Hybrid

[chad hampton]

Misleading due to an error is public records is one thing. Misleading because a property inspector misses something is another. Am I allowed to declare in my scope of work that if I measured wrong, missed a bathroom, or labeled a basement that I'm not responsible? Can I state - "the information contained in this report regarding the subject property obtained during the site visit may or may not be correct - I'm really not sure?"

We will be found liable for the person the bank hired to supply material information for the basis of our report.

 

[Evincere]

Misleading due to an error is public records is one thing. Misleading because a property inspector misses something is another. Am I allowed to declare in my scope of work that if I measured wrong, missed a bathroom, or labeled a basement that I'm not responsible? Can I state - "the information contained in this report regarding the subject property obtained during the site visit may or may not be correct - I'm really not sure?"

We will be found liable for the person the bank hired to supply material information for the basis of our report.

Excellent point. For so long we have been shouldering the burden of value responsibility and accountability. The fear of state board Gods, underwriters, and every Tom dick and sally that could report us has been drilled into our heads for even the slightest error or omission.

Now, we’re being told there’s a handy dandy little form that relieves us of ALL responsibility and we should be ever so grateful for the reprieve. Because apparently, NO one will be held responsible or accountable. Everyone - the appraiser, banker, inspector to photographer has a scapegoat they can point the finger at (annonimity of unverified public records) and say “It wasn’t me! ..it’s the faster and cheaper yellow brick road to modernization!

 

[Carnivore]

Excellent point. For so long we have been shouldering the burden of value responsibility and accountability. The fear of state board Gods, underwriters, and every Tom dick and sally that could report us has been drilled into our heads for even the slightest error or omission.

Now, we’re being told there’s a handy dandy little form that relieves us of ALL responsibility and we should be ever so grateful for the reprieve. Because apparently, NO one will be held responsible or accountable. Everyone - the appraiser, banker, inspector to photographer has a scapegoat they can point the finger at (annonimity of unverified public records) and say “It wasn’t me!

Lawyers cast the widest net that they can! We as the appraiser are probably the least able to defend ourselves. So E&O is extremely important in our Risk Management. I am switching E&O carrier when I come up for Renewal. Going with "LIA" They seem to be the Best out there for RE Appraisers.

 

[Evincere]

Lawyers cast the widest net that they can! We as the appraiser are probably the least able to defend ourselves. So E&O is extremely important in our Risk Management. I am switching E&O carrier when I come up for Renewal. Going with "LIA" They seem to be the Best out there for RE Appraisers.

The question....and it’s a big one. Are the purveyors of hybrids going to demand the Appraisers E&O as a requirement to do these reports and IS the Appraiser who does them going to just roll over and provide it.

Something else to think about. Many who are signed up with AMCs have already provided their E&O as a routine on boarding requirement. Is the AMC going to just forward the Appraisers policy along with these hybrid reports without the Appraisers knowing? Is the fact that Appraisers supply their policy info to onboard not considered implied consent to forward the info for any product completed by the Appraiser including hybrids?

From what I have read to date E&O carriers are still on the fence undecided about these hybrid reports.

I received a panel invite to do these reports ($50 fee) from an AMC I have never done business with before. One of the documents required was my E&O. So if all the caveat statements relieving the appraiser of responsibility are in place...why do they want my insurance info.

 

[DWiley]

Note how what was an inspection is now being re named. and demoted to "data gathering," , "data collection" or , "information" from a source ...setting the stage so subject inspection instead of appraisal practice can be said, nah, it;s not, it's just like any other data gathering...opening the door for bifurcated anyone can inspect for the appraisal, an hour class how to measure and press a button to photo. Fine, you win, appraisers can sit at computer instead of inspecting ( appraisers won't be able to afford a car anyway lol as each new development indicates)

While you may see this as something new, it isn't new at all for USPAP instructors. Since the instructor class was first presented (and our own George H was in the very first class), it has addressed the fact that the primary goal of inspection was to comply with SR 1-2's requirements to identify relevant characteristics of the subject. USPAP has always allowed the identification of that information via some other source or method. Within the certification itself we have always had to identify if we inspected or not, which is really just a clarification of the primary source of the data on the subject's relevant charcteristics. These are not "changes" - they are fundamentals of USPAP that existed and were published before the term "hybrid" was first uttered.

