The Appraisal Foundation Chocking The Appraisal Industry

VaCAP Board

VaCAP Board

Coalition of Appraisers in Virginia at Virginia Coalition of Appraiser Professionals
Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.
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The Appraisal Foundation Chocking The Appraisal Industry and Resisting Change - Imagecredit Flickr - Rafa Garces

The Appraisal Foundation Resisting Change

The Appraisal Foundation sent out a correspondence stating the Appraisal Institute is undermining their authority. This was very one sided and off the mark.

Everything changes. The appraisal business is changing. AI is staying on the fore front of this change. The Appraisal Foundation is resisting change. The Appraisal Foundation policies are chocking the appraisal industry. It is next to impossible to bring on new people. As a result the number of appraisers across the country in 2007 were 120,000 +/-. Today its about 70,000. The industry is changing and so must the policies. AI does not want to go back to the ways of the 80’s, AI wants the appraiser to have more tools to use.

USPAP started out for Federally Related Transactions. The States set their laws up that appraisals must comply to USPAP. This now limits the things we can do. Now 90% of the appraisals will still comply to USPAP, but it would be nice to offer other services.

I found that letter from The Appraisal Foundation very one sided and very anti Appraisal Institute. I ask you to know the facts before voicing your opinion to The Appraisal Foundation.

By Alex Uminski, VaCAP Treasurer

VaCAP Board

VaCAP Board

Coalition of individual appraisers working together to unite, promote and protect the collective interests of all appraisal professionals in Virginia; to promote needed changes in laws, rules, regulations, policies and standards affecting all appraisers in Virginia; to observe and report the actions of regulatory, legislative, oversight, and standards-setting entities of the Commonwealth.

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23 Responses

  1. bubba jay bubba jay says:

    lets not forget how many fingers are pointing back at us when we point at someone else.

    we will never know who is doing what or who isnt doing what, but what we do know know is, we have a lot of decision makers in charge that are running this profession into the ground with a lot of horrible decisions. the 120,000 to 70,000 membership numbers are solid proof we have a lot of problems and we are going in the wrong direction. (thats a loss of 50,000 members!). our decision makers need to put the brakes on this speeding train now, stop for a few moments, take a deep breath, and strongly consider other alternatives if the direction we are all going is not considered acceptable. appraisers wont tolerate feeling like they are getting beat up by everyone for very long. nobody would.

    some may argue people are aging, people are retiring, whatever. i will agree with that, but i will say that the declining numbers also have to do with USCRAP being written and re-written all the time to such ridiculous and insane levels, that it makes appraisers feel like they are walking on eggs shells every minute of the day. i will say it also has to do with over-the-top and sometimes unnecessary requirements for trainees, that are keeping new people from entering the profession, and veterans unwilling to train them. i will also say that is has to do with appraisal businesses going broke because of clueless outside individuals telling them how much money they get to run their businesses. not good. i cant think of any other business anywhere that has to deal with all the garbage appraisers have to deal with nowadays.

    look, i dont think people mind change as long as they know it will accomplish something good and its a move in the right direction. the problem here though is, the vast majority of our changes seem to always be taking us in the wrong direction, and only appear to accomplish justifying someones existence.

    till our decision makers start listening to appraisers for a change, and we start moving in the right direction . . . . .

    the bleeding continues . . . . .

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  2. Retired Appraiser Retired Appraiser says:

    Bubba

    I know of no business that comes close to simulating what appraisers have been forced to deal with.

    If you want to know just how bad it is take a look at the classic comparison:  Buggy Whip Manufacturers.  At least they had the opportunity to reinvent themselves as starter manufacturers as soon as they saw the future of transportation.

    *At no point were they told to hand 50% of their fee to wholesalers who would then scrutinize the product and pass it along to the retailers.

    *At no point were they told they would have to wait 90 days or more for their fee and then forced to sue to collect it.

