An Appraisal Profession Tsunami is Coming
TSUNAMI!
Before the Internet and YouTube, most of us read about or saw a few pictures of Tsunami’s in books. Reading about a tsunami though, will never be the same as actually being in a tsunami, or seeing a video of a tsunami. A YouTube video of the Japanese tsunami of 2011 truly captures what a tsunami is, and how destructive it can be. If you have never seen that video, take a look at it below.
People die in tsunamis. Tsunami death pictures can be found all over the internet. But who were those people and why did they die? Most of the time, the people that died were the ones who stood on the beach and talked about how amazing it was that the water had just rushed out to sea and cool it was that the water was starting to come back.
Who are the people that lived? Those were the people that were either in a tall building or the ones who took action and ran off the beach.
I am asking any and all appraisal profession leaders, AMC’s, and banks who might be reading this: What would YOU do in a tsunami? Which scenario makes sense to YOU?
Does your common sense tell you to continue standing and talking on the beach, or does it tell you to run for a tall building?
If running for a tall building is your decision, then I ask you WHY was that your decision? I am assuming that running would be your decision because you wouldn’t want to die, and common sense told you that you KNEW you needed to take ACTION.
An appraisal profession tsunami is coming.
The statistics clearly show that an appraisal profession tsunami is coming. Everyone knows all about the many problems facing appraisers these days: frozen fees, increasing costs, insane liability, USCRAP, over-zealous regulatory boards, absurd and time wasting revision requests, untrained reviewers, out of state reviewers who don’t know the markets they review, scope creep, increased education requirements, inspect this and inspect more of that, longer hours, less sleep, more stress, the list goes on and on. Appraisers are leaving in droves and statistics clearly show this as fact. Nine hundred appraisers in Illinois not renewing their license last year, multiplied by annual renewal costs for software of $350, is around $350,000 gone every year now from the software providers. That is just in Illinois. That is just one renewal cycle. How many of those appraisers belonged to and paid membership fees to a professional organization? Do the math. How much money was lost to E&O providers? Do the math. How much money was lost to each state in licensing fees? Do the math. How much money was lost to continuing education providers? Do the math. Do the math not just for one year, but for all the years in the future too. What other related businesses will be effected?
But this isn’t just an appraiser problem.
How soon will it be till every AMC also goes out of business along with everyone else? But more importantly, how soon will it be till loans start taking forever to close or can’t get closed at all because banks cant find appraisers anymore?
An appraisal profession tsunami is coming. It has been coming for a LONG TIME. The water has already receded and is STARTING TO COME BACK TO THE BEACH.
My question to all of you is this: Will you continue to just stand and talk on the beach, or will you finally take ACTION?
Too long have appraisers read about all the meetings being held. Too long have appraisers read about all the decisions still being made. Too long have our leaders stared that tsunami wave directly in the face, and waited to talk about it and put the matter off until next month again.
An appraisal profession tsunami is coming.
The entire appraisal profession, and everything effected by it, can not afford lazy leaders standing and talking on the beach any longer.
ITS TIME FOR ACTION.
An appraisal profession tsunami is coming.
The bleeding continues…
You said it Bubba Jay. As long as interest rates remain low the tsunami remains out at sea; once interest rates begin to rise the stampede for higher ground resumes. Why wait when you have unlimited options. If nothing else, open an AMC, it makes more sense than having your nose ground off of your face daily.
I am the new and improved Retired Appraiser and I approve of this warning.
Hey! You’ve got the Lemony Snicket avatar. LOL. Just watched that for the first time this very week. “You’re a terrible actor.” LOL. Best!
Good article there Bubba. I would add; The industries overly competitive nature and oftentimes self serving agenda, is what is creating imbalance. The losses of the various industry participants dwarf the savings these companies have achieved with unnecessary advances in underwriter productivity, order assignment competition platforms, and such. Obviously, creating an imbalance for the appraisal side participants. But like all systems in nature, the laws of differential proportions apply, and all systems seek and achieve eventual balance.
