Phil Crawford Podcast

[George Hatch]

Of course we want to see some for-real examples. Why wouldn't we?

As an appraiser I'd rather see than not-see; I'd rather know than not-know. So do most appraisers if they're thinking about it. That applies to all the controversies of the day: the racism allegations, the AMC-pressure allegations, the client-advocacy allegations, the unlicensed runner allegations, the blacklist allegations and of course the price-creep @ waiver allegations. Whatever the real number is of the occurrence of these problems, I don't think we can zero in on appropriate responses and solutions to these problems until we first quantify how common/rare they are in real life.

Nobody has addressed it directly yet in the Data Cancer theme, but that chronic 1%-2% valuation creep has been juiced by the appraisers since forever. And those juiced cookies haven't just been limited to the worst of the worst of appraisers, either.

Most appraisers will already round up when appraising for a sale if the comps are within 1% to as much as 3% of the contract price. Rounding is a standard practice in appraising; and that rounding is usually to the higher number. Tie goes to the runner. I've done it before and my guess is that every appraiser here has done it even if only under limited circumstances. The "rounding up" might even occur more commonly among the reviewers than the appraisers. "I don't completely agree with this number but the difference isn't enough to justify a demand for revision". I've done that as a reviewer before, too.

AVMs can be manipulated by their users to do the same, or the lenders can simply choose to increase the actual LTV on the decision making side. The question that applies is whether or not the AVM users will do that more often or less often than the appraisers.


A borrower who doesn't get what they want might submit an ROV, but the AVM will never be subject to getting blacklisted for not submitting to the pressure. The user might calibrate the AVM so as to get the looser slot machine but if/when that happens it is the user doing it, not an appraiser.

 

[Zoe]

Of course we want to see some for-real examples. Why wouldn't we?

As an appraiser I'd rather see than not-see; I'd rather know than not-know. So do most appraisers if they're thinking about it. That applies to all the controversies of the day: the racism allegations, the AMC-pressure allegations, the client-advocacy allegations, the unlicensed runner allegations, the blacklist allegations and of course the price-creep @ waiver allegations. Whatever the real number is of the occurrence of these problems, I don't think we can zero in on appropriate responses and solutions to these problems until we first quantify how common/rare they are in real life.

Nobody has addressed it directly yet in the Data Cancer theme, but that chronic 1%-2% valuation creep has been juiced by the appraisers since forever. And those juiced cookies haven't just been limited to the worst of the worst of appraisers, either.

Most appraisers will already round up when appraising for a sale if the comps are within 1% to as much as 3% of the contract price. Rounding is a standard practice in appraising; and that rounding is usually to the higher number. Tie goes to the runner. I've done it before and my guess is that every appraiser here has done it even if only under limited circumstances. The "rounding up" might even occur more commonly among the reviewers than the appraisers. "I don't completely agree with this number but the difference isn't enough to justify a demand for revision". I've done that as a reviewer before, too.

AVMs can be manipulated by their users to do the same, or the lenders can simply choose to increase the actual LTV on the decision making side. The question that applies is whether or not the AVM users will do that more often or less often than the appraisers.


A borrower who doesn't get what they want might submit an ROV, but the AVM will never be subject to getting blacklisted for not submitting to the pressure. The user might calibrate the AVM so as to get the looser slot machine but if/when that happens it is the user doing it, not an appraiser.

Good comments.

In the current system, avms are created by biased parties. I get the blacklisted part which is also by a biased party.

The 1-2% reference is an arbitrary concept. I could throw out 10-30% arbitrary concept.

 

[Joyce Potts]

The better question is: If F/F were not still under conservatorship and publically traded, would these waivers have ever come into play? Perhaps we're about to another 'big short'.

 

[George Hatch]

I suspect the increase in the max LTVs was involuntarily imposed on the GSEs by the current administration and is entirely motivated by partisan politics.

I have to admit, though. It makes for a great virtue signal to those people who are all-in on the theology of public entitlements.

 

[Fernando]

Of course we want to see some for-real examples. Why wouldn't we?