    *At no point were they told the materials that went into their buggy whips would be analyzed, compared to their competition, and even compared to their own materials used during the previous six years.  If the government detected substandard material the government would blacklist the manufacturer from selling whips.

    No sir; no other business in history comes close to the today’s residential appraisal industry.  The nearest business model would be the Pay-To-Play business model that was so popular with organized crime; a model known all too well by Andrew Cuomo of Sicilian descent.

    Although Far Less Significant, The Rape Of The Appraisal Profession By Banks Compares To:

    The Theft Of Lands From American Indians – They lost everything including their lives.

    World War II Internment Of Americans of Japanese & German Descent On American Soil – Thousands of innocent Americans lost their homes and their businesses overnight, were arrested because of their looks, and never repaid.

    The Batan Death March– The number of casualties is already comparable. Banks made the decision to pave their road to Ft. Knox with the bodies of residential appraisers in 2009. Since then they have reaped billions in appraisal fees captured by their AMC subsidiaries.

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  3. Bubba Jay and Retired Appraiser both raise MANY valid points. Id also like to share a few thoughts.

    The AI author is clearly correct that TAF’s article and letters are written from a biased advocacy standpoint rather than an independent analysis. I am especially offended by the use of the buzz-word description “conservative” Congressman, as if that somehow disqualifies his opinions?

    Having said that, there is merit in BOTH positions. That of the AI and that of TAF. A third potentially broader “position” would be that held by all the appraisers that have NOT been consulted on this. I’ll address that further.

    When FIRREA 1989 was first drafted and ultimately passed; it was only after having special interest carve outs accommodated. Specifically the de minimus threshold (where any appraisal was required for loans from a GSE) was raised from $25,000 to $250,000. Bankers had argued that $25,000 was too low and requested it be raised to $50,000. Congress in its unfathomable ‘wisdom’ raised it to $250,000. At that time the amount exceeded the national median price for a single family residence! ONLY loan transactions through federally regulated institutions had to be USPAP compliant in the early iterations of FIRREA and most first passed State Licensing Laws; including California.

    Over the years, the GSEs’ TAF AND the States modified there various regulatory laws to (in California) make even non federally regulated transaction appraisals subject to USPAP and State oversight. OK, no problem. The intent was to protect and promote the integrity of the process.

    Despite this, the various major lenders got the software providers to write appraisal forms that CLAIMED to be USPAP compliant, or appeared to be compliant in a deliberate effort to make less experienced appraisers think that the ‘less than” USPAP compliant services being requested by the lender, could be done by the appraiser. Otherwise, why would they have the forms, right?

    When we notified the State (California) of this in the early years, their response was that they were only concerned with federally regulated transaction appraisals. In later years, California incorporated language into its other state licensing regulations to increase the umbrella of mandatory USPAP overlap into non federal transactions including those made by private lenders (hard money loans).

    USPAP compliance was largely embraced by most appraisers. Heck, it was modeled after the AI’s own USPAP which had existed for years! The first problems though were increased costs. Honest appraisers now had to jump through more cumbersome, though still reasonable ‘hoops’ to complete a USPAP compliant appraisal. They ALSO had to educate their clients on WHY they could no longer do things ‘the old way’ in many cases (like comp checks). Lenders in particular were not willing to pay the increased costs for the additional time it takes for USPAP compliant appraisals. They wanted MUCH cheaper products that paid only lip service to USPAP. Forms designers and people like FNMA and Freddie Mac and even Indy Mac accommodated them.

    Coupled with this was TAF’s penchant for needlessly modifying USPAP every two years. About the time an appraiser had it nearly memorized, it was changed slightly. Not much of a big deal in the early years, but the ever changing two year cycles eventually took its toll. Very obscure exceptions that one would only be aware of it one read USPAP before every single assignment started cropping up. Changes for the sake of change were being made just to justify the TAF sale of new USPAP books every two years for $75.00 (or more now); and to promote revenue for course providers. PRINCIPLES should not be changed like they were no more than old underwear.

