AQB Changing Course on Appraiser Qualifications?

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

AQB Changing Course on Appraiser Qualifications?

Is AQB Potentially Changing Course on Appraiser Qualifications?

Appraisers & others,

The Appraisal Qualifications Board (AQB) is one of the voluntary Boards under The Appraisal Foundation. Their role is to analyze, debate, review, and decide the minimum qualifications necessary for a person to become an appraiser.

While all who currently or in the past have served on this Board, are individually good and experienced people, collectively by Board action they have nearly caused residential appraising to grind to a halt due to their highly restrictive policy decisions. Yes, this a strong statement, and ‘halting’ won’t happen until the majority of current residential appraisers retire or leave not long from now – some say within a decade. But current policy enforced nationally has already begun to affect “us” due to few entering the profession.

This Board is mostly comprised of Certified General appraisers; few Certified Residential appraisers have ever served on it. Thus, their viewpoint and decisions have been skewed to high level educational requirements before one is allowed, by themselves without direct supervision, to carry a tape or laser measure, clipboard or tablet, and write residential appraisal reports for mortgage lending purposes.

From my perspective, it appears to me that the AQB decided years ago to mandate US residential appraisers must be equal to appraisers in distant countries (such as Australia, New Zealand, and Europe) where the lending business model, esteem for the profession and educational requirements are far different than what exists in the US.

However, it appears the AQB has finally realized the pendulum has possibly swung too far to one side, and are now asking for your input to see what should or could be changed. I commend them for this.

The four page  PDF ‘white paper’ below is a concept document issued on July 9, 2015, with a request people review it and respond in writing with comments and suggestions, ideally no later than Sept. 30 so that Board members have your input prior to a mid-October Board meeting.

I would especially encourage RESIDENTIAL appraisers review this document and respond with your comments.  It’s time for the AQB to actually see how their policy decisions have affected our residential appraising work and livelihood, both currently, and far into the future unless more sensible experience requirements are put into place.

Image credit flickr -Judit Klein
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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60 Responses

  1. Timely article Dave.

     
    I think AQB has seriously missed the mark in their perceptions of the reasons there are so few newcomers to appraising. It is NOT the experience requirement. It IS the requirement for a college degree.
    There is NOTHING in the appraisal of residential real estate that requires a four, or even two year degree. NOTHING! There is instead a trend among those to whom such things are important (generally AI and OPM bureaucrats) , to opine that one of the signs or standards of a “profession” is formal education and ongoing training.  Tell that to Steve Jobs and many other ultra successful people! Given their mindset it was inevitable that a requirement for a four year degree would be put in place; cutting off over 80% of potential applicants.

    The BEST R.E. Appraisal trainees I ever had were those with no degree, and those with degrees from foreign lands. I have had American trained Engineers that were brilliant people but whom simply could not grasp the concept that PART of real estate appraisal, contrary to popular belief IS subjective. Frankly, a degree is not even necessary for C&I appraisal, but EXPERIENCE IS! Allow ME to decide which specific (recognized credit) courses are relevant at a given stage in an appraisers career, rather than some college accreditation board.

    As long as the federal government itself encourages all reports to be written for a sixth to eighth grade comprehension level, it’s pretentious to require a degree for appraisal. STOP trying to ‘compete’ with other disciplines, like CPAs. We aren’t CPAS. Frankly when it comes to real estate appraisal, we are far better!

    The AQB appears to be leaning toward recognition of other degrees and disciplines in lieu of experience when they SHOULD be looking at ways for trainees to gain experience in lieu of the college degrees.

    They have over complicated the possible solutions when its really quite simple. Use the SAME STANDARD the feds at OPM use! Two years experience equals one year of college education. THAT enables a real state sales person with anywhere from four to eight years experience (plus RELEVANT appraisal classes) to become an appraiser AND to make the jump to certified in only a couple years after that.

     An alternative track could be NO COLLEGE, but professional Appraisal/CE courses instead! Say Basic Principles to start; Report Writing; something like Harrison’s books on how to fill out specific forms up through 2-4 units (his books ALSO teach WHY something is required and provide examples of what’s  meaningful explanation, rather than leaving the new appraiser to ‘borrow’ someone else’s boilerplate with no understanding of WHY it is parsed as it is.

    Some of the worst and most dishonest appraisers I’ve had have been college degreed individuals. Maybe it’s the mind set in American Colleges these days; or maybe my exposure to people that did not believe rules applied to them was coincidental. What I DO know is that I can take 90% of most high school grads and teach them to be outstanding appraisers in two to three years. However, I am no longer allowed to do that, even though I have never had a trainee in 30 years that has had a complaint filed against them at the state OREA/BREA.

    The incentive for me to train others would be for ALL lenders to allow ME to decide when a trainee is qualified to inspect on property on their own; provided I am comfortable reviewing and cosigning their work. Frankly it is the only way I will accept AMC/UAD work from more than the one small AMC I periodically work with now, OR be willing to train new folks. I pay VERY well (never less than $25 and hour for a trainee, even ten years ago when I had them) and the current practice of lenders requiring certified or general certified appraisers (me) to inspect the property is just not profitable. At $300 to $350; or even $400 per SFR that I must also inspect, it is simply not worth my time to train anyone. Work volume drops by half when training. Filed training takes even longer. I’m willing to do that, but I have to see profit potential at some point early on. Say after a month of field training. I’d still spot check (field review) trainees work just to remind them that ‘short cuts’ are found out; and to help them ‘avoid’ bad habits.

    Instead, allow me up to three trainees (two full time and one part time) and you will get 100% of reports delivered that FAR EXCEED typical AMC delivered reports.  THAT was the old training paradigm that worked.

    Also, stop telling me I am afraid to train because my trainees will ‘leave me’. I WANT them to leave me after three or four years! I want THEM to become sources of referrals to me for assignments that require my General Certification.  The best R.E. appraisal firms are those that are well diversified; SFR & condos, 2-4 units, land , and C&I. If you want us to bring trainees back into the business, then STOP micromanaging us! 

    PS-urge lenders to do the same! Many AMCs wont even allow fully trained ALs to work for them, let alone trainees!

     

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    • Retired Appraiser Retired Appraiser says:

      You make a very convincing point Michael.   I would like to add to your list. Consider the fact that two of the presidents carved into Mount Rushmore never attended college.  These two men are also considered to be the greatest presidents in American history;  George Washington & Abraham Lincoln.  College has very little to do with a man’s ethics because you cannot instill ethics in someone by the time they have reached age 18+.  Universities cannot turn you into a master appraiser any more than they could turn a plumber or electrician into experts in their field.  A college education these days does nothing more than open doors that would otherwise be closed to an individual.  It’s a credential screen in the employee funnel used by firms today. It’s actually useful for some employment (teaching, chemists, engineers,) but does very little to improve the quality of appraisers. Regardless of how many classroom hours you have (PhDs included) you can only become an expert appraiser through experience in the field.

