Will There Be A Shortage Of Appraisers?

[Dale Smalley]

Brad
Does your company order new appraisals from ethical and competent appraisers to check the values?

I suspect that you use AVMs and BPOs?

 

[bradellis]

Dale,

In a word, yes. We actually have 2 lists- one of our "generally" approved folks, and another for "special" assignments- the tough ones.

Sometimes, the AVM is quite accurate; other times not. Note also that I look at the data the AVM uses and not just the number it produces.

When the AVM and the appraisal conflict and I cannot tell which data is relevant (often), it goes out to one of our "experts" with localized knowledge. In those cases, I use "bump logic"- essentially allowing the appraiser to take the assignment as far as needed to produce credible results. Some could be done from the desk; others require a full blown new appraisal.

One very interesting exercise is found in using that database you cited. If I get an appraisal in what is clearly a well established subdivision, I do a radius search for sales within 1% of the subject size. Often revealing. If I find 5 sales of exactly the same size, they could well be model matches. More often than not, these sales are ignored by the first appraiser- as they do not support the value their client wants.

The expert finds them. If the first appraisal was egregious, we will and do report that to the state.

And to Randy, sure there are fraudulent appraisers out there in high demand. I never said they were not- only that there continues to be a good demand for the honest ones, and on that we totally agree, as well.

Brad Ellis, IFA, RAA

 

[Richard J. Glesser]

A bit of clarification on my previous post...

Mike,
I guess I wasn't clear when I said appraisers delay the loan process. It was intended to be that appraisers are perceived by the lenders to be a delay in the closing process. I agree with you that more often than not, we're merely the scapegoat for lender delays due to our absence at the moment. But I stick to my belief that most lenders see us as another hurdle to get over to get to the closing table and collect their $.

Doug,
I believe I predicted another S & L type crisis. It will not be the same since preventative measures have been put in place. But your own statements point to areas vulnerable with increased PMI and VA & FHA spreading out the losses. Herein lies the problem in my view: lenders care more about who will cover their losses on poor quality loans and where the blame can be placed. Your statement that poor governance was the cause of the S & L Crisis was correct. But it continues in a different form with the lowering of appraisal requirements for loans.

Finally, Brad,
You sound like the type of lender I enjoy working for, expecting a quality, accurate appraisal. Unfortunately, you are not the norm from my appraisal career. You seem to be concerned about making good loans first rather than where the blame and cost for losses will go when a poor loan goes bad. Many lenders know less about the appraisal process and requirements than their underwriters, and we all know how limited that knowledge is. Having worked a major metropolitan area, I can see how AVMs & BPOs could be accurate providing the interior of the home is in accordance with the assumptions made. However, having appraised the last 8 years in Northern Michigan, I have yet to see any AVM or BPO that was anywhere close to accurate since there is no volume of sales on which to build and statistical data of concrete relevance.

:usa:

 

[Terrel L. Shields]

Your statement that poor governance was the cause of the S & L Crisis was correct.

That I might dispute. It was NO governance that caused the S & L crisis. Deregulation of the S & Ls sent S & L managers out scouring for higher yielding investments without a clear understanding of the risks they took, an old book called Liar's Poker spelled it all out very neatly...People like JIm McDougal, Bill Clinton's friend, saw this deregulation as an easy way to borrow lots of money and make lots of political friends via buying the S & L. But these rubes were incompetent to deal in the world of Wall Street and made enormous mistakes which sank the S & L boat.

Had S & L's remained fully regulated, there would have been no S & L crisis. This all began under Carter who bought into the deregulation fantasy. Reagan was a full blown believer. First airlines. Then banks remained regulated while S & L's were allowed to call themselves banks but were not regulated as much. Brokers began to allow people to write checks (but this was still before the banks were allowed to sell discount brokerage), competing directly with banks without banks being able to reciprocate. The banks were not making the kinds of margins the S & L's were, but they were safer, much safer, largely because they still had oversight and were limited to the narrow services they could provide. This deregulation was supposed to give S & L's equal footing with banks. In the end, it basically destroyed the S & L system.

Deregulation of the rules put in place in the 30's to stop a hemmorage of bank closures precipitated the crisis. Bad appraising did not.

 

[bradellis]

Richard,

Thanks. We do try to be honest and use appraisers for what they really ought to do- give us the truth. I am aware that this is not the norm out there.

And I am also aware that AVMs aznd even BPOs in your area are either not available or are fraught with potential problems.

Brad Ellis, IFA, RAA

 

[EDWARD BERRY]

ALL,

The question about a shortage of appraisers has generated many interesting comments and much info about our industry in many parts of the Country.

When you can buy a complete office set up(low end), pay $20/month for all sales in the County, get DSL for $39/month and pay for all it with 3 -5 appraisals, why would there be a shortage?(AT least in NW ARK)

Leon had it right, we do not have a good apprentice system. I wish I could design a system much like the multi-level marketing system that before you could go out on your own you had to replace yourself. That was the TRAINER would not suffer $$$$$.

I am not going to "give" experience to some one and in 18 months they are competing with me, and proably "hitting the #'s" and thus doing twice as much business that way.

You cannot get them to accept a relo at $675 because they do not know the sale price.

Terrel is correct, there is a shortage now, but it is difficult to predict what the future holds.

Good comments from all. Ed down in the backwoods.

 

[Fred]

The "shortage" is as "acute" right now, as it will get.

From: Appraisal Intelligence

"Ameriquest Mortgage will replace traditional appraisals with FNIS’ CVI

Ameriquest Mortgage Company, a large non-prime mortgage originator, announced a pilot program in which it will replace traditional appraisals on certain mortgage programs with Collateral Valuation Insurance (CVI), a new appraisal alternative product developed by Fidelity National Information Solutions (FNIS)."