    Like ALL bureaucracies, TAF has grown far past the point of competency and like the AI claims, it now hinders the profession rather than enhances it. Example? College being a required prequalification. I have trained residential appraisers. Those still in the business have gone on to become certified. NOTHING in residential appraisal is so complex as to require a degree. Nothing. I would argue that in most cases, the same applies to commercial work. With all the computer power available most of the old formulas that could take days to calculate are reduced to a few minutes of software use now. Report writing skills? The federal standard is to write at a sixth grade level! Traditional jargon has lost favor over basic, direct language.

    Another area of interference is in limiting the number of trainees an appraiser may supervise. A successful all around appraisal business operated by a “designated” appraiser-owner required from one to three trained (licensed level) appraisers; and one to two trainees. A staff of four to six people with up to half of those being part time was the norm. Normally the owner reviewed every single report that went out and often co signed all of them. Even those from licensed appraisers, because it was HIS (or Her) reputation on the line. The worst thing TAF did was to limit the number of trainees we could have. You focused overly on the term “directly supervised” rather than the intention. States also focus more on technical (subjective) “violations” rather than the more substantive issue of whether an appraisal is right or wrong in its conclusion.

    Along came HVCC and overnight our working business models based on long term reputations were shut down overnight by Andrew Cuomo and the knee jerk adoption of his settlement specifics with WAMU and Countrywide. To this day, many accuse Cuomo of having ulterior motives, favoring his or his old firms large title company clients.

    The AI is not without ‘sin’ either. They used their leverage early on to obtain influential membership as a sponsor of TAF. They used that leverage to have federal governmental (OPM) hiring practices modified so that designation by themselves (and VERY few others) became a requirement for senior employment as an appraiser with the FEDS. They also lobbied to have FIRREA’s prohibition against specific designation requirements removed. When approached by hundreds of residential appraisers to help repeal HVCC, they looked to their own interests instead. While the AI has some of the best appraisal courses available in America, they cannot pretend to understand, care about, or advocate for the interests of most appraisers in America. Not even the interests of their own SRA designated members!

    The issue before TAF and potentially Congress SHOULD be tabled for the time being. It requires honest and open hearings among ALL stake holders without the influence of the lobbyists. Also, it is NOT the foremost issue in importance for TAF to be concerned with. The “reasonable” part of C&R fees is! Until that issue is definitively put to rest in a way that guarantees reasonably adequate specific minimal compensation for appraisers, all the other issues are secondary.

    It ALSO requires far more input directly from the bulk of appraisers in America. We have traditionally not been represented by any single professional group. Most of us are not ‘joiners’.  At best we have partial representation through our State Appraisal Coalitions. In recent years we have also had representation at the national level through the American Guild of Appraisers (AGA) http://www.appraisersguild.org .

    I urge the TAF to hold regional meetings to address these issues, specifically inviting each state coalition in the region AND the American Guild of Appraisers of the OPEIU/ AFL-CIO to participate. The AGA is the ONLY national voice appraisers have today focused on the appraisers rights and needs; coupled with concerns for the American consumers that rely on our appraisal services.

    PS-Drop the partisan buzzwords. I am a Republican (oft labeled ‘conservative’) even though I am ALSO an appraiser union member and organizer. Euphemisms are rarely accurate. Lets focus on the facts rather than the politics for once.

    Mike Ford, California Certified General Appraiser

    Chairman, AGA National Appraiser Peer Review Committee

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    • Retired Appraiser Retired Appraiser says:

      Mike

      If you ever tire of appraising you would make a world class screenwriter or novelist.  No sarcasm intended; I mean this as a true compliment.

