Solution for Alternative Reports
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Lenders are having a problem finding enough appraisers to fulfill the number of ‘alternative’ reports…
This is my follow-up to the previous essay about FIVE different types of ‘hybrid’ reports.
You need to know some background about why I’m writing about this.
I’m acquainted with a highly skilled appraiser/instructor of 40+/- years in the trenches. I had the pleasure of meeting this appraiser in glitter gulch in 2008, again in 2013, and we have stayed in touch over the years. I greatly respect this appraiser’s opinions and willingness to contribute cogent remarks in-person, when teaching, and via various forum posts, etc.
About a month or so ago, the appraiser called me, and in the course of a lengthy conversation, I was implored to ‘help solve problems’ in our appraisal world, rather than just exposing the problems in my somewhat negative commentaries at times. This appraiser had done so a number of years ago, when the appraiser helped develop a form and format to enable appraisers to more accurately report market info, which had not been done adequately or correctly prior.
My involvement in this biz began in 2001. It wasn’t too long after that I began to realize many appraisers are very isolated – both in their thinking and in their involvement in our profession. Too many appraisers have the opinion that only a full blown 1004 walk through GSE form report is the ONLY way to provide an appraisal. (And too many appraisers will not associate with their peers, believing they are enemies… totally untrue.)
Sadly, these appraisers are wrong. In case you have not heard, many lending decisions do not need to rely on the outdated 1004 or the 2055. And appraisers are really nice people, when given the opportunity to associate.
Appraiser intransigence is why the myriad alternative ‘Hybrid Appraisal Reports’ have been developed. Lenders are trying to figure out how to solve their valuation lending decision problems. But most appraisers do not believe in “hybrid” reports, or do them, currently. Lenders are having a problem finding enough appraisers to fulfill the number of ‘alternative’ reports they want done. However, the fact is, the lenders DO need to have appraisers involved, by providing a signed report for the loan file. In reality, they don’t want Evaluations, BPO’s or other non-appraiser-touched alternative reports, because their regulators want appraisers involved.
So how do ‘we’ solve the problem, and assist the lenders? Think about that as I present this additional info and suggestion.
We know that a full 1004/2055 is not needed. We know that extreme low cost alternative desktop ‘hybrid’ reports are not being done by many appraisers. So what is the middle ground, to help keep appraisers employed, and to help lenders make lending decisions for non-first mortgage loans and other needs?
Suggested Limited Scope Exterior-only Restricted Appraisal Report:
- The solution could be an alternative non-GSE report .
- This report would have requested data – simplified.
- Additional to keep time involvement shorter.
- The report would involve an USPAP. , coupled with a limited data sales comparison grid using only MLS & public data and MLS or assessor photos (without having to drive all comps). Remember, this is a limited SOW Restricted report, not reliant on GSE mandates, which allows the appraiser to comply with
- Maximum of , 3 sales and 2 Pendings/Listings.
- Comparison by , designed optionally on ONE form & select which used based on lender’s need
- Lenders/AMC’s would have to agree to allow the appraiser at least ‘turn-time’ to get the report submitted, after the date of assignment. In this way, the appraiser could schedule the subject ‘drive-by’ to fit into the time frame of other field assignments, and into the office work flow.
- would , except in extreme and obvious valuation problem cases.
- The paid for this report would be what most appraisers charge for a , but than the current total expenditure for ‘ ’ reports, meaning the administration, report prep, billing and bookkeeping is simpler.
To make this work, there has to be cooperation among all parties, lenders, AMC’s and appraisers. I would like to ask that a task force be put together involving all parties which would design the actual report form (with help from the appraisal software entities) and determine the acceptable SOW for all parties, lead by an organization that is not affiliated with any particular appraiser association… as a suggestion the Network of State Appraisal Organizations (NSAO) aka “The Network”.
The point of this is ‘we’ in this profession need to get out in front of the train, or else we’re going to be steamrolled into oblivion. We’ve got to learn to work together to benefit all of us, lenders included, or else we’re going to have to find other employment, as the work will dry up.
I want to help get the discussion going. Re-read the elements above for a Limited Scope Restricted Report, and look at the map below.
Then, find your location on the map below (note that several states are divided by region), decide what would be your AVERAGE fee for the suggested report, and send me back a message (by Wed, Nov. 29) identifying your region and the Average fee. (Alaska in Pacific Northwest, Hawaii in Pacific Southwest, and Puerto Rico in Southeast).
I’ll compile the results and make a report available to those who can work on a task force and/or various appraiser publications. I WILL NOT REVEAL ANY RESPONDING APPRAISER TO ANYONE ELSE. This also is not to be construed as any form of Price Fixing, it’s merely a survey.