CU: Nightmare or Income Opportunity?
Place this statement into your canned comments as it can serve you well.
I received a copy of Ken Harney’s recent CU article today via email. The article was sent from an old appraiser contact that remembered me from the fight that I was leading to boycott AMCs from 2009 to 2010. Ken Harney is undoubtedly the best friend an appraiser could ever have in the national media as he was the only syndicated columnist willing to cover the injustice of HVCC. He and I exchanged several emails during those days. I found no ground breaking news within his article. However, I was grateful for the fact that he continues to play the part of the old guard in his attempts to warn both consumers and real estate professionals about the latest government screw up that will rattle their world. The golden nugget that caught my eye with regard to CU was in fact located within the reader comment section below the article. The comment from Jared Michel best describes the coming CU fiasco and how it will affect appraisers who have never faced this type of situation. Here are Jared’s comments:
“There is really nothing wrong what Fannie is attempting. But it needs to be acknowledged that it represents a shift in the nature of appraising for the secondary market. The traditional Fannie appraisal has been the Appraiser’s opinion of the value of the property supported by facts and evidence. The facts and evidence have typically consisted of an analysis of several recent sales of similar types of property. Anecdotes essentially, that support the appraiser’s opinion.
What Fannie is contemplating is asking the Appraiser to complete a more holistic review of the market. Instead of simply presenting data that supports our opinion, we will be asked to also refute other data that might be construed to indicate a different value. Nothing wrong with that, but it should be obvious that this is a much bigger job as there is rarely any logical end point to the task of “proving a negative”. Expect prices for appraisals to rise.
If I ask you to describe the taste of a glass of wine you could do so with a couple of simple words…”dry, fruity, hints of oak and chocolate”. If I ask you to explain what that same glass of wine does not taste like its a lot harder job…”It doesn’t taste like beef, or pork, or chicken, or nachos… or cake…, or scotch,… definitely not brussell sprouts or kale…. You get the idea. “
Jared’s comments caught my eye because I was faced with a similar situation twice after submitting appraisal assignments. The first case came through our largest client after a homeowner had complained about our value. They then pushed the lender to fax us 20+ comparable sales and listings, asking us to consider each with regard to the property’s value. The fact that this was our largest client played a large part in my decision to comply with their request. After spending nearly two additional days on the analysis the lender responded that they were satisfied with our original value and comp selection. The problem of course was that we did the extra work for free. My second encounter with this type of request came from an AMC named PCV Murcor. They could not locate an appraiser willing to accept a rural assignment and were willing to pay top dollar if we would accept the order. As expected it was an extraordinarily difficult job with few comps available. We spent nearly three days completing the order because we knew PCV all to well. Their reviewers knew nothing about appraising but they were well versed in crucifixions. When their typical requests rolled in asking us to elaborate on items that were well explained within the appraisal we were ready. On day two they sent over a list of 20+ comparable sales and listings that we needed to analyze as well. Rather than comply, as we did in the previous example we replied with the following statement:
“As professional real estate appraisers we were asked to submit OUR opinion of value for the property. We will be happy to analyze any comparable sales and listings that you wish to submit to us as a separate assignment however our fee for such work is $50 per comparable sale if located within our county. The fee may higher however if the comparable sales and listings are located outside of our county”.
Place this statement into your canned comments as it can serve you well. These two lines have the ability to transform CU from a living nightmare into an income generating opportunity. The choice is yours.
I recommend that you read Jared Michel’s statement on CU again appraisers. He is offering your the most accurate insight into CU available to date.
After receiving the previously mentioned statement from our office PCV Murcor threatened to withhold payment for our previously submitted appraisal. We in turn turned them into the proper authorities for value coercion. We received our payment via Federal Express the following day.
By David Feather aka Retired Appraiser