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Rotation

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Terrel L. Shields

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Tom Horn, referenced in J. Miller's newsletter suggests changes in Dodd-Frank should include...
Independent ordering of appraisals (rotation)– In my opinion, the practice of rotating appraisers with appraisal assignments helps to prevent loan officers from colluding with appraisers. In the past, it was possible for a loan officer to work with an appraiser that may give them the value they want, or who they could pressure into giving favorable values. This undermines the appraisal process and takes independence out of the transaction.​

I disagree. Rotation does not match the assignment to the best appraiser. There is no recognition that an inexperienced appraiser might not be the best pick for a complex assignment. I feel like the AMC model failed. AMC's choose appraisers on the basis of what makes themselves the most money. The LO has more skin in the game, but I would say an independent in-house person should pick the appraiser based on matching the assignment to the appraiser.

Certainly this is not to say only the most experienced should get to hog assignments or that same only be assigned the hardest jobs. But clearly rotation might mean a newbie is assigned unusual and difficult assignments where their skill is taxed or exceeded.

Rotation in rural properties might send the wrong appraiser to do a simple job best handled by someone more familiar with that area. It is nuts to send appraisers to literally drive past each other to do jobs near the other valuers home turf. I used to shake my head that I had two clients who never sent work to me from the town closest to me, so I drove 15 miles to another town while a distant appraiser was doing the work in my backyard and sometimes calling me for comps.
 

Meandering

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I think it's all a bunch of hot air and wishful thinking.

If CU can pick comps and produce a value based on it's data,

It should be able to log all appraisers, their service areas by zip codes and all their qualifications and expertise claims.

CU could pick the best qualified local appraiser with a much smaller database, than the one for residential properties in the USA.

Every time you take new courses, for new skills, you/or the school, should be able to up load that information to the CU so that appraisers can be matched to assignments.

It's 1800s thinking that appraisers have to be selected by some party with an interest in the transaction.

We have technology. Use it.

.
 

Michigan CG

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Suggesting some sort of "fair" rotation is idiotic. It gives NO ONE the motivation to be better than the next guy. If a guy in the rotation writes bare-bones reports and his reports are acceptable why would I do any more than him as I would not get any more work because of the rotation.

A rotation based on nothing else but a rotation is not fair to the public. Small lenders and banks know who they need for certain assignments. I have numerous small bank/lender clients that I do work for and a few of them give me little work because they say I am too expensive. But when one certain lender gets a unique property they will call me. If I was in their regular rotation I would make a lot more money from them and I would get the easy stuff and most likely the few assignments they call me for would be assigned to the guys who do not want them.

I feel like the AMC model failed

Ya think? :)

Reviewers are clueless, they don't understand basic appraisal concepts and they will assign the weirdo property to the cheapest guy. They don't care if the cheapest guy is from 60 miles away as long as he is $25 cheaper than the local guy/gal.

I discussed my house on 29 acres a couple weeks ago. That lender does not use an AMC. If they did they would not have had to pay me $1,200 for the assignment, a city boy with absolutely no land sales in his files would have guessed at the land value or used the assessor land value for only $500. The AMC makes more money, the consumer gets screwed.
 

J Grant

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Florida
Mich, are you not aware that your $1200 assignment of a house on 29 acres is not the type of assignment that would be in a rotation? Or you were looking for an opportunity to brag about a fee or complex assignment?

I do high end assignments oceanfront estates for $1500. I don't expect they would be in a rotation either.

A rotation would be for non complex residential lending work only. It would not apply to complex assignments, or commercial work or private work .
 

J Grant

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Certified Residential Appraiser
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Florida
MichCG -"Suggesting some sort of "fair" rotation is idiotic. It gives NO ONE the motivation to be better than the next guy. If a guy in the rotation writes bare-bones reports and his reports are acceptable why would I do any more than him as I would not get any more work because of the rotation."

That is wither hypocritical, or showing complete denial of what is going on. Again, the rotation does not apply to complex assignments., so it gives EVERYONE motivation to be better than the next guy, to get the complex, higher paying assignments outside the rotation. There could also be ways to vet rotation panels for quality control, such as VA has, and weed out the guy you describe writing bare bones...an appraiser be dropped for poor quality.

The way it is NOW, the appraisers writing bare bones reports gets virtually ALL the work if he charges $250, while more experienced appraisers who write longer narrative better supported appraisals who might charge $350 get NOTHING, or a token 2 a year? . Do you think this is a good system, being that this is the reality in most places now? Yes or No.

In addition, work to number hitters can be assigned by identifying appraisers as well, which is much harder or impossible to do in a rotation. Do you think this is a good system, yes or no?
 

Mike Garrett RAA

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The VA rotation system works well because of the requirements for inclusion. As an example requiring certification and a minimum of 5 years experience just to apply. In years past it took a number of years after applying to get accepted. In my case it was 7 years so I had 13 years experience before becoming a VA appraiser.

The real problem hurting the profession is where the AMCs seek the low bidder for an appraisal assignment. Experienced appraisers generally won't work for the lowest fee. That means the lesser experienced appraiser is getting the assignments.
 

J Grant

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Dec 9, 2003
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Certified Residential Appraiser
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Florida
Agree Mike...yeah, the non rotation system is working so well....(sarcasm). It did not result in appraisers striving to be better than the next guy. Ir resulted in appraisers scrambling to be cheaper and faster than the next guy, to be awarded orders. If the next guy is "better", but charges $20 more, they are denied orders.

Since complex work, private work, commercial work, etc are not in the rotation, appraisers have plenty of incentive to better themselves. And as you say Mike, the rotation system can have higher entry barriers, as well as ongoing quality control and or mentor ship to ensure good quality among the panel. There is no incentive to keep a lesser appraiser on the panel producing inferior work, since fees would be equivalent in a regional area and not the driving force of selection any longer.
 

Terrel L. Shields

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Certified General Appraiser
State
Arkansas
based upon your thinking, the VA panel should be done away with too?
The VA rotation system works well because of the requirements for inclusion
That inclusion also includes the caveat that such assignments are generally relatively typical residential properties and not 29 acre properties. Nor do they typically have two houses, large farm buildings or out buildings. Nor does VA lend on Co-ops, vacant land, and financing new construction is problematic along with finding a lender who will finance a Modular or Manf. home because there are certain criteria that must be met first also with size criteria. Also, Condo projects have to be pre-approved before the individual condo is eligible for VA financing. You certainly have a much narrower range of property. Much the same could be said for FHA, but Fannie Mae? Not so sure, as I have seen some properties that should never have gone FHA or FM that were covered, including one that was over 100 acres with a shanty on it....land value was badly undervalued (much less than half its real value) so that there was ANY value to allocate to the dwelling.

Again, the rotation does not apply to complex assignments
Since when? Since we don't have a rotation system except VA, how do you know what "rotation" will look like in either secondary market or a real bank (you know, a full service bank that eats its own cooking and funds from its own deposits).
 
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