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

[timd354]

These market participants demonstrate their opinions of reliability by what they buy and use.

It's the secondary market that prices the perceived risks associated with the portfolios they buy. That perception occurring on their end and based on the methods they use to track these things, not on the seller's end.

If BPOs had a better track record we'd be losing more of our market share to them. If 2055s were equated the same as 1004s we'd be doing mostly 2055s, with the 1004 use being limited to the most critical situations.

Sometimes, a basic product is is sufficient to meet the client/buyer's needs (i.e. a Smart Car) while some producers/sellers insist on selling them something more than is needed (i.e. a Corvette) or nothing and then wonder why they were not able to make the sale

 

[timd354]

If BPOs had a better track record we'd be losing more of our market share to them. If 2055s were equated the same as 1004s we'd be doing mostly 2055s, with the 1004 use being limited to the most critical situations.

Appraisers have already lost market share to BPO's on the back side (servicing side) of the transaction in the default space. The guy who is the head of the claims department at my company has been working on the default side of the business and he much prefers BPO's over appraisals for his purposes because he has done several studies over the years which involved ordering both BPO''s and appraisals on the same defaulted properties and he has told me on numerous occasions that the studies all showed that BPO's actually were better at predicting the eventual, future sales price of a property and better at determining which repairs should be made in order to max the amount made of REO sales than appraisers were. Our head of claims is a very competent and earnest guy, so I have no reason to doubt what he is telling me.

 

[hastalavista]

The guy who is the head of the claims department at my company has been working on the default side of the business and he much prefers BPO's over appraisals for his purposes because he has done several studies over the years which involved ordering both BPO''s and appraisals on the same defaulted properties and he has told me on numerous occasions that the studies all showed that BPO's actually were better at predicting the eventual, future sales price of a property and better at determining which repairs should be made in order to max the amount made of REO sales than appraisers were. Our head of claims is a very competent and earnest guy, so I have no reason to doubt what he is telling me.

I suspect one reason why is because the brokers are providing an opinion of the price based on its as-is condition which includes its transactional (REO) condition vs. appraisers who, sometimes, exclude that transactional condition and appraise the property as if there were no REO stigma (if it affects value) attached.
While the work-around (for those who believe the REO stigma cannot be considered in an as-is market value) is to order two values based on two different value definitions within the appraisal, in your example, why do it when you can obtain a substitute that works as well?

The specifics of REO assignments is a discussion (which I got sidetracked above) is for another thread!
The example of a substitute for an appraisal is the relevant discussion here.

 

[George Hatch]

Computer repair used to be a viable business. Nowadays most people just buy a new unit. If someone who was fixing boxes 20 years ago fought the relentless march of commerce as enabled by technology and if they failed to find their way into more current modes of activity then they got left behind. That's not to say the skills they acquired previously were meaningless or worthless to their current endeavors, only that the most important of those skills was developing their own ability to adapt and learn new stuff and work their way through new situations they hadn't previously encountered, not necessarily the extent of their understanding of Window 3.0. Problem identification and problem solving.

 

[George Hatch]

I suspect one reason why is because the brokers are providing an opinion of the price based on its as-is condition which includes its transactional (REO) condition vs. appraisers who, sometimes, exclude that transactional condition and appraise the property as if there were no REO stigma (if it affects value) attached.
While the work-around (for those who believe the REO stigma cannot be considered in an as-is market value) is to order two values based on two different value definitions within the appraisal, in your example, why do it when you can obtain a substitute that works as well?

The specifics of REO assignments is a discussion (which I got sidetracked above) is for another thread!
The example of a substitute for an appraisal is the relevant discussion here.

I would also say that asking what the MV is today based on certain limitations for what is and isn't acceptable in the analysis like comp selection parameters or the explicit or implicit assumptions loaded into the definition of value will have an effect on the result. This is a perfect example of the widget that's appropriate for one intended use (making a loan decision) might be a poor fit for a different use (marketing the property). An appraisal process and appraisal report aimed at supporting safe/sound lending practices *shouldn't* look like an appraisal aimed at supporting a marketing decision.

It's the same reason why we can never get the same comps from a broker that we would get from another appraiser.

That most appraisers won't be forced off of autopilot to consider these other aspects isn't doing us any favors, either.

 

[Meandering]

If anybody can't see the person sitting in India, or some other country,
Typing up "geo-competent" appraisals, based on internet availability,
to be signed in the morning my some "geo-competent" appraiser sitting at a desk at an AMC in this country.

Then you've missed the entire rob-signing gig.

The only real difference here, is the signer can sign their own name, so long as they have an appraisal license and E&O insurance.

If you need a college degree to see this scenario is the future of lenders "buying what they can rely on", well, your college degree should have showed you that lenders have no skin in the valuation game at all. All they need is a borrower with decent credit scores and at least 3% +/- to put in as a down payment.

But you guys are fun to watch.

 

[George Hatch]

I would say that if someone or something who is offshore is capable of actually beating you at your own game that you have a serious problem; and that the most you can hope for in appealing to the state to protect you from your competition is to run the clock.

On the one hand, I have confidence in the ability of people to adapt to a dynamic environment if they're sufficiently motivated. But on the other hand I'm working on my 3rd RE cycle and I know from experience that a certain percentage of people will not make those changes - and the reasons why don't much matter WRT the results - and they will get starved out.

I am not trying to be a jerk here, I'm just reporting the weather.

 

[djd09]

If anybody can't see the person sitting in India, or some other country,

They sure do love them bloated BPOs from India.

 

[George Hatch]

"It's raining" is not an advocacy for the rain. It's simply an acknowledgement that if you're outside without a coat or umbrella you're probably going to get wet.

 

[George Hatch]

Sometimes, a basic product is is sufficient to meet the client/buyer's needs (i.e. a Smart Car) while some producers/sellers insist on selling them something more than is needed (i.e. a Corvette) or nothing and then wonder why they were not able to make the sale

Exactly. Both a 1984 Honda Civic and a 2018 Chevy pickup will get you from point A to point B. But if you want to carry a lot on stuff on that trip OR if you want to make that trip as cheaply as possible then some or your alternatives will fit those particular needs better than others.