Unintended consequence of reviews

[George Hatch]

If the requirement isn't in writing anywhere then it's just a wish. An uncommunicated wish.

It's like when someone says "if you really loved me you'd know what I want without me having to ask for it"

 

[DWiley]

And, by the way, the most significant "deficiency" in these reports was that neither included the township and range in the legal description, instead relying on the tract and plat numbers as expressed in the most recent deed pertaining to the subjects.

During my time as an investigator I had to spend significant time explaining to board members, and at times even testifying in hearings, about the the difference between what was required and what was board member(s) view of best practice

Items like you describe above would never have made it to our board, because any complaint like that would have been screened out before the board even saw it.

 

[George Hatch]

One other bit of trivia is conflating the SR2 report content with what the SR1 process did/did not include.

"Report omits HBU analysis"
vs
"Appraiser didn't perform an HBU analysis"

 

[RCA]

Appraisal reviews are intended to increase quality in the industry. They are intended to catch questionable reports before they are used to support lending decisions. Typically, when an AMC or Lender review spots and issue, revisions are requested. That's all good.

The down side is that AMC and Lenders rarely report bad appraisers to the state appraisal board. The reasons are understandable. They just want to close the loan. It's a big pain in the, um, paperwork to file a complaint. It takes a lot of time and effort.

However, if bad appraisers were routinely reported to their appraisal board.... maybe there would be fewer bad appraisers. Allowing appraisers to fix a report until it passes... with no other consequences.. just rewards and perpetuates bad appraising.

This has been going on for decades. You gotta come to the conclusion that the appraisal "system" is irrevocably screwed -- until they figure out how to stop users of appraisal reports from interfering with the mechanics of appraisal. And for that, you need to present a near-flawless appraisal system, which no one has made any significant progress on for decades. One where competence is not defined as "promising to be a good boy."

 

[timd354]

Arbitrary and capricious treatment of licensees is against the law here. I suppose you think it is just that "deficiencies" in my report warranted discipline while identical issues identified by the same "reviewer" at the same time in another report I signed were deemed inconsequential enough to ignore while awarding my trainee a license, too. And when the Board member mentioned above was asked about them, he downplayed their significance and said they were just something to think about.

And, by the way, the most significant "deficiency" in these reports was that neither included the township and range in the legal description, instead relying on the tract and plat numbers as expressed in the most recent deed pertaining to the subjects.

IF that is what they disciplined you for then what they did is complete bullsh*t.

 

[sputnam]

This has been going on for decades. You gotta come to the conclusion that the appraisal "system" is irrevocably screwed -- until they figure out how to stop users of appraisal reports from interfering with the mechanics of appraisal. And for that, you need to present a near-flawless appraisal system, which no one has made any significant progress on for decades. One where competence is not defined as "promising to be a good boy."

To me the cure is to get rid of appraisers who allow their mechanics to be interfered with. We all know... or are supposed to know... the ethical and technical 'rules' for appraisals.

 

[RCA]

To me the cure is to get rid of appraisers who allow their mechanics to be interfered with. We all know... or are supposed to know... the ethical and technical 'rules' for appraisals.

Reforming Real Estate Appraisal Standards: A Framework for Accountability​

The Core Problem​

Real estate appraisals face a fundamental credibility challenge. Appraisal reports must withstand scrutiny from multiple stakeholders—bankers, lenders, homeowners, courts, and society at large—yet current standards allow too much subjectivity in valuation methodologies. This creates systematic risks in property valuation that can undermine market confidence and financial stability.

The Solution Framework​

Establish rigorous, standardized appraisal constraints that prevent significant under- or over-valuation while preserving professional judgment for communicating value conclusions. These standards should function like guardrails: flexible enough to accommodate legitimate variation, strict enough to prevent arbitrary valuations.

Key Reform Areas​

Mathematical Rigor in Adjustments​

Current Problem: Appraisers can make subjective adjustments without sufficient mathematical justification.

Solution: Require all adjustments to be calculated as quantifiable differences between subject and comparable properties. Component values must reconcile to net sale prices of comparables, creating mathematical accountability in the valuation process.