      I would go one step further and say that it’s not even the college education requirement that’s keeping people out; it’s those G.D. sub minimum wage fees that appraisers are now taking home.

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  2. bubba jay bubba jay says:

    what he ^ ^ ^ ^ ^ said.

    anyone see the latest Appraisalport poll? a steady 60%(!) of appraisers say they would not recommend the appraisal business to anyone. 30% arent sure, and only 10% said yes. from another article, it was reported that we have approximately 70,000 appraisers still in the business. so:

    70,000 x 90% = 63,000 saying they would not recommend the business to anyone, or are not sure.

    70,000 x 10% = 7,000 saying they would recommend the business to anyone.

    damn scary numbers if you ask me, yet every year, nothing changes and we still keep going right down the same path, dont we?  D-U-H.

    not requiring such insane education requirements is a good start to bringing a little sanity back into this business, but i think trying to fix all the damage that has already been done is similar to someone trying to pick up a turd by the clean end.

    the bleeding continues . . . . .

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  3. Retired Appraiser Retired Appraiser says:

    One can only assume that the 10% who recommend it are supported by spouses who earn over $100,000 or they are trust fund recipients.  I agree with the 10%…it’s not a bad hobby IF you can afford to dabble in it.

    I believe we should push it to the max and out do Australia or whomever they are trying to compete with.  Why not require a PhD and you’ll get rid of those pesky appraisers who insist on hanging on to their businesses?

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  4. Why isn’t Bubba J’s comment showing here? Loved the ‘picking up a turd by the clean end’ comment! I’m sure he meant TRID though,…. which with its built in appraisal price fixing will turn out to be pretty much the same thing.

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  5. Jeremy Hall Appraisals - Colorado Jeremy Hall Appraisals - Colorado says:

    As long as realty sales agents can buy their licenses out of a box, the appraisal collegiate requirements won’t mean a darn thing in the real world of real estate practice.  Appraisers should have 6,000 hours training experience minimum, and no college degree requirement.  Report submission to the state should not be a random selection of mentors work, but instead a specific test where an appraiser has to hand write an appraisal report by themselves, at the testing desk.

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  6. RA-Agreed.

    We just had modest impact ‘victory’ by AGA/OPEIU and CCAP working together with other organizations and even TAF in California! Got an already passed bill stopped in its tracks (at least temporarily-potentially permanently) in less than four weeks! I thought we had already lost when OPEIU jumped in and contacted labor reps in California. Looks like bill COULD die in appropriations now…or at least be deferred long enough for it to be given a fair public hearing instead of being sneaked through!

    We really could use guys like you and Bubba Jay in AGA. In case you forgot its http://www.appraisersguild.org

    Keep up the good work on your end, either way!

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    • Retired Appraiser Retired Appraiser says:

      I am passionate about the ask plucking that appraiser have taken over the past decade but I refuse to spend a dime on joining an organization.  I’m more into spreading the word and spreading the hate (between appraisers and banks that own AMCs) in every conceivable way.  When enough appraisers come to hate banks and AMCs we may begin to see change.

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  7. Ron Schwartz says:

    Seriously this must be a joke? There’s nothing wrong with expecting a professional to have a bachelors degree people appreciate when I tell them I have a masters degree…But nothing will change until NAR and MBA stops blaming us Appraisers for killing their deals…We are not sales people like they are. We do not earn a percentage of the loan or sales price.. I am a second generation appraiser and my kids and nephews and nieces would never want to do what I do…They see me working crazy hours and writing up thesis like reports defending my reports and me fighting with realtors, AMC’s and Mtg brokers…Stop sending us to continuing education classes and conferences so all we keep hearing is that one day we will be sued and sent to jail…Other professions don’t set up a system that their peers are encouraged to do reviews on each others work and turn them into state boards…Any appraiser that has been in this crazy profession for years should not feel threatened by so many entities and have to keep looking over their shoulders. We should be applauded and thanked by society for helping them not be screwed by unscroupolous deals…

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    • Mike Ford, CA AG, SCREA, GAA, RAA Mike Ford, CA AG, SCREA, GAA, RAA says:

      Ron, respectfully disagree. I want my doctor to have a degree; I’d prefer my attorney to have the same but in some states even that’s not a requirement. Pass the bar and you are accepted. Degree or not. I want my CPA to have one, but could care less if my bookkeeper has one or not as long as he or she knows bookkeeping. I need a MUCH better reason than “There’s nothing wrong with expecting a professional to have a degree.” Worst trainees I ever had were engineers (electrical in one case and structural in the other). I want innovative thinkers, not status quo don’t rock the boat clones. I want people that will fight me and stand up for their positions and beliefs; and SUPPORT them!  But that’s just me. Oddly enough I had a liberal arts major that was ok as a trainee once. I think he took collegiate basket weaving or something equally germane, but the desire and attitude were great.

      People I speak with are comforted by me knowing what the hell I am talking about with respect to appraisal and taking the time to ASK them for information and their views too. I weigh the responses, but if something is not jibing with my observations, then I want to know WHY.

      I have been rated among the top 3% of appraisers nationally before being hired by the Treasury Department. No degree, but I KNOW my profession. IRS rated me between top 2% and top 3% in state. HUD Office of Insured Health Care Facilities ranked me qualified to the GS 14 level. GSA at GS 12 and IRS at GS 13. Coastal Commission offered me a temp job as a Plan Analyst I in 1991. I’ll stack my experience (including pre appraisal) against anyone’s. I’ve met better appraisers than I am, but THEY didn’t know it. I’m not exceptional though I used to be a little bit ‘driven’, and have a low tolerance for bullshyte that forces me to learn much more than I wish to.

      Im not anti degree, but lets not pretend it makes anyone a better appraiser. It  doesn’t. By the way, ANOTHER requirement for a profession to BE a profession is ongoing professional development (CE). CPAS have it; Educators have it, Doctors do it. You get the idea. We SHOULD have it-though I’d rather it be new information rather than the fastest and cheapest I can get two months before renewal; or USPAP every two years due to unnecessary changes.

      Instead of complaining about NAR I joined them as a Realtor(r) to build bridges between agents and ourselves as well as NHB and perhaps even MBA.

      I’ve never feared ‘going to jail’ because I don’t violate the law in performing appraisals or accepting assignments. I’m ok with reviewing peers work & being reviewed, though I’d prefer to have the availability of remedial education as an option rather than fines or revocations in everything aside from ethics and honesty issues. Once our Appraisers Guild achieves it primary goals (fees, blacklisting recourse, CU for appraisers & a return to sanity in regulations), I hope to spend all of my volunteer time defending appraiser members against wrongful claims, reviews and enforcement actions. I have already started that and had several minor successes.

      We can reclaim OUR profession, but not until we stop all the back biting and elitism and unite in effectively fighting for our common causes.

