Are You a Hybrid Appraiser?

Hamp Thomas

Hamp Thomas

Founder and President at Institute of Housing Technologies
Hamp Thomas, founder and president of the Institute of Housing Technologies. He is also the president of Carolina Appraisers & Real Estate. Leading expert on residential square footage and its influence on the home valuation process. Instructor, Appraiser, Realtor and Author. He is the author of “How to Measure a House” based on the ANSI® Guideline; the American Measurement Standard, Death of an Industry-Real Estate Appraisal, etc. & offers continuing education courses (for agents and appraisers), and numerous other real estate courses, webinars, and YouTube videos.
Hamp Thomas

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Are You a Hybrid Appraiser? Relying on Real Estate Trainees...

We won’t take appraiser trainees, but we’ll take real estate trainees…

That’s the million dollar question. Big banking is counting on the majority of appraisers to fall in line with whatever hybrid product they decide is best. It makes for an interesting road ahead because appraisers actually have the power to make these products a success or a failure. A hybrid appraisal is still an appraisal and must have a signature from a licensed appraiser.

If banks can keep whittling away at the appraiser’s scope and can get the total appraisal fee low enough, they will achieve their goal and increase their declining profits (if you really believe they are declining or if they just want more). And, why not? Appraisers have been forced to go along with every other change thrown at them in the last ten years, so why not this one? Or, will appraisers say, “you know I really like to see the house in person and measure it, and make my own judgments about condition and quality. My fee is the same whether I inspect it or you get someone else. My fee is based on what I know, just like every other professional. It’s not tics of the clock, but tics of the brain.”

Let’s talk about who’s going to do these hybrid inspections. If I’m a successful real estate agent, do you really think I’m going to spend my time doing appraisal inspections for peanuts? Who will get the jobs? The newest of the agents who could use a little gas money. It’ll be just a part time gig until they start making some real money selling real estate. It will actually be very good on the job training for the agents, but for home-owners and consumer protection, on the job training may not be the best way to handle something this important. People who have the least education and experience of anyone in the industry, who know little about the real estate business and even less about measuring square footage will be the people appraisers are supposed to rely on to provide them with accurate information. If I’m buying a house, do I really want the lowest person on the totem pole providing the foundation for my value? Not likely…

And remember, these are the same bankers that don’t like appraisal Trainees. They don’t trust the people appraisers have personally trained and know. So they say, let’s get someone we don’t know or trust at all and let them get this important info for us. And make no mistake, this information is extremely important to the valuation process. An outsider looking in on this would say it’s an insane scenario. We won’t take appraiser trainees, but we’ll take real estate trainees who have about 30% of the education of appraisal trainees, who are not good enough for the job evidently.

Consider what might happen if appraisers simply refused to sign these reports. You can write whatever you want in the report, but if there’s a problem in the future, guess who they’re coming after. Look at a little history and you can see who lenders will come after if there is any trouble, and it may be six or seven years after the fact –  the lowly appraiser. Do you really want to sign a report (with all it takes to earn and keep an appraisal license) for a few hundred dollars? Is that an appraiser’s worth to the mortgage industry? Have you ever seen GSE’s and banks asking for public comments on this topic? It’s only important to those looking to make huge profits from the new products. The Golden Rule is in full swing.

If there was ever a time for appraisers to just say no, this is it.

Of course, this is a business decision for every appraisal business across the country. However, if the number of appraisers willing to sign off on these hybrid reports is low enough, just maybe, they will figure out we’ve gone as low as we’re going and we’re starting to push back. Just maybe it’s time to leave the appraisal industry alone for a while and focus on the real estate industry and appraiser’s “Source” of information. No one ever clamoured for lower appraisal fees, except for lenders, and they only want a cut of the appraisal profits. It’s still all about control and money. But this time, appraisers can actually influence their own futures. So, are you going to be a hybrid appraiser? Get ready, the requests are coming soon…

Image credit flickr - Osvaldo Gago
Hamp Thomas

Hamp Thomas

Hamp Thomas, founder and president of the Institute of Housing Technologies. He is also the president of Carolina Appraisers & Real Estate. Leading expert on residential square footage and its influence on the home valuation process. Instructor, Appraiser, Realtor and Author. He is the author of “How to Measure a House” based on the ANSI® Guideline; the American Measurement Standard, Death of an Industry-Real Estate Appraisal, etc. & offers continuing education courses (for agents and appraisers), and numerous other real estate courses, webinars, and YouTube videos.