We have long relied on data about comparables' relevant characteristics from third parties, and there are typically a lot more comps than subjects in an appraisal. Emotionally, many see that as being very different, but it isn't different at all.

 

[J Grant]

Good point about USPAP, though the FAQ I linked to does list inspection as a TIER III appraisal service ( a trainee or other appraiser would need to be stated as contributing significant appraisal if assistance ).

To get around that on a bifurcated, a non appraiser is deliberately selected by the client to inspect so they will not have to be named. USPAP are min standards and minimum can be abused . While it is not an excuse for appraisers who have a pattern of doing bad work, a segment of bad work stems from clients abusing the process...

If most appraisers can do good work when a non appraiser inspects, then the results will show it.I might enjoy sitting in PJ's at computer rather than driving...

There is a potential for abuse of the expansion of this produce, such as appraiser doing desktops to appraise in far off areas they are not familiar with , and clients imposing accelerated turn times not enough to verify, research etc . One can say decline the order /ask for more turn time if not enough, but clients usually drop an appraiser who does that on a regular basis.

Relying on third party data for subject vs a comp is not just "emotionally different" because we are not appraising the comp. And it becomes a different level of reliance for an interior inspection by a third party vs exterior only.

Data being "off" on a comp does not form the basis for an entire appraisal And the means an appraiser has for correcting bad third party comp info usually is sufficient to correct it...verifying, driving by the comp to observe, public records /sources etc. If the data from a comp is too "off" to use we can exclude it form a report, but we cant exclude our own subject. It will not always be apparent if the results of an inspection of a subject is "off" in certain situations, when the only way to know that would be be for us to inspect it ourselves.

 

[DWiley]

I don't think it is just a matter of it being "emotionally different" re relying on data of comps' characteristics vs subject from third parties, because we are not appraising the comps ! Therefore, if data of a comp is "off" and we relied on it, one comp alone usually will not throw off entire appraisal .The means an appraiser has for correcting bad third party information about a comp usually is sufficient to compensate- calling and verifying, driving by the comp to observe, comparing records/source information. But those means may not suffice to compensate for a "bad" third party inspection of a subject, as I assume there will be no conversations allowed between the inspector and appraiser? Is the phone number or contact info of inspector going to be sent to appraiser, or withheld ? Bottom line is even if the inspector does a good job measuring taking notes ettc, what they "see" and then include or exclude or characterize as int sf or an enclosed area or street noise etc will differ ...the problem is the appraiser can never tell when when certain things an inspector reports (or excludes ) about subject for a 1004 may be an issue or not.

And?

We already rely on very incomplete/imperfect information about the subject. The inspections that appraiser do are limited to those things readily observable. We are not responsible for things hidden or unapparent. Radon. Hidden structural issues. Mold inside of walls. The list of things that could be in a home that we do not currently inspect/test for is endless. Yet, we have accepted that for years, and we are comfortable with it because "that's how we gave always done it." Relying on third party data for relevant characteristics is fundamentally no different. It is just contrary to "but we have always done it this way" thinking.

Add to that, the data sources we use regularly have errors in them. Ever seen a tax card with the wrong year built? I have seen them that weren't even close. Just this past week I had a report where the subject's site size was reported to be 7 acres (odd shaped curved lot). That is what the tax card and online GIS data said. That was what was used in the appraisal report. Uh oh, survey shows its actually only 4.5 acres. OMG !! How much trouble is the appraiser in? Answer: None.

 

[J Grant]

And?

