CU Not the Only AVM Affecting Appraisers

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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HouseCanary, Another High Powered AVM Affecting Appraisers

Assignments Funneled Back Through HouseCanary & Your Data

Appraisers,

CU from the GSE’s was thrust on appraisers in 2011. Since then, the giant sink hole designed by the ‘enterprises’ has gobbled up millions of home data elements. And in some cases, this data has been used AGAINST appraisers – who have no direct access to it, even though ‘we’ are the ones supplying the data.

But they are not the only entity doing this.  A company named ‘HouseCanary’ has also been amassing more millions of data points about US properties.

During 2017, HouseCanary has had $64 MILLION dollars of investor funding poured into it. They claim they will use this bottomless pit of dollar bills to…

provide home price insights and forecasts within a margin of error of 2.5 percent or less.”

And per this article, their desired goal is to decrease that margin further. According to the article, a key element of HouseCanary service is…

to help sellers and buyers determine listing prices and understand how the value of the property will be reconciled with the appraiser valuation.”

We’ve never heard how accurate CU is when they present ‘sales’ to be considered as “comparables” in appraisal reports. What we do know is CU assigns a ‘loan safety rating’ to the property based on the appraisal info and other data. Even Zillow admits their Z-mates are not totally accurate. Realist (available in many MLS systems) has a ‘confidence score’ no better than 75% in some cases. But here’s HouseCanary claiming they can come within a very narrow margin of error when determining ‘price insights.’

To add insult to injury, HouseCanary has display booths at various appraiser conferences (and on their web site), where they encourage appraisers to ‘sign up with us’ and use HouseCanary data to help you do your reports quicker and easier. When that happens, and assignments are funneled back through the HouseCanary system, guess what happens to your property data? Do I really have to explain this??

Famous songster Bob Dylan said it best… in 1964 – The Times They Are A-Changin’

Image credit flickr - mtarvainen
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser – Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com

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19 Responses

  1. Chaz Thomas says:

    I put a copyright logo on every one of my pics and a copyright notification within the report. Not that they care about violating the law.

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  2. mark freitag says:

    It seems they are a “reverse” canary in the coal mine. If they thrive we die!

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  3. Anna R Todaro says:

    Appraisers need to unite and create a program we use for us and is owned by appraisers. It is not too late to take back our industry. Real Estate Agents are working toward this. We can too!

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    • It’s an excellent idea and one that is currently being considered. The problem is that it is FNMA itself that demands alternative forms, in response to pressure from cheaper-faster-mortgage broker & originating lender advocacy.

      We could design one that strongly facilitates or emphasizes USPAP compliance, only to have FNMA reject it because it doesn’t flow with their data mining software.

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  4. Koma says:

    Waiting for the next big crash? Well your looking at the cause right now. Afterwards the big egg heads at the lending institutions will say “We didn’t see it coming!”.

    Umm who was it…Zillow CEO had a zestimate on his house at 1.4 million and it sold for 1 million I believe. Man gotta love those numbers their providing. But according to a recent Illinois judge ruling in a case against Zillow, that Zillow’s information is just the first step nobody really relies on that information they provide. Yea how many RE agents has this judged talked to or how many appraisers hear those numbers when the go out to observe a borrowers property.

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  5. Donald Cox says:

    The newsprint in the bottom of the canary’s cage has to be cleaned.  The sloppy appraisers work has to answered, the regulators position’s has to be measured.  Time is the only reliable answer.  Time works against all of us.  Our concern is of the appraisers work, our contemporaries work.  The others have the defend themselves.  The  media-canary goes to other positions.  The regulators hiding behind signs, concealing exculpatory information are part of the good appraisers challenge.  We are professional Bastards, meeting the un-obtainable  ideal of  Fair Market  Value.

    don

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    • Well said Don.

      BTW FMV and MV have different definitions in IRS and Treasury Regulations; along with many states official definitions. FMV started as an accounting concept adopted by the legal profession because it sounded better. I urge all appraisers to make the distinction. Check Calif. definition for FMV per state code (CCR). www,mfford.com value definitions tab. I absolutely LOVE method or definition “B”.

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  6. Baggins Baggins says:

    Well this is an easy one.  Data brokerage is huge and often more profitable than the goods the companies whom sell consumers data may provide on the front end.  If you object to data brokerage, quit consuming with the major data brokers out there.  Change the consumer trend and expectation.  The strongest growth industries remain as the companies with no storefronts, no products, whom primarily shuttle and reform data and requests, managing the excess and ever growing requests for more data and current validated data.  The ultimate middle men, the companies who capitalize and monetize everything while simultaneously providing nothing.  Let’s see, what’s new what’s funny lately?  Here you go.  Cheers.

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  7. Newbie says:

    Isn’t Alamode going web based ? Won’t they just create their own database ? And ACI too ? Then what? We revolt and provide uspap compliant reports on our own homemade forms ? We all need to wake up. The days of our reports being private are long gone. If your bread and butter is lender work, you’re gonna have to play by the industry’s new rules. If you don’t like them, find non lender work.
    Our job as we knew it when it comes to lender work is going will become nearly obsolete. All we can hope for is they need us in some capacity, maybe as boots on the ground for some drive bys or measurements and interior photos. The only reason why I don’t see lenders using minimum wage staff to do this is because they wouldn’t have anyone’s e/o to go after when the s@*# hits the fan. And when it does, maybe they will come around and realize our worth.

