I see it differently; but that difference is more nuanced (for the most part) than substantive.
1. I don't believe any chief appraiser, risk manager, or underwriter thinks a hybrid is as reliable as if the appraiser did the inspection (drive-by or walk-through) him/herself. I've yet to hear that from anyone in those positions when this topic comes up. And, believe it or not, some in those positions don't like them and are not inclined to use them. That can be subject to change.
2. What I do hear from risk officers is that while being less reliable, the collateral value portion of the lending equation is just not that significant for the transactions these are being considered. They'd be fine with some sub-appraisal tool but prefer to have a current photo of the property. On an asset-monitoring basis (troubled asset), they are not going to get access to the property anyway; the hybrid is one step above a desk top because at least there is a current photo to document what the property looks like from the outside.
So, no one I know (other than the companies that are trying to sell these services) thinks these are as reliable as a traditional appraisal; and that includes those in positions of management at AMCs. Everyone I speak to who considers these products as a potential option are for situations where (a) the collateral value isn't the risk and/or (b) they cannot get access to the property anyway.
Everyone likes the idea of an appraiser doing the valuation because they believe the appraiser, who knows the market, will provide an independent and objective opinion of value following recognized techniques. This is much better than a BPO or an AVM.
If appraisers aren't being paid enough and no one wants to do them, then this product dies on the vine. Period.
I'd do them if they paid me what I think I'm worth. I'd do them with little hesitation (assuming I agree with the SOW and the extraordinary assumptions or limiting conditions).
I've repeated the story in my market where, this product was rolled out and there were not enough takers at the initial bid (about $75). The price has moved up to $125 to $150, and there are takers. That's not enough for me, but enough for those who are taking them.
Terrel pointed out that this isn't a USPAP thread so the discussion on this product shouldn't be based on its ability to be completed according to the USPAP. I agreed with another poster who said that USPAP compliance isn't the problem.
The problem here is
(a) the individual appraiser's choice to take this work or not based on their minimum standards; I'm good with that and have no issues if someone says they just don't think they're credible enough regardless of what the client may think. I and most of the rest of us make that decision myself for traditional appraisals based on what the SOW is for the intended use.
Or
(b) they don't pay enough. I agree; that's why I don't take them at this price.
Or
(c) the liability is too high. Again, an individual choice that is partially based on the SOW for the assignment and usually based on the fee received (does the fee offset the risk?). Another valid reason as far as I see it.
You early stated that its (I'm paraphrasing) disappointing that I seem to be a supporter of these products and it leaves you wondering why?
I said the term support implies endorsement. So let me be clear:
I don't support hybrids for all lending transactions. I think they are appropriate for a very limited set of conditions. I think for some lending purposes, a product like this can match the risk attached to the collateral value-component of the equation. I've said I'd rather see appraisers have the opportunity to take this business then let it go to a non-appraisal source. I've clearly said I wouldn't do them at the fees they are offered at, but I also consistently say I'm not going to tell another appraiser not to take them because the fee doesn't meet my benchmark.
I've also said this isn't a USPAP issue, it is a regulatory issue. I endorse advocating for limits on their use with the regulators... because they are the ones who are going to ultimately decide (for lending-related transactions) how far these things can be used. And regardless of what the regulators say, if enough appraisers say no for whatever reason, these are not going to become a viable appraisal-option.
That's the world as I see it. The public trust issue, from my vantage point, isn't on the appraisal process. I can do these and conclude credible results as defined by the USPAP (otherwise, they wouldn't be USPAP compliant) for a certain set of transactions.
If there is a public trust issue, it is with the regulators and the regulations. I've said that we are stakeholders in that process, so we have a voice and it should be heard. The organizations I'm involved with are making their voice heard and are looking to significantly reduce or limit these hybrids for lending purposes. That's a position I do endorse.
The fees... I'll leave to the individual appraisers.
