Where are the review appraisers?

[Carnivore]

Just doing the minimum amount of work isn't going to cut it in this lending climate. If you are not making a serious effort to attend the best appraisal courses, networking with the most respected appraisers and looking at your own work product with a critical eye, I don't think you'll be working in this business for long. The appraisal world is changing.

I think we both have some points.

I started out in general brokerage in 1986 after a long and boring military career. Started Apprasing full time in 1990 , got licensed/certified in 1993 and am doing just fine up to today, even in this downturn.

I do belong to AI as an asociate, getting closer on the SRA, maybe I will make it maybe I will not before I quit altogether.

 

[Wingit]

David, your point is well taken. I can't advertise for my company, but I can tell you that one thing that differentiates my firm from other AMCs is that I have the internal compliance criteria for every investor that my clients sell loans to. This information is communicated to the appraiser on a regular basis - through personal meetings with my roster appraisers, through informative emails and by working with them on each individual appraisal report when something is missing.

As a reviewer, my first rule is this: the appraiser deserves the benefit of the doubt. The appraiser is the one who managed to receive a credential and that's no easy feat in most states.

My second reviewer rule is reminding myself that there are literally dozens of layers of regulations and guidelines. Let's list a few - can everyone provide even one guideline from each (Fannie Mae's are the most commonly understood) that applies to appraisal reports? Do all appraisers understand that Fannie Mae is not:
FIRREA; USPAP; your individual State appraiser regulation; FDIC/OTS/OCC/NCUA /FRB (inter-agency regs). Fannie Mae is NOT your client's internal compliance criteria - and it is NOT your client's investor criteria. Otherwise, no appraisals would be ordered when the transaction value is less than $250,000. Let's throw in FHA, VA, HUD, (in Wisconsin WHEDA which is virtually non-existent anymore); for commercial SBA has a few appraisal requirements.

That's just for federally regulated transactions, of course.

But here's an interesting state regulation - in Wisconsin, if you are a certified residential appraiser and are appraising a commercial property valued at more than $250,000 (no problem here because WI is not a mandatory state - one of fewer than six or seven) - you cannot sign your name with your Wisconsin appraiser credential listed under it.

I have served in a state regulatory capacity for more than five years and I just learned that one.

My point is that if you are not doing the educational courses and networking (so many one-person shops in this profession) you will never have the opportunity to learn this stuff or how it applies to the appraisals you produce. And then, it all goes back to the Competency provision of USPAP - something that applies to just about everyone - no matter what the intended use or user of your appraisal.

Every appraiser on my roster gets a copy of the applicable guidelines and criteria when he or she is approved. Regular meetings and personal conversation help me help the appraiser. Having been subjected to working with AMCs when I was a fee appraiser, I DO understand and it's time the rest of the AMCs take responsibility instead of just money from the client.

 

[Wingit]

I have to clarify a point mis-spoken in my previous post. In Wisconsin, any appraisal completed for a federally related transaction requires an appraiser credential (state regulations, FIRREA, ASC).

What the statute says exactly is this: Chapter RL 86 Rules of Professional Conduct; RL 86.01 (3): A certified residential appraiser shall not use the title "Wisconsin Certified Residential Appraiser" on any appraisal report or written appraisal agreement pertaining to commercial real estate having a transaction value of more than $250,000."

This would apply if a certified residential appraiser completed commercial work for an attorney or property owner, for instance.

Hoping to stave off comments from anyone I've infuriated due to my mistake.

 

[Vegan702]

Who chooses your clients? You do! Everyone is absolutely right - it SHOULD be one way, and always seems to be another.

Trainees have little choice about who they work for, but they still have a choice. In my experience, the supervisory appraiser is frequently guilty of bad training and the trainee won't even realize it until he or she submits his experience for a state license or certification.

Financial institutions do indeed use a "checklist." They also use incompetent reviewers because appraisal review is not a priority and they think they are savings themselves money.

Today I called Fannie Mae about a major AMC that has thousands of clients. The AMC violates every rule in the book by ordering desk reviews of residential reports and asking for a value "recommendation", ordered from their approved appraisers. The form they use was developed in 1988 and says so right on the form. A New Jersey appraiser cut the value conclusion reached by one of my roster appraisers from $570,000 to $300,000 without ever supporting the "recommendation." My poor client - its investor recommended requesting the review and suggested which AMC, implying that the review would make the file acceptable despite some larger than typical (read: exceeding guidelines) in the original appraisal (which, by the way was completed by a competent appraiser with 25 years of geographic competence).

So, the client must use the value conclusion reached by the AMC's New Jersey appraiser on a lake property in Wisconsin. The review that was completed didn't even attempt to comply with USPAP Standard Rule 3 and because the appraiser was from New Jersey, even violated state regulations (no reciprocity applied for).

