Hybrid Appraisals

[J Grant]

The same reason a primary Md is not responsible for a MRI that was done by a radiologist. The MD just uses the report he didn't physically do it.

The same with a civil engineer's report the appraser depends on it's conclusions but did not do the physical inspection.

A radiologist is a highly trained professional with a license and works in a supervised MD setting; they are not people off the street who took a one-day training course on how to press a button on an MRI machine.

 

[Tom D]

Long ago when i wanted to be an appraiser, i was a r.e. broker. It took forever to find someone to work under. I finally did, under a MAI. Great guy, took me out on 1 appraisal, walked thru the house, that was one 30 minute appraiser training class. We weren't runners, i thought of myself as more of a ghost appraiser.
But afterwards, to get to the point where i could get orders from a lender, was a much harder longer process, than certification ever was.

 

[George Hatch]

Interesting to bring up civil engineering. I worked in a CE office for a decade. We would never rely on field work done by any technician that wasn’t an employee and trained in house.

Anyone who likes the hybrid model must have also been a fan of the trainee “runner” model of the 90/2000s. That was at least a model where the licensed individual “trained” their trainee in some way. Maybe that’s the case? The folks I see defending/pushing hybrids are imo some of the most unethical professionals I’ve ever encountered in any profession. So it shouldn’t surprise me.

Despite your constant insinuations nobody here is pushing the hybrid model over a conventional 1004. With that said, if the lender's choice is between a hybrid vs an AVM, my guess is that even you might prefer they use an appraiser instead of a calculator. I would rather see an appraiser used regardless of which type of valuation they pick. I don't favor AVMs but if a lender is going to use one then I'd rather see an appraiser running it than a clerk.

There might be some appraisers who are mobility challenged and can't get around who appreciate the opportunity to continue working as an appraiser instead of being forced out. And I'm sure there are appraisers in low-volume areas or oversaturated areas who appreciate the opportunity to continue working as an appraisers instead of being forced out. We have at least a couple of our regulars here who have done them for those reasons. But that doesn't mean they actually think the hybrid is just as good as a conventional 1004. Even if they were to say otherwise in some virtue signal.

The only "defense" that's going on here is against the allegations that these cannot be done to specs or that nobody doing them is working to specs. That isn't advocacy for hybrid 1004s over conventional 1004s, it's just an observation.

 

[Justinjla]

The appraiser must comply with USPAP. Hybrid appraisals can comply.... or not. Just exactly the same as any other appraisal. Hybrid or not, there are two written report options.

I haven't yet figured out what the attraction is.. for Lender/Clients. I get reports based on hybrid appraisals for review. I also get to see the fees and the turn times. They don't seem to be cheaper or faster, most of the time. Yeah, the appraiser gets less... but the property inspector gets paid too... and the AMC, if there is one.

Today, with low volume, we typically don't see them faster either. During high volume periods like we had a few years ago, we did see 5-6 days faster on average. As this scales, there could be opportunity for more efficiency. For example, I could see a scenario where a PDC is captured at the time a property is listed for sale. When the loan is initiated and the lender receives a hybrid offer, in theory, the appraisal could start immediately. Could get to a point where you see 24-48 hour hybrid appraisals.

 

[sputnam]

Maybe they could be, but numerous USPAP instructors on Facebook groups say they’ve reviewed hundreds of them and haven’t seen one yet.

Well... I can help you out there. I am a AQB Certified USPAP Instructor and I've seen hybrids that do comply with USPAP.

 

[George Hatch]

Imo, one of the advantages of hybrid to the GSE and affiliates such as AMC's is that the hybrid essentially increases the supply of "appraisers", not the actual licensed appraise supply, but that the work volume that appraises can produce is now relieved in part with a nonappraiser insect pro - a RE agent or property manager or the like - who are in greater numbers and who might charge less for an inspection as a side gig.

The AMCs or a lender can also squeeze more work out of staff appraisers - who no longer have to leave their desks, The AMC sends out a nonappraiser instead - or if a staff appraiser has a free hour, sends them out - and the deskbound appraiser can do more volume in a wider geo area - who cares if they ever set foot in a subadvisor that is 90 miles away.

There is no advantage for a hybrid and perhaps even is a disadvantage to the consumer or the investor - thus, the entities designed a cherry-picked study to provide a rationale -they claim more through reporting on condition or fewer errors if one can believe that on face value.

The corporate types like the term "leverages the resource" which for the bean counters refers to those portions of the assignment which actually involve the analyses, opinions and conclusions - those being the actions that actually speak to the definition of "appraisal".

