Where Do You Think "geographic Competency" Begins And Ends?

[Terrel L. Shields]

Can't agree on anything.

Frankly the poll is meaningless because competency depends upon the individual. Give me a blank check....I can figure out most anything by using the exact methods USPAP describes to achieve competence. Limit my fee to $350, and my range of competence is quite limited...

I've been asked quite recently to provide a value for minerals for an estate as a letter but, no they didn't want to pay me. They had been offered $75,000 for their minerals and wanted to know if that was enough...? I told them since I make a living doing this I saw no reason to work for free outside some indigent elderly person with a small interest.

 

[timd354]

Our state sanctioned so many people over sloppy work that the director made a point in our annual "Day with the Board" in Little Rock once to warn the group that unacceptable excuses included short turn times, low fees, inadequate research nor any other impediment to doing it "right." With a typical 1 in 10 reports being thoroughly reviewed there is plenty of reward for shortcuts.

That just proves that there are many incompetent appraisers in Arkansas, nothing less and nothing more. Pay those same incompetents $100, $200 or $500 more a reports, and the results are likely still the same.

By the way, even if I accept your assertion that only 1 in 10 reports gets thoroughly reviewed (which I don't), since most appraisers perform several hundred appraisals per year, then such a review rate would be more than adequate to catch most of the incompetents.

 

[Terrel L. Shields]

most appraisers perform several hundred appraisals per year,

I doubt I was reviewed more than 1 in 40 reports & told I was. When doing FHA I was told by their reviewer that they checked 1:10 reports and every report by those whom has "history" with them. As for FmHA they used to check about every third report and were very thorough. That was FmHA backed loans, not FmHA direct loans. They got 100% reviewed. Secondary market was maybe 1 in 6 got a call to correct an error. Those were administrative reviews but done by appraisers on staff with the one secondary market client I had in this century. Been told by a couple banks they only ordered technical reviews when the value seemed really off and one LO said if the client requested a review then they were just as likely to order a second appraisal.

Secondary market via big lenders may have tighter controls but to what end? No one defaulted here more than the loans made by Chase, H&R Block, Deutsche Bank, or Countrywide. Arvest, BOK, and other regionals did much better. So who do you think got sold the high risk stuff? Why didn't they review it?

 

[Randolph Kinney]

... will resort to "willful negligence" out of sheer necessity. Few of us are truly that noble although we might think ourselves above reproach until faced with the cruel pinch of want.

What an indictment of appraisers! Don't expect anything but crap appraisal reports for those that work for AMCs because these appraisers are weak and basically immoral. Rather than leave the profession, stay and do a crappy appraisal with the excuse that the assignment conditions are too stringent and fees too low to produce anything that resembles competent appraisal.

 

[Randolph Kinney]

When doing FHA I was told by their reviewer that they checked 1:10 reports and every report by those whom has "history" with them.

FHA was teaching free CE courses in requirements for FHA appraisals. They made a point of focusing on those appraisers who produce abnormally high volume of FHA appraisals. They made the connection with appraisers doing FHA assignments and taking shortcuts as you label it, meaning they did not do the work they said they did. And some reports were outright fraud at most and very misleading at least.

For what reasons may an appraiser be removed from the FHA Appraiser Roster?

FHA may remove an appraiser from the FHA Appraiser Roster for failure to comply with the requirements in Handbook 4000.1. Causes for removal include, but are not limited to:

• significant appraisal deficiencies
• losing standing as a state-certified appraiser due to disciplinary action in any state in which the appraiser is certified
• prosecution for committing, attempting to commit, or conspiring to commit fraud, misrepresentation, or any other offense that may reflect on the appraiser’s character or integrity
• failure to perform appraisal functions in accordance with instructions and standards issued by HUD
• failure to comply with any agreement made between the appraiser and HUD or with any certification made by the appraiser
• issuance of a final debarment, suspension, or limited denial of participation
• failure to maintain eligibility requirements for placement on the Appraiser Roster; or
• failure to comply with HUD-imposed education requirements
  

 

[J Grant]

What an indictment of appraisers! Don't expect anything but crap appraisal reports for those that work for AMCs because these appraisers are weak and basically immoral. Rather than leave the profession, stay and do a crappy appraisal with the excuse that the assignment conditions are too stringent and fees too low to produce anything that resembles competent appraisal.