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23 Responses

  1. TruthBeTold says:

    Thanks, Hamp for another outstanding article! Just want to add, and I know I’m being redundant, but appraisers also need to be aware of how they scale their business. Too many trainees lead to an oversupply of appraisers. With this business being cyclical and automation continuously reducing the volume, an oversupply of appraisers allows banks to have more control!

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  2. David Samnick on Facebook David Samnick on Facebook says:

    Unless all Appraisers decide to unionize and collectively go on strike the beatings will continue. I know The disgusting UNION word. It’s true. We could have collectively insulated ourselves by coming together. However the majority of Appraisers are chicken shits. Apologies for the vulgarity.

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    • TruthBeTold says:

      Another huge problem, Unions are not disgusting at all, if done for the right reasons and not abused. I think the younger generation has been brainwashed to think that unions are disgusting and don’t realize what their core purpose is and how they have helped the labor force over the years!

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    • chris says:

      The NUDE models in this county unionized as they were paid horrible low and forced to stand in positions for hours with out a break and in cold school basements…why cold ? Because it was better for the paints to be cold. They unionized for better working conditions, breaks and fare pay !!!! And WE appraisers have not….crazy !!!

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  3. Donna Corrado on Facebook Donna Corrado on Facebook says:

    Hybrids came about before E&O companies have had a chance to put a dollar amount on the insurance fees. Just wait on new rates.

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    • Jeff Weeks says:

      I have actually talked to E&O companies in hopes they will see hybrids are of greater risk and they must be owned or lobbied by the big banks as well. They said they didnt think insurance would go up. My complaint is that I will not do a hybrid appraiser but once insurance does go up it will go up for all of us because of this. So once again big lenders will once again cause pricing to increase when they keep trying to make things faster and cheaper. Nothing is about a fair price for something but more a seek and destroy mentality

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  4. EJ says:

    I don’t even know how to spell hibread.

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  5. Jeff Weeks says:

    Field inspections are not just about the house but views, proximity to shopping, appearance of neighborhood, and so many other things. Also who drives around and takes comp photos? I just cant believe people are actually signing on to do these.

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  6. Koma says:

    Just say NO!

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  7. Stand up and be counted. Do not give away your experience or expertise.

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  8. Matt Beiseigel on Facebook Matt Beiseigel on Facebook says:

    They only want an appraiser to sign it and attach their E&O and license. So they can say “look, it’s backed up by an appraiser”. Then the appraiser who accepted this crap is on the hook.

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  9. Anna R Todaro says:

    I have a Realtor friend who was a newby in RE in 2017 and has made a total of 1 sale in the low end of the market since being licensed.

    On Sept 14 she texted this to me “Hi Anna. How is your vacation going? A quick question for you. A company is asking me if I would be interested in doing mini appraisal/inspection reports for them for $75. It includes pictures, measurements, and some questions. $75 sounds too little to me. What do you think?”

    I never responded (bad on me but she would have been caught in my crosshairs through no fault of her own.) However, this Realtor asks me questions all the time ranging from what design a house is (rambler, colonial… nothing extravagant) to, does the Home Warranty cover basement water leak.

    This is an example of who they are targeting and not even she thinks she would be making enough and her license isn’t even on the line!

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    • Don says:

      Geez Anna, I will do 5 inspections a day for $75.00 each, 5 days a week. That’s 93,750 a year and I don’t have to sign my name to a report. All I have to do is measure and ask some simple questions and take a few photos. Wow, no stress, liability, aggravation and my only expense is gas and time. This would be a part time job compared to the number of hours I work now. Depending on where they are located. Its incredible, these companies are willing to pay a inexperienced person more than the appraiser gets for writing and signing his or her name to the report. This just shows what these companies think of the appraiser. Why not hire Bob down the street. Train him to measure, take photos and teach him what to look for and what questions to ask and keep $25.00 for yourself of every inspection he/she completes. Thus, if appraisers never completes one of these hybrid products for the lender. Then we would be stealing from them instead of the other way around.

