Hybrid

[Evincere]

(my bold)

I think everyone, whether they are in favor, neutral, or against the hybrid process, has consistently argued the bolded part. The difference I may have with some/others is this: I advocate that the appraiser charge an appropriate rate for their time/efforts/work product/liability. But if their rate, after all those things are factored in, is lower than mine, then all things being equal, they will be more competitive.

These products will succeed or fail based on appraiser participation. If appraisers, as you suggest, come to the realization that they need to charge more than what is being offered, and if they hold that line, then they'll get more or this product will disappear from the appraiser-option list.

This apparently will be where our choices stand I completely agree with your summation. The test is about to begin via fee negotiations and those Appraisers who are starting to receive solicitations to do these hybrids will best serve their own (and all Appraisers at large) interests by immediately countering back with a fee they believe represents the SOW required.

If they are accepted across the board at the $50 offerings I’ve seen then there they shall remain considered a customary and reasonable fee for these products.

If Appraisers don’t push back on the fees and raise the bar from the get go they will have no standing to do so down the road.

 

[George Hatch]

When a appraiser uses the guidelines as the criteria for selecting comparables and the only differences considered are the categories in the form to bracket, that method does not comply with standard 1-2(e).

That's not true. There's nothing in Fannie's guidelines that discourages an appraiser from adding any additional criteria or mode of analysis they think are necessary to the mix.

Appraisers need to get away from the using "what the client will accept" as the sole criteria for what they do. Many appraisers add extras - on their own - to their assignments if/when they think it necessary. It's up to the appraiser to do the appraisal and then make their case in the appraisal report.

 

[Carnivore]

So this is an interesting Read! I took it out of context because what you read below goes to the heart of the Desktop/BIFU Appraisals.

This is about competing a 1004/2055. So basically in paragraph #3 bold this isn't so important anymore or at least it is no longer CRITICAL. Additionally they if they adopt the Desktop/BIFU Report SOW on a regular and ongoing common process...then we are not responsible any longer as bolded in Paragraph #4. My guess is that Harry the Aluminum Can Collector and Home Inspector is now responsible. Assuming you can even find him just to fire him from the Job or just drop him from the list of eligible's.

So I see why they are using this as a Pilot Program for more data and information. My guess is that Credit is still King and Collateral is even less but mitigated by lower LTV mortgage loans. They have Stock Holders who have a direct Interest in the operations of the GSE's. It will be interesting to see how a publicly traded stock reacts to this policy if adopted to a great extent. The Federal Government has a stake in this also as does the public indirectly.

So as Appraisers we have a responsibility. Even though we have a lessor role in the Inspection, this causes a greater difficulty in developing a credible as-is opinion of value. This seems to be something we should clearly and conspicuously state in any report. Even to the point of a strongly stated Warning in Bold Type.

So just to make a point; I understand that USPAP allows this type of developing and reporting and also I know that Appraisers have great freedom in determining the minimum SOW. SOW is determined at the time of assignment by the Client and affirmed and agreed to by the Appraiser upon acceptance.

What I am trying to say is be careful when you go out and complete this type of work. Remember your responsibilities of Standard #1, the Ethics Rule and very importantly the Record Keeping Rule. Please don't devalue your years of experience and knowledge by accepting a insultingly low fee.



3. What is the appraiser’s responsibility for reporting property condition? The appraiser is responsible for considering all factors that have an impact on value in the development of his or her opinion of market value for the subject property. Fannie Mae requires the appraiser to express an opinion about the condition of the property improvements on our appraisal report forms. The appraiser must report the condition of the improvements in factual, specific terms. We believe that an accurate description of the physical condition of the subject property is a critical element in arriving at a supportable opinion of market value, as well as in the prudent underwriting of a mortgage loan.

4. What is expected with regard to the appraiser’s inspection of a property? Fannie Mae’s expectation of the appraiser’s property inspection for an appraisal based on an interior and exterior inspection is a complete visual inspection of the accessible areas of the property. The appraiser is responsible for noting in his or her report any adverse conditions (such as, but not limited to, needed repairs; deterioration; the presence of hazardous wastes, toxic substances, or adverse environmental conditions; etc.) that were apparent during the inspection of the property or that he or she became aware of during the research involved in performing the appraisal. The appraiser is expected to consider and describe the overall quality and condition of the property and identify items that require immediate repair as well as items where maintenance may have been deferred, which may or may not require immediate repair. On the other hand, an appraiser is not responsible for hidden or unapparent conditions. In addition, we do not consider the appraiser to be an expert in all fields, such as environmental hazards. In situations where an adverse property condition may be observed by the appraiser but the appraiser may not be qualified to decide whether that condition requires immediate repair (such as the presence of mold, an active roof leak, settlement in the foundation, etc.), the property must be appraised subject to an inspection by a qualified professional. In such cases, the lender may need to ask the appraiser to update his or her appraisal based on the results of the inspection, in which case the appraiser would incorporate the results of the inspection and measure the impact, if any, on his or her final opinion of market value.

