Hybrid Appraisals

[shrubberyvaluation]

From a Fakebook thread about hybrids:

"I do these for 1 client, fee is $400 for a typical SFR. Another AMC sends them out for $180-250 and apparently someone accepts them as I counter back at $400 and never hear back. I think the data collector fee is $100+/-. They are fairly straightforward to complete, but I work in urban/suburban markets with very conforming properties and great data. I often can have a regular SFR mostly completed before the inspection, with only minor changes after inspecting the subject and verifying the quality/condition/features. Probably 25% of the time the 3rd party inspection report needs to be corrected before I can finish. Total turn time is almost double a traditional appraisal most of the time. When I get the assignment, the inspection is usually 5 or more days old. If I did a full appraisal, the report would be completed the next day after inspection unless there was something unique. I don't see where these are saving time or money for the borrower. In my opinion, most appraisers could complete a desktop only report with no inspection and have 98% similar results, at least in the markets I work in, especially if the subject is a sale that is in the MLS."

"I charge $500, which is based on a small 2000 sq ft home. I’ll have to review about 100 photos and a 20 page report. Reading all this information takes time and cost money. The larger the home the more I charge. Many things are unknown. Age of appliances, systems, condition of the roof, siding / exterior. The photos provided are terrible and not a super high quality like You would expect. I condition 8/10 of these reports for repairs or additional inspections. The product is similar to an exterior report for a foreclosure. In this case photos of the interior are provided. With this type of data the opinion is going to be limited based upon what data is provided. Not to mention the photo measurement does not follow ANSI for sloped ceilings."

"I just had a business trying to brag about these. The appraiser is licensed in 10 states and does 10 a day according to them. They also charge $255 per report"

These products will attract those who do not do thorough reports and don't verify anything. How do you do 10 a day and verify information. Just had one where it took forever to verify something with the listing agent who has an incentive to get back to me, others can take days.

 

[shrubberyvaluation]

"I charge $500, which is based on a small 2000 sq ft home. I’ll have to review about 100 photos and a 20 page report. Reading all this information takes time and cost money. The larger the home the more I charge. Many things are unknown. Age of appliances, systems, condition of the roof, siding / exterior. The photos provided are terrible and not a super high quality like You would expect. I condition 8/10 of these reports for repairs or additional inspections. The product is similar to an exterior report for a foreclosure. In this case photos of the interior are provided. With this type of data the opinion is going to be limited based upon what data is provided. Not to mention the photo measurement does not follow ANSI for sloped ceilings."

This is why I say its faster to just inspect it myself. If I had someone I knew and could rely on to give me the necessary data it would be more viable. This is just a crap product that some are trying to make look better. Quantity over quality.

 

[shrubberyvaluation]

Whether we embrace it or not, we’re living through an efficiency revolution. Set aside mortgages and appraisals for a moment—every facet of our lives has already shifted, and AI will drive even bigger transformations in the years ahead.

In the mortgage world, getting value certainty early is crucial. The process is complex, with a lengthy sequence of steps that don’t all fire at once—they’re chained together by dependencies. The faster lenders and borrowers lock in that value certainty, the sooner the rest of the dominoes (underwriting, title checks, closing, etc.) can fall into place. As you noted, in today’s market, a traditional appraisal can deliver that certainty swiftly, keeping things on track. But in a high-volume period, when appraisals can stretch out over weeks, it can throw a wrench into everything, creating delays
and headaches downstream.

To your point, there are challenges with getting a full PDC captured at the point of listing. Someone would have to figure out the logistics and economics of it. I'm not saying it will happen, but conceptually, it makes some sense to me and someone in the primary market might come up with a way to do it.

AI is fine. The problem is when you over rely on something that isn't good enough yet. Markets are local, imperfect, and they change. Using PDC that are not appraisers leads me to believe there are other reasons for this, whether it be fraudulent or just to simply try to get rid of appraisers.