I wish I had a better answer for you about how to deal with incompetent reviewers. Metamorphic, it's not you - they really are incompetent and it is demeaning to have to answer to someone who doesn't really understand appraisal.

You really can't fight it other than to find better clients. They are certainly out there. Turning down assignments is a drag but it's worth it in the long run.

If I am not mistaken the state would have no jurisdiction over the NJ appraiser if this is for a FRT, correct? If so then the NJ appraiser doesn't need to apply for any license from WI. Now with Fannie/Freddie and a host of others that just received government money or were taken over by the Feds, almost every mortgage related appraisal will be a FRT transaction and as such fall under Federal guidelines as far as licensing goes. So I as an appraiser in NV can legally review any appraisal in the US that is a FRT without any regard to to the states licensing guidelines, laws, regulations, or whatever you want to call them. Not that I couldn't do this before the whole mortgage meltdown, but now a lot more people will know about it. The only real obstacle in my way of reviewing reports from all 50 states would be geo-competency, but then we are in a SOW issue and that may not even be an issue in some cases. I find the best way to get geo-competent is to start reviewing in that area, where best to gain knowledge, then from the reports being developed there.

 

[The Warrior Monk]

But here's an interesting state regulation - in Wisconsin, if you are a certified residential appraiser and are appraising a commercial property valued at more than $250,000 (no problem here because WI is not a mandatory state - one of fewer than six or seven) - you cannot sign your name with your Wisconsin appraiser credential listed under it.

The deminimus is an interesting situation. Just be a client allows something doesn't mean that an appraiser holding a credential from the state can provide it. For example, state licensing law in NY specifically spells out what a certified residential may appraise. And that would not include appraising a commercial with a transaction value below $250,000. While it may be acceptable to a client, the appraiser would be violating state licensing law.

 

[Carnivore]

Mike,

Did you mean to say that all commercial work under 250 cannot be appraised by a CR. If so does this include a mixed use SFR/biz site like a three story residential condo with includes 1st floor zoning allowing an office.

Example, In other words the owner of the condo can have his residence upstairs and a office location on the first floor to the street storefront signage?

 

[The Warrior Monk]

Mike,

Did you mean to say that all commercial work under 250 cannot be appraised by a CR. If so does this include a mixed use SFR/biz site like a three story residential condo with includes 1st floor zoning allowing an office.

Example, In other words the owner of the condo can have his residence upstairs and a office location on the first floor to the street storefront signage?

In NY, which is not a mandatory licensing state, the appraisal of the property would not be allowed by a CR. From the ASB:

The Certified Residential Real Property Appraiser Classification qualifies the appraiser to appraise one to four residential units without regard to value or complexity.

The classification includes the appraisal of
1. vacant or unimproved land that is utilized for one to four family purposes or for which the highest and best use is for one to four family purposes.

The classification does not include the appraisal
2. of subdivisions for which a development analysis/appraisal is necessary.

Note that the above does not include an exception for a deminimus or allowance for nonresidential uses.

 

[Kevin Mc]

Note that the above does not include an exception for a deminimus or allowance for nonresidential uses.

There are some exceptions. There is the Artist in residence program in NYC which allows for one to use part of their units (most are in Soho and Chinatown) for commercial purposes (making and selling their arts or crafts) while the unit remains classified 100% residential. Very odd duck, but residential nonetheless. There is no transfer of artist in residence status upon sale without a new application etc...

 

[LACKLAND27]

Its not my job to continously have to deal with UW's who are poorly trained and unable to understand 4th grade level writing. Lenders are power users of Appraisal products. When I write reports for civilians I use much more detail on things I know they understand and leave out tough processes that only confuse the civilian reader.I did not dumb down the UW's. Its not my job to educate them. Unless you want to pay me for my time!

It's a service business Carnivore, it is your job to accommodate the client. The clients want service that makes them happy. I have a friend who tells all the clients to screw off whenever they make a request that he sees as unreasonable. Guess what he has no clients left is going back to teaching grammar school. And if you don't educate them, you end up taking the same calls anyway and doing the same work over and over. But that's your choice.

 

[Workbox]

It's a service business Carnivore, it is your job to accommodate the client. The clients want service that makes them happy. I have a friend who tells all the clients to screw off whenever they make a request that he sees as unreasonable. Guess what he has no clients left is going back to teaching grammar school. And if you don't educate them, you end up taking the same calls anyway and doing the same work over and over. But that's your choice.

Many of us do try to educate the client, many do not want to hear. As for the service that they want, it basically boils down to hitting the number. I have been able to convince some, but they are rare and few.

We are not a product or service like a Kiosk at the mall. We are a policing system that has been over run by the crooks, AMC's, lenders, and title companies. I hear similar statement and reasoning and I reply with, "That is the reason why we are in the financial crisis that we are in." Go ahead, serve your stupid "service product". What a mental marketing joke.