Hybrid

[George Hatch]

Why do any two lenders have different expectations (from each other) for appraisal reports that are performed for them? Because they want what they want. IRL it is the clients and users who establish their own expectations. Not the AMCs or the appraisers who are trying to meet those expectations.

I have a client who requires a separate Insurable Value opinion in every SFR appraisal they engage, and who requires a gridded land sale analysis for their Cost Approach in those assignments where one is completed. Not to mention some of their other quirks. Why? Because they want what they want.

--------------------------------

If Fannie or any other client or user is trying to get a 1004-variant then everyone knows how much research, analyses, report writing and other desktop work - besides the field inspections - that process involves. The pricing should reflect that. In fact, I think it might make sense for the sum of what they pay the appraiser and the inspector to be *higher* than what they would pay the appraiser for a conventional 1004 because in the bifurcated process the appraiser is redoing a couple things the inspector would be doing if their field trip included everything the appraiser does during our field trips.

 

[J Grant]

If appraisers get cheap offers for a modified 1004 , or any other hybrid that entails more effort/time than it is paying, refuse it or counter with a higher fee. End of story....

Its not always a $ per hour as these companies like to paint..you sit at desk and can do it in X hours! Fee lack benefits , add 15% -20% what is really needed to earn to compensate for paying all own medical, no 401k, no nothing. Then factor in most fee appraisers don't have a steady flow of work... busy some months, slow for others- earnings need to more $ to sustain through the low periods, so add in another 15% -20% for that and can gauge how under compensated the work can be.

 

[Evincere]

If Fannie or any other client or user is trying to get a 1004-variant then everyone knows how much research, analyses, report writing and other desktop work - besides the field inspections - that process involves. The pricing should reflect that. In fact, I think it might make sense for the sum of what they pay the appraiser and the inspector to be *higher* than what they would pay the appraiser for a conventional 1004 because in the bifurcated process the appraiser is redoing a couple things the inspector would be doing if their field trip included everything the appraiser does during our field trips.

If appraisers get cheap offers for a modified 1004 , or any other hybrid that entails more effort/time than it is paying, refuse it or counter with a higher fee. End of story....

End of story....

 

[J Grant]

--------------------------------If Fannie or any other client or user is trying to get a 1004-variant then everyone knows how much research, analyses, report writing and other desktop work - besides the field inspections - that process involves. The pricing should reflect that. In fact, I think it might make sense for the sum of what they pay the appraiser and the inspector to be *higher* than what they would pay the appraiser for a conventional 1004 because in the bifurcated process the appraiser is redoing a couple things the inspector would be doing if their field trip included everything the appraiser does during our field trips.

Why would lenders or AMCs want bifurcated 1004 if they have to pay MORE? They intend to pay less if possible, the reasons they state for wanting these products are lower cost /faster.. Of course another economic benefit will be they would get higher volume output from salaried staff appraisers .

Imo they will pay the non appraiser inspectors low rates , based on the very low fees photo runners/inspectors now earn doing ext inspections or photos for BPO orders. As far as what they will pay the appraiser for the desk part, , unless appraisers hold out for good compensation, expect the same tactics to drive $ down to appraisers for full 1004 work from AMC;s or big box lenders.

I expect regular direct clients will not use bifurcated or at least pay decently if they do use them, since they pay decently now for 1004 work.

 

[George Hatch]

It is to be expected that the lenders will attempt to establish an initial expectation among appraisers that these assignments won't take much time and can therefore be compensated at the same $20/hr rates they pay their employees. They clearly don't think the work appraisers do is worth more than what they pay their clerks. If they can get you to work for $20/hr they'll do it without a second thought. And then they'll lay you off when the volumes dry up, the same as they do with their other employees.

Think of their opening bid as the beginning of negotiations. If you do it for them once at that price that will be their expectation for the next such assignment that comes up. They don't need everyone to be desperate; they only need however many appraisers it takes to service this segment of their work.

 

[gregb]

With a "valuation engine" no need to involve an appraiser.

https://www.proteckservices.com/contact-us/landing-pages/hybrid-appraisal/

COMBINING QUALITY DATA WITH THE EXPERIENCE OF AN APPRAISER
Wise business decisions require objective risk solutions.

There is a wide range of products on the market for real estate valuation, and depending on one’s needs, restrictions and budget, each product has its own application. Hybrid home valuations, sometimes called hybrid appraisals or hybrid products, combine the features of these products into custom tools.

CollateralPoint® uses collateral, market demographic and economic data and then factors in multiple industry-standard valuation methods that are reviewed and adjusted by a seasoned appraiser. Both the quantitative and qualitative information are then fed into CollateralPoint®’s valuation engine that produces the most objective and accurate valuation on the market. The hybrid home valuation produced is unbiased, reliable and defensible.

An added benefit of a hybrid valuation product like CollateralPoint® is that it comes without the price tag of a traditional appraisal.

To meet your risk tolerance needs, CollateralPoint® is available in three tiers:

• – CollateralPoint® Desk: Desktop Valuation with the added strength of local MLS comp data
• – CollateralPoint® Field: Adds a full exterior inspection for even greater accuracy
• – CollateralPoint® Interior: Adds a full interior inspection for the most accurate valuation.
• – When you need an accurate value and risk assessment in origination, secondary market, capital markets or servicing, CollateralPoint® delivers the utmost in reliable, defensible results.