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      • ron schwartz says:

        Mike, I am a fellow Guild Member and I always wish that appraisers could get together and sit around a very large conference table and discuss their issues good and bad especially since every part of the country have their distinct differences and experiences. I love what I do, I have been appraising for over 18 years, I work very hard and I am very honest and do not play games, never have never will. I choose who my clients are and assignments and walk away from many assignments whenever I don’t feel comfortable and smell a possible problem. Unfortunately many Realtors don’t like me since I offer my opinion when I see the many games that are played at least down here in South Florida. Yesterday I did a job and ended up talking to one of the realtors who cried on my shoulder for over an hour that shes been a realtor for many years and have many credentials and now cant deal with the over glut of so many uneducated and unscrupulous realtors out there again I’m speaking of my area of the country and yes I believe most realtors are honest professionals. I was not speaking to her about the house I was appraising. But the sales price was more than $75000 more than any other sale in the market area within the past six months and the other realtor was boasting when I was doing my inspection that he hopes the deal falls through so he could get much more from an international cash buyer and not have to deal with the appraisal process. Regardless the appraisal industry has always suffered from what I call being a Bipolar profession. Don’t call it an Opinion of Value and then be subject to different litigation. If its an Opinion than buyers and sellers and realtors and mortgage brokers should be able to hire a different appraiser and not be locked into one appraiser.  It is my opinion that FHA and Fannie Mae need to look at VA as good model of business, after waiting years to be placed on the roster, I am now on the roster and I love working with them. I work as a professional ask questions to who I need to, receive an adequate fee and if the value appears not to be supported we stop the process and invoke the Tidewater Act and allow the all parties to state their case or offer other sales to review before submitting the final report. It just makes sense. We all have been complaining for years of low fees and now that there is smaller pool of appraisers via attrition or lack of taking and/or passing state exams, I hope those of us who are very good appraisers out there are left. Yes there needs to be a long and intensive talk about how to welcome, work and pay new apprentice appraisers but the current process does not work and I have no trainees under me and wont until it makes sense. We are now demanding higher fees and now some want to open the flood gates for many more appraisers with less experience and education that it took years for everyone to agree with the latest set of rules. My kids are now entering college, they want to be accountant, engineers and architects. I’m not gonna tell them to stick around long enough and the rules should change in order for them to pass their boards or bar exams down the road….

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      • Hi Ron, always a pleasure to see another AGA Member on the blogs here. As for your comments, not much I could add. Agree 100%!

        Especially agree re comments about everybody submitting their best comparables. I’ve always approached it more from a standpoint of are you SURE you don’t want me to consider any sales data you may have in addition to what I bring with me? Be more than happy to look at anything you or your agent believe is relevant. Pre inspection interview used to be the most important part as far as I was concerned to. Avoid surprises about the property whenever possible. Verify that what PR or loan app says it is, is what it REALLY is.

        Anyway, best of luck to you folks down there. Hope to meet you by phone during one of the conferences with Leo or Peter soon.

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  8. Thomas Molinari says:

    Anyone who has completed an Econ 101 course can answer the question of why new, younger individuals are not entering the residential appraisal profession. It is because the financial incentives for entering the residential appraisal business are not as attractive as they are for similar professions. End of story. If you want to attract reasonably intelligent, educated individuals to residential appraisal then offer pay scales that compete with those of accountants, middle management corporate positions, or even retail management.

    This is has nothing to do with a college degree is required or how long one must train as an apprentice before being certified. If the financial incentives are strong enough then having a degree or not having a degree is irrelevant. When the anticipated financial rewards for becoming a residential appraiser meet or exceed the financial rewards of other professions then more young people will enter the profession.

    The income generation potential on the residential side of the business has been decimated by AMCs, scope creep, and other regulations over the past five to ten years. Even with full fee work at current residential fees the income is marginal. Don’t get me wrong, I enjoy working through an assignment, trending data, identifying market trends, calculating adjustments, and developing a reasonable conclusion of market value. Just pay me reasonably for the time spent doing the necessary work. Making a good living completing well thought out reports and doing the work that is required is marginal at best today. The current system rewards appraisers that work cheap and spin out 2 or 3 reports a day. I do not work that way but this is the unintended consequence of the low fee environment.

    Perhaps requiring a college degree or having an alternative such as an intensive examination that tests a trainee with their knowledge of very complex residential concepts and situations would be reasonable. But the apprenticeship or training requirements should not be eased. The dumbing down of the industry will not have a positive impact on the quality of residential valuation or the quality of those attracted to the industry.

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  9. BC says:

    Who wants to work for a split of a split? Take your basic AMC, which may charge $600.00, then pay the appraiser $300. Then the appraisal company tells the new trainee you get a whopping 40% of $300, which =$120.00 per report (after you just spent 75 hours on a Trainee license), which you have to drive to, use your own gas and time, then go to the office spend all day writing it up, have it reviewed, then re-do the entire report as you are brand new and don’t know what you are doing.  Wake up, do that all over again until you have 2,500 hours. You may be able to crank out 3 per week for a gross of $360.00, then subtract gas and costs on the road.  That seems like the road to financial success!  For a new college graduate with 100k in student loan debt.  Btw that same person can have their real estate sales licence in 2 weekends in my state of MA and continuing ED is only 12 hrs per yr.  Can the AQB really not figure this out?

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  10. Mike says:

    Amen to the last 2 comments. This is all about economic incentive. Thomas is correct. It makes no difference what you do with the requirements. If the potential to make a good living is there, they will come. AMCs have stolen every economic incentive from this industry. They have stripped every last buck of profitability out of it, and if there are callbacks about silly, irrelevant review items, actually cost you money. These guys continue to make the case that they provide value. And all of the board members as well as others in our industry continue to play patty cakes and say “they are welcome” or “there’s a place for them”. No, there is not. Their whole business is funded on the backs of appraisers. These guys should not even be in the room. They are unnecessary middlemen who have ravaged this business. Every request I have seen is about fee and turn. I have never, ever, been asked about competency. Get rid of AMCs, put the cash back in the pockets of the people performing the work, and this problem will go away almost overnight. Anything short of enhancing economic incentive, the thing that makes anyone do anything in this economy, is a waste of time.

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    • Mike I used to feel the same way. Seriously. Several years ago I spoke with a B of A VP of Corporate Security, out of Texas about some of Landsafe’s abuses and how there were better business models for B of A to use, including their own past, excellent approved appraiser lists. He resolved the problem I had complained about almost immediately (pressure by a regional manager to offer a contrary value opinion on the basis of a desk review-I had refused; appraisal reviewed supported NOTHING).

      IF B of A had decided that very day to change corporate policy, it would take two years to implement. That’s ASSUMING they wanted to revert back. Truth is almost all banks have eliminated their residential appraisal staff and have no intention of replacing them. So, the question becomes “What replaces the AMCS TOMORROW?.”

