PAREA: Darn the torpedoes / 3 Sheets to the Wind

[RCA]

Take a look at the sponsors. What else do you need to know? A coordinated attack by TAF and their IAC partners to flood the market with form-fillers.

Appraiser Diversity Initiative

The Appraiser Diversity Initiative is the premier nationwide program designed to attract new entrants to the real estate appraisal field while fostering diversity in the profession.

www.appraisalinstitute.org

Well, they do say "... talented candidates ...". If they require a SAT test and a score in the upper 5% in math and 10% in verbal aptitude, that would actually be a big improvement. I don't have a problem with that, plus of course the background check, drug tests, and interviews.

But, of course, in the back of our minds, we kind of know this is not going to happen. Otherwise, they would have just stuck with the degree requirements to begin with.

Time will tell. It shall eventually become obvious what they have done, what they are doing and they take the blame for the result.

I wait for the day to proclaim: "Look at these total idiots the Appraisal Institute has produced!!!'

You can get property owners to give you copies of the appraisal reports. NO PROBLEM.

 

[Highlander416]

Agreed - and that just comes with experience. I really believe the PAREA folks will probably be 'entry level better' than most folks who are trained by Jim Bob, but to your point - it's when folks get into the real world 'on their own' that they really start to develop. IMO - that's when folks need a network of people to assist. Much like this board. I still field about 5-10 calls a week from folks I've mentored who run into 'new' scenarios...

It still doesn't make sense to me. A flood of entry level appraisers with no work to do. I conceed that I might be wrong, and work could be plentiful for decades to come. But, my gut tells me that far, far fewer appraisals will be needed 10 years from now. I understand that private work will always be available, but PAREA appears to have been created to fix an issue in the lending world, where it appears the move is not toward PAREA and bringing in the next generation of appraisers, but rather to mostly sunset the residential appraisal business. I guess only time will tell.

 

[alebrewer]

It still doesn't make sense to me. A flood of entry level appraisers with no work to do. I conceed that I might be wrong, and work could be plentiful for decades to come. But, my gut tells me that far, far fewer appraisals will be needed 10 years from now. I understand that private work will always be available, but PAREA appears to have been created to fix an issue in the lending world, where it appears the move is not toward PAREA and bringing in the next generation of appraisers, but rather to mostly sunset the residential appraisal business. I guess only time will tell.

Agreed that time will tell. It seems to me, though, that your'e arguing two different things... are you arguing that there will be too many appraisers, or that PAREA appraisers won't be as well trained as the 'typical' training? I can tell you for a fact that the 'typical' training program is a failure. Who knows what the PAREA training will produce. As to whether or not there are too many appraisers. I, for one, am a free market guy - which means that, in general, I'm opposed to raising barriers to entry just so the folks who already have their credential can make above market profits (myself included). I understand, though, the concern that we may find ourselves out of a profession at some point. In that vein, we're no different than any other industry that has gone through similar fate...

 

[Highlander416]

Agreed that time will tell. It seems to me, though, that your'e arguing two different things... are you arguing that there will be too many appraisers, or that PAREA appraisers won't be as well trained as the 'typical' training? I can tell you for a fact that the 'typical' training program is a failure. Who knows what the PAREA training will produce. As to whether or not there are too many appraisers. I, for one, am a free market guy - which means that, in general, I'm opposed to raising barriers to entry just so the folks who already have their credential can make above market profits (myself included). I understand, though, the concern that we may find ourselves out of a profession at some point. In that vein, we're no different than any other industry that has gone through similar fate...

On the PAREA training itself. I have no idea if it will work or not.

Do you think there will be any market for the PAREA appraisers beyond a short term horizon? Yes, other industries have gone through a similar fate, but I think it is pretty wise to avoid training for one of those industries, when it appears the writing is on the wall already.

 

[Non Sequitur]

Do you think there will be any market for the PAREA appraisers beyond a short term horizon?

