Regression Analysis

[Joe Flacco]

Denis and other appraisers like him with 100+ appraisers working in house and supervised would greatly improve appraisal report quality across the board.

 

[timd354]

Why do appraisals continue to be assigned to those appraisers?

Assigning 10% of assignments in the market area to a appraiser like Denis and letting him do his thing with a very large local firm is better than AMC model of ordering from hundreds of cheaper and faster people and then trying to micromanage their appraisal reports.

To be honest with you, when I see appraisals with unsupported adjustments or any other major problems, those appraisals are no more likely to be from an AMC appraiser than a directly engaged appraiser. We insure the loans originated by well over 1,000 different lenders, some of whom use directly engaged appraisers, some of whom use AMC's, some of whom use a mix of directly engaged appraisers and AMC's, and some of who who have switched from directly engaged appraisers to AMC's (or vice-versa). What I have observed is that there is little or no overall difference in quality between AMC and non-AMC appraisals, but there is a difference in appraisal quality between different lenders. I know that is not what many of you believe or what to hear, but that is what I have observed in my 5+ years in position as the chief appraiser of a major mortgage insurer.

 

[Joe Flacco]

To be honest with you, when I see appraisals with unsupported adjustments or any other major problems, those appraisals are no more likely to be from an AMC appraiser than a directly engaged appraiser. We insure the loans originated by well over 1,000 different lenders, some of whom use directly engaged appraisers, some of whom use AMC's, some of whom use a mix of directly engaged appraisers and AMC's, and some of who who have switched from directly engaged appraisers to AMC's (or vice-versa). What I have observed is that there is little or no overall difference in quality between AMC and non-AMC appraisals, but there is a difference in appraisal quality between different lenders. I know that is not what many of you believe or what to hear, but that is what I have observed in my 5+ years in position as the chief appraiser of a major mortgage insurer.

I agree with you. It is not a question about AMC vs direct engagement. It has more to do with about all licensed appraisers being equal to some engaging parties. You can't order from just anybody that will accept the order and then complain that the appraisal is not credibly developed and then order from them again. That doesn't make any sense. Order from somebody that will deliver a credible report without the client having to question adjustments or micromanage the report content on a regular basis. That's all I am saying. There is no reason a direct lender or AMC should not be trying to order as many reports as possible from Denis in the bay area. A place like bay area must have hundreds of orders placed per day.

 

[DWiley]

Why do appraisals continue to be assigned to those appraisers?

I do not know. We have a process to get rid of such, and we use it - regularly. I cannot speak for others.

 

[Howard Klahr]

Also, we have to understand that predictive statistics - which is what we've been discussing here for the most part - is much less credible in real estate analysis than descriptive statistics. You can roll out a model that shows a relationship between variables as a predictor of value, but don't confuse this with point-estimation of value. Most of the AI education is pretty good at this but somehow they go a little too far giving appraisers the confidence to use statistics to predict (forecast) a point estimate rather than just say that the relationship between X, Y and Z is this and thus supportive of my adjustment or conclusion - which should be HOW it's used. Show the DATA and do the WORK before conveying your CONCLUSION, and then back it up with statistics; don't believe that statistics is giving you the conclusion.

Well said

 

[timd354]

I agree with you. It is not a question about AMC vs direct engagement. It has more to do with about all licensed appraisers being equal to some engaging parties. You can't order from just anybody that will accept the order and then complain that the appraisal is not credibly developed and then order from them again. That doesn't make any sense. Order from somebody that will deliver a credible report without the client having to question adjustments or micromanage the report content on a regular basis. That's all I am saying. There is no reason a direct lender or AMC should not be trying to order as many reports as possible from Denis in the bay area. A place like bay area must have hundreds of orders placed per day.

Some lenders/AMC's manage collateral risk better than others and these entities do get rid of substandard appraisers and direct their work to competent appraisers. Some entities just don't do a good job......I don't know why it would surprise anyone that a certain percentage of lenders, AMC's, and, yes, appraisers just are not very good....this is true for any profession or industry

 

[bnmappraisal]

I am looking at an appraisal right now of a 988 sf home with a contract price of $412,000 in which the comps range in size from 1,756 sf - 3,014 sf

How the H*!! can one compare a 988 sf home to others that are between 1,756 - 3,014 sf ... I hope this is a VERY rural area with little sales activity.
(Sorry, I know it's not on topic of regression, but at least the appraiser did not say (s)he used regression. They just said "paired sales' and $10/sf ... on a $400k+ property. Idiotic

 

[Joe Flacco]

Maybe the site value is $400k?

 

[timd354]

How the H*!! can one compare a 988 sf home to others that are between 1,756 - 3,014 sf ... I hope this is a VERY rural area with little sales activity.
(Sorry, I know it's not on topic of regression, but at least the appraiser did not say (s)he used regression. They just said "paired sales' and $10/sf ... on a $400k+ property. Idiotic

It is rural, but not that rural. That was not even the worst thing wrong with the appraisal. The worst thing wrong with the appraisal is that the subject property is 2 blocks from a popular recreational river (with deeded river access) and all of the comparable sales are direct riverfront properties which the appraiser did not bother to disclose (nor adjust for) in the appraisal report. I am not from the area where this property is located, but I am just guessing that maybe, perhaps (lol), direct waterfront properties are worth more than properties not located on the water.

 

[bnmappraisal]

It is rural, but not that rural. That was not even the worst thing wrong with the appraisal. The worst thing wrong with the appraisal is that the subject property is 2 blocks from a popular recreational river (with deeded river access) and all of the comparable sales are direct riverfront properties which the appraiser did not bother to disclose (nor adjust for) in the appraisal report. I am not from the area where this property is located, but I am just guessing that maybe, perhaps (lol), direct waterfront properties are worth more than properties not located on the water.

(my bold) I doubt I'm from that area either, but having a lot of experience with waterfront, water access and non waterfront properties ... I'm inclined to agree with you, too!