Hybrid Appraisals

[shrubberyvaluation]

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.

If the area just got hit by a recent disaster how do you have solid market data? You do realize markets can change drastically after a disaster. The risk isn't just the property condition, its that the market conditions have most likely changed.

So say after the fires in the pacific palisades, you assume you have great data right after the fire (based on what?) and that you just need a PDC to access risk?

The fact that your value model is highly confident right after a natural disaster is scary.

 

[J Grant]

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.

You might want to analyze if efficiency is the best modality for every profession, industry, and situation. It did not work out so well for Twitter after Musk fired 80% of staff to make it efficient, and the company ( now called X) lost 3/4 of its worth.

As far as getting value early - mortgage lenders only make money when more people borrow and take out loans. Mortgage lenders made the most $ they likely will ever see during the boom years with a less "efficient" appraisal process. And even you admit that the traditional appraisal is fast enough, and the hybrids may not be any faster. So again, other than profiting AMCs, what is the rationale for this product in origination loans?

When all the mortgage lenders offer the same speed, then they are still the same in a consumer 's eyes. Lending has an existential problem in that it is a limited amount of volume each year to be divided up and if the turn time shrinks to close a loan from 30 days to 20 days, it will not increase the loan volume


How can you capture PDC info t a listing? The listing agent is a marketing person, not hired as a data collector. Their aim is a 10k commission, not a $75 fee paid by ( who? Their interests are taking flattering photos to put on MLS, not providing appraisal-purpose photos or a list of repairs, etc.

 

[shrubberyvaluation]

You might want to analyze if efficiency is the best modality for every profession, industry, and situation. It did not work out so well for Twitter after Musk fired 80% of staff to make it efficient, and the company ( now called X) lost 3/4 of its worth.

As far as getting value early - mortgage lenders only make money when more people borrow and take out loans. Mortgage lenders made the most $ they likely will ever see during the boom years with a less "efficient" appraisal process. And even you admit that the traditional appraisal is fast enough, and the hybrids may not be any faster. So again, other than profiting AMCs, what is the rationale for this product in origination loans?

When all the mortgage lenders offer the same speed, then they are still the same in a consumer 's eyes. Lending has an existential problem in that it is a limited amount of volume each year to be divided up and if the turn time shrinks to close a loan from 30 days to 20 days, it will not increase the loan volume


How can you capture PDC info t a listing? The listing agent is a marketing person, not hired as a data collector. Their aim is a 10k commission, not a $75 fee paid by ( who? Their interests are taking flattering photos to put on MLS, not providing appraisal-purpose photos or a list of repairs, etc.

X seems to be doing fine. I think it was a lot of the revelations including a lot of the bots.

FNMA says they want faster turn times, but are adding a longer form rather than lowering the scope of work.

 

[Justinjla]

You might want to analyze if efficiency is the best modality for every profession, industry, and situation. It did not work out so well for Twitter after Musk fired 80% of staff to make it efficient, and the company ( now called X) lost 3/4 of its worth.

As far as getting value early - mortgage lenders only make money when more people borrow and take out loans. Mortgage lenders made the most $ they likely will ever see during the boom years with a less "efficient" appraisal process. And even you admit that the traditional appraisal is fast enough, and the hybrids may not be any faster. So again, other than profiting AMCs, what is the rationale for this product in origination loans?

When all the mortgage lenders offer the same speed, then they are still the same in a consumer 's eyes. Lending has an existential problem in that it is a limited amount of volume each year to be divided up and if the turn time shrinks to close a loan from 30 days to 20 days, it will not increase the loan volume


How can you capture PDC info t a listing? The listing agent is a marketing person, not hired as a data collector. Their aim is a 10k commission, not a $75 fee paid by ( who? Their interests are taking flattering photos to put on MLS, not providing appraisal-purpose photos or a list of repairs, etc.

