Hybrid Appraisal Created by Appraisers?
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Hybrid Appraisal Created by Independent Appraisers?
Hybrid appraisals/alternative valuations is the most polarizing topic in the profession these days. With AMC’s all rolling out their new alternative valuation products, wouldn’t it make sense for independent appraisers to come together and create OUR own hybrid/alternative product? This is our opportunity to compete directly with AMC’s and regain control of our profession. The blueprint for this hybrid/alternative valuation model is already in place. We just need to come together, create a better one, and market it to the same investors that are already using them. If independent appraisers got together and did this, every other hybrid product would become obsolete.
The hybrids I’ve done work like this: an “inspector” is sent out to a property to shoot a few photos. The inspector is usually a real estate agent or other “qualified” person. The inspector then uploads the photos, marks approximately 10-15 yes/no check-boxes, then makes general remarks regarding positive and negative influences in the neighborhood. It’s about a 10-minute process— plus however long it takes to drive to the property. The inspector report is called a Property Condition Report (PCR) or something similar. The PCR is then sent to an appraiser to aid them in a desktop appraisal. The sales pitch for these hybrid products is that once the appraiser gets comfortable with the process, they should be able to knock out an assignment in about an hour. The fees are pretty brutal, but sometimes you can get them close to your typical hourly rate. If we cut out the middle-man and deal directly with the client, then we could get reasonable fees for these types of assignments.
Appraisers should be doing both sides of the hybrid. Getting control of the inspector/property condition side of the hybrid appraisal is a business opportunity for us. Appraisers could make a living just doing the inspector part. There is a massive market for field inspectors that appraisers aren’t tapping into. Just do an internet search of “field inspection companies” and it will blow your hair back with all the opportunity that exists in that field. In addition to that, I don’t think most appraisers realize that appraisals only make up 20-25% of the entire valuation industry. We need to be getting this other business. Who’s better equipped to perform property observations and valuations than an appraiser?
Creating a hybrid/alternative valuation product is the perfect starting point for us to cut out the middle man and tap into these other business opportunities. If we independent appraisers start working on this product now — market it at the local level — then we could launch a national product by Appraiser Fest 2018.
Again, the blueprint for this product is already there for us, and lenders want to use it. We already have desktop forms provided by our software companies, and it would be simple to create a standard form for the observation part. One thing we could add that’s not being done is: create a form that the lender sends to the homeowner that asks them to verify a few property characteristics, and to list all the recent updates made. The homeowner could even shoot a few interior photos of the house and send those to the appraiser. We’re in this together. We spend too much time bickering and throwing each other under the bus— we need to be collaborating.