Reality vs Positivity
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Read any sales training publication and you will learn about positivity and how it helps you succeed. For the most part, this is true. But what happens when reality sets in?
Positivity: Many appraisers have praised the decision by Fannie Mae to eliminate the 1004MC. No question, it is a flawed form, but every software vendor allows us to complete the form with the push of a button. This can be done in most MLS systems as well. The form shows the number of sales in the past 90 days and the number of current active listings. With enough data, it can show a trend.
Reality: Many lenders no longer require the 1004MC. They are now asking for 2 closed sales within 90 days and 2 active or pending listings. Inventory is low, active listings are rare so an explanation of why there are no active or pending listings must be done. You may not have sales within the past 90 days either, so more commentary is need. Both of these things are clearly displayed on the 1004MC without explanation. Now we have stips to expand our search because the of checklist underwriter or reviewer needs to check the boxes, regardless of the commentary you have already made. Let’s not forget about those lenders who want the charts and graphs to prove your market trends. Oh yes, limited data results in less credible trends, so more expansion and more commentary on what you did and why is now needed.
Positivity: An increase in the time and effort needed to produce credible market trends and the scope of work and/or revision requests provides an opportunity to re-evaluate the fees charged by my company.
Reality: Appraisal Management Companies believe when business is slow appraisers should lower their fees. MLS does not lower the cost when the market is slow. Software vendors do not lower their costs when the market is slow. Upload fees to portals are not reduced when the market is slow. Why should an appraiser lower their fees? Doesn’t that further deteriorate the economy? Aren’t lower fees pushing more appraisers out of the industry? Don’t the amcs need appraisers for their own survival?
Positivity: The narrative of how great the economy is and how unemployment is low is being broadcast everywhere.
Reality: Lower level jobs are skewing the numbers and people are actually earning less than they did. Homeowners are refinancing at increasing rates and using the equity in their homes as their personal finance company; much like they did 10-15 years ago before the financial collapse.
Have you noticed an increase in FHA appraisals? How many of those are for people who bought their homes a few years ago with 3% down? How many of those properties need repairs completed to meet the minimum standards? How many homeowners inform you they don’t have the money to fix the issues and that is why they need the refinance. Yes it is happening all over again, just like 10-15 years ago before the financial collapse.
Positivity: Appraisal Waivers and Hybrid Appraisals are saving money and speeding up the appraisal process.
Reality: Appraisal waivers and hybrid appraisals increase the risk to the homeowner and investors. Not only are homeowners rejecting these products, they do not save any time nor do they save any money. Most appraisers can typically turn around an appraisal in 7-10 business days. The delay is the appraisal management company shopping for the lowest fee for a week. How much of the fee paid by the borrower goes to the amc? What is the quality of that report?
Positivity is a great thing and can do wonders for us. Reality is what we have to deal with. When the two work hand in hand, progress is made.
By Advocate, Certified Real Estate Appraiser – author requested to remain anonymous