I have no idea who these appraisers are who work for low fees or how good or bad their work is . I know I won't work for such low fees, and the few competent appraisers I personally know won't either, and many on this boards say they don't either. So who is left doing these reports? Who bids the lowest most of the time and gets the work? None of us know, but we do know if they are taking lower fees, in order to make a decent living, they have to pump out volume, and all of us know by our own experience the difference between racing through a report as soon as possible and spending time researching and doing analysis to get the best results we can. And we all know the shortcut methods available to produce a report fast. And any of us who do review work have reviewed lousy reports - done as recently as yesterday, so who is hiring these lousy appraisers, and why, since everywhere but a few states there is an ample supply to over supply of appraisers.

AMC's are good at catching errors, but error is not the same as content. A spell check on a meaningful paragraph does the same error hunt as a spell check on a meaningful paragraph.

 

[J Grant]

Pay those same incompetents $100, $200 or $500 more a reports, and the results are likely still the same.

That is true, but not the point. If a lender is putting together a fee panel,AMC/ panel and can pay either $250 a report or pay $500 (either way borrower pays $500 ) , which price point will client attract not just more appraisers, but more experienced/comptent appraisers? The $500 fee.

At a higher fee, with many more and better qualified applicants, they can weed out the less competent. They also would attract a group of better appraisers who will not work for $250. So who are the appraisers that would fulfill the work at $250? We cant' know , but we know the lower fee won't attract a segment of the more competent, and some of the less competent rejected by the bank panel at $500 fee might do the lower fee work. And if a competent appraiser does do the lower fee work, he has to take on twice the volume to make the same $ as at a $500 fee, which will impact the time and care he can spend on each report.

The savings on fee with AMC or order dept paying cheap to appraiser does not reach the borrower. To be clear,, the borrower savings is not my main concern, I am pointing it out. Being that the savings does not get passed on to borrower and by process of elimination lower fees will result in fewer appraisers as well as including a segment of less qualified appraisers to choose from, and no matter the level of competence result in appraiser piling on volume/rushing reports to compensate for low fees, the question should be, why is this allowed to continue for taxpayer backed work?

Change it to cost plus/ let the lender pay the AMC apart from the borrower paid appraisal fee. The lender will find a way to recoup it either in the front end or back end of loan

 

[J Grant]

This thread has meandered a bit off topic, however I want to point something out. Regarding competency, whether it is about geographic area or anything else there are two kinds of posters: those who insist on separating competency from real life working conditions, whether that be fee, turn time, visit to property vs desk, or other. Then there are posters (typically, boots on ground appraisers )who say that in their experience, competence to perform an assignment can be impacted by assignment conditions , be it fee, turn time, travel to subject property vs desk work etc.

There is a degree of either denial, or hypocrisy in saying assignment conditions have no bearing on competency. How is that so, when nearly every appraiser would say it takes time ( and thus needs pay to compensate for the time ) to become competent in a realm unfamiliar to an appraiser, be that realm a geographic area, a property type, or specific methodology .

The ideal set of conditions in the poll ; unlimited time, resources , full local data access and /or allow visit to a property, will likely turn out to be MIA when it becomes actual large scale lender work with a view toward future products seeing appraisers mainly doing their portion from desktop.

When minimal standards become low standards, the level of competence accepted to appraise in a far off area might be so low I suppose we all can achieve it quickly

 

[J Grant]

The affect of fee , and turn time/conditions can be seen in appraiser selection comparing the the difference between direct order lender work panels /VA panels and low pay/fast tt /scorecard AMC panels.

It can be typical for there to be a years long wait list to get approved by a direct lender panel or VA panel- being that they pay well and allow reasonable TT, they tend to attract a pool of good appraisers and retain their good appraisers .

Whereas with low pay fast TT AMC, they are typically adding unlimited appraisers to their panel , because the appraisers are vendors whose primary purpose is making $ for the AMC. They can have competent appraisers on their panel, however the competent have to compete with the low experience gaining competency, as well as the marginally competent and those who set out to undercut on fees, capture the volume / do the reports fast, often using methods other appraisers would not touch, explained away by "efficiency"

There is a conflict of interest in how/why AMC panels select appraisers, though a few might do a good job, the conflict of interest created by the pay structure of split fees creates all kinds of problems that would not be there if it was eliminated and cost plus or similar the norm..

All of the above would apply to geo competency as a segment of competency.

 

[djd09]

Does anyone believe Enron did not deliberately hide their true financial condition? Do you think Dr. Ken Lay, PhD economist, didn't know better? And Arthur Anderson auditors didn't know better? When a financial benefit results from taking liberties with the "rules of the game" those about to lose their home or car, or like Enron the very company & ego that went with it, will resort to "willful negligence" out of sheer necessity. Few of us are truly that noble although we might think ourselves above reproach until faced with the cruel pinch of want.

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This is his story."

http://www.larryrkatzen.com/about-the-book/