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  4. bubba jay bubba jay says:

    awesome write-up Michael.

    thank you for taking the time.

    i would join your AGA in a heart beat Michael, if i had plans to keep doing appraising. unfortunately, like so many others, i am making plans to be a member of the 50,000+ club in the very near future.

    i believe we wont see any of this mess cleaned up for at least 10-15 years if we are lucky. IMO, the “s*it will (finally) hit the fan” around 2025 because loans will take 6-9+ months to close due to a severe shortage of appraisers and increased workloads/regulations. not a future i look forward to or want to be a part of.

    in the meantime, the bleeding continues . . . . .

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  5. Retired and Bubba Jay, Thank you. I sincerely appreciate the kind thoughts.

    Now! If I can only get you both to join the AGA! Seriously. Best,

    Mike Ford

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    • Retired Appraiser Retired Appraiser says:

      Mike

      My goal from the beginning has been to convince appraisers to boycott AMC orders for a month, generate national news, and bring those G D banks to their knees.  I have been boycotting all appraisal orders since 2009, to the point of throwing away my license.

      We’re after the same thing, but pursuing the goal via different means.  Years ago I began work on a documentary which would illustrate precisely how HVCC came about and how Andrew Cuomo and banks made out like bandits.  Halfway through the project I became disgusted with appraiser apathy and left the business.  Perhaps it’s time for me to dust off the short film, post it on YouTube and pray for a viral response from the public. 

      To this day homeowners have no clue how Andrew Cuomo raised funds to be elected governor.  To this day they have no clue that they are being billed $500+ for appraisals and getting cut rate work from appraisers.

      I can’t think of a better time to expose Cuomo than now. I’m all for the Clintons regaining the White House but I’m smart enough to know that when they move up Cuomo moves up. I’m a strong believer in the Clinton team’s ability but I would go so far as to vote against Hillary to halt any chance of Andrew Cuomo’s advancement.

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      • Hi RA,

        I commend your efforts. Seriously. Re short film definitely! Some years ago I read something by an author in Sacramento California about Cuomo’s (alleged) title company client having HVCC specifically written for their benefit.

        At that time, the author provided a flow chart demonstrating the relationships and no one ever refuted it to my knowledge.

        When I was in the Marine Corps decades ago, during boot camp our Drill Instructors used to say there is nothing lower than whale shit… but then they didn’t know about Cuomo either.

        I understand re appraiser apathy far too well. Best description I ever heard was getting us organized, is like trying to herd cats.

        Best of luck. Let me have the link when you post it! Seriously.

        Best,
        Mike

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  6. Wayne says:

    The Appraisal Foundation VS the Appraisal Institute…..not sure which group has done the least for appraisers. I say flush both and be sure to send the toilet photo to the AMCs and GSEs!

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  7. false says:

    The AI ands it members are the ones who run the amcs so of course they want alot more appraisers in the profession.   SUPPLY AND DEMAND.  There are over a 100,000 appraisers!  There still is a over supply of appraisers in the profession that’s why some appraisers are still making $250 for 1004s….

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  8. False, SOME AI members own or operate amcs, but not ‘all’ by any means. Low fees came about because of ruinous original competition among the amcs themselves for bank work. Not long ago and appraiser information ‘service’ (informed appraiser with a huge email list) posted a list of what several major lenders were paying AMCs. Invariably it was predominantly about $495.00. An AMC typically takes at least $100 for themselves, and tries to get $150 if the appraiser is ‘soft’ on standing up for themselves. In my state more than half the licensed appraisers from out high period have since left the business. An oversupply of appraisers is not the whole problem. People that willingly work for less than is required for the amount of work to do the job properly are the problem.

    On another issue, the AI IS, contrary to some of their paid spokesman’s claims, actively seeking to circumvent USPAP in several State Legislatures (California; Texas, Tennessee and Illinois). I don’t mind them proposing unspecified ‘alternate standards’. What I DO object to is their claiming to speak for appraisers and the general public as if they are the only spokes people for us all without ever having made the slightest effort to ASK US.