As an appraiser I'd rather see than not-see; I'd rather know than not-know. So do most appraisers if they're thinking about it. That applies to all the controversies of the day: the racism allegations, the AMC-pressure allegations, the client-advocacy allegations, the unlicensed runner allegations, the blacklist allegations and of course the price-creep @ waiver allegations. Whatever the real number is of the occurrence of these problems, I don't think we can zero in on appropriate responses and solutions to these problems until we first quantify how common/rare they are in real life.

Nobody has addressed it directly yet in the Data Cancer theme, but that chronic 1%-2% valuation creep has been juiced by the appraisers since forever. And those juiced cookies haven't just been limited to the worst of the worst of appraisers, either.

Most appraisers will already round up when appraising for a sale if the comps are within 1% to as much as 3% of the contract price. Rounding is a standard practice in appraising; and that rounding is usually to the higher number. Tie goes to the runner. I've done it before and my guess is that every appraiser here has done it even if only under limited circumstances. The "rounding up" might even occur more commonly among the reviewers than the appraisers. "I don't completely agree with this number but the difference isn't enough to justify a demand for revision". I've done that as a reviewer before, too.

I just about finishing my report and my appraised value is 0.3% below contract price. What should I do?
I can round up and massage my adjustments or I can just leave it as it is.

In the past when I'm slightly off, client/lender would come back and ask me to reconsider.
My thinking is if a small decrease is such a big deal, buyer either can't afford it and shouldn't buy it.
If buyer really love the house, small difference shouldn't be a deal breaker. Or is it a lender thing to have appraised value match exactly with contract price?

On the other hand, client/lender will see I'm a trouble maker and doesn't play ball.
I can see with waivers or AVMs, no human influence on outputted value.
I may keep it the same below contract price and see if client/lender will make it a big deal out of it.
What do you think? Should I just round off and make everyone happy except me?

AVMs can be manipulated by their users to do the same, or the lenders can simply choose to increase the actual LTV on the decision making side. The question that applies is whether or not the AVM users will do that more often or less often than the appraisers.


A borrower who doesn't get what they want might submit an ROV, but the AVM will never be subject to getting blacklisted for not submitting to the pressure. The user might calibrate the AVM so as to get the looser slot machine but if/when that happens it is the user doing it, not an appraiser.

 

[Terrel L. Shields]

BUT, Seriously? Jewish?

Well, I believe Phil is Jewish but that hardly is an automatic pass to wealth....Like most ethnicities and/or religions, they come in 2 flavors. Poor and Not so Poor (rich if you will). So, yes, the

you can't be serious with these kinds of comments.

Oh, but he is, yes, he is.

 

[Fernando]

With all due respect, it is deeper than that Sir. Look at it from a macro economic standpoint vs a micro economic standpoint and the parties involved.

I was impress that George was quick and thorough in pointing out the flaws in PC's data cancer issue.
The problem with outliers has existed prior to waivers.
When prices were increasing, it was difficult to appraise at the higher contract price. Agents would hate me when I can't deliver.
What I saw were these concessions which bumped the prices higher.
I knew that price was high but when closed, other agents and buyers would use that sale and prices continued to go up.

On the otherhand when I got a bargain deal on a purchase, I think that lowered the price for future sales in that area.
I knew the circumstances in getting a low sales price but others saw a comp in not justifying higher price in area until more higher price sales occur.

 

[Terrel L. Shields]

Or is it a lender thing to have appraised value match exactly with contract pric

Yes, it is. A bank under the FDIC must hold 100% in reserve if the appraised value is less than the loan. If the appraised value is higher than the loan value, then the bank only needs to hold a small percent as reserve. Close does not count in bank world.

 

[Fernando]

Well, I believe Phil is Jewish but that hardly is an automatic pass to wealth....Like most ethnicities and/or religions, they come in 2 flavors. Poor and Not so Poor (rich if you will). So, yes, the

Oh, but he is, yes, he is.

There are some ethnic groups all over the world which their culture has propensity to put importance in wealth. Wealth also related to power.
It's just you can't say it in this politically correct environment in generalizing.

 

[Fernando]

Yes, it is. A bank under the FDIC must hold 100% in reserve if the appraised value is less than the loan. If the appraised value is higher than the loan value, then the bank only needs to hold a small percent as reserve. Close does not count in bank world.

Thanks for seeing how it works and see the "light".
Appraisers are better than waivers. I'll round up.