Practical Applications of Real Estate Appraisal (PAREA)----New idea from the AQB

[Joe Flacco]

The AQB has no evidence that the appraiser community will not take on trainees if/when an area actually runs into the prospects of a long term shortage of appraisers. I don't see any reason to believe that the same people who were running trainees back during the 2001-2008 boom won't return to the same behavior (even if only limited to 3/time) when the market for appraisal services improves to the point that the fees increase.

The problem with the AQB is that they got the lenders and AMC's in their ear. Banks and AMC's run Appraisal Foundation.

 

[Overimprovement]

The AQB has no evidence that the appraiser community will not take on trainees if/when an area actually runs into the prospects of a long term shortage of appraisers. I don't see any reason to believe that the same people who were running trainees back during the 2001-2008 boom won't return to the same behavior (even if only limited to 3/time) when the market for appraisal services improves to the point that the fees increase.

Instead of continuing to reduce the experience and education requirements to battle the incorrect perceptions that there are A) a current and increasingly likely appraiser shortage, and B) high barriers to entry because of the current supervisory model, the AQB and GSEs would be providing a much better service to consumers and appraisers alike by simply relaxing the rules surrounding the use of trainees.

Trainees in many states can never inspect a subject on their own for GSEs, no matter their experience. But instead of moving the needle back, and stating trainees can now inspect solo with at least X hours under their belt, the powers that be will now allow essentially anyone to inspect the subject. With no formal supervisory appraisal training at all. Maybe they will have to take a 2 hour measuring practicum. Have not seen ANY details about the level of training that will be required.

Talk about overkill to respond to perceived problems in the profession. Its like treating a bleeding paper cut by dropping the patient in liquid nitrogen. Bleeding stopped!

So in 5 years what will we have? Some percentage of homes inspected by someone with 2 hours (or whatever) of informal training--I am sure there will be no actual testing using real houses...and the remaining percentage of homes inspected by PAREA graduates, who possibly have never stepped foot into a home prior to getting their license. The PAREA graduates will surely work for far less, since they don't have the education, time, or experience requirements to make up for like all of us have. We know there will NO difference in license designation. That would benefit the profession, so it will never happen.

What could go wrong?

 

[George Hatch]

If a state has that prohibition then it's the state doing that, not the AQB. In my opinion the bigger barrier to the more frequent use of the "did not inspect" checkbox for the supervisor's signature - which Fannie has never removed - is at the originating lenders. A couple people have said that a few of the lenders have relaxed their attitude toward that.

As of 2019, if a lender will seriously consider the use of the BF hybrids for certain assignments then there's no justifiable reason for not also using 1004s where a trainee with 500+ hours is doing solo inspections. Presumably for the simplest SFR assignments. And being limited to those states which don't currently prohibit that.

Of course, once that happens appraisers will flood their market with trainees and perpetuate and exacerbate the long term oversupply into perpetuity again, but that's their own fault.

 

[J Grant]

If a state has that prohibition then it's the state doing that, not the AQB. In my opinion the bigger barrier to the more frequent use of the "did not inspect" checkbox for the supervisor's signature - which Fannie has never removed - is at the originating lenders. A couple people have said that a few of the lenders have relaxed their attitude toward that.

As of 2019, if a lender will seriously consider the use of the BF hybrids for certain assignments then there's no justifiable reason for not also using 1004s where a trainee with 500+ hours is doing solo inspections. Presumably for the simplest SFR assignments. And being limited to those states which don't currently prohibit that.

Of course, once that happens appraisers will flood their market with trainees and perpetuate and exacerbate the long term oversupply into perpetuity again, but that's their own fault.

Imo that is a false prediction. Even if trainees are allowed /green lighted to inspect with no supervisor to inspect, most appraisers are not that short sighted to run out and hire trainees. The amount of appraisals due to waivers will decrease and 1004 assignments likely to decrease due to bifurcated , no cert appraiser in right mind would hire a trainee with that present, though there is always a few greedy outliers.

The coming changes to training period favors AMC;s hiring them if anything .