Paying $50/hr or $75/hr for the technical portions of the assignment that require the SR1 elements but only paying the equivalent of $10/hr or $20/hr for doing something any can collector can do will make a certain amount of sense to some people. Even if you think there's too much at risk to take any shortcuts.

Some CGs never measure the buildings they appraise due to the sheer size or complexity or multi-building composition of the properties they appraise. I generally don't appraise properties like that so I virtually always measure unless the assignment is for an exterior-only or desktop. (with a relative handful of inspections) But nobody is doing floorplans on a 10-story building or a 30-building farm or ranch.

 

[J Grant]

Today, with low volume, we typically don't see them faster either. During high volume periods like we had a few years ago, we did see 5-6 days faster on average. As this scales, there could be opportunity for more efficiency. For example, I could see a scenario where a PDC is captured at the time a property is listed for sale. When the loan is initiated and the lender receives a hybrid offer, in theory, the appraisal could start immediately. Could get to a point where you see 24-48 hour hybrid appraisals.

Why is your agency pushing speed and "efficiency" in a loan for collateral worth hundreds of thousands of dollars, and where most closings are not out 30 days or more anyway? It is not a McDonald's franchise, Happy Meal. Traditional appraisals are plenty fast these days since most clients want a 48-hour turn time after the inspection.

I do not see how the information captured at a listing is suitable for a PDC appraisal use. - unless the entity wants to pay a PDC collector every time a property is listed.

 

[Overimprovement]

For example, I could see a scenario where a PDC is captured at the time a property is listed for sale. When the loan is initiated and the lender receives a hybrid offer, in theory, the appraisal could start immediately. Could get to a point where you see 24-48 hour hybrid appraisals.

So you are advocating for retrospective valuations? What would the effective date be in this scenario? Typical DOM has been 60-90 days in normal markets.

 

[J Grant]

The corporate types like the term "leverages the resource" which for the bean counters refers to those portions of the assignment which actually involve the analyses, opinions and conclusions - those being the actions that actually speak to the definition of "appraisal".

Paying $50/hr or $75/hr for the technical portions of the assignment that require the SR1 elements but only paying the equivalent of $10/hr or $20/hr for doing something any can collector can do will make a certain amount of sense to some people. Even if you think there's too much at risk to take any shortcuts.

Some CGs never measure the buildings they appraise due to the sheer size or complexity or multi-building composition of the properties they appraise. I generally don't appraise properties like that so I virtually always measure unless the assignment is for an exterior-only or desktop. (with a relative handful of inspections) But nobody is doing floorplans on a 10-story building or a 30-building farm or ranch.

Of all the fees in the RE food chain, the modest fees of even traditional appraisals in the hundreds of dollars keep being carved up for no purpose whatsoever, except that some "bean counter" keeps coming up with new ways to do it, thus seeing even more competent appraisers either turn down res lending work for AMC's or leave the profession. That is all it is accomplishing.

It does not save a consumer any significant amount of money when the consumer is spending thousands and tens of thousands on loan fees, points, and junk fees and then adds in more tens of thousands in RE commissions. A hard sell that saves $50 on an appraisal is going to make any difference to a consumer's financials.

The only ones profiting off carving up assignments into fast food pieces are the AMC's who are the main ones ordering the PDC and have an endless supply of chumps available for it, since no appraisal license is needed for the inspection portion. They can squeeze more volume from staff appraisers and give them work far out of a geographic area of expertise.

 

[Non Sequitur]

Today, with low volume, we typically don't see them faster either. During high volume periods like we had a few years ago, we did see 5-6 days faster on average. As this scales, there could be opportunity for more efficiency. For example, I could see a scenario where a PDC is captured at the time a property is listed for sale. When the loan is initiated and the lender receives a hybrid offer, in theory, the appraisal could start immediately. Could get to a point where you see 24-48 hour hybrid appraisals.

That would be a BIG change to allow for a retro effective date or require a hypothetical for current condition/effective date.

Well... I can help you out there. I am a AQB Certified USPAP Instructor and I've seen hybrids that do comply with USPAP.

sputman, this isn't directed at you, I'm just trying to make a point.

The rub is there are only two report options and neither are "hybrid." How can any knowledgeable and experienced appraiser put together a GSE report with all of the required show you work adjustment data, market condition analysis and illustrations, required comp verification, etc. for AMC fees of around $120 with 24-48 turn time? And let's not gloss over that if this becomes the norm an appraiser trying to make a living would have to complete several a day, day after day after day. I get there a few coach and team systems out there, but we all know the game and one has already been busted (but they have been forgiven-imagine that). There's no money in hybrids for indie appraisers, but the AMCs and coach/system firms are making bank.