We already rely on very incomplete/imperfect information about the subject. The inspections that appraiser do are limited to those things readily observable. We are not responsible for things hidden or unapparent. Radon. Hidden structural issues. Mold inside of walls. The list of things that could be in a home that we do not currently inspect/test for is endless. Yet, we have accepted that for years, and we are comfortable with it because "that's how we gave always done it." Relying on third party data for relevant characteristics is fundamentally no different. It is just contrary to "but we have always done it this way" thinking.

Add to that, the data sources we use regularly have errors in them. Ever seen a tax card with the wrong year built? I have seen them that weren't even close. Just this past week I had a report where the subject's site size was reported to be 7 acres (odd shaped curved lot). That is what the tax card and online GIS data said. That was what was used in the appraisal report. Uh oh, survey shows its actually only 4.5 acres. OMG !! How much trouble is the appraiser in? Answer: None.

We can go back and forth forever lol....on a subject we are mold or radon inspectors so what? Yes, we rely on assumptions/ other data but the purpose of inspection is how observable conditin etc effects value, not what kind of mold spores might be beneath the soil.

The difference is, when I inspect, i own the results, when someone else inspects, I own "their" results. If it's an exterior drive by, there is (usually ) minimal or no difference if a third party does it vs the appraiser .(unless conclusion about area or ext influences matters )

But there could be greater differences between what I conclude in interior inspections.both in individual items and then holistic impression of the property as a whole,vs someone else.Appraiser will also miss out on asking questions to RE agent or owner or builder on site.

The fact that a tax cards or comps can have data errors....is straw argument. A tax card error usually does not drive results of the entire appraisal, but conclusions from an interior inspection can.

Still not addressed is possible abuse of this process... what is to stop appraisers from vastly expanding their geo areas for desk work? When fee becomes a component, will a client choose Joe 6 counties ( he only know 2 well ), will client choose Jim who limits his desk top work to the 2 counties he knows well, if Jim charges more than Joe? Will staff appraisers be told by employers now they need to expand the area they do desk analysis on ? If one inspector charges $75 per / takes detailed notes with good observation skills, and another inspector takes short notes/s mediocre observation skills but charges $50, which inspector will a client whose business is run off profiting from appraisal work choose ? The results will be compounded with these products.

How much will pressure for tighter deadlines/turn time affect racing around and appraisers having less time to verify and research?

Fannie's pilot program may not see the real world conditions of low pay/fast turn time/abuse of coverage are impacting results, but these conditions will be in play if these products become widely used.

 

[djd09]

It is interesting that requirements are lower then the financial crisis. 1000 experience, no first hand inspections, PIW's, Then the regulators will blame the appraiser, while they created the mess, and punish all but the real culprits.

 

[DWiley]

The fact that a tax cards or comps can have data errors....is straw argument. A tax card error usually does not drive results of the entire appraisal, but conclusions from an interior inspection can.

Really? So, you don't think that 7 acres versus 4.5 changed the value? It certainly did

Still not addressed is possible abuse of this process... what is to stop appraisers from vastly expanding their geo areas for desk work? When fee becomes a component, will a client choose Joe 6 counties ( he only know 2 well ), will client choose Jim who limits his desk top work to the 2 counties he knows well, if Jim charges more than Joe? Will staff appraisers be told by employers now they need to expand the area they do desk analysis on ? If one inspector charges $75 per / takes detailed notes with good observation skills, and another inspector takes short notes/s mediocre observation skills but charges $50, which inspector will a client whose business is run off profiting from appraisal work choose ? The results will be compounded with these products.

Now THAT is a strawman. There is plenty of abuse in the current system (i.e. runners inspecting rather than the appraiser). And, most ironically, the very "abuse" you cite for "hybrids" exists with 1004s today. It is very common for appraisers to do 1004s in areas where they have no prior experience, and then falsely sign a certification saying that they did. In fact, I just reviewed a bog post on that very topic - and it was not a blog about "hybrids."

Keep swingin'