Our policy prevents the listing agent from collecting the data. In the hypothetical I described, it would have to be a disinterested source collecting the PDC.

Appraiser and Property Data Collector Independence Requirements | Fannie Mae

Appraiser Independence Requirements (AIR) set forth standards to safeguard the independence, objectivity, and impartiality of appraisers and other independent parties throughout the valuation process for 1 to 4-unit residential properties.

singlefamily.fanniemae.com

 

[J Grant]

Our policy prevents the listing agent from collecting the data. In the hypothetical I described, it would have to be a disinterested source collecting the PDC.

Appraiser and Property Data Collector Independence Requirements | Fannie Mae

Appraiser Independence Requirements (AIR) set forth standards to safeguard the independence, objectivity, and impartiality of appraisers and other independent parties throughout the valuation process for 1 to 4-unit residential properties.

singlefamily.fanniemae.com

So what will you do - send PDC collectors out to listed properties, not even knowing if they will get sold or a loan taken out? That sounds very expensive.

And even if you found a way to hire people and take the loss of sending them out to properties that might not sell or might sell all cash for no mortgage, there is no guarantee the owner seller would let you in. They let an inspector in now because they have to in order for a borrower in contract to get their loan,

If you somehow manage to get it done we will hear about it at that time-

 

[Justinjla]

So what will you do - send PDC collectors out to listed properties, not even knowing if they will get sold or a loan taken out? That sounds very expensive.

And even if you found a way to hire people and take the loss of sending them out to properties that might not sell or might sell all cash for no mortgage, there is no guarantee the owner seller would let you in. They let an inspector in now because they have to in order for a borrower in contract to get their loan,

If you somehow manage to get it done we will hear about it at that time-

I said the concept had challenges. I could see someone in the primary market trying to figure out how to make it work. Maybe not.

 

[shrubberyvaluation]

So what will you do - send PDC collectors out to listed properties, not even knowing if they will get sold or a loan taken out? That sounds very expensive.

And even if you found a way to hire people and take the loss of sending them out to properties that might not sell or might sell all cash for no mortgage, there is no guarantee the owner seller would let you in. They let an inspector in now because they have to in order for a borrower in contract to get their loan,

If you somehow manage to get it done we will hear about it at that time-

Expensive? Its just $25. Its not like they are sending out some expert, they are sending out someone with a pulse and no experience. The point is the appearance of due diligence, not actual due diligence.

 

[J Grant]

I said the concept had challenges. I could see someone in the primary market trying to figure out how to make it work. Maybe not.

You mentioned AI before _ what is your plan when AI comes for YOUR job?

My comment here addresses the long term aspect of AI for humanity wrt everyone jumping on the efficiency train, choosing to put efficiency above all else. We as a species do not HAVE to do that. We can choose to value human input and ensure that people have jobs, even if AI can do the job faster. AI has genuine contributions to make in medicine and science, but if all it does is replace human labor or professional functions, then what is the outcome?

Take the RE field. Let AI or automation do as many tasks as possible. It puts lots of people in RE out of work or reduces their income on the sales end, and on the mortgage end , on the valuation end. Mutliply that happening across various fields and professions.

It is more efficient, though - a house can be bought online with a click and a mortgage takes 5 days from application to closing.

But there is a problem! Since so many lost and are losing their jobs, few people make enough income to buy homes, take out a loan, or pay rent. Now you have lots of empty vandalized homes, sellers are taking a steep loss, and lenders are starving. As well as an angry, out-for-vengeance populace. All in the name of "efficiency"...

 

[TerryRohrer]

Ziao without the valuation.

 

[J Grant]

Expensive? Its just $25. Its not like they are sending out some expert, they are sending out someone with a pulse and no experience. The point is the appearance of due diligence, not actual due diligence.

I read the folks who do an inspection PDC for 1004/hybrids for ordination loans, that the fees average $75-$100 - for a fairly thorough inspection. Idk what the inspection is that pays $25-