Accurate Appraisal Underreporting
The HousingWire article highlighting that only 40% of homes sold include an “accurate” appraisal, as defined by the Corporate Settlement Solutions (CSS) report, is deeply problematic and indicative of a concerning lack of understanding around the appraisal process. The report cited from CSS, analyzed appraisal data across 10 states in the East Coast and Midwest, finding that only around 40% of home sales included an appraisal that was within $2,500 of the final sale price. This is being presented as evidence that the vast majority of home appraisals are inaccurate.
Appraising a home’s value is an inherently complex endeavor, with numerous variables and nuances that must be carefully considered. To claim that any appraisal falling outside a $2,500 margin of the sale price is “inaccurate” is an egregiously narrow and simplistic view that fails to account for the realities of the housing market. Given that the median home price in the US currently sits around $420,000, a $2,500 discrepancy represents a mere 0.006 deviation – an infinitesimally small margin that in no way calls into question the validity or reliability of the appraisal. This misguided definition of “accuracy” is both misleading and dangerous, as it perpetuates the misconception that appraisals should be precise to the dollar, when in reality, there is always going to be a degree of subjectivity and variability involved.
Rather than publishing such a reductive and sensationalized take, HousingWire would have better served its readership by delving deeper into the complexities of the appraisal process, acknowledging its inherent challenges, and providing a more balanced, well-researched perspective. Shame indeed on HousingWire for failing to uphold journalistic integrity and perpetuating a harmful narrative around a critical component of the housing industry.
“The gap between home appraisals and sale prices is rising.
That’s according to a new report from Corporate Settlement Solutions (CSS)…
Properties were considered accurately appraised if these values fell within $2,500 of the sale price. Across the 10 states studied, slightly more than 40% of transactions met this definition…
“The growing gap between home appraisals and actual sale prices underscores the challenges of providing accurate valuations in a rapidly appreciating market with limited inventory”, CSS CEO Ashley Jelinek said in a statement.”
- Outrage Over Connect by ValueLink’s New Monthly “Junk Fee” - November 27, 2024
- ARCC Discussion Exposes GSEs Agenda to Reduce Appraisal “Friction” - November 22, 2024
- FHFA’s Appraisal Waivers Expansion - October 29, 2024
I mean, housing wire is nothing more than a paid mouthpiece by every AMC article they have put out. What’s funny is if you were to run AVMs under that same requirement you would probably have a 90-95% fail rate.
So, this data could also include appraisals that are $3,000 or more than the purchase price? I’ve had a number of those the past few years where buyers were actually getting a good deal. Dang my inaccuracy!
Market value and contract price have different definitions thus to equally compare them to each other is misleading at best.
Seek the truth.
Clearly the author of the HW article does not comprehend that appraisals are not meant, in any possible way, to meet contract price. Appraisals are necessary to determine “market value” which may be at, above or below contract price. Why is that type of garbage “journalism” allowed? Especially in specific industry related materials? You would think anyone with a functioning brain in the real estate industry would comprehend market value and contract price are not synonymous. Beyond misleading and inaccurate article in HW. They should be embarrassed.
We and appraisals don’t “determine” market value. Courts and the market “determine”. We develop opinions of value.
HW is just selling amcs to appraisers. Now they are questioning the appraiser’s role, suggesting we are a racist group when we have worked in the environment that taught us the importance of our indepence. The amcs are turning us into slaves!
Oh, and how accurate are the damn AVMs???!!???!!
“Only 40% of homes sold include an accurate appraisal”.
Okay, cool.
Now disclose the number of home sales in the past 4 years have used a drive-by, hybrid appraisal, or some AVM product for loan value verification. Line them all up against a 1004 and see who’s most accurate.
Lets not even talk about the number of outright appraiser waivers.
The lenders, bankers, and the GSE’s will complain no matter what appraisers do or how accurate we are. We will always be the scapegoat.
Baggins- What will we do in the winter when there are no lawns to mow? Snow removal? LOL
Hard labor makes my back hurt. One of these days I’m going to get a legitimate job with benefits, but we’re trying to sell the home and buy another, land in a better school district across town first. I have no clue what I want to do. This guy had a shirt on which struck me as interesting; death before cubicles. Yeah, I’ll probably go with that one. Have to turn three appraisals in three days. Challenge mode.
