RIP AQB and ASC, to be replaced with "Federal Valuation Agency"

[CGinMN]

I think using the "limit discretion" triggers appraisers because it implies an arbitrary infringement on their impartiality and objectivity. I think "limit subjectivity" relates more directly to what they're really talking about because it's antonym is "objectivity" which is what we normally aspire to. We all want to do more objectivity and less subjectivity whenever we can, right?

Go back to what the complaints are: that appraisers are allegedly allowing their personal biases (which is not a legitimate form of "discretion" in our business) to influence their comp selection and analyses. I tell brokers and borrowers all the time that they're welcome to send me any and all data they want me to consider, and that I will consider them in my analysis. But I also tell them that regardless of what they send me, I will be exercising my own discretion as to what I consider to be the most relevant and comparable data 'cause it's my appraisal.

Can you give me an example of how regulators could codify national rules to limit subjectivity WRT comp selection?

 

[George Hatch]

The complaint from the most popular case in Marin City seems to be based on claiming the appraiser is not using other market areas because of their demographics. Do you think federal regulators should tell you that you have to use comps from Mill Valley or something?

TBH, if the feds want to add or swap in another definition of value which speaks to equity and not equal then that's fine by me. Render unto Caesar both the authority AND the responsibility for their decisions. Just don't ask me to say one thing (MV) and do something different (Restorative Value). Not because I feel some kind of way about the latter but because I don't want to be required to lie in furtherance of assumptions which have been added to what we're doing but which we are being prohibited from prominent disclosure.

Lemme ask you this: as long as it's all done out in the open and we're allowed to say what we're doing (per our instructions) do you really care whether the appraisal you sign expresses your opinion of Restorative Value as opposed to Market Value? Do you really care if your users ask for both values in an appraisal report? I don't.

 

[Mejappz]

You can make this stuff up, the swamp choosing your comps and adjustments, having you sign on the dotted line, and taking liability for all of it.

 

[RCA]

One of my problems with Park's statement, is who then makes the decision regarding comparables, adjustments, etc? DWiley may not think that removing the appraiser's discretion from comparable choice and adjustments is a USPAP violation, but it may be a violation in what replaces the appraiser's discretion. I think it violates the Ethics rule regarding appraiser independence. Tell me how it doesn't?

No, this is the problem.

Appraisers have been using only 3-8 comps since time began. In many areas of the Silicon Valley, there are in fact many more comparables available. And guess what? 4-8 comps will not give you a reliable sample for 6+ possible adjustments. You get wishy washy results. You need at least 5 times the number of factors you are adjusting for. The more data, the better. You can pull your sales grid comps from the past year, if they are available. But to get an appropriate selection that encompases not only the various features of your subject and comps, but also as many of the different combination of those factors and associated values, you will likely need to analyze the past 5-10 years of all sales within a mile radius (or more if out in the country). Then, only only then, can you really say you are truly data driven. And if you do that, the reality is it doesn't matter which of those comps you put in the sale grid - because adjusting them with your model will give you the same result, no matter what. Only, if you do use the most similar comps, you will most likely get the lowest Net % and Gross % adjustments.

The Ph.D's at FNMA and Freddie Mac who you would think have some depth of understanding in these things are apparently clueless. They are infected with "bottom of the barrel mentality".

 

[George Hatch]

Can you give me an example of how regulators could codify national rules to limit subjectivity WRT comp selection?

You mean in addition to the (stated) limitations to subjectivity on comp selection that have always existed? I don't know how much more the feds could clamp down beyond what already applies.

Do you consider "I have selected the properties that are most comparable" to be a primarily subjective judgement? Or can it instead be reasonably characterized as a objective judgement that can be quantified (and tested) in terms of proximity, age, Q or C ratings? I believe in the latter, and I believe that appraisers have very little discretion when it comes to which properties can and cannot be reasonably characterized as "most similar".

Matter of fact, I look for the big lie (WRT "most similar") when I review. If the subject is accurately described and reasonably rated for its attributes and if the comps presented as such really are among the most similar and if their attributes are reported with a reasonable degree of accuracy then it's usually pretty hard for the appraisal to end up with an unreasonable value conclusion. I virtually never hassle the adjustments unless they're being applied inconsistently.

I think the truthiness of the assertion can be rated on the binary basis (T) or (F)

"7. I selected and used comparable sales that are locationally, physically, and functionally the most similar to the subject property."​

What do you think?

 

[Mejappz]

I would say they should not be "deciding" such things - they should be extracting and supporting them from data and analysis.

Suppose an appraisal report has multiple pages demonstrating, with data, that home prices were increasing 9% per year over the time period covered by the comps. But then the appraiser "decided" to use only 3% as the adjustment, and stated right in the report that was done to be conservative. Is that discretion?

Should appraisers keep "deciding" to adjust at $35-$40/SF for years and years, even when data in the area objectively shows that the adjustment should be far more than that?

Is it acceptable for an appraiser to decide to apply market condition adjustments to purchase appraisals but then not apply them for refinance appraisals of very similar homes in the same neighborhood?

How much "discretion" should appraisers have in the above situations??

You should be asking yourself why your friends like John Dingelman at Classles Valuation keep hiring these "appraisers."

 

[Mejappz]

There is nothing that a wave of a wand and the words "Expelliarmus" can't fix.

 

[shrubberyvaluation]

TBH, if the feds want to add or swap in another definition of value which speaks to equity and not equal then that's fine by me. Render unto Caesar both the authority AND the responsibility for their decisions. Just don't ask me to say one thing (MV) and do something different (Restorative Value). Not because I feel some kind of way about the latter but because I don't want to be required to lie in furtherance of assumptions which have been added to what we're doing but which we are being prohibited from prominent disclosure.

Lemme ask you this: as long as it's all done out in the open and we're allowed to say what we're doing (per our instructions) do you really care whether the appraisal you sign expresses your opinion of Restorative Value as opposed to Market Value? Do you really care if your users ask for both values in an appraisal report? I don't.

I don't care except as a taxpayer who will foot the bill if they are insuring based on some non market based value.

 

[George Hatch]

I don't care except as a taxpayer who will foot the bill if they are insuring based on some non market based value.

Me neither. It's no different than when the VA or FHA or the GSEs get charged with promulgating social policies even at the expense of profitability (or viability). If our society is willing to pay the price it takes to move in that direction then it's fine by me. The only thing I ask is that I be allowed to do what I say and say what I do.

In the Miller case the complainants have commented on all sorts of factors that the respondent had no hand in creating or promulgating. She doesn't have the discretion it would take change any of those historical events or decisions. She is required to operate within the constraints of the current legal and administrative environment and it is solely within that context that her conduct and performance can be (fairly) examined.

For example, its not the appraiser's fault that the property at 28 Buckelew sold in 2019 for $650k in an all cash transaction. That's because there was no loan (or appraiser) reported for that transaction.

 

[Mejappz]

So there will be a lowering of education and experience standards, equity recruitment of appraisers, and does anyone know how appraisers can be more "precise." Was the subject of 'natural imprecision' ever part of your appraisal education and how to correct it ?

That's what PAREA is for.