The market is AMC staff. The way it's working out a couple of large AMCs are in various stages of developing proprietary programs/courses, and they aren't planning on offering it to the public (that doesn't mean once PAREA noobs figure things out they won't join the indie ranks). The AI is so far behind that even with the grant money flowing from TAF I would be surprised if we see anything from them in the next few years. And when/if it is offered, I'm guessing the price will be a serious pain point. I'm sure a few will pay the AI entry fee but I really don't see a flood coming from AI PAREA, I see it coming from the churn and burn corporate AMC side. Time will tell.

 

[George Hatch]

I've written appraisal courses before, and one thing I can tell you is that its not that easy to write appraisal problems that include more than a couple of significant variables without the "datapoints" looking contrived and overly-simplified. If during a real world assignment you'd be looking at 30 different datapoints in order to get the 10 possibles and 5-6 comparables, each one of the 30 have to be developed enough to be able to either fit or not fit your solution. That's what it would take for an "experience" to mimic a live assignment. Rinse and repeat for maybe 200 such PAREA assignments that would cover a broad swath of different types of appraisal problems and that would be quite the undertaking. The report writing for 200 appraisals will comprise some of those experience hours, so somebody is going to have to read those and provide feedback.

There aren't any shortcuts with live assignments that we perform out in the wild. That's an uncontrolled environment, and it occasionally includes people lying to appraisers about what is/what isn't. Out in the wild, outliers are common in almost all assignments. In order for a PAREA course to mimic those conditions the range of different types of appraisal problems and the specifics of each of the data points that comprise the database for those appraisal problems would need to be a lot more messy and inconclusive than the neatly configured examples that are commonly used in the instructional texts.

Just as an example, if an appraiser covers 8 or 10 or 20 county or municipal jurisdictions, that's how many zoning codes and zoning maps they would need to find, query and interpret over the course of a year. If a PAREA program is being built to mimic that experience and competency it would have to include that level of detail in their materials AND provide a way for the appraiser to access and use that material on their own, without that info just being given to them as normally occurs in a contrived word problem. Same with MLS databases. Same with pics of every datapoint in those databases because those pics are part of the info we analyze during the course of an assignment.

I contemplated building virtual towns, comprised of different property types, size, age and quality neighborhoods, different sized lots, different zoning - the works. Then build a public records database and a separate MLS database (because the two don't always match up IRL). Create the complex world first and then give the student an address to one of the datapoints to proceed on their own. No prompts, no tips, no EASY button. Figure it out, boy, and don't ask for help unless you run into a dead end. And BTW, if your solution sux then you can expect an ROV or a stip from your client. Heck, even if your solution doesn't sux you'll still get ROVs telling you that you "missed" these comps.

If you want to be the man then you gots to be the man. So to speak.

 

[J Grant]

There is not going to be a flood of "Parea appraisers" because what idiot would sign themselves on for a "career" of being exploited by AMC's , having to bid lower /lowest to get an assignment and facing cycles of low volume where any $ made in high volume cycles goes to sustaining a low volume cycle ?

This is not the old days, this is now and all a newbie/wannabe appraiser has to do is look up a BB or facebook group to read the reality of res mortgage appraisal work and they can see for themselves how bad it is. The exception of course are those appraisers who can find enough direct order lender and or private/other work to make a decent income, but those clients typically will not accept a less experienced appraiser and even experienced appraisers can find it hard to get non AMC clients due to AMC's having a volume lock in many areas.

There will always be of course some folks who will finish the courses and stick it out and become appraisers, but I do not foresee a flood of them, even if AMC's want to line them up for staff appraiser careers. Staff pay at most AMC or big box lenders stinks, unless one wants to work 7 days a weeks to pump out volume and how many people want to sign on for that...easy come easy go, less hours or years invested in training means easier to walk away from. The AMC's had a great ride in being able to exploit well trained, seasoned appraisers who were already vested in the business and by the time AMC's took over volume those appraisers gave it a last run until retirement. Now those appraisers are aging out and AMC's are desperate to replace them.