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    • Mike Ford Mike Ford says:

      Anna, that’s an example of the BETTER inspectors they are targeting. Some areas (Seattle recently) just run ads for “Photo takers-no experience necessary. We train in half a day.”

      There is NO reason or justification for a so called hybrid EXCEPT TO MISLEAD INVESTORS. IF it were otherwise, they would not use words like appraisal or neighborhood market conditions or anything other than saying “This is a desk appraisal with no verified data or meaningful analyses of quantified market perceptions.”

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  10. chris says:

    Just left the house, real estate agent says she gets emails everyday to do $50 inspections, isn’t that about 2 to 3 hours worth of work plus gas, can you imagine!!!

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  11. Baggins Baggins says:

    I wonder if realty agents would be so eager to do these if they knew that unlike bpo’s, their service is tied to an official appraisal report that would likely ride a full 30 years with a subject, and turned in to the forensic and state investigators upon any and all instances of borrower default.

    Probably time to bring in some sales agents to this board, or we go over there and cross link articles, etc. A bpo, without the price opinion, used in lieu of an appraisers services for federally related lending, what could go wrong? That’s a brave new frontier for agent practice, and they should see if their insurers cover a sales agent performing appraisal inspection practice. Questions that need answered.

    However, I think you guys are being overly optimistic. The initial roll out is dressed up nicely. In the very near future these companies will off load the realty agents and go with insurance grade day labor inspection services instead. This past weeks vacap article says they discovered a 5-8 dollar per inspection fee rate or something close to that.

    This is about control and profit, hybrids are not meant to help anyone. They are being implemented as another clever way to sidestep regulation and place the burden of irresponsible lending risk on taxpayers while simultaneously increasing lenders profits and loan capture rates, further eroding what’s left of checks and balances systems.

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  12. Mike Ford Mike Ford says:

    An alternative new source of full appraisals for litigation purposes business may well be the buyers (or sellers) who made decisions based on hybrids. Certainly private or hard money lenders who believed they were getting honest values, could be  a source of new work. Maybe even their investors. You know, the folks that make companies like Amroc and Rocket Mortgage, or a host of others of similar ilk possible.

    Remember all the loan mods for people that claimed they were taken advantage of by unscrupulous lenders? Whether for sales or refis they would be an easy market to contact direct by appraisers marketing ‘appraisal reviews for from $500 to $1,000+- I think. Throw in expert witness fees of $300 to $600 per hour depending on your market area  and there may be entirely new users of good, quality appraisals and appraisal reviews.

    I think I am going to avoid the rush and start making marketing efforts in that direction now….now where is that Georgia hybrid appraisal sample again?

    Maybe it’s time for a second webpage promoting hybrid field reviews and desk reviews.

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  13. Jeff Weeks says:

    The end goal for the AMC and lender is to do the appraisal in house based off of field data from the realtor and hire staff appraisers which they already have. To put a stop to this we will need to take back our data. Privatize our data so only we can decide if we want our data shared. So how do we do that

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  14. Jo Dee says:

    What about individual state compliance for hybrid appraisals? I just can’t help but wonder if they have put the cart before the horse, and are assuming there is no problem with these hybrid appraisals with the state appraisal requirements. If, and I do stress If, these are not in compliance with state requirements, isn’t there a huge risk that if you complete these garbage products you may lose your license, and severely reduce the number of licensed appraisers, and thin out the competition, which would inevitably put the power back in the control of the appraisers that are still standing with their license, not having taken this type of assignment? Just a thought, however, I also realize, big money will probably find a way to circumvent this as well. It just seems to me that each state should have a group of appraisers approach their state board (or whatever form it takes in each state), and present this as an informational discussion to the the state, and make sure they are aware of these products, and have the state verify compliance or non-compliance. If we find more that say non-compliance, wouldn’t this be a game changer?

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    • Koma says:

      Don’t the big players in this industry always do that? They don’t care because their profits are always much larger than any of the ramifications. But us we’ll be crushed, that’s exactly why I won’t do these.

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Are You a Hybrid Appraiser?

by Hamp Thomas time to read: 3 min