CollateralPoint® Field meets the Interagency Appraisal and Valuation Guidelines.

 

[Evincere]

If Fannie or any other client or user is trying to get a 1004-variant then everyone knows how much research, analyses, report writing and other desktop work - besides the field inspections - that process involves. The pricing should reflect that. In fact, I think it might make sense for the sum of what they pay the appraiser and the inspector to be *higher* than what they would pay the appraiser for a conventional 1004 because in the bifurcated process the appraiser is redoing a couple things the inspector would be doing if their field trip included everything the appraiser does during our field trips.

With a "valuation engine" no need to involve an appraiser.

https://www.proteckservices.com/contact-us/landing-pages/hybrid-appraisal/

COMBINING QUALITY DATA WITH THE EXPERIENCE OF AN APPRAISER
Wise business decisions require objective risk solutions.

There is a wide range of products on the market for real estate valuation, and depending on one’s needs, restrictions and budget, each product has its own application. Hybrid home valuations, sometimes called hybrid appraisals or hybrid products, combine the features of these products into custom tools.

CollateralPoint® uses collateral, market demographic and economic data and then factors in multiple industry-standard valuation methods that are reviewed and adjusted by a seasoned appraiser. Both the quantitative and qualitative information are then fed into CollateralPoint®’s valuation engine that produces the most objective and accurate valuation on the market. The hybrid home valuation produced is unbiased, reliable and defensible.

An added benefit of a hybrid valuation product like CollateralPoint® is that it comes without the price tag of a traditional appraisal.

To meet your risk tolerance needs, CollateralPoint® is available in three tiers:

• – CollateralPoint® Desk: Desktop Valuation with the added strength of local MLS comp data
• – CollateralPoint® Field: Adds a full exterior inspection for even greater accuracy
• – CollateralPoint® Interior: Adds a full interior inspection for the most accurate valuation.
• – When you need an accurate value and risk assessment in origination, secondary market, capital markets or servicing, CollateralPoint® delivers the utmost in reliable, defensible results.

CollateralPoint® Field meets the Interagency Appraisal and Valuation Guidelines.

Its still a pig. When you compare the marketing of these products t he only difference is what it's feed and how its dressed up .

 

[George Hatch]

And what it looks like after its cooked.

In my estimation the "combo" will not include certain elements that a competent appraiser routinely does when they perform their own inspections. That's because neither the appraiser nor the inspector will be doing them. I think it's critical that appraisers at least recognize this little factoid on their end, even if they're not smart enough to disclose the additional limitation in their reports.

Every appraiser knows that some MLS pics of those properties suck because the person taking the pic zoomed in too closely. That's an *example* of the myopia you get when someone is only looking for what they're looking for and not necessarily what you would look for if you were onsite.

For example, I include a grid with the ceiling heights and floor coverings for every room in the house in all my SFR appraisals, and I note (in my notes) the brands and quality for cabinetry, fixtures and appliances. Not every appraiser does that, but some appraisers do that even if those details don't make it into the report. Even if they only take note of issues mentally and even if they're doing it subconsciously. After all, what is an appraiser's "judgment" if not being comprised of the sum total of all their exposure to all these elements over however many assignments they've ever completed.

When we're looking at what these outside inspections are and aren't I think it would behoove appraisers to sit down and really try to identify *everything* they are actually doing in their process - isolate every element of it. And then refrain from trivializing the cumulative effect of all those elements, both in terms of how they think of their assignments AND how they disclose the additional assumptions and limitations that will be inherent in using a 3rd party inspection performed by a non-appraiser who isn't doing everything you would do.

Appraisers can take control over conveying to the readers what the difference is between what they did/didn't do in one of these hybrid assignments vs what they would have done had they personally inspected. The lenders can't stop you guys from doing that on your own and outside of their spin zone. But if you stop yourselves from accurately conveying these limitations that will be all on you. Not the lenders. So use your heads. Whether you choose to do these or not, whether you choose to do them for cheap or not, you can still refrain from trivializing your own work. You don't need any outside authority or assistance to do that much for yourselves.

 

[gregb]

Conversation with a local bank's Chief Appraiser on hybrids:

"I see it as a product that requires the management company to have a more active role in the report, which serves as a justification for them capturing a larger portion of the fee split. I don't see a benefit in terms of quality or speed."

 

[hastalavista]

If appraisers get cheap offers for a modified 1004 , or any other hybrid that entails more effort/time than it is paying, refuse it or counter with a higher fee. End of story....

Its not always a $ per hour as these companies like to paint..you sit at desk and can do it in X hours! Fee lack benefits , add 15% -20% what is really needed to earn to compensate for paying all own medical, no 401k, no nothing. Then factor in most fee appraisers don't have a steady flow of work... busy some months, slow for others- earnings need to more $ to sustain through the low periods, so add in another 15% -20% for that and can gauge how under compensated the work can be.

Seems like this is advice some of us have given over and over. Definitely worth a "like".