Enough Already, Nobody is Listening
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AMC technology is not about efficiency of the appraisal process…
I am very tired of reading all the articles from appraisal management companies stating appraisers need to embrace new technologies and tools. Please stop telling me how to do my job!
For the record, appraisers are professionally trained and licensed individuals. We use technology each and every day. We use analytical tools each and every day. Our most power tool, our brains, tells us most of these new technologies and analytical tools are pure garbage; not because the programs are flawed, but they do not have enough accurate data to produce credible results. Credible results are a requirement of the Uniform Standards of Professional Appraisal Practice (USPAP). There is simply no way around it.
In a recent article, “Reading the Tea Leaves” on Appraisal Buzz, Alan Hummel, the Chief Appraiser at First American, embraces the notion appraisers need to “get out from behind the keyboard and attend meetings such as Valuation Expo or attend a CE class with your peers.” The reality is everyone knows Valuation Expo is nothing more than Appraisal Management Company (AMC) propaganda. You are not fooling anyone into believing otherwise. Professional appraisers do not benefit from bias AMC propaganda. Our analytical nature sees right through it.
In the article, Mr. Hummel is under the delusion technology forced upon us by non valuation people and entities, the appraisal management companies, are good for appraisal professionals. This technology is not about efficiency of the appraisal process, it is about money in AMC pockets. It is really quite simple, the 20 year old gum chewing, burger flipping, pizza delivering want to be at the AMCs simply does not understand the appraisal process. It is impossible for these individuals to justify their existence against the skills and training of professional appraisers. These technologies were developed because the AMC employee, you know the gum chewing, burger flipping, pizza delivery want to be, does not have the ability to communicate or think in the real world. They simply hide behind technology. In other words, they lack the necessary skills to function in a real world environment.
In the article Mr. Hummel encourages hybrid appraisals where a property inspector will visit the property and provide “factual” data about the property. This will never work. I am not a pessimist, I am an appraiser and I understand and employ the appraisal process. Not only is the site inspection the most crucial part of my job, it is the most interesting. The interaction with homeowners, neighbors, and yes, even agents is by far the most important step in gathering the data needed to solve the problem; that is, “what is the property worth”. Gathering data is a crucial part in determining the scope of work necessary to comply with USPAP’s credible results requirement. Whatever group of attendees mentioned in the article that came up with this absurdity, clearly are not appraisers.
As someone who takes my license very seriously, I would never sign any appraisal report based on information provided by someone else. It just is not happening. Besides, doesn’t USPAP require verification of all data? If I am certifying I have complied with USPAP and have verified the information, I might as well gather it myself. I have to do it anyway. Let me provide a scenario that Lenders will go ballistic over. Suppose an appraiser was provided information about the property by a third party property inspector then completes and delivers the report based on that information. The client then asks for clarification on something that was provided by the third party property inspector. The appraiser never visited the property and has no first-hand knowledge of the situation. Is the client going to accept, “I don’t know”? Is the property inspector going to answer the client’s question? Who has the liability for incorrect information provided to the appraiser? Using the most advanced, most powerful tool I have at my disposal, my brain, it is the determination based on common sense, and sound human analysis this is nothing more than an attempt for higher profits of the AMC and does not protect the consumer, as my license dictates.
Now let’s talk about big data. I live in an area rich with diversity. From my front door, I can go two blocks north and be in a neighborhood with small ranch style, 1,000 square foot starter homes with price points in the mid $100,000 range. Two blocks east, a newer more affluent neighborhood with 3,000-4,000 square foot homes and price points in the $600,000-$700,000 range. Two blocks south, 5,000 to 6,000 square foot custom homes with price points in the $1,000,000 plus range and finally two blocks west, a small development of tutor style homes with gas street lights and a rod iron fencing. These price points are in the mid $500,000 range. My immediate section of the neighborhood, well, let’s just say I live in the poor man section with 2,000 square foot homes ranging from $250,000 to $300,000. Within this six block radius of my home, there are multiple price points, custom homes, diversity in age, style and construction materials. These homes are less than a mile from each other, in the same zip code, same neighborhood code, and all in the same elementary school district. Amenities within these sections of my neighborhood have different market values. I am sure there are areas throughout the country with similar scenarios. Big data simply does not work here as there is not enough data points of comparable properties for credible results. So please, stop trying to tell appraisers we must use the data and analytical tools to be more efficient. The local professional appraiser knows his or her market and will determine when, how and what “analytical tools” to use.
If new technologies are more efficient, then why are so many appraisers complaining about blasting orders via text message, AMC software, and automated reviews by computers? Why is there some much negativity around AVM’s? Why is there an active lawsuit against Zillow for their Zestimate?
These technologies may appear fast and efficient to the gum chewing, burger flipping, pizza delivery guy at the AMC, but from the appraiser’s perspective, this is dangerous territory and is counter-productive to determining a fair market value. First, blasting of orders is not professional. Second, not every property will fit into a nice little box. Each piece of real estate is unique and not suppose-to fit into little electronic boxes. That is not why people buy their homes and does not reflect market activity. Could you imagine how boring neighborhoods would be with each house exactly the same; the same color, same floor plan, etc.? No two people, not even twins, are exactly alike, real estate is no different. Third, communication is lacking. Sending messages through portals is not quick, nor efficient; therefore it simply is not effective communication. The tone of voice people use is far more powerful than any written words or emoji will ever be. Communication is more than words; the look your parents gave you when you were misbehaving, the rolling of the eyes, the hard stare, etc. These quick and effective forms of communication send the message loud and clear and yes the recipient receives that message loud and clear. Ownership of problems never happens with technology, because the gum chewing, burger flipping, pizza delivery want to be hides behind technology because they simply lack the thinking and communication skills necessary to function in the real world with real people.
While we are on the topic of real world, where is all this data supporting bathroom colors bring more value to your home? Real Estate Agents have always advised their clients to paint the walls neutral colors to attract more buyers. To my knowledge, this has not changed. As an appraiser, I simply cannot support a $5,000 +/- bump in value because of bathroom color. Rest assured some appraiser will get that argument in the form of a reconsideration of value when the opinion of market value does not meet the contract price.
Technology is not going away and it shouldn’t. There are many benefits and it can be excellent tools. However, not all technology is better than tried and true methods, and there is no technology better than good judgement, common sense and utilizing human analytical abilities.
Please stop telling me how to do my job. You are not the Appraiser!
By John J. Appraiser, Certified Real Estate Appraiser – author requested to remain anonymous