    AGA attended the recent Appraisal Foundation Appraisal Standards Board (TAF ASB) meeting in Redondo Beach to add our voice to requests that California AB 624 be tabled until ALL appraisal groups are given an opportunity to comment on it. Its possible we will be unsuccessful because it has passed too many steps already. We will next send comments to the State Senate Finance Committee asking it be tabled until its financial impact can be properly analyzed. We joined with CCAP and TAF as well as numerous other appraiser groups asking this legislation be tabled until input from ALL appraisers can be obtained.

    The question I have is WHY the AI is trying to sneak these things through various states WITHOUT adequate effort to obtain informed input from other appraisal groups? Independent appraisers and other groups MAY well have supported their proposal IF they had been given accurate information on it, or even told about it. As it is we are left to speculate about the reasons ONE small group with a declining membership, wants special carve outs that allow them to provide non USPAP compliant services.

    Its actually much worse. While specific legislation (AB624) HAS been directly tied to them, they pretend and claim by very carefully parsed language that “they didn’t sponsor any federal legislation in this area”, nor state legislation. The latter is definitely an untrue statement according to the author of the California Bill and it’s own history from inception. No one wants a turf war with the AI, but we are also not going to sit idly by while they try to pretend they are the ‘go to’ source for all American appraisal interests.

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  9. Wayne says:

    The appraisal occupation has become a meal ticket to so many parasites that it is difficult to count them all. Everywhere you look is some useless organization, AMC, newsletter, webinar, coach, expo, software platform ripoff,  AMC directory and on and on…..

    Don’t waste your money paying dues to one of these groups or traveling to hear some bureaucrat or AMC guru. That money could be invested for your retirement. Do not feed the parasites!

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  10. Retired Appraiser Retired Appraiser says:

    AMEN to that Wayne! I must have had 30 leeches attached to my torso without the guys you mentioned. No wonder my physician told me I was 2 pints low on blood when I quit the business.

    Examples:
    E&O Insurance
    MLS Dues County I
    MLS Dues County II
    MLS Dues County III
    MLS Dues Couny IV
    Alamode Software
    State Farm Insurance
    Windstream Long Distance & Broadband
    Marshall & Swift
    Apex Sketch Software
    Office rent
    County Clerk Fees
    Technology Upgrades (Computers, digital cameras, scanners, printers, fax machines, etc.)
    Cell Phone costs
    AppraiserUSA.com (20+ counties)
    Appraiser.com (20+ counties)
    Yellow Page Ads
    AMCs
    Etc.

    The wold was eating well while I was in business but I was dining on 5 minute hamburgers between jobs. I am amazed that the leeches that you mentioned found enough appraisers with blood to spare.

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  11. bubba jay bubba jay says:

    RA, dont forget about the biggest expense – insane amounts of GAS. going to the property, driving by the comps, running to courthouses, etc.

    Add in on top of that – Continuing Ed and things like Alamode Vault if you want to store your files elsewhere.

    Dont forget about state and federal taxes.

    Dont forget about wear and tear on the car – brake pads, tires, oil changes, etc.

    Dont forget about an accountant if you dont do your own taxes.

    Dont forget about incorporation fees.

    Dont forget about attorneys to file your incorporation papers correctly.

    Here’s another big one – what about our PAY? Savings? Retirement? Investments?

    i think you covered everything else.

     

    sure, there are a lot of things that are choking this business, i agree with that. but most appraisers are also too stupid to know that they are choking THEMSELVES. no appraiser in there right mind, who knows HOW TO RUN A BUSINESS, can look at our expense lists and then somehow justify that a conventional appraisal is worth only $250, or $300. Appraisers really need to stop and sit down, and look closely at the bigger picture around them. Being a good appraiser doesnt mean you are good at running a business. Appraisers need to “grow a pair”, and start demanding professional pay, for their professional services. We should be paid extremely well all things considered, and we are not.