      Bring your views to the AGA (www.appraisersguild.org). If there is support for it and we can make a case that it’s best for appraisers AND consumers (that’s our particular non appraiser burden), we can start developing a plan and taking action. Personally I think attacking smaller, single issues one at a time is a losing proposition too-though better than noting.

      I’m beginning to think we need to completely rewrite Chapter XI of FIIRREA and incorporate out TOP TEN most serious issues in the Foundational Appraisal Law. Before I saw what OPEIU could do with CCAP, REAA, ASA and a few others INCLUDING TAF to stop California’s AB 624, I’m reassured  Changing FIRREA IS within our reach.

      So far, the problem is special interests changing only THEIR pet issues. It’s a tall order, but one that I KNOW we can do. Of course we need YOU and a respectable portion of the remaining 70,000 to 80,000+ appraisers in the country to do that. IF we continue to show OPEIU (& ultimately AFL-CIO) that we are serious and reasonably united, they WILL put the weight of THEIR 13,000,000 members, retirees and family members behind us. They PROVED it to me by getting behind us when I went to testify before TAF in California recently; and in the follow up. They are still behind us.

      Call me (anyone)  1(714) 366 9404 or email mike@mfford.com or go straight to AGA at link above.

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  11. L.Lentz says:

    Now comes our CLUES about why the AQB has jacked up the requirements for appraisers over the past years. I’ve wondered countless times how this all happened. The AQB royalty is EGO driven!

    They want American appraiser standards to equal those in Europe, Australia and elsewhere!

    I had to go back and reread this part! Stated officially or merely implied, is this and similar thinking what drives the AQB? WTF?

    These ass clowns are exposed for what they’ve done to us all.  Instead of helping the profession and individual appraisers, they tighten the screws…

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    • Wayne says:

      Well here it is! We all (most of us) knew it was coming! Just as the appraisal occupation was beginning to take tiny steps toward professionalism the “ALL Interested Parties” and “concerned stakeholders” (aka AMCs and Lenders) want to see the current requirements gutted so that they can continue to ride appraisers like rented mules!

      We all know the reasons that thousands of appraisers are dropping out of this occupation each year. These are appraisers who already have earned the license/certification. If they do not find this to be a desirable occupation what makes anyone think reducing the entry requirements would improve the situation? It appears to me that the AMCs and lenders are putting pressure on the AQB  to dumb down the requirements so that they will continue to have an abundance of silly geese to exploit!

      I say leave the requirements just as they are. As more appraisers retire or move on this occupation will begin to see a substantial increase in pay. If the money is there, the appraisers will soon be there too! (We may even gain a bit of respect!)

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      • bubba jay bubba jay says:

        i think you just contradicted yourself there Wayne. In one paragraph you talk about appraisers getting ridden like rented mules, and in another paragraph, you talk about appraisers pay going up. The fee appraisers make on an assignment will never go up as long as we dont have full control over them, and other people are allowed to line their pockets deeper, by paying us the least amount they can get away with. If the system we have in place today doesnt change, appraisers will always be ALLOWED to be ridden like rented mules no matter what. With fewer appraisers, it will begin to take forever to get a report back, but i doubt the pay will change one bit because it still wont be our decision.

        The smart appraisers, (old or new), will take RA’s advice and open their minds, and take a strong look at all the opportunities that are out there right now, and there are plenty of them. Many pay well, some have benefits, many have unlimited income opportunities based on performance just like our business used to be. All had employee handbooks, but none had anything that looked like USCRAP.

        Appraisers are leaving for many reasons, but i am guessing many of the more veteran appraisers are also leaving because they are starting to see all the less stressful and much greener pastures that are out there. AMC’s and banks know that the newer appraisers will stick around no matter what and take all the abuse they are given, because this job does pay slightly better than the McDonalds job they had just a few years ago.

        the bleeding continues . . . . .

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      • Wayne says:

        I do not work with any appraisal management company and if forced to do so would change careers today! I personally believe that the AMCs are the major reason for the reduction in the number of appraisers.

        I typically receive three to four AMC assignment offers each week. Even though I do not accept these assignments I am totally aware that other appraisers in my market area are accepting them. I would like to increase my base fee to $500. but cannot as long as there are appraisers within a mile or two accepting $250. I believe that a reduction in certification requirements will just add more $250. appraisers and will not benefit any of us!

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      • Hi Wayne, it’s a legitimate concern for you, albeit one that I don’t think is likely to actually happen.

        New appraisers seeking experience are by default $250 appraisers if you and I are charging $500. I never paid a trainee more than half and doubt I would in the future. The market fee remains $500. If I started accepting $250 fees, then there is only $125 available for the trainee. No one is coming into this field capable of passing the license examination, for $375 a week,

        I would lower the college requirement (or offer a more reasonable ‘in lieu of’) but NOT the experience requirement. The current thinking of AQB is just the opposite.

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      • Retired Appraiser Retired Appraiser says:

        Ride appraisers like rented mules?  No

        Ride appraisers like rented prostitutes?  Absolutely

        One is left to wonder if the overseas appraisers with those hefty credentials work for minimum wage as well.

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      • Wayne says:

        RA, I enjoy reading your posts and feel pretty sure that you already know that this is a done deal. By the time those of us in the cheap seats are asked to send comments…..the ink is dry.

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      • Dumb down? Since it was AQB that implemented the for year degree requirement, it is NOT a case of dumbing down anything. FIRREA 1989 and early licensing had no four year degree provision.

        The old belief that a basket weaving degree lends ANYHING to this profession or any other “profession” has be proven to be a false is premise every time it is applied. It is tantamount to an admission that our tests are so meaningless that unqualified people can pass them with ease.

        What they ARE suggesting is that yours, mine and everyone else’s decades of experience can be offset with a degree, and LESS experience!

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  12. l. lentz says:

    And another thing…

    The AQB college degree requirement is ridiculous over reach.  Just one more hurdle to clear because the AQB is given way too much power over our profession.

    I’ve appraised over 30 years and have TWO college degrees. While I’d gladly do it all again because of the life changing benefits of education, it certainly should not be a requirement to become an appraiser. Where do these AQB petty tyrants get these ideas? Their elitist leanings are actually engineered to “thin the herd”.

    You suppose they will ever “back off” and do anything FOR the appraisers out in the trenches?

    Pee tests are next……………

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  13. Vince Slupski, MAI says:

    I wonder if the buggy whip manufacturers of 1915 were discussing the experience required for making a really good buggy whip, and the number of windings around the shaft that a really good buggy whip requires. Maybe the appraisal as a risk management tool has failed, or at least failed in a cost-benefit sense. It is expensive, it takes a long time, and is no guarantee of anything. Appraisals failed to prevent or even address the boom and bust in real estate values in the 2000s. If anyone feels that appraisals aren’t really set up to address market cycles, you’re making my point. It seems to me that before tinkering with education and experience requirements, we need to be straight on the function that the appraisal serves, and the efficacy in fulfilling that function. People with cash have determined that it doesn’t provide any function at all – REITs and SFR investors aren’t getting appraisals. Look, Fannie Mae has Collateral Underwriter, mining big data to compare appraisals against its database. It’s a small step from there to providing AVM values on the spot. FNMA is no doubt trying to calculate the cost-benefit of cheap AVMs against expensive appraisals. At some point, they will decide they can get along fine without appraisers, and the appraisal trade will be finished.

