Hybrid

[ucbruin]

We finally got our appraisal fees over $400, so now naturally Big Brother needs to step in again to make sure appraisers aren't making too much income. One new hybrid product I've seen recently proposes to pay $125 or less to perform an appraisal on the data collected by some third person.

So sick of being the political pawn of the government and their bosses in the banking industry. Our industry goes from one financial catastrophe to the next in a regular cycle, and appraisers are used by the industry to be the fall guy when the next meltdown occurs. Damn I wish I had trained to get a legitimate career during college.

I'm not getting on your case....
Just sharing with you....

The appraiser couple that got me started in appraising gave me 2 bits of advice...
1. don't expect appraisal volume to be stable, save your money for the slow periods....
2. expect appraisers to be blamed when the property values decline and the real estate market goes south....

That was in 1987.....
So why do appraisers acted surprised each time this happens????
Isn't this just the nature of our industry???

 

[Meandering]

IOnce again, it is all about fees..............

Of course it is all about the fees.

If AMCs simply wanted you to do your job faster, they would have sent you -along with the order,
the current deed,
the current tax map,
the current zoning map,
the current zoning permitted and conditional uses
Plus all the other things that are supposed to be disclosed to the appraiser.

That would make the appraiser's job faster.

But no,
that's not what they are trying to do.




https://www.fanniemae.com/content/guide/selling/b4/1.1/05.html

 

[DWiley]

Smoothly stated Danny. However, my post was in reply to George's post regarding your participation on the forum in general, not specifically in relation to hybrid work. My apologies if my post mis-states what I was attempting to express.

Understood. No worries. I do find it interesting that some seem to think that my current role creates some kind of conflict. Some even state blatantly that I am no longer even an appraiser, despite the fact that I engage in appraisal practice virtually every day. While my main focus is on policy, strategy and compliance, most days I find myself spending at least some time dealing with the kinds of issues that field appraisers deal with regularly - is it a PUD or a condo? How does one reconcile a GIS map that says the site is 7 acres with a survey that indicates 4.5 acres? And those were just yesterday I like the opportunity to talk through such things with other appraisers.

I have yet to find a case where what is generally in the best interest of the independent fee appraiser is in conflict with my current role, but I understand that some will have such a perception/belief. In my adult life I have never had a non-appraisal related job. I spent 29 years as an independent fee appraiser, and I did not suddenly forget all those experiences when i started working in PA. I spend a great deal of my time trying to improve things for appraisers. In some cases some will view an honest disagreement over what is in the best interest of appraisers as some sort of company driven bias, even if my current employment is not germane at all. That is just reality in social media.

 

[George Hatch]

An assumption that is so common that it applies to all such assignments types is no longer "extraordinary" or assignment-specific. Not that it matters one way or the other because appraisers still have to disclose their assumptions.

The supervisor's "did not inspect" box on the Fannie forms we've been using for so many years is "buried in the fine print" on the cert page and not otherwise addressed in virtually all appraisal reports where a supervisor signs, but nobody is worried about that being misleading if/when a supervisor signs "did not inspect". We don't get into misleading until the Supervisor falsely checks the "did inspect" box, because that is....wait for it....misleading.

If appraisers and/or their E&O carriers think that the requisite disclosures in a given report format template are not sufficiently prominent then there are a couple work arounds, similar to the other work-arounds MOST appraisers have been using all along with the other report deficiencies in the Fannie.

for instance, there's nothing so special about the no-inspection disclosure that prevents an appraiser from repeating it in several places in their comment fields.

Just because a report is being hosted on someone else's computer doesn't mean the appraiser has lost control of their access to it any more than appraisers lose control when they send out a PDF. Unless the "host" deliberately locks the appraiser out, of course.

If you think an assignment condition is unreasonable then don't take the assignment.

The argument is still really about the fee. Which, wait until you all see what happens with the 1004 fees when the demand for 1004s declines relative to the number of appraisers who prefer to do them.

 

[Deleted member 130081]

So, you read this, "It originated with appraisers." and somehow concluded that I said it all started with a single appraiser. ??? My reference to "an appraiser" was a reference to GSE exposure. Yes, they hired an appraiser, who had been exposed to hundreds of other appraisers who had already been doing "hybrids" for many years. As I have said multiple times, this process is not nearly as new as some appraisers believe that it is.

The "hybrid" process has been employed by multiple companies for many years now. Do you think that those companies have ever run any tests to compare the results of the "hybrid" process to "traditional" processes? Do you think the lenders who have been using the process for years now for non-origination work have ever conducted such tests themselves?

