement on whether it is a condo or a PUD. The attorneys for one lender would look at the docs and decide t is a condo; the attorneys for another lender would look at the same docs and conclude it is a PUD. If it is so convoluted that the attorneys cannot sort it out, what can we expect of the appraiser?

Funny you bring this up because I am dealing with issue right now.

 

[J Grant]

Danny had indicated in an earlier thread shortly after this hybridization project was announced that the GSE's would insist that the valuation portion be performed by someone who was geographically competent in the subject market which they were appraising in. Can you tell us if that's still the case? Or has that criteria been expanded to anybody who's licensed in the state that the subject is located in?

How will that be enforced?

 

[CGinMN]

Appraisers have been saying AVMs will put them out of business for the last 15+ years, yet here we are today with 80% of our acquisitions coming to us with an appraisal.

PMI, servicing, and HELOC is mostly gone. Refis are now half gone. Purchase is 15% gone and climbing. Appraisal review is mostly automated. AVMs have been putting appraisers out of business for the past 15 years.

 

[shrubberyvaluation]

I don't think it is that simple. There is a complex a few miles east of me, and I hated doing appraisals there because the docs were so convoluted that there is no real agreement on whether it is a condo or a PUD. The attorneys for one lender would look at the docs and decide t is a condo; the attorneys for another lender would look at the same docs and conclude it is a PUD. If it is so convoluted that the attorneys cannot sort it out, what can we expect of the appraiser?

So put it on hold until you figure it out. Normally I look at the deed and it shows the property ownership rights being transferred. The weirdest for me was a condo project with a defunct regime.