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  14. Jeff says:

    I am surprised so many appraisers want to see the college degree requirement removed. I am hearing mainly two arguments for removing this requirement. The first argument is that the degree requirement is why there are so few new appraisers. The second argument is that a degree does not make a better appraiser. In response to the first argument, I think the degree requirement has very little to do with why there are so few people entering the profession. There are plenty of college graduates that would gladly enter the profession if there was enough financial incentive. And why is there not enough financial incentive? It is because there is still an over-supply of appraisers. That situation is gradually improving and as it does, demand for our services will increase, which will lead to higher fees. As fees go up, interest in the profession will naturally increase. It’s simply a supply and demand issue. Lowering the bar will not help. It will just make the profession less attractive because when the bar is low there will always be an over-supply of under paid appraisers. Professions that pay well generally take a significant effort to enter and when significant effort is required, respect for the profession generally increases. A college degree requirement increases public trust and confidence in our profession.

    In response to the second argument, I do believe a college degree has relevance to appraising. Having a college degree does not guarantee you will be a better appraiser, but it helps. College can help in writing and communication skills. It can help in presenting information and supporting a conclusion, all of which are useful skills to appraising. Of course, not all courses have a direct correlation to appraising, but that could be said of any profession where a college degree is expected. Instead of eliminating the college degree requirement, we should work to make the degree more relevant by offering more real estate and appraisal related college courses.

    There was a time when an appraiser could take a few classes and immediately go out and appraise, as long as they could find a certified appraiser to sign as the supervisory appraiser. Our profession is still suffering to some degree from the problems associated with so many poorly trained appraisers entering the profession during that period. It takes time to change the public’s perception. This is an example of the bar being way to low and we do not want to go back to that situation.

    Instead of changing the college degree requirement. I think we need to look at changing the way we use trainees. We need to insure trainees are trained adequately, but it is not reasonable to expect the trainer to inspect the subject and comps with a trainee until they are certified, which is what most clients expect today. In my State, the trainer is expected to go out with the trainee for the first 100 appraisals, which seems reasonable, but doesn’t really matter since most clients expect the trainer (certified appraiser) to inspect the subject and comps regardless of how much experience the trainee has. The current situation doesn’t make sense. It makes sense for the trainer to inspect for say 6 months, but not 2-3 years. We don’t want to go back to having trainees inspect on their own almost immediately or have sweat shops with dozens of trainees with little supervision. We need to make sure our States have reasonable requirements for trainees and trainers, such as how much supervision is required and for how long and how many trainees can one trainer have at a time. The trend is heading this way as demand for our services is increasing. US Bank recently announced that they will now accept appraisals where the trainee inspects and the supervisory appraiser signs on the right. We need to encourage others to follow and make sure we are prepared for when they do.

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    • Jeff, well stated case for college, but I respectfully disagree. I don’t know what YOU think the old days were, but I started in 1986 and AIREA had its own standards. They were adapted to develop USPAP. We had LOTS of professional training. I still have my old Financial Tables. You are inarguably right about one thing. It is NOT the degree stopping those from entering the profession-though its a factor. It is the unreasonable burden of micro managed experience requirements rather than common sense. That in turn plays out as inadequate

      Your last paragraph regarding supervisory inspection really is the issue. Experienced real estate agents and other categories of home inspectors usually do not need six months or even 100 house inspection hand holding. That wasn’t even the case in the days of Polaroid’s being stapled to typed reports and hard copy MLS, CMDC and micro fiche data services.

      Today my (hypothetical-since I no longer use them either) trainee can bring back a hundred digital photos if needed at no extra cost to SHOW me what they used to have to explain. When the trainee can reliably bring back accurate (hand drawn) site-improvement orientation sketches and notes; and manually calculate GBA correctly they are usually ready to ‘solo’ subject to supervisor’s FREQUENT and announced field reviews and siting down afterward to review findings. Depending on their other experience that (in my experience) may be from one to three months. If they cannot do these things at the end of three months, it is time to move on to the next trainee.

      When I throw the first few condos at them, same thing. I need to go out and guide them along until they demonstrate competence and understanding of the differences between Co-ops; flat stacked condos, townhomes (detached or attached), zero lot lines, “own your owns” (in my state they were created to circumvent Co-op limits), self managed projects and professionally managed projects.

      Same thing when they are ready for first 2 to four unit (though personally I want them to have already completed an income course before doing this). Each property category builds on the prior experience, and takes less and less of my time.

      YOU and I determine when this solo flying is. I CANNOT afford AMC fees for six months and then split half that with a trainee! Even at split rates, I never want the trainee earning less than $25 an hour: and I don’t want to be earning less than $100 an hour for non expert witness, split fee work. THAT economic model works!

      By the way, six months experience in a good fee shop is well beyond two years in an S&L staff environment, or bank residential entry positions.

      As for college, I’ll concede the point WHEN the college grad novice appraiser can tell me when and  WHY regression analysis will not normally reliably give me what my local micro market GLA and or room count adjustments are, but my local agents can.

      (Anyone can play the latter game! Look up Hollywood Riviera, Zip code 90277 and no, it is NOT in Redondo Beach despite the RB zip); define the bounds and then post a GLA adjustment for 300 sf difference in a 1,200 sf to 1,500 sf range 1940’s to 1960’s built sfr in UPPER Riviera and LOWER Riviera. Come on! Put those degrees to use! IF you need an anchor address use 249 Paseo de Gracia in lower Riviera; (never a client of mine). The “TO” in the zoning code is for Torrance.

       

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  15. Retired Appraiser Retired Appraiser says:

    A wickedly popular post with a plethora of comments from AMC haters.  Congrats AppraisersBlogs team!  As of today I believe that you’ve claimed the appraiser blog kingdom once ruled by AppraisalScoop.com

    Hail to the new King: AppraisersBlogs.com

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  16. L.Lentz says:

    Hey “Retired Appraiser” who posted  on July 16. 11:07 pm.

    I like your attitude and ideas. But I have a question …

    What is an “ask plucking”?

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  17.  
    Vince’ comment highlights one of the most serious concerns  I’ve ever seen here. No disrespect to other posters, or Vince personally.

    It is also imho, misleading and yet another a sign that the MAIs of the AI, are now in full fledged pursuit of eliminating the distinctions between REAL ESTATE appraisals, and those of INTERESTS in real estate (securities, stocks and bonds) formerly the exclusive realm of the AICPA; and CPAS of America.
     
