Original Comparable Photos
I recently received an AMC update and reminder about the need for and why actual comparable photos are necessary.
Original Comparable Photographs: Scope of Work Point 3: Inspection of the comparable sales from at least the street. This requirement does not tie the appraiser to a specific time for that inspection. Geographical competence would have the appraiser in the area of the comparables many times, and depending on the appraiser’s experience, for many years. Taking a comparable photo a month, six months, a year or more after the sale, does not represent the sale’s condition at the time of the listing/sale. If the assignment is done in February in our Michigan area, what good are comparable photos when there is two feet of snow covering the house and site? This archaic lender requirement should be brought to the technological times of today.
Point 2: Inspect the Neighborhood. Are we to photograph the entire neighborhood? If you have to in #3 why not in #2? The reason being we can get aerial photos from the internet. But wait, can’t we get comparable comp photos from the same place? The difference being???
You signed the report saying that you did do something. Enough said period!. How can the lender assume that we didn’t?
“Photos taken by the appraiser are considered evidence of compliance with the Scope of Work”.
Should we bring a certified note “as evidence” from a disinterested source, attesting that we verified all information in the report that was provided by parties who have a financial interest in the sale or financing of the subject property (Appraiser’s Certification #10)? There is a slew of other certifications that are assumed because we said we did. We say we did but we don’t supply evidence to prove it. We said we inspected the comps from the street….the difference being? The use of MLS or online photos of the comparables does not mean that the comparables were not observed from the street.
Come on! Lets beat this dead horse some more. Give me a logical reason why current photos of historical comps need to be used for a current appraisal. The lender wants me to prove that I actually drove by the comps? Why don’t they believe me when I certify that I did, yet they believe my opinion of value, reasons and explanations in the appraisal? Something is very, very wrong here. Logic or lack thereof, appears void in this one sided requirement.
With CU and “Big Data” the supplying of “actual comparable photos” appears to be a redundancy. The verification that the correct comparable photo was utilized in an appraisal should be easily completed much like verifying a comparable’s view and location rating (external obsolescence). The main reason for driving by the comparable sales is to see if any adverse neighborhood conditions exist. This would be appropriate for a newbie or anyone who lacks geographical competence or access to a website like Google Maps or Bing.
The AMC letter states
“When appraisers sign a certification that they inspected each comparable sale when, in truth, the appraiser did not, that deception short-changes their client, adds unnecessary risk to the loan underwriting, and undermines the integrity of appraisal process. The lender and secondary market investors need to know that the appraiser has complied with the stated scope of work.”
“When in truth, the appraiser did not” is an assumption that should be treated as any condition that is unknown. Why can’t the client make the extraordinary assumption that we did inspect the comparables from the street instead of assuming that we didn’t? “Short changes their client” of what? Photos of comparable homes that may not be indicative of the home at the time of sale? “Unnecessary risk” of what? Missing an external obsolescence factor which is part of the geographical competence of the appraiser? “Undermines the integrity of the appraisal process”? Wow! Those original comparable photos hold a lot more weight than my 38 years of appraising?
To verify the condition and features of a historical comparable from the road for a current assignment may conclude that an addition, a structural change or a possible garage or an out building were added or removed. Now the appraiser has to discuss the changes that appear in the photo and verify the change, details and facts. What bearing do changes to a comparable after purchase have on the Subject? It doesn’t! However, it could add considerable time and effort to the assignment, which of course doesn’t matter to the client. Should we place a caveat in our report that the condition and features seen in the photos may vary from the actual condition and features present at the time of sale?
If the appraiser has geographical competence, which is needed to accept an assignment, any concern about comparables’ location and features is settled and will be properly addressed in the appraisal. The proper use of CU and Big Data should eliminate any purported risk and report integrity. As for short changing the client….what do they say about pay backs?