We all saw what happened to zillow. Picked the hottest markets, used their AVM, and couldn't hack it.

 

[Carnivore]

Yes, the hybrid form complies with USPAP - though USPAP compliance lies within the content of the appraisal, not a form or format (in this case, pairing the inspection done by someone other than the appraiser doing the appraisal.)

A better question might be: why is the appraiser, who will be responsible for the appraisal, not the same person who inspects the property?

So are you suggesting we w should inspect all our comparable sale the way we inspect a subject? or do we rely on agents MLS listings with photos and other data like. the gis.

 

[shrubberyvaluation]

Just don't worry about it. The topic is way over hyped and over discussed.

They need the appraisal fee to be $120 for it to be feasible but that's just not going to work.

If somebody charges $300 normally and charge $100 for finals, then they value the appraisal portion at $200.

If somebody charges $500 normally and charges $150 for finals, then they value the appraisal portion at $350.

If somebody charges $1000 normally and charge $200 for finals then they value the appraisal portion at $800.

They wasted their time on hybrids. It is not a model that will work.

Depends on the definition of working, what is the end goal. It works for FNMA.

 

[J Grant]

I think at $200 for the appraisal portion there would be a lot of takers. It would make sense for those doing appraisals with inspections for $300.

But then at $200 the hybrid probably costs more than the appraisal will h inspection.

It's not a model that is feasible.

$200 for the appraisal portion might get some takers, but it will still send people out of business or making the equivalent of an UBER driver. The retail appraisal fee C and R in my area which I get, makes a base level professional income and reducing that for those wo work for an AMC with the AMC split then reducing it further with cutting the appraisal in half for a hybrid will not make this a viable field for res lending work, where competence is the most ndded. Public trust and all that.

 

[shrubberyvaluation]

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.

Is it FNMA position that verifying information should not be done in the name of expediency?

 

[J Grant]

So are you suggesting we w should inspect all our comparable sale the way we inspect a subject? or do we rely on agents MLS listings with photos and other data like. the gis.

The reality is it would be better if appraisers could inspect the comp sales, but we all know that is not feasible. However, we can inspect our subject, and it is the subject that we are appraising. The reason we can not inspect the comps is obvious, but now the GSEs;s are separating the appraiser from the subject when, of course, we are able to inspect it .

 

[shrubberyvaluation]

$200 for the appraisal portion might get some takers, but it will still send people out of business or making the equivalent of an UBER driver. The retail appraisal fee C and R in my area which I get, makes a base level professional income and reducing that for those wo work for an AMC with the AMC split then reducing it further with cutting the appraisal in half for a hybrid will not make this a viable field for res lending work, where competence is the most ndded. Public trust and all that.

I think putting us out of business is the point. We have to verify information and are bound by USPAP. No such requirements from some random person with no experience.

Give us super long forms to fill out, so they can pitch the unexperienced PDC can do it faster.

 

[Justinjla]

"This option provides lenders and consumers with value certainty earlier in the mortgage process and saves consumers on average $350-$400 over the traditional appraisal." (Here, that translates to well under $150 left to the appraiser.)

I think there’s a bit of a mix-up here. Let me clarify—this is about value acceptance + property data. With this option, we’re providing the lender and consumer a value acceptance (appraisal waiver) because we’ve determined that the loan falls within an acceptable risk range and our valuation model has strong confidence. What’s missing, though, is a current look at the property itself. To move forward with this, the lender would need to order a PDC, evaluate the property’s condition, and confirm it meets our eligibility standards to deliver the loan.

Here’s an example:

• Say a home is in an area hit by a recent disaster.
• Our market data for that area is solid, the loan-to-value ratio is low, our value model is highly confident, and the borrower’s risk profile is minimal.
• Before the disaster, we would have offered value acceptance.
• Now, the PDC mitigates the key risk—property condition.
• The consumer saves $350-$400 because a PDC costs $200-$250, compared to a $600 full appraisal.

This option is offered on a small percentage of loans.