Seems to me few appraisers on this forum, or any other I have spoken with, save you and other "appraisers" with questionable motives, believe a bifurcated product is a good product for lending, or much else really, at least when quality is a primary concern. This is the basis for my statements in response to yours. As for tests and statistics well, do you really expect me or anyone else to believe that "test" results are not doctored in favor of a cause all the time or at the very least, highly subjective to interpretaion. When big money is on the line, morality tends to take a back seat - now there's a typical behavior you can rely on from history.

The unstated assumption in this argument is that the inspection done by the appraiser in a typical traditional appraisal assignment is inherently superior to an inspection that might be conducted by a non-appraiser. Yet, are there not regularly posts in this very forum addressing some grievous mistake that an appraiser made during the inspection process? How much formal training in property inspection is required in order to obtain appraiser credentials?

No, no, no. That is your stated assumption in this argument, not mine (with added misleading anecdotes for good measure). My conclusion, is that a picture is not an equal substitute for a walk-through, that a buyer would never purchase on a picture alone and that if the actual appraiser is not inspecting homes on a regular basis, they will not be experienced enough in that which they appraise to be as competent as they could/should be. Meaning that, after awhile, the competence of appraisers as a whole could begin to degrade from a lack of hands-on experience with e property they appraise. As far as an inspection being done by an appraiser, being better than an inspection done by a non-appraiser, it is also my conclusion that it is ridiculous to claim that it wouldn't be. There is so much information regarding the elements of property value that enter the appraisers head from the walk-through that never make it into the notes or pictures. Again, to claim having someone else, even another appraiser, do an inspection for the appraiser, and the process would somehow not be diminished and remain equal, is a ridiculous claim. That claim is just as ridiculous as it would be to claim a drive-by is every bit as good as an interior inspection, when any moron knows it is most certainly not.

In my view, appraisers keep focusing on the wrong thing. Twenty plus years ago appraisers made the collective decision to forego participating in a national database, because they thought that data collection was such a valuable part of the appraisal process. Now, some are poised to repeat that move because they are once again focused, IMO, on the wrong value proposition. The primary value that appraisers add is analysis of data, not collection of data.

I agree with you in part on this one. Appraisers did make a mistake in not participating in the data business. However, I don't think this is quite the same thing here. This time, appraisers stand to lose money from loss of service and worse, the profession has potential to become degraded. The last time around, appraisers could have actually made money and stopped the AVM from gaining as much ground as it has. I do agree with the sentiment that in general, appraisers tend to lack the appropriate focus when it comes to the profession.

As for the last sentence, I could not agree more, that our highest value is our ability to analyze data. That is also exactly why I bring the arguments I do to this discussion. If an appraisers ability to analyze the data were to degrade, lets say from a lack of hands-on experience from the property we appraise, the most valuable part of what we do becomes less valuable. ...You were saying something about focus?

That depends on the appraiser and the exact process that is employed. From a pure appraisal perspective, the reason that we have historically personally inspected homes is because that has been the only way to get information about the relevant characteristics of the subject property. If that data is made available from another source that is equally reliable (recognizing that appraiser inspections themselves are not 100% reliable), then there is no reason sound appraisals cannot be developed through such a process.

LOL. Here you go playing lobbyist again. Ignoring relevant details, while presenting less-relevant and questionable details. You see Danny, this is why I give you a hard time. You do seem to understand focus. You do seem to understand narrative. So when you come on the Appraisers Forum, and say the things you do, in the ways you say them, I just have a hard time believing you are here to forward the appraisal profession, and tend to believe you are here as liaison of the AMC/lending industry, with the task of smoothing over the natives. Have I come to the wrong conclusion?

I will say this, it will be hard for appraisers to win when the opposition has people like you in their corner. Maybe you would consider returning from the dark side?

 

[djd09]

The Blind Appraisal of Real Estate

"In this day of increased real estate appraisal regulation; banks, appraisers, and appraisal management companies are being subjected to more, “under the microscope” scrutiny. The costs of appraisals have risen significantly as a result of the Dodd Frank Act and one would think that consumers would be protected from inferior appraisals. Unfortunately, this is not the case.

One would expect that, at a minimum, all appraisal regulatory agencies would require the appraiser to perform inspections of the surrounding neighborhood and the subject property. The primary regulations affecting real estate appraisals for bank loans in the United States are the Uniform Standards for Professional Appraisal Practice (USPAP) and the Interagency Appraisal and Evaluation Guidelines.

Perhaps you guessed it! With all of the many pages of regulations contained in these government mandated appraisal rules, none of them require that the appraiser appraising a property physically inspect the neighborhood or the subject property. Would common sense not dictate that an appraiser inspect and kick the tires on a property under evaluation?

