The Race To Automate Appraisal Process

[Artemis Fowl]

At least here in California, assessor data is the data that is collected by the County Assessor's office and is the basis for MLS data - which is what residential appraisers use. That is, the MLS will pull its initial data for a property from the assessor's database and then let agents add to it. Also, records sales transaction data gets fed into the assessor database and eventually comes back out in the numerous services such as NDCData and CoreLogic's DataExperss.

Not all of the assessor data necessarily gets through to the MLS or other data services for one reason or another.

Singular property appraisal has an effective date. Assessor's property inspections may span years and doesn't always play well with as-of xx/xx/xxxx. Add a deck or inground pool without permit the day after I inspect and that record will lack that information for the next 5 years or so. Different purpose, intended use and scope. A mass appraisal model can account for this issue...a singular property model (for most uses) will be flawed without making sure the data is updated and relevant to the effective date...via MLS, for example. Sale data have a short lag-time...45 days by law in my state. Used as base for most MLS here too.

 

[timd354]

I don't know that cheap/fast is necessarily the driver here. I think that much of it is a backlash against lazy appraisal practice.

Straight "rank the subject in the range" qualitative analysis works, but only when someone actually performs that analysis.
"Appraiser's judgement" works, but only when someone actually performs that analysis
"Matched paired analysis" works, but only when someone actually performs that analysis.
"Group analysis" works, but only when someone actually performs that analysis.
"Sensitivity analysis" works, but only when someone actually performs that analysis

Etc, etc. They all work to one degree or another - but only when someone actually does it. No analytical method works when they are merely referenced in the report but aren't otherwise performed. To the extent that so many of us have not been doing what we say we do, that's why the charts and graphs crowd has been able to sell the chrome plated spinners with the 22"s as a necessary component of the Yugo we are selling to these lenders.

We did this to ourselves.

Exactly correct...many people suspect that the most often repeated lie in this profession is that the adjustments were derived using a matched pair analysis

 

[J Grant]

Exactly correct...many people suspect that the most often repeated lie in this profession is that the adjustments were derived using a matched pair analysis

Few appraisers use the phrase "matched pairs", since true matched pairs are rare . Appraisers say "paired sales" and you can see right on the grid the paired sales and extraction. For GH to say we "did this to ourselves" is preposterous- Most appraisals have adjustments that are well explained and supported and if they don't, that is on the client for choosing the appraiser. As if lenders/UW can decipher the "support" from an AVM or RA of adjustments. They can't understand them at all in most cases.


If the AI offered panels of designated appraisers to gratis review each appraisal for adjustment support, does anyone think that would make a speck of difference? It simply is more profitable and faster not to use appraisals for certain assignments, or to use appraisers in a more marginal capacity to achieve speed and "efficiency".

 

[ucbruin]

Exactly correct...many people suspect that the most often repeated lie in this profession is that the adjustments were derived using a matched pair analysis

I agree....
I doubt every or even the majority of AF members are reinventing the wheel for each assignment for each adjustment....

Why are appraisers allowed to get away with this open lie???

 

[timd354]

Few appraisers use the phrase "matched pairs", since true matched pairs are rare . Appraisers say "paired sales" and you can see right on the grid the paired sales and extraction. For GH to say we "did this to ourselves" is preposterous- Most appraisals have adjustments that are well explained and supported and if they don't, that is on the client for choosing the appraiser.

I see a huge number of appraisal reports and while the phrase "paired sales" is probably used more often, many appraisers use the phrase "matched pairs" as opposed to "paired sales"....maybe there is a regional component to the differing use of these terms, I don't know.

Your contention that you can see the paired sales right on the grid is simply not correct in many cases...what gets lenders bent out of the shape most often about the supposed use of paired sales is when there is an across the board adjustment for a particular attribute that the appraisal states was derived using paired sales and then the appraisal states that no comps could be found with that particular attribute and/or when the lender asks for a comp with that particular attribute, the appraiser states that no such sales can be found.

While most appraisals generally are pretty decent, unfortunately there is a small but significant percentage of appraisals that are garbage and the % of appraisals that are garbage is large enough, that yes, a lot of the mistrust that lenders and others in the secondary market have for appraisers is a result of appraisers having done this to themselves as a profession....by the way, before you go blaming AMC's there was at least as much garbage pre-HVCC and pre-bubble.

 

[J Grant]

I agree....
I doubt every or even the majority of AF members are reinventing the wheel for each assignment for each adjustment....

