Verifying Sales

[Elliott]

I'll bet that NLC's 8 AMC panels all boast they have the best appraisers on their panel, with 10+ years of experience, high educational standards, the best in the industry....but they don't tell them they don't ever use them because they have the highest fees.

 

[mark hurlock]

I apologize if I used the term "Nobody". I will say this. I have not seen one appraisal where the verification included any of the following terms: "Buyer", "Seller", "Listing Agent", "Selling Agent", or "Outside Broker".

With regard to our hiring process for appraisers, our company has no control over appraiser selection. We utilize national AMCs and the VA Portal; they select the appraiser. Damned AIR forces this issue.

I have another question.

Are you going to sanction the AMC for poor appraiser selection or just go after that poor quality appraiser?

 

[Peter LeQuire]

With regard to our hiring process for appraisers, our company has no control over appraiser selection.

If you're saying you have no control over the placing of any individual assignment, that's one thing. If you're saying that you simply rely upon your AMCs to evaluate the credentials of the appraisers on their "approved" roster, I question the prudence of that. You can't control the VA roster: it seems that if you're simply passive in the composition of your appraiser panel, that your company relies on the AMCs to set the qualifications of the appraisals doing work for your assignments, I don't believe that's required by any of the appraiser independence laws or regulations. If you can't control the qualifications of the appraisers doing your company's work, I'd simply observe that doing so makes no sense whatever, and is probably irresponsible. If that is the case, you've got an opportunity to move the integrity of your area of responsibility forward.

 

[NLCApprMgr]

AMC culpability

I have another question.

Are you going to sanction the AMC for poor appraiser selection or just go after that poor quality appraiser?

The AMC retains a portion of the fee our borrower pays for appraisal services. If they are not doing their job, their culpability is just as high as that of the appraiser, in that they are (or should be) acting as a reviewer under Section 3 of USPAP. As I mentioned before, I do not have enough data to determine the quality of work or quality of appraisers each AMC provides. Once I do, then I can determine what needs (if any) have to be addressed with the AMC.

 

[TxArmadillo]

...what you cite is much more common than not.

So true. I frequently talk to realtors about sales, particularly when something appears out of whack with the sale or it appears to not be arms-length, and ask them if they have ever been contacted by an appraiser to verify conditions of a previous sale.

Nope.

Guess that explains why they act surprised when I call them.

 

[Lee Lansford]

I'll bet that NLC's 8 AMC panels all boast they have the best appraisers on their panel, with 10+ years of experience, high educational standards, the best in the industry....but they don't tell them they don't ever use them because they have the highest fees.

Unfortunately, length of service is not necessarily an indicator of an appraiser's proficiency.

10 years of experience may be nothing more than a year of experience repeated nine times.

 

[NEINAPPR]

"If they are not doing their job, their culpability is just as high as that of the appraiser, in that they are (or should be) acting as a reviewer under Section 3 of USPAP."

Not so sure about that comment. An AMC "reviews" a report looking for standard items or lack thereof (they go down their checklist), but they are rarely ever doing anything near a standard 3 review. I am pretty sure that they do not have geographically competent appraisers with the appropriate data sources in every market that they cover that would enable them to actually review appraisals. In fact VERY FEW of the people who "review" a report for a typical AMC are not now nor ever have been appraisers. Many are more like telemarketers that read from a script than an appraiser. Most have no idea what they are talking about when it comes to appraisals and when you question them they either send you up the food chain to someone else or they just make a note in their computer system and move on. You might want to brush up on some of the regulations concerning the company you work for, the regulators have made it perfectly clear that the use of a third party to order and process appraisals does not relieve the lender from any responsibility in appraiser selection. The AMC is acting as your agent and the appraiser they select to do your work is exactly the same as if you personally selected them. The lender is the one who is ultimately responsible for appraiser selection, not the AMC.