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  8. Baggins Baggins says:

    Corelogic purchasing Alamode!?!? The horror! Please don’t ruin my day like that. What’s that other offbeat program nobody uses, clickforms or what? I’m with alamode for life, except of course if they sell to corelogic. In that case I’d rather use a word processor or even a 50’s typewriter. That can’t happen can it? Wake me when it’s over.

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  9. Newbie says:

    Corelogic already purchased Alamode’s Mercury Network.

    When Alamode goes web based, and they have all of our millions of appraisals in their database, Corelogic will just buy the entire company.

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    • Newbie-not to mention that when they go web based, software that we used to buy will now become RENTED software and if we want access to OUR professional work product down the road, we will have to ‘rent’ their product for another year at the same price we used to buy it for.

      I will NOT rely on cloud based software for my professional work product & work file where I’m required to keep ALL records for a five year period.

      How dumb is that?

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      • Baggins Baggins says:

        “The Cloud”.  Strangely synonymous with selling rainbows.  Hardline or bust, own it or leave it, leasing is for the birds.

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  10. koma says:

    Data, Data, Data, Garbage in Garbage out! I’m tired of this BS.

    Did a drive-by and state the GLA comes from the county tax assessor with sketch. Before you ask this county does not allow copies to be made of their information. Comes back saying well are “on-line sources” shows something different. Performed a full appraisal (different property) state that I measured the property, included my sketch, photos and check that it is in line with what the county assessor has. Comes back well are “on-line sources” show something different. Really? Really? REALLY!

    Thanks for letting me vent.

    P.S. In computer science, garbage in, garbage out (GIGO) is where flawed, or nonsense input data produces nonsense output or “garbage“. The principle also applies more generally to all analysis and logic, in that arguments are unsound if their premises are flawed. Source: Wiki

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    • Bill Johnson says:

      I get it Koma. In the past week within a few blocks of each other, I’ve appraised a detached condominium, and an attached non-condominium home. The detached condo was overpriced (agent compared to traditional detached non-condo homes), and the attached non-condo home was under priced (agent compared to traditional attached condos). To confuse things further (garbage in), public records falsely indicate attached homes (non-condo) under a use code of condominium. With agents and public records often misidentifying the property type, how would anyone with confidence expect a computer to solve this local issue. For the record, and as taught to me on day one of my appraiser training, locally all properties regardless if attached or detached that have an APN number that end with anything from 01 to 99, are of a condo form of ownership.

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      • Bill, In So. California (only), in 1970’s a townhouse was always a condo in which the land under the specific unit was also owned as well as the airspace above it. Stacked flat Condos were valued lower-no individual land ownership. Strictly airspace.

        Builders then went to manipulated higher selling townhouse “style,” where row type townhouses were built over common area garages…some of which had further separations inside them for private G2s (usually owned) but I have seen both owned and exclusive right via easement. It was a marketing ploy. Nothing more. Anti ‘condo’ market stigma. Individual lots still not owned but the “townhouse” description was usurped for pure condos that happened to have two stories.

        Too many (local) appraisers and agents didn’t know the distinction and it disappeared over the years. Eventually it came to mean no one above and no one under…until they started building townshouse “style” units on top of stacked flat units on top of common area semi subterranean garages. Clear? Everyone with me?

        The DRE Commissioner’s Sub Division Final Public Report was often the deciding descriptive factor for appraisers…until it too stopped being reliable (or honest, in it’s descriptions)..

        Orange County Ca is a further exception.

        (1) OC never used to provide GLA for anything. SFR OR condo. In recent years they started doing so. Think about that one for PIWs and AVMs. Less than half have any credibly reported gla.

        (2) Condos have always had TWO APNs there. One for the unit and one for the common area plat map. Unit plats did not show interior dimensions like most of the rest of the state counties do. Practice was to find a look alike unit in mls where agent listed GLA guesstimate for comps.

        (3) Savvy appraisers knew about a small company with brilliant tract searching software called Inside Tract by Dean Rathenburg (erg?) He had all original builder floor plans with dimensions and stated sf.

        Go ahead FNMA-do ANY PIW condo waiver with AVM or hybrid in OC and see what you get! Did I mention developers ALSO created the attached row house sfr (NOT a condo) but it obviously has CC&Rs for access and maintenance. Some are PUDs and some are not. Literally no different than the 1970’s townhouse description I noted above except that it is an sfr (by official sub division distinction and map act public report). So, whats the legal ownership interest in real estate that our FNMA AVM is reporting for these?

        In Long Beach CA an appraiser friend owned a 900 SF condo. County records had it as 1,200 sf based on a doubling of 600sf 1st floor area for the two story (loft) units. They never did have builder unit plats for second story (legal living area lofts where the one bedroom and second bath is). Appraiser owner notifies County they are wrong re sf. County comes out and measures specific unit. Changes records for that unit only. Now exact model matches will show 1,200 sf which will result in AVM under valuation for the 900 sf unit. The honest appraiser owned unit where the gla was corrected will be compared with units where (obviously) male owners think 900 SF is 1,200 sf.

        FNMA NOW tell your federal regulators how “leveraging” your forty years of Big Data will accurately handle ALL of the above instances.

        Cites above are COMMON issues faced by appraisers every day in every part of the country. Specifics vary from case to case, but analyzing these type of things are what appraisers do and Big Data CANNOT do.

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CU Not the Only AVM Affecting Appraisers

by Dave Towne time to read: 1 min
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