The PAREA coursework itself might be very good, but it is not the course work that is the problem. It is the whole industry on the res lending side and I predict half the naive PAREA grads will head for the exist once they have to produce actual appraisals under the intense time pressure of deadlines/update harassments. The the newbie will discover after the appraisal is sent in, an ROV or nit pick QC review awaits, as adding hours of $ losing time suck work.
Next, the newbie might wonder why their client is ghosting them and sending no further orders if the appraisal happened to come in "low". That is the working reality of a large segement on the res lending side, and PAREA will not disclose nor prepare candidates for the reality.

 

[alebrewer]

Do you think there will be any market for the PAREA appraisers beyond a short term horizon? Yes, other industries have gone through a similar fate, but I think it is pretty wise to avoid training for one of those industries, when it appears the writing is on the wall already.

Couple of thoughts: once someone has their credential, they're not a 'PAREA' appraiser - they're just an appraiser - no different than you or me (depending on credential level of course). (2) If the reason for not allowing PAREA appraisers into the profession is to limit the number of appraisers, that is, in effect, collusion to set prices. I'm generally not in favor of actions that serve to keep prices for a good or service artificially high.

 

[Non Sequitur]

I've written appraisal courses before, and one thing I can tell you is that its not that easy to write appraisal problems that include more than a couple of significant variables without the "datapoints" looking contrived and overly-simplified. If during a real world assignment you'd be looking at 30 different datapoints in order to get the 10 possibles and 5-6 comparables, each one of the 30 have to be developed enough to be able to either fit or not fit your solution. That's what it would take for an "experience" to mimic a live assignment. Rinse and repeat for maybe 200 such PAREA assignments that would cover a broad swath of different types of appraisal problems and that would be quite the undertaking. The report writing for 200 appraisals will comprise some of those experience hours, so somebody is going to have to read those and provide feedback.

There aren't any shortcuts with live assignments that we perform out in the wild. That's an uncontrolled environment, and it occasionally includes people lying to appraisers about what is/what isn't. Out in the wild, outliers are common in almost all assignments. In order for a PAREA course to mimic those conditions the range of different types of appraisal problems and the specifics of each of the data points that comprise the database for those appraisal problems would need to be a lot more messy and inconclusive than the neatly configured examples that are commonly used in the instructional texts.

Just as an example, if an appraiser covers 8 or 10 or 20 county or municipal jurisdictions, that's how many zoning codes and zoning maps they would need to find, query and interpret over the course of a year. If a PAREA program is being built to mimic that experience and competency it would have to include that level of detail in their materials AND provide a way for the appraiser to access and use that material on their own, without that info just being given to them as normally occurs in a contrived word problem. Same with MLS databases. Same with pics of every datapoint in those databases because those pics are part of the info we analyze during the course of an assignment.

I contemplated building virtual towns, comprised of different property types, size, age and quality neighborhoods, different sized lots, different zoning - the works. Then build a public records database and a separate MLS database (because the two don't always match up IRL). Create the complex world first and then give the student an address to one of the datapoints to proceed on their own. No prompts, no tips, no EASY button. Figure it out, boy, and don't ask for help unless you run into a dead end. And BTW, if your solution sux then you can expect an ROV or a stip from your client. Heck, even if your solution doesn't sux you'll still get ROVs telling you that you "missed" these comps.

If you want to be the man then you gots to be the man. So to speak.

None of this really matters. Once the virtual class is done the PAREA noobs will work off of scripts and pull down menus while their "team" does the lifting. Click here, click there, then "poof" like magic an appraisal report will be created.

 

[Elliott]

The market is AMC staff. The way it's working out a couple of large AMCs are in various stages of developing proprietary programs/courses, and they aren't planning on offering it to the public (that doesn't mean once PAREA noobs figures thing out they won't join the indie ranks). The AI is so far behind that even with the grant money flowing from TAF I would be surprised if we see anything from them in the next few years. And when/if it is offered, I'm guessing the price will be a serious pain point. I'm sure a few will pay the AI entry fee but I really don't see a flood coming from AI PAREA, I see it coming from the churn and burn corporate AMC side. Time will tell.

I'm betting AARO will get its nose into PAREA to complete the trifecta.