Your post has been flagged for subjective language. Better than what school district and by who’s standards?
Look at this nonsense. Alamodes new incorporated language filter.
Go to tools, configure settings, forms, then scroll down to the ; allow eo checker to check for terms potentially…. Uncheck that box. All the software will have this soon, if they don’t already.
They could have like fixed something, or did nothing and allowed the product to be more affordable at a lower price. Instead they invested in r&d with the specific goal of supporting a government censorship program aimed squarely at their own appraiser customers. GD corelogic strikes again. I really should have switched but at this point the program is on autopilot. Alamode; Now with language censorship tools! What a good selling point to customers; We’re the better company, because we actively support government censorship against our own customers!
This is so far on the other spectrum away from a professional approach, how does anyone whom supports this idea even take themselves seriously? Let them flag all the words. I’m not caring because it would never stand up in a court of law or even in front of the state board. Can you imagine being dragged through court or some administrative proceeding for this ‘banned words list’? You’d hold that up in front of you and interrupt the court judge and panelists themselves every other sentence; Um sir, you’re not allowed to use that word anymore. Then you could highlight in yellow all the times the court or panel used that same word from the banned word list in their own documents and writing. You’d run out of highlighters. The banned words list campaign is too juvenile to be taken serious.
LOL, well said.
What is the appraiser supposed to do? Get out a thesaurus and find alternative words for the already most basic simplified descriptions in the English language?
I present to the word police; Their own guidance documents.
https://singlefamily.fanniemae.com/media/39241/display
Control+F for the word search tool.
Good; Appears 77 times.
Fair; Appears 51 times.
High; Appears 401 times.
Low; Appears more than 1,000 times (went off the scales!)
Rapid; Appears 5 times.
Black; Appears 4 times.
White; Appears 2 times.
School; Appears 4 times.
Average; Appears 112 times.
Crime; Appears 28 times.
Fast; Appears 2 times.
Slow; Appears 0 times.
Strong; Appears 2 times.
Illegal; Appears 7 times.
Gentrified; Appears 0 times.
Church; Appears 0 times.
Another home run, ?
Yes, I immediately revised this feature. It’s funny how they got in front of it by sending me an email telling me how to disregard the feature the same day they released the update. It was like, “We’re sorry, we know this is annoying so here’s how to unf$%k it. You can’t even describe the condition of the flooring without a “bad” word these days. Needless to say, I don’t sleep very well lately due to the anxiety the GSE’s & HUD have created. It’s like playing “whack a mole” every time I complete an assignment – It’s exhausting. Is it a coincidence that I buy more lotto tickets these days?
“Appraisal” waivers. Not “appraiser” waivers.
Sorry. That was a dragon speak software error.
Careful, you sound like a bored underwriter! LOL
Neither. Shame on you. It’s “value acceptance”. Keep it more real, inclusive and tolerant.
I’m speaking with him now. Hoping to fill you in more later. Cheers.
So far all he had so say is that this is not his normal beat and he wrote just to pay bills. So it doesn’t appear that he has a clue about what is really going on and was not really interested in doing the back work on any of it. Just needed to keep the lights on.
Don’t tell us. Write an article for Housing Wire and submit it to them.
Housinwire has no interest in publishing content from appraisers. They removed the comment section, likely to avoid hearing critical feedback from the appraiser community. In fact, HousingWire has not featured an appraiser-authored article in quite some time. The publication is aligned with AMCs and will persistently promote their narrative against appraisers.
https://appraisersblogs.com/appraisers-blasted-HousingWire-fake-news
It just makes no sense. If appraisers die on the vine, AMC’s will have nothing left to pillage.
Be assured there is a master plan at work. These are sharks not nieve lambs. It will eventually become apparent in the coming months.
The differences between price and value. Look at this MC chart detail. There are numerous examples of agents adjusting price, negotiating price up or down, on average 5% or less, some more varied. This is only two metrics, the last known listed price, the final sales price. If one looked in detail tracking the total movement of price from start to contract (multiple pricing adjustments), the numbers can easily double in terms of total percentage variance.