 

[Joe Flacco]

That's not true. There's nothing in Fannie's guidelines that discourages an appraiser from adding any additional criteria or mode of analysis they think are necessary to the mix.

Yeah but I am saying they are not getting that. How many posts do you see on here talking about comps within a mile. When all a appraiser does is use fannie mae guidelines to select comps then yeah, any monkey can do it and do it fast. Same thing as BPO.

 

[timd354]

I am telling some of you that I don't think it's in your best interests to lead with some of the factual untruths that are being used in criticism of this type of appraisal assignment. I have been telling you guys for years that your primary stock in trade is not 1004s with your signature on it, but your credibility. That's why I think it's a big mistake to lead with weak arguments that will undermine your credibility to the extent the decision makers recognize those untruths.

This advice cannot be repeated often enough.

 

[George Hatch]

Yeah but I am saying they are not getting that. How many posts do you see on here talking about comps within a mile.

Yeah, I'm not going to stick up for appraisers who are shortsheeting the bed. What you're talking about is mostly a matter of appraisers working off the basis of what think they can get away with, not Fannie trying to deliberately undermine the definition of MV.

Most of Fannie's guidelines are just that - guidelines; not actual requirements. As unimpressed as I am with their understanding of the appraisal process, even I would acknowledge that if you can't bracket a subject or you can't find enough sales within their 6mo/1mi parameters they will still accept whatever amounts to the next best thing - so long as the appraiser explains what they did and why they had to do it.

IRL there are a lot of appraisers who just duck the situation in the name of expediency - that isn't professional practice even if the workproduct appears at first glance to fit Fannie's criteria.

 

[hastalavista]

When a appraiser uses the guidelines as the criteria for selecting comparables and the only differences considered are the categories in the form to bracket, that method does not comply with standard 1-2(e).

I just read the most recent Selling Guide, pages 580-585. I did not see that bracketing was a requirement? I may have missed it, but I did not see it.

From page 580:


Now, they do require somethings that are not required in the USPAP; like a minimum of three comparables. But they can do that as it exceeds the minimum; doesn't contradict it.

Further, they do require a sale from a new condo project or subdivision, and they have a list of requirements for that. However, they do not require that the appraiser rely on those sales; they require them to demonstrate market acceptance. I don't see this as being in conflict with the USPAP either.

Lenders may want to see bracketing of certain elements of comparison in order to meet their satisfaction. The appraiser may or may not be able to provide that. If they can, the lender is happy. If they cannot, the lender may decide not to rely on the report; but that is not a USPAP violation on either side.

 

[Joe Flacco]

That is appraisers working off the basis of what think they can get away with, not Fannie trying to deliberately undermine the definition of MV.

Most of Fannie's guidelines are just that - guidelines; not actual requirements. As unimpressed as I am with their understanding of the appraisal process, even I would acknowledge that if you can't bracket a subject or you can't find enough sales within their 6mo/1mi parameters they will still accept whatever amounts to the next best thing - so long as the appraiser explains what they did and why they had to do it.

IRL there are a lot of appraisers who just duck the situation in the name of expediency - that isn't professional practice even if the workproduct appears at first glance to fit Fannie's criteria.

Well that non professional practice is what you get when appraiser selection is based on the lower fee.

 

[Joe Flacco]

I just read the most recent Selling Guide, pages 580-585. I did not see that bracketing was a requirement? I may have missed it, but I did not see it.

From page 580:
View attachment 36072

Now, they do require somethings that are not required in the USPAP; like a minimum of three comparables. But they can do that as it exceeds the minimum; doesn't contradict it.

Further, they do require a sale from a new condo project or subdivision, and they have a list of requirements for that. However, they do not require that the appraiser rely on those sales; they require them to demonstrate market acceptance. I don't see this as being in conflict with the USPAP either.

Lenders may want to see bracketing of certain elements of comparison in order to meet their satisfaction. The appraiser may or may not be able to provide that. If they can, the lender is happy. If they cannot, the lender may decide not to rely on the report; but that is not a USPAP violation on either side.

I think what I am trying to say is being misunderstood. I am not saying GSE guidelines conflict with USPAP. I am saying appraisals that use the GSE guidelines as the rules for selecting comparables do not comply with USPAP.

 

[George Hatch]

All appraisals use assumptions and limitations. Some assignments involve more assumptions - and hence include more limitations - than others.

We certify that "to the best of our knowledge and belief", but IRL the various limitations in assignment conditions will result in different levels of what can be known. We *could* perform destructive testing or do our own engineering surveys or soils reports or radon testing as part of our everyday SOW, but in practice we don't.

Nobody has a problem with the idea that the appraiser won't be held to exactly the same expectation for "knowing" the subject's attributes in a 2055 that they are for a 1004, or that performing 2055s pose additional exposure to liability for appraisers. Why? Because the additional limitations of the 2055 SOW are both disclosed by the appraiser and tacitly acknowledged by the users via their continued usage of the workproduct with the open and notorious limitations.