Purpose Of An Appraisal?

[Michigan CG]

No appraiser with a brain is hiring a trainee when they accept $350 fees. Run.

 

[hastalavista]

Appraisers will always be needed.
But...
A. They won't be needed as much as they used to be needed for mortgage work; and
B. The appraisal process ("process"... not "methodology") will be changing in the residential mortgage segment (for sure.. it is happening now) and to some extent in the commercial mortgage work.

If you are focusing in residential appraisal, then completing mortgage assignments is a good place to start. Most work shouldn't be that complicated or difficult and it will allow you to take what you've learned in your basic courses and apply it in practical application.
I'd say your challenge (and anyone in your position) is how to break-out of the mortgage-finance bubble into the more specialized and better-paying work. Trust me, it is there.

I'll give you some free advice: If I were starting all over as a residential appraiser, I'd do everything I could to learn right-of-way (ROW) work. It is a niche market that is undeserved by the residential appraisers.
Unless I was hired by a ROW appraiser, the way to break into that niche is to earn your experience-stripes in the mortgage-world, take some specialized classes for ROW valuation, and then start approaching ROW firms and appraisers.

That's my 2-cents.
Good luck!

 

[bnmappraisal]

why even have an appraiser in the first place?

My above reply (post #10) was pretty cynical ... welcome to the AF

But to answer your quoted above question, there are actually clients out there who REALLY do want us to answer their appraisal question(s)

Just yesterday I accepted an assignment from a private individual going through a divorce who would like to know what their property is worth. He/they (he and his soon to be ex) would actually like to know what the property is worth! Thus the need for an appraiser. I will be objective, unbiased, independent (see USPAP). I told him upfront that it didn't matter to me what he ends up doing (getting divorced, sells the property, keeps it, rents it, etc) ...

Sadly, as it sounds like you're finding out, on the RES side, AMCs dominate a nice chunk of the industry ... BUT ... it doesn't have to be that way

Again, welcome to the AF

 

[bnmappraisal]

I'd say your challenge (and anyone in your position) is how to break-out of the mortgage-finance bubble into the more specialized and better-paying work. Trust me, it is there.

(my bold)

 

[VALU8]

Thank you

 

[Elliott]

Economics is t0he study of the allocation of scarce resources. The appraisal function is part of the process to provide risk assessment and equitable allocation for equity and mortgages resources. Most of the time appraisals reaffirm the behavior of the market, but sometimes the appraisal indicates a value isn't supported. Its a very important function and it is challenged more than other appraisals by buyers, sellers, lenders, UWs, and AMCs. In the long run, lenders appreciate our effort to get it correct.

 

[J Grant]

A part of the client activity regarding the business of is as corrupt as you observe. The AMC's were supposed to be a firewall that took away lender pressure to hit a value, but instead, as you note, a number of them pressure an appraiser by hounding them for revisions/ROV sales if a number is not hit...and may also stop giving the appraiser work Not all clients are like that, some are ethical, but the fact that it goes on with a number of them shows you what exists vs the spin about a firewall and appraiser independence. Then the depressed fees paid to appraisers on most AMC work

Though I wonder if such a high percent of reports are being returned if there is some quality issue with the reports, or how the value was developed. It is hard to find a good mentor on the res side as the business has been so decimated few want to train. Take as much high quality education classes as you can ( Appraisal Institute ) . The commercial license is a better bet, or if res only, go for the SRA designation, you have to stand above the pack in work quality to escape the AMC grind .

Automation is encroaching, though at same time it is creating desktop and hybrid work -outlook is mixed, though well educated appraisers with experience will always be needed in some capacity.

 

[Deleted member 130081]

Yeah I won't rule out user error- It could just be the appraiser who hasn't been doing it for 20 years- He's done it on and off since 2006 or so. Am I just looking at the work with a bit too much cynicism?

No, quite the opposite, you are looking at the world without years of ingrained bias. The more you see the world without the influence of this bias, the better appraiser you are going to be. However conversely, the more you subscribe to the bias, the more successful you might be. Not a very pretty thought is it? I think the advice from Denis is excellent. I would add getting the General license is a prudent long-term strategy, though that may not be enough in the long run either, which makes what Denis said even more significant.

Here's some possible insight, and maybe this is more of a confirmation to what you already suspect, the appraisal world is a conflicting one. I wont even begin to start citing the various conflicts as they are so many in so many different areas. But, you have discovered a tremendous resource in this forum. There are years of content that can be referenced. Just keep in mind, this is an internet forum and just because we have an obligation to promote and maintain the public trust, doesn't mean we aren't human (though some of the posts might make you wonder about that from time to time - lol).

If I knew then what I know now about appraisal, I would not have become an appraiser. Then again, if I knew then what I know now about a lot of things, I'd have made numerous other choices too. Good luck young one. Choose your path wisely because if the old-timers are right about anything, its that life is short and it is what you make of it.

 

[TRESinc]

while i don't like ROVs i have found that the vast majority of them are really easy to deal with. case in point i got one today.

the subject was listed on the market for 110 days (very abnormal for my market when typical listing time currently is 30 days or less) @ $172,000, contract price was $180,000 with $8,000 in concessions (not hard to see what is going on here). i appraised it at $173,000 with 2 comps in the same development and one that was 0.75 miles away, all sales in the past 6 months. got the ROV and laughed out loud - it was written by the listing agent, emailed to the borrower who then emailed it to the lender but wasn't smart enough to redact all the info about the listing agent (advertising, sig line, etc).

so here i am telling the borrower (in a roundabout way) that they are overpaying for the property and they enlist the help of the person selling them the house to attempt to justify why they should be paying more than the house is worth. the 3 supplied sales, and they were not comps, were all 2-3 miles away, different styles of housing and all had more GLA than the subject (fwiw the subject was a split level, all comps were colonials). it took me less than 10 minutes to write my reply.

this was from a direct engagement lender who i have worked with for more than 13 years. they are a good client, so while they never really review these requests and just send them on to me i make the business decision to respond to them in a timely fashion. you will find that there are some good clients out there, and for those i go above and beyond, but they won't come knocking at your door. you have to learn the craft, establish yourself and then market yourself. the last bit is where most appraisers run into problems. there are far too many of us who think that because we have a license we are automatically entitled to work, and that work should be everything we think it should be. it doesn't work like that in real life. it took me a couple years to change my work from 100% residential lending to now only having 50% or less of my total workload. eventually i will be out of residential lending work completely, but it's where almost every residential appraiser cuts their teeth and some stay there forever.

 

[Deleted member 134708]

To the OP topic.

Got a ROV for 1st time this year. Was a newer construction development that continued building phases. All my comps were aged 5 years and C2 as the subject was..

They sent over 3 C1's.

Why did you even order an appraisal? Just give them money and your good to go.

My response. C1 properties in no way represent or are viewed as replacements to C2's by market participants.