Clear Capital’s Push For Hybrid VA Appraisals
Clear Capital suggests that the VA consider the use of a desktop appraisal
On April 4, 2017, the House Committee on Veterans Affairs held a hearing on “Assessing VA Approved Appraisers And How To Improve The Program For The 21st Century.” The hearing was designed to “assess VA’s current appraisal process, as well as specific difficulties for timely appraisals in highly rural areas”, as well as to investigate possible technological solutions to mitigate timeliness issues.
Much of the hearing focused on two areas: The requirements for becoming a member of the VA appraiser panel, and the baseline requirements for comparable sales data in VA appraisal reports. Most witnesses were supportive of the current VA panel structure, going so far as to call it the “gold standard” in the appraisal community. One witness, Russell Johnson of Clear Capital, suggested that desktop appraisals could streamline the work flow for VA appraisers, though others were skeptical of the ability to use this approach in rural and remote areas where data is scarce.
At the end, Subcommittee Chairman Jodey Arrington (R-TX) asked the witness panel to come back within a month with recommendations regarding ways to improve appraiser availability and willingness to perform VA appraisal assignments. The full witness panel included:
- Mr. Jeffrey London Director Loan Guaranty Service Veterans Benefits Administration U.S. Department of Veterans Affairs (Accompanied by: Mr. Gerald Kifer Supervisory Appraiser Loan Guaranty Service Veterans Benefits Administration U.S. Department of Veterans Affairs)
- Ms. Michelle Bradley 2016 Real Property Valuation Committee Chair National Association of Realtors
- Mr. Stephen S. Wagner, MAI, SRA, AI-GRS Vice President Appraisal Institute
- Mr. Russell Johnson Chief Revenue Officer Clear Capital
Michelle Bradley (NAR) Witness Statement Excerpt
… why are many markets facing situations that suggest a much greater shortage of appraisers? To gain a richer understanding of these matters, NAR conducted a survey of REALTOR® appraisers in early 2017.
NAR found that appraisers are generally dissatisfied with most elements of their job. Over 50 percent felt dissatisfied with their level of compensation andoverburdened by the level of regulation in the appraisal industry. Those appraisers intending to leave the profession in the next five years cited excessive regulation and insufficient compensation as the two main reasons for their departure…[read more]
Stephen S. Wagner (AI) Witness Statement Excerpt
Generally speaking, the VA fee schedules are much more indicative of customary and reasonable than what is found in the private sector today. This largely is because the schedule is developed by surveying local market participants. As such, the schedule has become an important measure for customary and reasonable fees in the marketplace. In recent years, several states have recognized the VA Fee Schedule in assessing customary and reasonable fees…[read more]
Russell Johnson (Clear Capital) Witness Statement Excerpt
With the advent of new products, services and analytics, Clear Capital suggests that the VA consider the use of a desktop appraisal, based on the physical inspection of a subject property by an industry professional, where appropriate as an option by the Department of Veterans Affairs. The product is a hybrid of traditional appraisal process and methods and leverages a qualified, arms-length, real estate professional, such as a real estate broker or agent, performing a visual inspection of the subject property and providing other market insight and analytics.
The inspection and other market data are provided to a geographically-competent, licensed appraiser for analysis, along with supporting data such as real-time MLS information, public records, and local market data and analytics. The appraiser analyzes all the information and data and concludes the final value of the property…
The desktop appraisal process allows a single appraiser to complete several more appraisals per day than is possible with the traditional approach. In some parts of the country, an appraiser spends 30% of his or her time driving to and from a property. This is not a productive use of time for these skilled and knowledgeable professionals.
Neither should an appraiser necessarily need to spend valuable time taking room measurements. Rather, wherever possible the appraiser should be applying their expertise and knowledge by performing the analysis of data and information about a property, in order to arrive at a solid property valuation. He or she should not need to be an Uber-driver, or handle a tape measure, or be a photographer, for hours on end for every valuation assignment. This only drives up the cost of an appraisal – to the veteran, remember — and slows the decision-making process… [read more]