    Two things, (along with hundreds of others), need to happen in order for appraisers to survive:

    1. We are given full control of of our fees. No more AMC control, no more control by anyone. Experienced contractors of any kind charge more than new contractors, and so should we. Liability and professionalism is expensive in any business but ours. We should be like any other business – we should be able to raise our fees freely and when WE feel its necessary, to cover any expenses that our businesses have to pay for. (See a list of all those expenses above).

    2. Appraisers need to learn how to run a business as previously mentioned. Appraisers can place blame on everyone else for going broke all they want, but its also appraisers who are slitting their own throats for accepting work that pays little to nothing. AMC’s are also slitting their own throats for sending out appraisal requests that pay little to nothing. Appraisers are going broke and leaving the business because of their own stupidity, and the never-ending unrestricted greed of outsiders.

    A conventional appraisal is easily worth $500 all day long.  FHA, $600. EASILY.

    Until appraisers understand this, and until AMC’s understand this, our problems will continue to get worse, and . . . . .

    the bleeding continues . . . . .

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  12. Wayne, RA, and Bubba you are 100% right! Can I offer a suggestion (aside from my usual one which comes later)?

    1. Look us the Federal General Services pay scale for GS 7 through GS 15 ALSO look up the state COLA multipliers (California was about 27% more last time I checked) MOST states have a multiplier-very few do not.

    2. Figure out how long it takes you to do a thorough appraisal start to finish from the first inquiry to looking up the property to make sure you can do it and at what fee. Lets assume we few still believe in the confidentiality clause and do NOT send our reports out to typing services or any other third party parasites. My estimate is that a great appraisal takes from 8 to 12 hours including a meaningful highest and best use analysis that includes actually looking at zoning maps and general plans.

    3. Once you know the time- assume ALL are midway between fast and longest periods so if 6 hrs is fast for you and 12 is long, call it 9 hours on average. Figure out how many you can do in a forty hour workweek; NOT 41 or 60 but FORTY hours ONLY.

    4. Use the federal pay scale to determine your base rate per week assuming NO OFFICE overhead or license fees which feds normally pay for. Same with gas, software, etc.. ALL we are trying to do is get to an hourly or weekly rate for the amount of work you / we do. A trainee-license should be GS7; a 1 to 5 year licensee able to do condos and sfrs should be GS 9. if they can do 2-4s PROPERLY. If you are certified residential call it GS 11. Commercial should be from GS 12 to GS 14. IF you own and operate the company, supervise & teach four or more appraisers doing both res. and cmml of all flavors, then go to GS 15.

    THEN add in-grade step increases per scale..

    IF in business less than five years allow two weeks vacation (plus six federal holidays)-call it 49 working weeks per year. If 5-9 years take 3 weeks vacation plus 6 paid federal days off. Ten or more years take 4 weeks vacation plus 6 fed holidays off and for ALL, add in 3 more sick leave days per month. Calculate all of the above out and you actually have closer to a 40 week work year OR LESS.

    Divide what your annual GS rate should be by 40; and then that result by 3 to calculate the per assignment fees (make sure you added COLA into base first).

    NOW add ALL the costs of the things you itemized back in above your base!

    I think you will find a base in excess of $650 for a non complex sfr for FNMA UAD complaint with all necessary support (don’t forget per appraisal regression analysis costs of $15!!!).

    You can do ONLY four NON COMPLEX sfrs a week and have 4 hours left for marketing and administrative chores. Personally I think you need a full day which reduces volume to 3 a week.

    OK, NOW HOW DO YOU GET THERE? Keep griping and hope a groundswell of support develops. Wait for the AI to do something. They have their own agenda. Rely on State coalitions (there are only 20 -21 of them)-despite that they HAVE made some great strides already.

    OR join both your state coalition-make sure its not just a local chapter of the AI people; or dominated by them; AND join the American Guild of Appraisers! (AGA) We are already fighting appraiser blacklisting and regulatory abuses. We have spoken before TAF and numerous state and federal agencies on appraisers behalf.