In which scenario is the appraiser doing it wrong? When they appraise at initial list, even though final contracted price was higher or lower? Or when the appraiser hits the final contracted number, despite such volatile upward and downward price movement during the listing and negotiation process?
The reason NY had the highest volume of less appraised variance, is because of the incredible volume of condo’s, mid rises, high rises, which are more uniform in size and similar market potential than not, as hundreds if not thousands of units occupy the same building or similar buildings. Kentucky vice versa, because much of the housing out there is not uniform, is lower density housing, and with such wildly varying trends in land size, home size, home maintenance, area amenity, and attitudes towards municipal authorities regulating land use and home character, there is a much higher potential of variance.
Another corporate entity torturing the data until it confesses what they want to hear. Fairness is value in the current market. Price is merely an indication of profit, potential profit, or loss. Buyers can dream of amazingly low priced deals. Sellers can wish for unreasonably high selling prices. Neither side moves until they can achieve a price which is better aligned with value, fair to both parties, or one side successfully takes advantage of the other.
The appraiser being the only non advocate in the transaction. What the study really shows is that less than so much percent of the realty agents successfully forecast a price which will be accepted by the market the first time around. Otherwise the appraisal would have followed up with their final sales price figures under closer matching peramiters more frequently.
Why put us through this minefield of crap. Just eliminate us and be done with it. I believe it’s the absolute worst solution. Eventually home prices will rise to the point AVMs can’t keep up either, unless manipulated by humans. Home prices will skyrocket if value is being assigned by those making commissions… it’s not rocket science. Why make us go thru all this BS, give us a new 1004 for data mining, threaten us with new FHFA policies, bash us with low or biased appraisal propaganda. Just fire us all and let us begin to heal!
Hold on. I’m not ready to be relegated to the basement janitor closet with my red stapler just quite yet. Management obviously has some fundamental operational problems to deal with first. Also important to understand the push back potential from MB security investors.
In retrospect it’s obvious the coordinated ruse which was ‘racist appraisers’ was merely an effort put forth to justify the rapid transition and reliance upon new automated systems. Otherwise the investors would have continued to have a healthy distrust of GSE’s being in total control of the value process.
https://www.fanniemae.com/media/15041/display
https://appraisersblogs.com/why-r-fannie-mae-n-freddie-mac-peddling-exotic-junk-related-risk-swaps
https://consumersresearch.us7.list-manage.com/subscribe?u=f33c6d2dfde63a53b3f39543b&id=0c70c9435c
edited. Yeah. I’ve held my breath too long already…
I hope you’re not holding your breath for that.
Turn on the theme to Mash (suicide is painless) have a few drinks and force yourself into pulling the trigger.
By pulling the trigger I don’t mean THAT. I mean QUIT…walk away…tell them what you really think of them for the next 6 months when they call you (that was the best part). I cannot say that it’s painless but it is as liberating as anything that you will ever do.
Well, many of us have the drinks part down. What comes after that again? Have you heard of mescal? Apparently I’m the last person on earth to learn about this. The elixir of the gods. I ran out last night. That’s why I’m sad today. (throws half full can of rolling rock across the room in a fit of anger and rage.)
I had to look that one up. I had it confused with mescaline (peyote). LOL…talk about creative valuation! I never tried either one. Thanks for the tip.
I’ve often written up reports half asleep or sometimes hung over but do not recall hallucinogens as helping defensible appraisal reports. That’s a good one.
I wrote the CFPB letter on amc billing. Finally made the time.
They won’t listen. But at least we tried.
Very solid. I will send this as far and wide as I can.
I owe you a bottle of Mescal.
Thanks, appreciated.
This was the online video about mescal production that sparked my interest. Super interesting, traditional production methods.16 min. How traditional mescal is harvested and produced locally.
https://www.msn.com/en-in/video/other/mezcal-is-now-the-fastest-growing-liquor-in-the-us-why-aren-t-mexican-producers-cashing-in/vi-BB1kSwkn?ocid=FinanceShimLayer
It looks like you covered everything, including my wire fraud observation. We (appraisers) owe you a bottle of mescaline….only to be used when you have two to four weeks off to prepare for reentry.