In my practice I regularly find properties being appraised, whereby the appraiser did not even do a curbside or drive-by inspection of the subject property. In some cases appraisals are being prepared by appraisers located out of state, who never enter the state where the property is located. Typically these are low cost appraisals completed for commercial and residential bank portfolio properties.

Fortunately there are banks, appraisers and appraisal management companies that have inspection requirements which exceed the minimum for USPAP and the Interagency Guidelines. Sadly enough, not all do. It is disappointing that our politicians and regulatory agencies spend so much of our time, money and mental energy mandating appraisal regulations, when they do not even require an appraiser to inspect the neighborhood or property being appraised. Why must this condition exist?

I say to Mr. Dodd, Mr. Frank, Mr. Regulator, Mr. Banker and to all others to whom we entrust our financial system; all real estate appraisals should at a minimum be subject to neighborhood and subject property site inspections by the appraisers performing the appraisal. In the United States we are paying an even heavier regulatory price for a sound financial system, and with this should come quality service and accountability. "

https://www.linkedin.com/pulse/blind-appraisal-real-estate-charlie-elliott-MAI-asa-SRA

Common Sense? That left the room with the cash.

Blind appraisal. I like it.

 

[Artemis Fowl]

Have I come to the wrong conclusion?

I would speculate that is more likely than not.

I will say this, it will be hard for appraisers to win when the opposition has people like you in their corner.

Win what? Win the fight against change and modernization? That usually ends poorly for the resistance...
Better to have a say in how it evolves IMO. Seems like those you label enemy are actually trying to do just that.

I see plenty of issues and opportunity for idiots to sign themselves out of business with such a product. Good riddance. Hope they don't hurt too many on the way out.

Denis' posts more than adequately describe how a hybrid product should work and at what fee and why. Hope those type of views are being considered over the "I did it in 45 minutes!" crowd.

 

[George Hatch]

Seems to me few appraisers on this forum, or any other I have spoken with, save you and other "appraisers" with questionable motives, believe a bifurcated product is a good product for lending, or much else really, at least when quality is a primary concern.

I don't see anyone making the claim that these are a good product for all lending purposes. Or for appraising all types of properties.

Now let me ask you the reverse: when considering the lenders have been using BPOs and AVMs for certain uses, how certain are you that there are NO legitimate uses at a lender for a hybrid?

 

[Terrel L. Shields]

Are Realtors that are involved in the transaction doing inspections and taking these photos?

House Canary claims its inspections are by "certified home inspectors"...??? OK, Realtor? Home inspector? Appraiser?

wish I had trained to get a legitimate career

Nothing lasts very long it seems...

H canary offers these as a substitute for the evaluation below $250K, which means they expect to undercut even the cheapo products that my banker friend said "weren't worth the paper they are written on"...but it makes for compliance to bank regs...no one cares about appraisal compliance.

one regulation that says this is allowed for lending.

I don't think they are touting these as being a lending product other than the IAG evaluation, which does allow someone (anyone) to "personally inspect" the property. But how long before the cry and hue once again is that there is a "shortage" and the banks "need" to use these hybrids in order to turn appraisals around. HouseCanary promises a 5 day turn around to the client, but the appraiser is expected to "just do it" in 3 or even 2 days? I've spent 4 days with a client on line trying to just get them to tell me how many parcels are involved and in what county and they cannot understand why I cannot tell them what the fee is without any idea the scope of the problem. How clear do you think HC will be in directing you to the proper legals, facts, etc.?

 

[DWiley]

I agree with you in part on this one. Appraisers did make a mistake in not participating in the data business...I will say this, it will be hard for appraisers to win when the opposition has people like you in their corner. Maybe you would consider returning from the dark side?

Gee. Where I have heard sentiments like those last two sentences before?

When the database war was being waged, I was labeled as being part of the "opposition" and "the dark side" then as well. (you can easily scan historic posts and verify that). When, in fact, I was simply working for the best interest of appraisers, and doing so having been exposed to a broader experience than most who painted me with that label. So, at least I am on familiar ground. As things have played out, there are many who disparaged my views on a national appraiser database who have subsequently called for the formation of the very thing I was fighting for. C'est la vie. Whats a few million dollars lost?

Many appraisers label the people who provide a their very livelihood (at least for most residential appraisers) as "opposition." I am working hard to try to change that, but that does not include just telling people what they want to hear to appease them, as some of today's popular pundits do.

There is over ten years of market testing behind the "hybrid" process. Lenders order hundreds of them every day, and have been doing so many years. It is THEIR analysis of how this affects risk that, at the end of the day, will drive market demand.

I understand the fear, especially given the crazy fees I see being tossed around. But fear is best addressed with a logic and sound reasoning. All this ad hominem, ignoring of basic facts, and general fear mongering will get us nowhere.