    Politicians look at numbers! Put the strength of the Appraisers Guild of OPEIU / AFL-CIO’s thirteen million plus members and their families behind you! You do NOT have to be a typical union guy to join. Im certainly not.

    http://www.appraisersguild.org

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    • Retired Appraiser Retired Appraiser says:

      I agree on the number of hours it takes these days to do an appraisal. I told my people, “Approach every assignment as if you will be called sued over it. When you confident that you cannot lose a lawsuit in court turn it over to me for review.” That approach worked like a charm in keeping us out of trouble. “Court Proofing” an appraisal today while jumping through countless additional hoops would easily require 8 to 12 hours. Those crazy ask properties that you run into (once or twice per year) could run into 3 days or more now. For me leaving was easy; the math no longer made sense (Time + Liability – Expenses = Fee).

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      • bubba jay bubba jay says:

        i dont think your “court-proofing” would always keep someone out of court anymore RA. lord knows i try, but take it from someone who has been turned into the state by a disgruntle homeowner who simply disagreed with the value in the report and wanted a little revenge. it quickly became obvious to me that we are seen as guilty until proven innocent, and even the best written appraisals wont keep you out of some kind of trouble if someone really wants to pursue the matter.

        lets look at defining a neighborhood – anyone who thinks defining a neighborhood is always black and white, is delusional. with just this one point, everyone involved would have to be in complete agreement in order to stay completely out of trouble. aint happening, especially if you appraise rural properties. have you ever seen two appraisers pull the same comps, or write the same exact report, or make the same adjustments? i didnt think so.

        the bleeding continues . . . . .

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  13. Wayne says:

    Each of you have made some excellent points. I want to throw a few more thoughts into this issue if I may. It really does not matter very much if our analysis indicates our typical fee should be XXX. There are appraisers willing to work for only X when XXX should be the fee. They seem to think they are doing good. As appraisers we should remember some of our basic training and understand the theory of competition. That theory is still alive and well. For example there are hundreds of AMCs currently earning a living sucking the life blood from some appraisers. I can just imagine how plush the CEO’s office at each one must be. What will these leaches do when interest rates begin to rise? What will these staff appraisers do when the lenders begin to lay them off in droves?

    I worked this gig when the peanut farmer was in office. If you have ever had a seller wanting to sell and a buyer wanting to buy, add in a lender wanting to lend…..try that with a 16%+/- interest rate! I am not saying that interest rates will be that high in the near future. Try to think what would happen if current rates were to increase to say 6% to 8%. Just something to think about!

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  14. Mike Ford Mike Ford says:

    Wayne, I remember when interest rates DROPPED DOWN to 12% and the market went CRAZY!. They spiked when the 12% drop happened; shot up drastically when rates dipped below that. Once they became “normal” again (between 7 1/2 and 8 1/2%) the California market was in run away price hikes again. Its more than supply and demand though. THAT was effective demand made possible by Wall Street and government policy.

    Our ‘recovery’ is so weak that a bump to 6% right now could kill off the recovery completely.

    Anyway, your comments about x vs 2x or 3 x are correct EXCEPT that we KNOW substandard work is being done at the low end. LOTS of sub standard work. 80% of what I ‘glance at’ doing QC screening for an AMC (when I want it) is bad appraisal. Not just a little bit bad, but VERY bad. Maybe 25% could be ‘fixed’ if the appraisers were my trainees, but they are not. They are licensed and even certified! 50% are so bad that reappraisal by different QUALIFIED appraisers is probably called for. Secondly no one is paying for, or even wants desk reviews; and these appraisers are so arrogant they think value is (or isn’t) there because THEY say it is!

    The owner is conscientious (appraiser and AMC owner) and he runs weekend training for his staff and fee appraisers that care enough to attend. He culls out the worst offenders as he comes across them, but he knows a LOT is going through that is perfectly acceptable to the lenders; that would never pass my desk review or almost anyone’s qualified field review.