Thank you both. I actually asked mod for an edit down to a more simple statement.
People outside of this immediate forum can seek out and read the comments if they want.
I’ll remain convinced the effort is a cover over type of deal, only pretending to care about the issues for PR purposes.
The CFPB’s safe harbor rule caused the amc problem to continue.
Now they’re going to magically correct their own error?
Dare to dream.
The editing process to 5k characters was pretty rough. lol. I made a point of keeping the wire fraud topic matter in there. Among the more important suggestions to be sure.
Thank you both. Have a good one.
Thank you.
Housing Wire is a publication that poses as an appraiser’s friend. However, since they testified to congress in the last bailout, they sold us down the river. They and the former ceo of the AI is promoting his chatgpt bs. Whatever they are besides clueless, they are great used car salesmen who took our profession over to please the banks. I have no admiration of that rag.
so when the appraised value comes in at the exact sales price then we are hitting numbers but when it is not within $2,500 of sales price then it is inaccurate. we can’t win.
$2,500 / $420,00 is 0.6%, not 0.006%. Still an insignificant amount. CSS is an AMC. What they are saying is that 40% of appraisals ordered through this company are inaccurate.
‘CSS is an amc.’ You cracked the code right there TP. Did they just admit their own review process and vetting of appraisers is deficient?
https://visitcss.com/lender-solutions/appraisal-management-1
https://visitcss.spurams.com/AppraiserSelfRegistration.aspx
There it is. On the appraiser sign up page. 24/48/72/2hr. Remember when amc’s were to be required to refer to open market fee surveys? The appraiser is prohibited from being honest with borrowers about the appraisers own fee. Sounds legit. Checks out. They forgot the indemnity agreement.
—————————————————————————
You affirm that by choosing to accept the orders assigned by Corporate Settlement Solutions to you/your company, you agree that the appraiser’s fees for the order are reasonable and customary for the area where the subject property is located. / Fees and Payment Terms: / Do not attach an invoice to your appraisal report. All invoicing is handled automatically through our accounting dept. This requirement does not apply to appraisals performed in the state of New York, where we require that the appraisers attach a copy of their invoice to the appraisal report. / Do not discuss appraisal fee with the borrower. Direct any questions regarding your fee to CSS. / The acceptance of this assignment will serve as your attestation that you are competent (as defined by USPAP) to accept the assignment. In addition, you are affirming that you have knowledge and experience in appraising this type of property in this market area and being aware of and having access to the necessary and appropriate data sources for the area in which the property is located.
How do I get a copy of this letter?
They are so damn stupid
Don’t include your invoice
BUT in NY you are REQUIRED to?!?!?
Pat that’s in the second link from the post above. Just scroll down to the amc’s terms and conditions. It’s extra ordinarily easy to read and prove offensive amc policies. They literally all have the same non disclosure policies.
https://appraisersblogs.com/amc-engagement-letter-appraisers-do-not-include-your-invoice/
It’s no secret and the amc industry has gotten away with this unearned fee junk fee rake billing scheme for twenty years already.
New york is the only state to legally require the appraisers to submit invoices, passed by way of their legislative process. But nowhere else.
So. They. Could. Make. Billions. Of. Dollars. Raking. Junk. Fees. Without. Consumers. Lenders. Or. Regulators. Knowing.
FHFA has set policies which condition FNMA executive compensation on their ability to use appraisers less rather then more. They get corporate windfall bonus compensation packages for doing so.
The CFPB investigation into junk fees is most likely just part of a cleanup effort to answer possible accountability and paper trails.
In preparation for appraisal automation where they can legally rake the entire fee and there will be no human appraisers to complain, be in total control of all automated value products and subsequent lending decision outcomes.
Good catch! I noticed the math error immediately because I am an appraiser and accustomed to using math daily. You would think the writer of this article would know better.
It’s always the decibels on percentages that confuse the jr math associates.
That and sometimes I swear my calculator is haunted.