 

[mark hurlock]

The AMC retains a portion of the fee our borrower pays for appraisal services. If they are not doing their job, their culpability is just as high as that of the appraiser, in that they are (or should be) acting as a reviewer under Section 3 of USPAP. As I mentioned before, I do not have enough data to determine the quality of work or quality of appraisers each AMC provides. Once I do, then I can determine what needs (if any) have to be addressed with the AMC.

I once had a conversation with a senior reviewer at an AMC company who said they do not provide the level of review that would have discovered your particular issue.

I was told they only review it for technical issues, like will it past the automated program without getting flagged for not checking a box on the form.

If this is true, how can you hold them to a higher standard of review? I am assuming the lender/client established the extent of review to be performed by an AMC when they contracted to provide their service.

I appreciate your desire to improve the profession and feel the answer to some of these questions may lead you to a solution.

 

[hastalavista]

You've probably read enough threads on this forum to see that there is a certain segment that believes agent verification isn't necessary, and the reports still meet the minimum standards.
In fact, they are proud of their ability to turn reports in quickly and still receive a decent fee (I think one says he gets $375 to $425 or maybe $450). They inform us that their clients are happy with the appraisals they complete. I don't doubt them. But, it sounds to me like you are not one of their clients (or, maybe you are, and are not happy about it!). :new_smile-l:

My low-end fees are mid-$400s for a simple SFR. I can tell you that I (or my assistant) will attempt to speak with each agent for each comparable I consider.
Sometimes I'm considering 7-sales, but end up using 4. 6-8 agents will have been interviewed. I'll list each one in the report like so (this example has 9 agents):

For this assignment, the following market participants were interviewed: Ms. XXXXX XXXX, People & Properties Sotheby's (Comparable #1); Ms. XXXX XXXX, Empire Realty Assoc. & Ms. XXXX zzz, BHG Tri-Valley Realty (Comparable #2); Ms. XXXX XXXXX, Re/Max Accord (Comparable #3); Ms. XXXX XXXXX, People & Properties Sotheby's (Comparable #4); Ms. XXXX XXXXX, J. Rockcliff Realtors (Comparable #5).

Also interviewed: Mr. XXXX XXXXX, Coldwell Banker; Ms. XXXX XXXXX, Empire Realty Assoc.; Mr. XXXX XXXX, Coldwell Banker.

But, I'll tell you what I cannot do: I cannot turn the reports back in 2-4 days (others might be able to do that and provide the level of verification). I'm more like a 7-10 days for the non-complex properties.
And while my low-end fees start at mid $400s, my average fee is well above that.

I don't do a lot of high-volume (although I have done so in the past).
So, I may be at the other end of the extreme range vs. the 4-hour appraiser.

You, as a decision-maker for your institution, need to decide what you want and how much you are willing to pay for what you want (in terms of fee expense and turn-time wait); I gave this advice to you before.

Your criticisms of the quality of the appraisal work you are seeing come as no surprise to me; I happen to agree with much of what you say.
But you are in a unique position to do something about it:
A. Develop your appraisal requirements so they meet your standards.
B. Communicate your appraisal requirements to the appraisers you use.
C. Expect that your appraisals meet those requirements.
D. Be prepared to make adjustments (if necessary*) to fee and turn-time if that is what it takes to obtain the results you require,
or
E. If you don't get what you want, and are not willing or able to change your fee and turn-time requirements, then live with what you receive.


I hope you are able to achieve A-D.


* I say "if necessary". I'm not convinced that an increase in fee always equals a commensurate increase in quality. I am convinced that quality appraisers provide quality work whenever they accept an assignment regardless of the fee. So, you may not have to increase fees that much if at all. And, you may not have to extend your turn-time. But what you will have to do is to become active and not passive in your appraiser-selection criteria.

Good luck!

 

[Elliott]

The reality is, a lender that hires an AMC gets an appraisal from their 'go to' guy. And the 'go to' guy is the one that makes the AMC the most profit. AMCs are a corporation and the only purpose of a corporation is to make money.