    The more I think about it I have to ask whether the low standards direction and policies that facilitate it are not intentional? Lower the perception of appraisers far enough and the argument for AVMs becomes that much stronger. Who cares if they are worthless?

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    • Wayne says:

      Mike, I am not sure that I made my point clear. What I am trying to say is that there are too many AMCs making too much money for too long! These companies have expanded their budgets to a point that it will require a certain number of appraisals to skim their fee from to even exist. If interest rates rise enough, the volume will not be there for them to hang on. The appraisers who use these AMCs as their major clients will then be forced to compete with the rest of us who are established without AMCs.

      Many of these appraisers only know how to fill out a 1004 form. They do not have the certification level or experience to prepare appraisals for many other clients. The clients I am referring to are like the highway department. Slope easements, drainage easements, temporary construction easements, etc. Have they ever appraised a national guard armory, an explosive manufacturing company, a steel plating facility? All I am saying is a few ticks upward in that interest rate and we will have a different ballgame!

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      • bubba jay bubba jay says:

        i agree with you MIke. I am not licensed to do commercial work, so i have no idea how to appraise any of the things you mentioned. interest rates are already starting to trickle up, so the majority of the refinance work will be gone soon. i hope appraisers either have a good backup plan or have saved a lot of money, because without refinance work and sales slowing down as it starts to get cold, this winter is going to be SLOW for mortgage work.

        i think its going to get even uglier soon as starving appraisers fight over every tiny morsel of work that comes their way. it wont be long till appraisers are bidding $200 for 1004 work to stay afloat. no refinance work, less purchase work, less pay as costs go up and fees remain the same, means more businesses closing for good and appraisers out looking for jobs. lets see – more appraisal businesses closing their doors, more appraisers getting out, (because of frustration, going broke, retiring, whatever), and nobody coming into the business. YIKES.

        will the last person out, please turn off the lights and close the door? thanks.

        the bleeding continues . . . . .

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      • Retired Appraiser Retired Appraiser says:

        You have a keen eye for predicting the future with regard to interest rate impact Bubba.

        I hit upon yet another lucrative “alternate career” choice for appraisers this weekend.  I knew this type of business existed but had no idea how much profit was involved.

        Smart Phone & Tablet Repair Service.

        Very little training involved and with customers lined up as far as the eye can see.  By far the most frequent repair is replacing the glass $99+ for something that takes you about 20 minutes to do.  It’s still the wild wild west out there with this business.  Incredible growth potential just don’t throw away your money on buying a franchise.

        My favorites so far for 2015 are:

        Web & App Design: Requires computer and a web design program.  Very little investment involved.

        Title Company: If you don’t feel competent, find an attorney to partner with that doesn’t do this type work.  Highly lucrative.

        Smart Phone & Tablet Repair: See above

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  15. Mike Ford Mike Ford says:

    Wayne, I don’t see us (general certified) as being as insulated as you may think, but I now get your point. Residential licensees and even certified residential in many instances cannot even do a 2 to 4 unit properly. At least in Southern California.

    There is a reason that The Appraisal Institute rewrote their standards to allow them to do contingent fees; and that they are seeking to strip away USPAP as the only standard in many states. They appear to be setting up for a cross over into BV as soon as IVSC and USA adopt similar standards. TAF is seeking to work out differences, but AI is going behind the scenes and quietly trying to change the rules for their own benefit; while denying they are doing anything. Look at the language. Supposedly senators approached THEM! Asking “What can we do to make appraising regulations better?”

    Like THAT ever happened, even in their wet dreams.

    There is very real risk that the extreme drop in quality for residential loan transaction appraising could lead to acceptance of alternative methods. Like Zillow, or  AVMs from one of the regression software wizards. I mean these people are CLAIMING a high degree of accuracy in adjustments, and its not a big leap for laypeople to think “Gee, if the software does all the adjustments, how tough can it be?”

     

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