Comments to the CFPB has been extended until August 15. Everybody get up off of your arse and do something for this profession!
Simply incredible. A substantial group effort will be required to go through and highlight the commentary. 950+ comments. There appear to be quite a few new comments in the 400-950+ comment ranges which may be worth reading, submitted in just the past few days. Reviewed last few dozen and there were a few unique appraisal focused comments.
Comments
https://www.regulations.gov/docket/CFPB-2024-0021/commentsmments.
https://www.regulations.gov/document/CFPB-2024-0021-0001
This is interesting. Reactive Reddit appraisers, following up here slightly later on in time. The Jr crowd quite often whom is still bright eyed about ‘amc opportunities’. Someone should show up there and tell them to come here instead for better real time accurate information.
https://www.reddit.com/r/appraisal/comments/1egwq7q/lack_of_fee_transparency_exposing_the_amc/
Mr Turner, could you please post the comment deadline extension link if you have, was not able to find. Thank you.
HW lost all cred when they started aligning themselves with AMC’s and regulators.
This would be a good article for the Appraisal Institute’s CEO Cindy Chance to respond. I wonder if she would take it on in this case.
This has become so comical. So now in addition to being racist and biased we are now incompetent. Hey, just part of their master plan to just keep piling on the coffin nails to seal our fate. This is just another coup de gras shot to ensure the industry is DOA. How some obscure entity can make such a ridiculous accusation is blasphemous. Hell, most “respected” publications will tell you any two appraisers worth their salt should be within 5% of one another. To site a figure like $2,500 based on what? Maybe I missed something or does “not an exact science” no longer apply? I like a good old fashioned back massage and hate it when it goes to waste on numbers to suite ones need to berate and lecture. Isn’t that arriving at a predetermined conclusion? Hell, if I was within $2,500 of a million-dollar sale price I would be pretty damn impressed with myself but then again, we are not appraising the sale price are we. It’s all a shame my friends built around big banking and fast and loose politicians. I think they just like kicking us when we are already down. With the amount of funds flowing into Congress from FNMA we don’t stand a chance. When they set the value as the sale price for purposes of comparison, well, why have an appraisal done if that is their belief. Sale price = value. Oh yea, that is their actual point isn’t it. Great study, wonder how many crayons they went through before they got to the final, “educated” analysis report?
There’s nothing like being an appraiser. The more you know, the more education you have, the more experience you have, the more expertise you have, the more you finish on time, the more accurate you are, etc., the more you’re considered nothing but a vendor, a tool, to pay as little as possible and to give as little civility and respect as possible. I’m more and more inclined by the minute to not renew this year. I’m really sick and tired of dwelling in this pathological realm. I’ve been thinking, hoping it would get better over the past 40 years … nope, just worse by the minute.
Counting down to retirement…less than 1 year
I do agree with the last quote “The growing gap. . .” paragraph, but not coming up to the contract price when you have accounted for market trends through timing adjustments isn’t a deficiency in the appraisal. Lets be honest, its the job of cash in the hands of buyers that want something more than they care about market value that often push the market to new heights. As appraisers, we cannot read the future, only analyze the present.
HW was pretty good when they first started, but have steadily become worse over time to the point they are useless. The quality of their staff has declined.
Reminds me when I had a agent put a question to me and it almost knocked me out. They stated why can’t buyers just pay what they want for a property they want to buy? WTH! I’m thinking they knew the seller asking price was too high. My response was they sure can by doling out the difference or just pay cash. lol
Housing Wire = Hot Garbage
Go to their facebook page and comment. That crap article was shared 6 days ago.
I shared a rebuttal to the original article with my Brokerage in Kentucky, well, because KY was listed as the #1 offender. Thought is was important that my brokerage peers had a solid answer if a client asked about the article. Wouldn’t ya know it, Appraisal Blog quoted my 1st point in the information to the brokerage almost verbatim. 🙂
“The CSS analysis of 10 states found that 51% of homes sold for less than the appraised value” so 51% of homes listed were overpriced in a declining market. Analysis of data can be skewed in whaever narrative outcome you want.