     REITS are not bought or sold in the real estate market any more than corm futures; or stocks in Microsoft are. Try finding one for sale in your MLS, CoStar, or Loopnet.
     
     Real Estate appraisals that follow accepted principles and practices of REAL ESTATE appraisal do very well in both up and down turning markets when the appraisers do their jobs.  Part of THAT job is to ignore or at least point out the irrelevance of GSE Guidelines when those guidelines & micro management are WRONG. Our job is and always has been to accurately appraise an interest or interests in specifically identified real estate; not personal property.  
     
    Those assuming that the underlying cumulative individual MV’s of the individual assets in a REIT are an indicator of the REITS Fair Value or Fair Market Value   would be in error. The REIT itself is valued based on the REITS performance- not one hotel in its portfolio.
     
     Fellow appraisers if you do NOT STRONGLY resist this subsurface trend to conflate real estate appraisals with business enterprise valuation, we will ALL be looking to find jobs making buggy whips for some equestrian boutique somewhere.
     
     Then again, like the buggy whip maker I don’t support the AI’s desire for  contingent fees either. Perhaps “Paula’s” explanation at the last TAF/ASB meeting 6/26/15 wasn’t compelling enough.
     
    I have no problem if MAIs want to become personal property (stock) appraisers . Just stop pretending it, or they  have anything to do with how real estate should be appraised; or that they even trade in similar markets. Perhaps its the concept of cash equivalence that needs to be redefined. R41b and R41c never did translate well to residential RE.
     

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  18. Vince Slupski, MAI says:

    Mike, not sure where you were going there re: securities valuation, but I think I was misunderstood in my effort to be brief. Let’s consider residential appraisals only. What are the goals of the lender? To make a loan at the lowest cost, and to be PAID BACK. That’s it. What’s the function of the appraiser in achieving those goals? The lender hopes the borrower will pay as agreed for the term of the loan, but sometimes that doesn’t happen. Then the collateral may be sold to pay back as much of the loan as possible. But the appraisal is only valid for a short time, given the volatility of housing markets over the last four decades. The appraisal may only be relevant for six months to a year. If the loan goes bad in that time, the appraisal should have detected flipping fraud, abject stupidity on the part of the buyer, or significant physical defects in the house that the lender wouldn’t otherwise detect. In that case, the house should be sold for a price reasonably predicted by a decent appraisal. However, the lender thinks he got an appraisal for assurance that he can be paid back three or five years down the line, when the couple is divorced, or the breadwinner goes bankrupt due to a car accident, or the world economy goes down the toilet. That’s what the lender wishes, anyway. Appraisal at the time of a loan doesn’t do much for those circumstances. Compare that to some of the other big costs in a loan transaction. Mortgage insurance is insurance – it actually makes good on a loss and pays the lender back. Title insurance is insurance – it pays the lender back in event of a title defect. Appraisal doesn’t insure anything and doesn’t pay anyone back. What is the value added for $500? What product can appraisers provide that will reasonably predict a house’s value in the intermediate term future? Let’s assume an AVM and a checklist drive-by inspection by a real estate agent or kid could be completed for $75. Does the appraisal really add $425 of additional value to the lender?

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    • Vince I may have disagreed with you on this one item but Im disappointed to see a ‘comments hidden’. Part of the learning process is for us  to consider ALL information; including that we may disagree with. I hope BlogTeam will reconsider this policy if it is something within their logistical abilities.

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  19. Retired Appraiser Retired Appraiser says:

    Vince

    In the off chance that you create the world’s first Value Insurance Company, sign me up as your first broker.  Just be sure to set the price high enough to make it as lucrative as Title Insurance sales.

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  20. Vince, my friendly respected nemesis; Neither I nor any other appraiser performing a USPAP compliant appraisal have ever provided an appraisal ‘good for six’ months or more in the scenario you outlined. I see where you are going with this (or think I do), but lets not confuse what we ARE with what others may desire us to be or become. The “value added” for my $450 to $3,500 sfr appraisal report is that the lender knows what the defined market value is as of the date they extended the loan. The only question that remains is whether they care what it is worth at that point?

    As part of that, I have also analyzed “neighborhood” (competitive market area) economic trends and conditions. This could be macro or micro.

    On November 1, 2008 I knew that outlying counties in Southern California were showing increasing signs of leveling prices overall; and in some cases decreases appeared to be normal equilibrium in the market place, seeking its sustainable value absent the buying frenzy of 2004-2007.

    Nothing I could have done would have adequately predicted Hank Paulson would come out mid month and say “The sky is falling! Give me sole discretion on how to spend a government bailout of $800,000,000, or the world as we know it will come to an end.”  THAT by the way, was the biggest theft in history up until that time. The immediate  effect was the same as someone walking over to a wall switch and saying “G’night folks. Time to turn off the real estate market and go to bed.”

    FIRREA as originally written and passed provided all the protection lenders needed. If they only had 1 in 10 appraisals field reviewed I submit the recession and real estate collapse we all experienced could never have taken place. Knowing there was a 1 in 10 PROBABILITY of being ‘caught’ would have curbed nearly all inflated appraising going on (imho).

    It was the lending side itself, that no longer had skin in the game, that put specious financing and qualifying programs into effect to generate more real estate backed securities sales for loans THAT COULD NEVER HAVE BEEN SUSTAINED from the day they were made.

    A 2% pick a payment, option ARM with negative amortization provisions and two and three year call dates absolutely relied upon double digit inflation to force borrowers into refinances. No way does the average buyers income go up enough in two to three years to cover the payment spread between a maxed out 2% qualified rate loan and one that adjusts to 8% or even 9% in that same short period! This is not a case of appraisals not adequately identifying market factors. It was a case of those market factors as were reported AND sound lending practices being completely ignored!

    As one of the very few center right, free enterprise advocating, capitalist, union organizers in the country it kills me to say this, but Wall Street is 100% to blame for the last fiasco! They corrupted the entire process including regulators. Im unwilling to change the standards of my “profession” to further accommodate them for rounds 2, 3 or 4.

    No one cares what the individual house is worth in terms of collateral. So why would they care what it is worth  six months from now? All they will do is add another layer to the reinsurance process and tax payers in the USA will guarantee investors from France or the Netherlands don’t lose anything on U.S. Real Estate backed securities.

    Now they want to do t all over again. Who cares? They know the taxpayers can be bled dry not only for today, but for future generations as well. THAT is not free enterprise btw. That’s criminal cronyism that would have made the Tea Pot Dome participants blush with envy.

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  21. PS-Vince the goal of the lender was never to be paid back. The ONLY goal of the lender was to originate loans and make a commission for doing so. Most were insured loans and they couldn’t care less whether repayment took place as long as THEY weren’t on the hook for buy backs.

