No Appraisals? Yes or No?
Well at least when the next crash comes, and it will…… they won’t be able to blame us, again, for giving the cocktail waitress a $400,000 loan……
what Appraiser? If they want to do away with US, then whom are they going to call to do that appraisal that challenges the AVM? I for one have only been in the profession for 27 years so I might not be waiting around for that random call that some AMC is going to want me to go do your appraisal for $255 and delivery it yesterday. NO, my appraisal cost if I DO hang around is going to be a bit higher.
See, I like to make a living as well. I try to do one appraisal a day at $500 (net to me – what ever the AMC tacks on on top of that is they’re business). In order to continue to make the same thing every month and I’m reduced to seven or eight appraisals a month, then that appraisal fee has to go to a minimum of $1,000 to $1,200 each. If I can’t make that, then why stay in business because I wont be able to stay in business if I don’t (my family likes to eat and have a roof over their heads as well).
The only Appraiser’s that will be left are the CG’s (Certified Generals – aka commercial Appraisers) and they don’t walk out the door for less than a four digit payday and you may have to wait weeks for them to have the time to accommodate you.
If you haven’t heard, FNMA came out with the UAD Protocol for appraisal assignments a few years back. The purpose of this was to refine the appraisal reporting process. Why? So a computer could read the data in the report so as to extract all pertinent info on the physical characteristics of the property. Why? To create FNMA’s own data pool of zillions of appraisals prepared nation-wide every year to do two things.
The first is actually done to “clean up” the reporting process.
Appraiser “A” calls a subject property they just appraised a “C3” condition. Appraiser “B” comes along next week and uses the same property now a sold in the MLS as a comp in a report and calls it “C3” condition based on the Brokers comments and MLS photos.Well, Appraiser “C” comes along and calls it a “C4”, someone is incorrect.
The second is this –
After that subject property gets used hundreds of times in appraisal reports, a pretty refined picture ends up in they’re (FNMA) database of what that house (and every other house in every appraisal report) looks like. Multiply that over hundreds of thousands of properties and FNMA now has they’re own AVM data pool. SEE… even the AVM companies are going to be forced out because FNMA wont need them.
The “appraisal” if you will will be performed by a person sent to a house to verify the condition, take photos and give it back to the lender the next day. This may be a competing Broker. If that Broker doesn’t like you, wants to undermine your business so they have less competition, they may miss-report the condition just to see your deal fall apart. Do you want that? Do you REALLY want to risk that?
We, as Appraisers, are the gate-keepers. That third party dis-interested factor in the loan process that reliably and accurately reports the facts of the secured property. Do away with us, and, well, can you say SILVERADO? (if you haven’t heard of that – look it up)
THEIR database not “they’re”.
They’re = They are.
Appraisers provide more than a value opinion. We provide accountability (E&O Insurance.) Would it be wise for a real estate agent to tell the client that there is no need for a home inspection? Whose going to be held responsible for an overvalued home when an owner can’t sell it for that which is necessary to pay off the mortgage balance? Who’s left if the appraiser is gone?
I am an appraiser and a REALTOR. Been appraising since 1991. Bottom line is ALL AVM’s are defective because the data they utilize is, for the most part, worthless, in my opinion.
Physical data in the tax records are very unreliable, and to base a value on that data for any property is bound to skew values one way or another. I know in GA the tax records will include what is thought to be finished basement area in above grade GLA. The figures of actual vs tax are off to a degree that can be staggering at times. How can any “model” be considered to be accurate when values are based on defective/inaccurate/unreliable data for the properties, both the subject and the comps? It is pathetic! Here is an answer to that problem – FNMA should share ALL of their data in a National Database that appraisers can access so the physical info we have to arrive at a value estimate is actually based on hands on field measurements by a professional. Anyone think that would fly with FNMA?
Good comment. Your right on the money, or non-money, lol. I also agree with your business model. Stick to your fee and weed out the bad AMC’s (there are a couple of good ones, it only took me 15 years to work through it). But, this only works if you’re in a strong market.
FNME wants to be able to decide if an appraisal is needed after an inspection. The report is not considered an appraisal. It includes photos, a sketch, and a condition rating so it is not in violation of USPAP but, Bill is correct regarding the whole rating dilemma. My thought is, since the beginning of my appraisal time I’ve wondered, why not use an appraiser for this type of inspection when the appraiser has to give their firstborn and lay their life’s work on the line to be considered an expert in this field? Make a mistake and you’ll be sitting in front of the appraisal board like a lost baby buffalo in the Savanah. Or, the way we must abide by the rules, regs., criteria, and conditions from five different agencies, deliver a report the size of the bible, and sign it in blood from a finger prick of your right hand (depending on your work order, could be your left just make sure you read the 20 pages first. Actually, BEFORE you accept the order!! More none paid time.) but, a computer algorithm is ok.
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