I was not aware the sale price was the bench mark for value. Perhaps they are misspoken and meant to say a sales price difference in excess of $2,500 of the appraised value is not accurate? Think maybe?
So the growing ignorant population with a bunch of zeal and no knowledge goes home to their families at night as if nothing has happened – while the appraiser is left gasping for air and survival. No one comes to the appraiser’s recue, not even the Appraisal Institute or other supposed appraisal groups. We now live in the post: honor; integrity; good conscience; and soul age. We are well on our way on the path to destruction.
Obviously this is wilful misinformation. As real estate prices rise, $2500 becomes a smaller and smaller percentage differential. It is quite obviously a knowing attempt to mischaracterize the industry. If you are appraising a $60,000 home maybe $3,000 would be significant. Where in the US can you buy a $60,000 home? Not around any major metropolitan area in the country. I guess the fools who wrote this study expect a home selling for $971,200 to be appraised for $971,200. What? The incompetent appraiser’s report rounded off their opinion to $975,000? That’s it! Torpedo the profession!
This is exactly what is happening and what Fudge was trying to push, along with a house in LA, New York or whatever by the same builder should be selling for the same price, as if it was a car. Location be damned.
It’s important to be one of the cool kids if you’re in the data analysis industry.
Obviously they’re not very good at the task. But they have the talking points down.
‘Torture the data until it confesses what they want to hear.’
Guaranteed results. Works literally every single time.
In the appraisal world we call that backing into the data or forming data around preconceived conclusions. It’s exactly the opposite of the scientific method. Shouting incompetence for the world to see. And they are so ignorant as to what real science and legitimate data analysis is, they are proud of themselves and promote each others non science works.
Those people are not experts. That is not science.
Does anybody have a copy of this “report” issued by CSS? It is not on their website.
The more I follow this the more I believe they are just yanking our chain so we are all chasing our tail. I’m not going to give these mush for brains any further satisfaction. I’m sure their having a good laugh.
To put it another way, these idiots are saying that the contract price is the number the banks should base their decision on funding a mortgage. But has that ever happened? I don’t think so and why is that? Because the world still adheres to the “Constitution of Appraising,” the “Bill of Appraising Rights.” Because appraisers and appraisals stand in the way of cheating, gouging, corruption, etc. To say that a $2500 difference between the final opinion of value and a listing or contract price renders the appraisal inaccurate, is ignorance personified.
I have never met an appraiser who thought they were wrong. Most think they are the expert, and everyone else is incorrect.
What a silly statement! Speaking in absolutes about an entire profession is ignorant, as well as not knowing that the appraiser is LITERALLY paid to be the expert. A true expert acknowledges the possibility of mistakes and the necessity of correcting them.
Then you probably believe the same of doctors, lawyers, accountants,…..
How many appraisers do you know? I know hundreds and they will all admit when they are wrong or made an error. The key is, you have to have factual and supportable evidence, not just emotional evidence. Keep in mind when we perform appraisals that it is for fair market value which has a long list of what this definition includes.
But this company that wrote this research is an AMC trying to promote their AVM product which has no regulatory parameters or rules to follow. They get to basically say “trust us, it’s proprietary” and nobody can see if the algorithm is violating fair lending rules or even follows basic appraisal theory.
This AMC is also likely price gouging consumers under the TRID-Respa disclosure rules by charging the consumer $600+ and then paying the appraiser $250-300 after sending it to bid to 200+ appraisers and taking the cheapest and fastest one. Quality is not an AMCs concern and these automated checks only look for certain boxes to be filled.
Hell I just caught a file FNMA passed off as a 2 on the DU/CU score as low risk. But, because I was familiar with the market I knew the land adjustments were incorrect and the appraiser manipulated the adjustments to pass DU/CU. Needless to say that is at their state board now showing the Secondary Market report vs the internal corrected report.
Charles is obviously not an appraiser.
Don’t feed the trolls people.
I’m like; A fan of trolls. They light up my day and bring joy to the boards.
And Charles. Sorry to inform you bro. You’re wrong again. Better luck next time. Close but no cigar.
Is this the same realtor guy whom hung up on me all frustrated and said; I’m not going to get drawn into some long annoying conversation about value… True story.