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  22. Vince Slupski, MAI says:

    Mike, first of all, when I use “lender” above, I mean the actual ultimate lender who provides money and holds the loan as an asset, whether a Norwegian bank, or the Sultan of Brunei, or a pension fund that holds mortgage bonds. Read it that way, please. Yes, the agency problem of aligning the interests of the loan officer, the securities underwriter, and others who are supposed to be working for the ultimate lender is a continuing problem.

    Re: your other message, I and everyone else will agree with much of what you write, but I’m not sure you draw the right conclusions. Without a doubt, aggressive lending practices like no-doc loans and neg-am loans blew the financing system apart. Appraisals were irrelevant. I think you made that point yourself above. Appraisals were irrelevant. They don’t prevent bad lending, and they don’t fix bad lending. Better lending regulation is the answer to that problem, not appraisals. If, as you say, the lenders (and loan officers, securities underwriters, securities salesmen, etc.) didn’t care about the appraised values, what was the point of doing them? How did they protect the financial system, the lenders, the shareholders, or the taxpayers?

    There were certainly egregious examples of appraisal malfeasance, negligence, incompetence, and fraud, as was true in the S & L times when FIRREA was passed. But imagine a regime of perfectly ethical and competent appraisers. Then imagine a shift in preference to hold more real estate equity and debt, resulting in increased prices. Now imagine a reversal of that trend. Appraisers are reporters, not market makers, and we will accurately report rising property values, then falling property values. But how does this help the lender get PAID BACK? Because that’s the lender’s only concern. What is the value added by the appraiser? If the market value estimate is accurate as of the date of appraisal, how does this help the lender get PAID BACK? That’s what appraisers have to demonstrate to have an ongoing role. The sad truth is that the appraiser can generate reams of analysis about supply, risk, value trends vs. income trends vs. historical inflation, economic weak links like reliance on a single employer, etc.; but if the LTV is what’s required by the lender, the deal is done. Again, where is the value added?

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  23. Vince Slupski, MAI says:

    One more comment, maybe just repetition: the appraisal is suited to detect flipping schemes, collusion between borrower and lender, stupid buyers, and properties with major physical defects or adverse influences. Since the appraiser is the only third party to actually see the property, the appraiser can see if the siding is off the back wall or the freeway is 10′ from the bedroom window. This is good stuff, but $500 is a lot to pay for this if it can be done by a real estate agent checklist/drive-by and an AVM.

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  24. Vince Slupski, MAI says:

    Can’t resist one more comment. Mike, you’re in Southern California? Let’s say an ethical and competent appraiser – you, or one of your colleagues – appraised a tract home in a subdivision in an outlying area of LA for $450,000 in June of 2007. Impeccable appraisal, supported by similar sales around the same price. Nothing to criticize in data, methodology, or judgment. And let’s even say it was a reasonable loan, normal terms, fully underwritten. By 2010 that house might be worth $300,000, and the construction guy who bought it was out of work and the home went to foreclosure and the ultimate lender, the shareholders of FNMA or the Singapore sovereign fund or somebody, lost more than $100,000. What value did the appraisal add to that transaction, to the borrower, or to the ultimate lender? This is the question that the appraisal industry needs to address. Instead we are talking about qualifications, fees, experience, pressure, etc., everything EXCEPT relevance.

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    • L.Lentz says:

      IMPECCABLE APPRAISAL!

      If it was an “impeccable” appraisal to begin with, and three years later the market tanks, so what? You can’t fault the appraisal or the appraiser for that.

      Although the lender, the appraisal police, and a host of others will try to pin it on the  appraiser. They need a fall guy. “We need a fall guy. Lets give them Wilmer” as Bogart says in the Maltese Falcon.

      The system need a fall guy. Lets give them the appraiser….

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      • Vince Slupski, MAI says:

        I don’t fault the appraiser. I’m saying the appraisal is irrelevant to the problem the lender faces, in this and many other cases.

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  25. Mike Ford, SCREA, AGA, GAA, RAA Mike Ford, SCREA, AGA, GAA, RAA says:

    Vince at what point does the appraisal stop being a whipping boy for either a bad loan or an unforeseeable market downturn? Measured in ten year cycles, no one has ever lost money in actual California Real Estate ownership EXCEPT when they chose to sell in abnormally low markets in under ten year holding periods.

    So, I will add the above statement to all my appraisals and tell those that expect the appraisal to protect them forever NOT to sell foreclosures when the market is down. THAT advice is worth far more than the $450 to $500+- fee I charged.

    Respectfully, I think you have over analyzed this to the point that your postulating that trucks should now become airplanes. The underlying premise about collateral is that it does not USUALLY decline in value.

    For me, ASB, the AI or anyone else to think we can predict OR account for these downturns in any credible manner is hubris. If the lender wants to move furniture (for some peculiar reason), let them rent a truck; if they want to travel across country quickly let them buy  a plane ticket. If they want to know the market value of real estate today let them get an appraisal.

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    • Vince Slupski, MAI says:

      Mike, could you please expand on your last sentence: “If [the lender] wants to know the market value of real estate today let them get an appraisal.” You simply assume this is an important function and that appraisers can do it well and with costs and benefits superior to any other estimation regime. I assure you, our clients are questioning these assumptions.

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      • Mike Ford CA AG etc. Mike Ford CA AG etc. says:

        Hi Vince,

        The whole issue is WHO specifically are the ‘clients’ you refer to? The disconnect between the need for/ benefits of an appraisal comes between FNMA and the sale of bundled securities that include loans that are represented to be insured for loss against the first 25%. NOT ONE of those ultimate end user securities investors are my client. Additionally they do not value the bundled security as the sum of the individual market value of its component parcels.

        Its apples and oranges. If the AI wants to delude itself into thinking that (Entity BV) is the direction of  real estate appraisal in America (or the world for that matter), they will drastically precipitate the demise of the MAI designation.

        Right now if the NY Trade Center needs to be appraised the 99.9% probability is that it will be done by a team of MAIs (and probably should be). You folks start rewriting standards and guidelines along the lines of the foolishness I heard being promoted by The AI at the recent (6/26/15) TAF/ASB meeting, and “Made As Instructed” will cease being nothing more than an offensive euphemism by jealous competitors. It will become a market wide perception.

        Again,we appraise real estate; not futures; commodities, bonds, stocks, REITS or bundled securities comprised of partially insured collateralized loans. Looking to the future of our profession is necessary. Attempting to make it cross over into something it never was intended for, nor should be used for, is another.

        I really enjoy and respect your views Vince. I just happen to disagree with them.

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      • L.Lentz says:

        Yes to what Mike Ford said.
        An appraisal for most properties is relatively straight forward in concept, execution and presentation and should stay that way. Look at a standard definition of “market value” used out there in the trenches. Fairly simple. 

        If some client wants verification, speculation, or what ever, on some other aspect the real estate – let them go find it. But, it’s not our job (not my job anyway) to provide them with such.
         