Quality Control and Review Standards​

Current Problem: Review processes are inconsistent and can introduce additional subjectivity rather than improving accuracy.

Solution: Implement standardized review protocols with clear criteria for acceptable variance. Reviewers should enhance quality through systematic verification, not introduce new arbitrary judgments.

Inspection and Measurement Standards​

Current Problem: Inspection standards like ANSI/BOMA Z65 contain gaps and inconsistencies, particularly regarding above/below grade classifications and hillside properties.
Solution: Develop comprehensive inspection protocols with:

• Clear logic for all measurement decisions
• Consistent treatment of challenging property types
• Required explanations for non-standard classifications
• Standardized documentation requirements

Regulatory Structure Reform​

Current Problem: Multiple agencies (Fannie Mae, Freddie Mac, VA, FHA) impose overlapping and sometimes conflicting requirements that compromise appraisal integrity.

Proposed Structure:

• Core Appraisal Standards: Universal requirements focused solely on accurate value estimation
• Agency-Specific Addenda: Additional information requirements separate from the appraisal itself
• Separate Fee Structure: GSE requirements carry additional fees, distinct from appraisal costs
• Standardized Formats: Preference for Excel-based templates with defined requirements (similar to AI forms like 100.07)

Governance and Independence​

Key Principles:

• Remove GSE authority over appraisal methodology and format
• Establish clear quality assurance guidelines that prevent regulatory overreach
• Create balanced workload requirements that don't compromise thoroughness
• Implement anti-retaliation protections for appraisers

Implementation Recommendations​

1. Phase-in Period: Implement reforms gradually to allow market adaptation
2. Training Requirements: Mandate education on new mathematical standards and inspection protocols
3. Technology Integration: Leverage standardized digital formats for consistency and efficiency
4. Ongoing Refinement: Establish mechanisms for continuous improvement based on market feedback

Expected Outcomes​

This framework would create:

• Greater Accuracy: Mathematical constraints reduce arbitrary valuations
• Enhanced Credibility: Standardized processes increase stakeholder confidence
• Improved Efficiency: Clear requirements reduce back-and-forth in review processes
• Market Stability: Consistent standards support more reliable property valuations

The goal is not to eliminate professional judgment but to channel it through rigorous, transparent methodologies that serve the broader interests of market participants and society.

.... enough for now

 

[Terrel L. Shields]

Yep, one of my mentors got a complaint that he was not using the book and page numbers. He wasn't. His reference number was the MLS number which had the same format YY-NNNNN. It was a condemnation case and the complaint came from the appraiser for the electric company. He pulled much the same trick a second time and the board said that his next complaint best be spot on, or HE would get a sanction for submitting a bogus complaint.

 

[Cob]

I expressed this same opinion as a regulator when I spoke to appraisers. Everyone one wanted to complain about the bad appraisals they saw yet most wouldn’t spend the time it took to file a complaint.

That's not really my job as an appraiser, it's also not really my concern what or how others complete their appraisal reports, it's always been my opinion that if someone is that bad of an appraiser and turning in such bad appraisal reports, they will pay the price, because at some point, it will catch up to them. I'm to busy keeping my own house in order and no offense, but the people who's job it is to go after bad appraisers, like I don't know, say a regulator, are the ones who get paid to do such things, not me or any other appraiser.

 

[Cob]

I’m not sure I understand the resistance to signing a complaint. It would only be an issue for the complainant if it were signed in bad faith.

AGAIN, that's not the job of ANY appraiser, so appraisers are suppose to make a living, work for their clients, work on appraisal orders, work weekends and holidays, deal with UW's and all kinds of other things AND monitor other appraisers and basically be the appraisal police, for free mind you, if they see a bad appraisal report, that's just not realistic, most appraisers have a hard enough time keeping their own house and order, while just trying to eek out a decent living, which is getting HARDER and HARDER with each passing day.

I quite frankly don't understand, how you don't understand the resistance to signing a complaint, when the simple fact of the matter is, most appraisers have other things to spend their time on and pretty much NOTHING to gain by filing or signing a complaint on another appraiser.