 

[George Hatch]

You know, I used to think appraisers (as a group) would learn from their mistakes. I don't think that anymore.

As far as the greedy few - that's all it takes when we're talking about a market that's already (still) oversupplied relative to the long term demand for services. As of 2019 we STILL have appraisers taking on trainees, despite the current market conditions. There's no reason to believe that number won't increase if/when fees increase as a result of supply approaching parity with demand. Or if/when the lenders flip the switch and start accepting appraisals where the supervising appraiser did not inspect.

 

[chad hampton]

I thought we had a shortage of appraisers? Which is it? Guess it depends on the agenda that's trying to be pushed.

This is all part of the long terms goal of AMC's morphing into nationwide appraisal companies with a few hundred/thousand staff appraisers sitting in an office somewhere churning out appraisals performed by low paid field inspectors all over the country. You think 1 certified appraiser having 25 trainees running around a state was a problem? You ain't seen nothing yet.

De-legitimizing the field work is only a step. Removing geo-competency is the next step. A reciprocal license and having MLS access (which nationwide companies have) will be all that is required for you to appraise all over the country. Hell, they might even start arguing that getting on Zillow is good enough.

These entities won't stop on their own. Their investors demand more profit.

It's a shame too, there are a couple smaller AMC that I love working with. Good people, pleasant to talk to on the phone. They treat me well and I give them first rate service. But the big boys are a totally different story. Not sure about the future if they are allowed to control the direction of the profession.

 

[George Hatch]

Amazon has been eating the retailers. And there's nothing most of the retailers can do to stop them.

If you're still appraising in 20 years maybe you will be commuting to work, filling a chair in a cubicle, punching a time clock, taking a 30-min lunch break every day, with hustling to meet a 40/week quota. It just depends on what levels of due diligence the lenders decide they need.

 

[chad hampton]

Possibly, but doubt I'll be doing that. Plenty of other options out there. I've had corporate office jobs - I got into appraising to get away from that mentality. Little did I know it would follow me here.

I don't believe you can accurately and credibly value residential real estate w/o getting out in your market. Real estate is local.

It also depends on what the folks that issue licenses have to say as they are tasked with protecting the public trust. I doubt lenders give too much thought about public trust. Lending isn't a free market, it's heavily regulated. When lenders make bad decisions and then come running for a gov't handout, they gave up that right.

Appraisers got in trouble 10-15 years ago for giving their clients anything they wanted. I don't recommend doing the same thing again.

 

[J Grant]

Amazon has been eating the retailers. And there's nothing most of the retailers can do to stop them.

If you're still appraising in 20 years maybe you will be commuting to work, filling a chair in a cubicle, punching a time clock, taking a 30-min lunch break every day, with hustling to meet a 40/week quota. It just depends on what levels of due diligence the lenders decide they need.

Comparisons to retail are annoying but since you made it..., Amazon fulfills many of its orders from other retailers. Amazon acts more like an AMC (a clearing house ) Other retailers have adapted online ordering so they regained parity and while some big b ox stores closed a plethora of online stores opened.

Amazon started out by offering consumers lower prices...these days, unless the consumer is an idiot it is easy to see that ordering from Amazon is often more expensive than other sources including online. Their "free " shipping is not free, it is either by paid membership (Amazon Prime yearly charge ) or rolled into a higher price or in some cases, selling returned merchandise marketed as "new "

 

[Overimprovement]

I don't believe you can accurately and credibly value residential real estate w/o getting out in your market. Real estate is local.

I strongly agree, and while I would never compare an appraiser with a doctor as far as skillset, etc, I do think there are parallels when comparing an in-office doctor visit vs a text or computer model of your symptoms...TO ...an appraiser in their local neighborhood being INSIDE houses, vs a computer model or staff appraiser in India/corporate HQ trying to appraise a local home, even with similar sales data available.

Its also why a family doctor who has treated someone for 10 years may come to a quicker/better diagnosis than the doc who just moved here from wherever. Local experience in the market matters. If anyone thinks it does not, then just turn your license in because what are you adding other than data manipulation, which a computer could do?

We are being forced to prove our value. What is our answer going to be?