        I’d resist any efforts to redefine the simple classic definition. 

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  26. bubba jay bubba jay says:

    an appraiser/appraisal is the only true “circuit breaker” in any sales/mortgage transaction. IMO, we are the only component of the sales/mortgage transaction that can be completely trusted and relied on. with USCRAP written so vaguely, and all of us feeling like we could violate some part of USCRAP nowadays if we dont put the toilet seat down in our own homes, we are forced to be ridiculously honest at all times.

    take the appraiser out of the equation, and who else can be trusted? personally, i wouldnt trust any realtor whos pay is based solely off of the sale of a property. i know many realtors in my area, and i wouldnt trust more than about 25% of them. i was a realtor for (15) years, and i saw all the nonsense people pulled or tried to pull to get paid, and things only got progressively worse when the market was slow. you want to see true chaos? take appraisers out of the equation to do thorough and honest valuations and inspections, and start relying only on AVM’s and realtors to do things like BPO’s, and watch what happens. let the 75% of realtors in my area take over everything, and watch how quickly things really get screwed up. for example, how rare are MLS sheets that are completely filled out correctly, or have well written descriptions of the property? in my area, they are pretty darn rare, and its these people that we will be relying on in the future for truthful, thorough, and accurate information for mortgage sales and refinances? yeah right. i dont foresee any problems there at all. LOL.

    at least one honest and trustworthy human being will always be needed in any mortgage transaction to keep everyone else honest, (including loan officers), and that is what appraisers do. an appraiser is the only one anyone can trust 99.9% of the time in any sale/mortgage transaction.

    the bleeding continues . . . . .

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    • Mike Ford CA AG, AGA, SCREA, GAA, RAA Mike Ford CA AG, AGA, SCREA, GAA, RAA says:

      Bubba 100% correct! I was an agent back in the days when they still taught fiduciary responsibilities to ALL parties until some ass-hat attorney latched on to the idea that fiduciary treatment was just possible where commissions were involved. Anyway-that’s another story….or is it? The AI has new standards that allow for contingent fees.  No conflict of interest there is there? I’m sure it will do wonders for the profession’s credibility overall.

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  27. Retired Appraiser Retired Appraiser says:

    As is usual, you hit the nail on the head Bubba.  The problem being of course that with so many people’s income on the line the skinny, pale faced, pocket protector wearing geek appraiser doesn’t stand a chance.  Realtors hate him, banks despise him, mortgage brokers endure him, and AMCs put up with him only because they need to drink his blood daily to survive.  I’m not sure if you’ve noticed but even the homeowners that the appraiser protects hate him.  I was once chewed out royally by a homeowner who was determined to buy a home that was overpriced by $100,000+.  I shot the deal down and sure enough she dug into her purse and paid the difference in cash.  It made my day when I heard about the ding bat blowing her wad on a property she would never recoup her money from.

    Everyone hates appraisers Bubba.  It’s sad but a fact of life.

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  28. Vince, (been awhile for this thread) Your SoCal example is right on the money in terms of realism. I think it also makes my point about who the appraisal is intended for and where the added value is.

    Fly-By-Night Lending, Inc. was a correspondent of (arbitrary name) Wells Fargo; or Aurora. They made a stated income loan. The lousier the buyers credit score was, the MORE likely it was that they’d get a 2% Option ARM WITH a prepayment Penalty. They got a FNMA (or Freddie or even Indy) commitment before they ever funded the loan.

    Fly-By-Night got paid; the former stripper-now (unlicensed) loan officer trainee, that found the lead got paid; her broker got paid three times as much PLUS the rebate. Wells Fargo got paid. The Account Executive got paid. The AE and the Broker split the prepayment penalty premium based on their predetermined kick back arrangement.

    Six months later FNMA bundled it and sold it to New York Securities Fund Series E-1832, and FNMA got paid. Real Estate and an interest in a single parcel of Real Estate stopped being sold at that point.

    NYSF-E1832 was a Bundled Security by “Too Big to Fail, But Not Dumb Enough To Be Self Insured. TBtF,BNDETOBSEI marketed the fund (NOW it is a PERSONAL PROPERTY interest) as an insured investment. The SEC was on holiday that summer. AIG wasn’t real sure about all their exposure on this one so they reinsured through Societe Generale. NOW your investor from Singapore or Greece or whatever comes along and says I want $500,000,000 from Menu A and half that from Menu B.

    The guy that originally bought the house out in Riverside County, CA  survived the first interest rate bump to 4%, but knows he’s in trouble. It is scheduled to be bumped again (based on the LIBOR rate which we now know to have been criminally manipulated). So too do the other 1,000+ individual owners that were included in NYSF-E1832 (know they are introuble-but at different times); so after making his payments for a full 17 months he goes back to refi out of it, into a new Option ARM. Lending policies have been getting just a little bit more cautious AND he was foolish enough to have waited until 11/09/2008. The day they turned off the Real Estate Market Switch.

    Back to your original concern (sorry ’bout that- I DO get windy). Your guy in Singapore IF he has any inside trading contacts is bailing out of his fund just as fast as he possibly can because the bleeding THERE has already started AHEAD of the default  / decline back in Riverside County.

    Where is the ‘value added’ to him derived from an appraisal? Absolutely none. Nor should there be. We don’t appraise personal property! He should have been listening when that guy with the initials EF spoke out.

    Its also why no one without a NACVA course under their belts should be calling themselves “valuators” in America. We are Real Estate Appraisers.

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  29. BRCJR says:

    I lack the formal education required to become “certified”.

    I would like to see something that allows me, at my age, to continue to grow in this profession.

    I only have, in my planning, about 10 more years or so before I retire.

    Cost benefit of college and time away from my young grandchildren disallow the returning to school.

    My problem, not yours, I am fully aware of.

    Why could a Licensed not sit for a Certified Residential exam if say, the license has been held for 5 (or 10-pick a number) years and never a disciplinary action was taken against the Licensee. You could implement a similar approach for a Certified Residential to upgrade to a CG.

     

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    • BS says:

      While this is a really old thread I am in the same boat but without the grand kids! Starting my 20th year in the business, LR with very little time over the years to jump up to the CR or CG. Even back in the days when we were allowed to take a week long income cap class and a test I didn’t have the time with 2 jobs and kids. As in your case my problem, not yours. Sad however that experience is not more of a factor, I’m not knocking an education by any means but over the many years in this field I have reviewed reports from all licenses and I have seen good and bad stuff from each. Within reason I think anyone can become proficient in this field. I wish as an industry as a whole we would do a better job of teaching, I learn a lot from the review of a well written report. I also learn a lot from a good AMC, they look and review the report differently than I do. I welcome the questions as a challenge and a way to learn and get better. My biggest fear as I near semi retirement is that they will require all reports be completed by CR & higher, I really liked doing FHA work and had a solid 10 year business then it was gone.

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