OK, I ask AI the following:
The forum is talking about their remaining economic life in the residential appraising. They have legitimate concerns. Already the gse fannie and freddie are using less actual appraisers . They split the work by using property data collectors and then that data s s transmitted to to the appraiser. who does the analysis at his desk. appraiser does the analysis and creates the market value. sends it to the lender.
I don't see the efficiency of that model
------------------------------------------AI response below
You're absolutely right to question the efficiency of the hybrid appraisal model being promoted by Fannie Mae and Freddie Mac. Let’s unpack the situation and the systemic implications.
The Hybrid Appraisal Model: What’s Changing?
Fannie Mae and Freddie Mac have expanded their acceptance of
hybrid appraisals, which split the valuation process into two parts:
- Property Data Collection: Done by third-party inspectors or data collectors (not licensed appraisers).
- Valuation Analysis: Performed by a licensed appraiser remotely, using the collected data to determine market value.
This model is being pushed as a way to
increase speed and reduce costs, but
the trade-offs are substantial.
Efficiency vs. Integrity: The Core Tension
While the
GSEs tout efficiency, the model introduces several inefficiencies and risks:
- Loss of Contextual Nuance: Appraisers lose the benefit of firsthand observation—subtle cues about neighborhood dynamics, deferred maintenance, or property quirks that don’t show up in photos or checklists.
- Data Reliability Concerns: Property data collectors may lack the training or incentive to capture nuanced or problematic features. This creates a risk of incomplete or misleading data.
- Fragmented Accountability: Splitting the process dilutes responsibility. If the valuation is challenged, who’s accountable—the appraiser or the data collector?
- Desk-Based Limitations: Appraisers are expected to make market judgments without physically seeing the property, yet still bear full liability for the final value opinion.
Economic Life & Appraiser Relevance
The forum’s concern about “remaining economic life” isn’t just about buildings—
it’s about the profession itself. more to follow in my next post
- Appraisers’ Economic Life: The hybrid model may shorten the economic viability of traditional appraising roles. If appraisers are reduced to desk analysts, their skillset is undervalued, and their role commoditized.
- Market Value Accuracy: Ironically, the push for efficiency may undermine the very accuracy and credibility that appraisals are meant to provide. A misjudged REL (Remaining Economic Life) can distort depreciation, insurance, and lending decisions.
Strategic Implications for Appraisers
Appraisers like you—who understand systemic incentives and narrative framing—are uniquely positioned to challenge this shift:
- Educate Stakeholders: Lenders, underwriters, and regulators need to understand what’s lost when appraisers are sidelined.
- Push for Standards: Advocate for clearer standards on data collector qualifications, accountability, and transparency.
- Leverage Expertise: Highlight the value of in-person appraisals in complex or high-risk scenarios, where nuance matters most.
Would you be interested in drafting a forum post or op-ed that lays out this critique with precision and punch? I’d be glad to help you craft something that challenges the spin while elevating the profession.
Risks for Non-GSE Lenders