Understanding the Appraisal Profession
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AMCs communication have failed consistently….
As a Certified Residential Appraiser that started my career as a loan officer in the early 1990’s, I am baffled how many who claim to be mortgage or valuation professionals that are just clueless. Don’t get me wrong, I am not talking about any one person, group or business type, but a true lack of understanding of the underlying principle of Real Estate… that is each property is unique. Even in cookie cutter subdivisions where every third home is the same model, there are differences both in the land and the improvements. If you don’t believe me, just pick up any real estate book and read.
Some would argue that the role of a Real Estate Appraiser is to determine an opinion of value. I would argue the role of a Real Estate Appraiser is that of a communicator. Yes, providing an opinion of value is a component of the Real Estate Appraiser, but it is not the role. Communication is the key to a successful appraisal and it starts with identifying the problem.
How does an appraiser identify the problem? Well, it’s not through any text message blast or mobile app that the AMC has forced upon you. Nor is it through an email blast to every appraiser that covers the locality of the property and it certainly is not the blasts asking for your fee and turn time.
Digressing back to my days as a loan officer, I would fill out a complete application on the borrower and talk to them. Just like an appraisal report, the loan application tells a story. Not only did this build rapport and trust with the borrower, it gave me the information needed to help the borrower. I found out about any credit issues, the type of property and any issues with the property. Most importantly, I found out the reason for the mortgage loan and put them into the right loan program. Applying this to the appraisal process; I identified the problem and determined the scope of work!
It is through communication, talking to the client: What is the purpose of the appraisal? Mortgage financing? Divorce? Estate Settlement? Right of Way? What are the characteristic of the property? Are there any unusual situations? Easements? Encroachments? Is the property historic? Historic designation? In other words, tell me all the details so I can help you or point you in the right direction. This is where the AMC communications have failed consistently.
The practices of text blasting, email blasting and requesting fee and turn time are detrimental to all parties involved, most especially the property owner. Federal and most states laws and regulations require the appraiser be vetted and be qualified to complete the assignment. This does not mean their license is active and they cover that area. This means does the appraiser have the qualifications, background education and experience to complete the assignment.
Any entity, AMC or lender that utilizes these practices, I encourage to stop. You are failing at you intended purpose and quite frankly are embarrassing yourselves with your lack of understanding of the core principle of Real Estate. An appraisal report is not a fast and cheap document. It is the unbiased expert opinion of value that protects the client, homeowners and investors. The success of the report is directly related to the communication done by the appraiser. This communication starts with the assignment, getting all the pertinent information, communicating with homeowners, agents, governmental agencies, and other appraisers. The appraisal report is a story and concludes with an opinion of value. This value is only credible if the communication is successful from the beginning.
I recently learned some state regulatory boards are watching closely how appraisal assignments are initiated by the AMC. This is being tracked when complaints are filed against an appraiser. I am unaware of any disciplinary action against an AMC for this practice thus far, but I would place a large wager it is coming very soon. Rumor has it there is one state that is in the process of trying to pass very specific legislation preventing and/ or limiting electronic blasts of appraisal assignments. I hope the bill passes. This will help appraisers across the country as other states will follow with similar laws.
There is no doubt technology has helped each and every one of us. Knowing when it is appropriate and beneficial is the key to success. As an appraiser, you have choices. You can chose to succumb to these degrading, harmful practices or you can be the Professional you are and refuse to work under these conditions.
By John J. Appraiser, Certified Real Estate Appraiser – author requested to remain anonymous