NAR’s Move To Replace Real Estate Appraisers With RVM’s

[Cicada]

Don't worry, the self appointed USPAP police, state boards, regulators, etc have a vested interest in having appraisers as pinatas. The regulatory-enforcement complex will be the appraiser's powerful ally. Need I mention the support from the CE industry?:icon_mrgreen:

The option of hanging an RRR or whatever it is called in effigy is just not as good of a safety diversion for the rioting masses. AVM's don't need CE, just occasional tweaking.

Word up. Seems to me appraisers and their licensing and certifications are in existence in large part to create the illusion of a safegaurd. Ever notice how there is little to no enforcement? Of course you did. We're here because it looks good politically to the "rioting masses" as Mentor put it and that's why I don't fear the AVM too much...yet.

 

[The Warrior Monk]

"The sky is falling!"

Not.

10 or more years ago I "learned" that AVMs would replace appraisers.

What I learned subsequently was that AVMs (and NAR's product) are merely additional tools for use in the valuation of properties.

There will always be opportunities for the competent and ethical appraiser.

Funny,

I was telling my peers about AMC's in 2004-2006. 95% of them had no idea what a AMC was, and they all laughed at me when I told them that this wll be the new wave. This was before the HVCC or the market crash.

It's a waiting game I guess. I just hope YOUR right this time.

I agree with Lee on this one. There is a whole lot of difference between an AMC function and that of an agent. The AMC is simply a entity that handles the appraisal management for a lender. The agent is an advocate for seller (usually) or buyer, and is not part of the lending process (though they may try to insert themselves into it). Lenders are not suddenly going to throw away lending standards for some third part advocate. It didn't happen in good times. It certainly won't happen in bad, especially with current and pending legislation geared to pushing advocates away from influencing the parties involved in the lending process.

AVMs have been around for years. The problem with them is that they are inherently unreliable. The didn't suffice in a market where mistakes were quickly erased through rapid appreciation. They're certainly not going to suffice in a depreciating market, especially with the major problem with not being able to sell MBSs.

 

[Kali the Boston Terrier]

RVM and RPR were created in part to head off products and coming products by Google. This was going to happen inevitably...it just depends whom you want to doing the game changer...I personally prefer NAR to Google in this department. Although I am just a lowly commercial broker, I see the benefit to Realtors and their brand.

As Lee suggested everyone thought the end was near when AVMs came out, form filling software, digital cameras...licensing...etc. I think you will always need somebody in the transaction that has liability if something goes wrong...hate to say it, but that is us, and always has been.

I do believe the days of getting paid 300 sheep skins to appraise a property that has 22 comparables and a variance of 1 - 2 % is probably over, but then again my three year old could have done that appraisal as well. It always comes down to what are your skills, knowledge, education, experience, and training...why are they better then your competition? If you cannot answer that question then you will likely be replaced by a computer regression model.

I've spent my career diversifying my skill set and knowledge base to be one of a kind, I feel confident that even if RVMs take over I will be ok.

 

[moh malekpour]

When AVM came to the market long time ago,they said it costs less, it is faster and it is more objective and unbiased because the machine does not side with anyone. If you use accurate data and formula, you will get accurate results.

After using it for several years, they found out that most AVM results were not so accurate although the machine was objective and the formula was accurate but their data were not accurate because they were not verified and it was like garbage in, garbage out.

Now, they say lets do the same thing that appraisers are doing and that is not to rely on one data source. Appraisers use MLS to verify their data that they get from public records or tax records. There are some information in the public records that are inaccurate or obsolete or just missing but appraisers verify and update them by reviewing MLS data for those properties.

Their argument is that their system has all information that appraisers are using (public data and MLS Data) and is more objective than appraisers because the machine does not side and of course, cost less and is faster.

One of the strongest reasons for using appraisers as a safeguard has been the idea of appraisers objectivity due to their compliance with USPAP but if this system can prove that the Machine doe not need USPAP compliance to be objective as long as the operator of that machine is objective, it can also be considered a safeguard and look good politically to the rioting masses.

Then there is the different between the accuracy of using traditional appraisal techniques and statistical formula used in AVM. There are some professionals who argue that the conclusion of accurate statistical formula can be more reliable than just traditional sales comparison approach.

I am afraid we are getting close to the demise of traditional appraisals as we know.

 

[The Warrior Monk]

Then there is the different between the accuracy of using traditional appraisal techniques and statistical formula used in AVM. There are some professionals who argue that the conclusion of accurate statistical formula can be more reliable than just traditional sales comparison approach.

Others argue that both should be used.

Why ignore something that may be relevant?

 

[moh malekpour]

Others argue that both should be used.

Why ignore something that may be relevant?

I would say the same thing because I like to use me too but it is not up to me. There are some decision makers who compare the cost of $25 with the cost of $2500 for a commercial appraisal and they tend to go for $25. Then, the question is that you get what you pay but the answer, sometimes, is that what about if you get the same regardless of what you pay.

 

[sunsetvalley]

I would say the same thing because I like to use me too but it is not up to me. There are some decision makers who compare the cost of $25 with the cost of $2500 for a commercial appraisal and they tend to go for $25. Then, the question is that you get what you pay but the answer, sometimes, is that what about if you get the same regardless of what you pay.

Moh - but then wouldn't it be upon the shoulders of the industry to adequately price the cost of having the AVM type analysis? In theory, the appraisal fee should reflect the cost involved with producing the appraisal report, including the liability. We don't compromise with the fee because another AMC will do it for $25 less. We say you want quality, you pay for it.

You're saying that because someone is willing to do it for $25 less and may get the same quality. But isn't that the huge slippery slope that has put the industry into the $170 appraisals? At what point do you move from competition to downright ruin of an industry?

 

[Riick]

You're saying that because someone is willing to do it for $25 less and may get the same quality. But isn't that the huge slippery slope that has put the industry into the $170 appraisals? At what point do you move from competition to downright ruin of an industry?

The argument is effectively that appraisers are making custom buggy-whips, while the NAR is promoting mass-produced accelerator pedals.
... and I do mean accelerator!

 

[Highlander416]

The argument is effectively that appraisers are making custom buggy-whips, while the NAR is promoting mass-produced accelerator pedals.
... and I do mean accelerator!

I think the bottom line is that if the NAR can provide a pruduct that gets similar results as a full appraisal, but will provide the product for $10, that will be all she wrote for the appraisal business. Of course, their will be no need for liability insurance, CE Classes, licensing, comp explanations etc with the AVM.

 

[1ststater]

If NAR wants to cross pollinate professions, fine. Just let us open up real estate brokerages so we have a slice of that pie.

I say if you are a certified real estate appraiser, you already have a better grip on the market and market dynamics than most realtors out there and are most likely more professional and articulate.