Why are appraisers allowed to get away with this open lie???

? Really...if so many appraisers are "lying" about their adjustments, then why are AMC's and lenders approving and using those appraisers? The lender is charged with due diligence and responsible for appraiser selection eve if they use AMC as agent. A large volume of appraisals go through AMCs , so why are they not catching the supposed lies? ( I personally don't think most appraisers lie about adjustments but if some appraisers are using weak support or not reliable explanations or lying , why are they being used since other appraisers are available... Oh yeah it's a lower fee , never mind )

GH and Tmd insist quality is fine even with fast turn time , that AMC and non AMC appraisals are the same quality if they meet min standards etc...now they claim many appraisers have been lying about adjustments? Which is it? Appraisals can't be acceptable min standards and lying at the same time.

 

[timd354]

I agree....
I doubt every or even the majority of AF members are reinventing the wheel for each assignment for each adjustment....

Why are appraisers allowed to get away with this open lie???

Because it is very difficult to prove unless you can get hold of the appraiser's work file which lenders cannot generally do. To quote Detective Harris, the dirty cop in Training Day, "it's not what you know, it's what you can prove"

 

[J Grant]

I see a huge number of appraisal reports and while the phrase "paired sales" is probably used more often, many appraisers use the phrase "matched pairs" as opposed to "paired sales"....maybe there is a regional component to the differing use of these terms, I don't know.

Your contention that you can see the paired sales right on the grid is simply not correct in many cases...what gets lenders bent out of the shape most often about the supposed use of paired sales is when there is an across the board adjustment for a particular attribute that the appraisal states was derived using paired sales and then the appraisal states that no comps could be found with that particular attribute and/or when the lender asks for a comp with that particular attribute, the appraiser states that no such sales can be found.

While most appraisals generally are pretty decent, unfortunately there is a small but significant percentage of appraisals that are garbage and the % of appraisals that are garbage is large enough, that yes, a lot of the mistrust that lenders and others in the secondary market have for appraisers is a result of appraisers having done this to themselves as a profession.

That very well may be true but then the question is, why are lenders using those appraisers, whether the lender selects them or outsources selection to an AMC? Esp since there is an over supply of appraisers in many areas and highly experienced /competent appraisers available in that supply. I have my ideas about the answer, what is your answer esp if the sole supposed reason of AMC;s is to vet the appraiser and appraisal...

The competent appraisers would love to get rid of the garbage appraisers, but if clients keep using the garbage appraisers because it is profitable to do so, how have appraisers "done this to ourselves?"

 

[timd354]

That very well may be true but then the question is, why are lenders using those appraisers, whether the lender selects them or outsources selection to an AMC? Esp since there is an over supply of appraisers in many areas and highly experienced /competent appraisers available in that supply. I have my ideas about the answer, what is your answer esp if the sole supposed reason of AMC;s is to vet the appraiser and appraisal...

The answer in many cases is that the lender is not competent in the appraisal and valuation space and that managing the appraisal process and underwriting appraisals is not easy. Appraisals are by far the most difficult part of the loan file for a lender to evaluate and many of them simply do not do a great job in this area. Another issue, is unlike credit scores, debt to income ratio, serves, etc. (all of which are objectively quantifiable), the market value of a property has a large subjective component.....in most cases, unless the subject property is a complete cookie cutter, it is not at all unusual to get two competent appraisers opining a market value that is more than 10% different from each other.

 

[ucbruin]

? Really...if so many appraisers are "lying" about their adjustments, then why are AMC's and lenders approving and using those appraisers? The lender is charged with due diligence and responsible for appraiser selection eve if they use AMC as agent. A large volume of appraisals go through AMCs , so why are they not catching the supposed lies? ( I personally don't think most appraisers lie about adjustments but if some appraisers are using weak support or not reliable explanations or lying , why are they being used since other appraisers are available... Oh yeah it's a lower fee , never mind )

GH and Tmd insist quality is fine even with fast turn time , that AMC and non AMC appraisals are the same quality if they meet min standards etc...now they claim many appraisers have been lying about adjustments? Which is it? Appraisals can't be acceptable min standards and lying at the same time.

It's not the low fee or the fastest turn time when it comes to the statements on how adjustments were extracted....
It's common sense....
The industry would grind to a halt (or move at a snails pace) if every appraiser reinvented the adjustment wheel for each assignment....