Here is my response to the yet another bid request, just this week; Let’s pull it together with some real assignments here. I’ve heard from (x) quite a bit now, and have only landed one or perhaps two orders. If you want serious appraisal service you can count on, the only thing you need do, is be a serious appraisal distributor that I can count on. You need to understand, a wide set of direct assignment clients have raised the standard minimums to at least $450 for every order, and others have exceeded those points and are steady assigning direct in the $500/550+ ranges. It should not take this many people, and this much effort, to assign individual orders. It’s time to demand the MB’s get current with their fees. I’m nowhere near retirement, and yesterdays fee scale will not keep me in business into the future. It’s time to get current.
And the lesson to appraisers is this; It’s your business. Take control of it already.
Thankfully we live in a world with an extreme shortage of “terrible actors”. This just in today regarding my salary: http://en.mediamass.net/people/jim-carrey/highest-paid.html Summary:
“It’s been a rough year for the actor, but at least he has his millions of dollars to ease the pain. 54-year-old Jim Carrey has taken the No. 1 spot on People With Money’s top 10 highest-paid actors for 2016 with an estimated $75 million in combined earnings.”
My only regret is doing the film, “Yes Man”. It quickly came to my attention that real estate appraisers were taking the film’s message literally, and saying “Yes” to every AMC and every fee request. Sorry guys…I accept full responsibility for the demise of your profession.
Alrighty Then!
Outstanding post!
I think the desired result is being obtained. The banks and lenders have been trying to get the appraisal out of the process for some time now. Looks to me like they have almost done it. Time = money. If they can’t get the appraisals done they will find a way to get it done some other way. AVM, BPO, whatever. June 1st = early retirement for me. It can’t get here soon enough. When I started, appraisals were about 9 pages. Now I am turning in reports that are 40 to 50 plus pages and there are still only 3-4 pages that really matter. I used to love this business. How did it ever come to this?
That end game is where price equals value, and there is no check to the balance. Except for the unexpected resistance from this small but fierce appraisal group, the lenders had hoped to have already written out most realty agents as well. The end game is total control of price, value, terms, and representation, so lenders can claim that whole piece of the pie themselves, and share with no one else. Nothing happening in this industry is random or chaotic, even if it may seem that way to the persons dealing with upheaval and displacement issues. The only problem with this concept of planned chaos to achieve a new system state, which is why I don’t subscribe to the notion the human valuator will ever be obsolete, is that consumers are not so stupid to think that the parent lender could remain unbiased in all those other duties. The broader network of independents and supportive companies in this industry will remain in place, in one form or another. Consumers worth their salt like myself, demand such terms. Checks and balances. Smart consumers simply side step all this regulatory nonsense, by sourcing loans through CU’s and achieving total ownership positions sooner, rather than later.
ok, i got my fish net ready when all those fish come in with this tsunami. now i just gotta figure out where to stand.
the coming negative interest rate, economy collapse, surge will be bad for everyone, but good for me to get those new refi’s fish into my net.
sorry for veering away from the original appraiser apocalypse thought. i’m a zombie appraiser, don’t need to worry about being a dead profession. kinda there, maybe.
Two words; Asset management. What goes up, must come down.
I agree. The stress has become huge for me. I no longer get to do easy assignments, those go to the people with the lowest fees who scoop up all the tract homes. The rest come to guys like me who charge a little more (but still not enough) and take longer. Every time I do a complex appraisal it means hours of extra work explaining everything and justifying my adjustments, all for a few extra bucks. And no matter how much extra time I take, there are always conditions, even when I make a concerted effort to address these issues. They always seems to come up with new questions that need explaining. Yesterday someone asked me to produce paired sales analysis for my lot adjustments. Luckily I had the data for that particular assignment, but what if that becomes the norm? I don’t have paired sales on every assignment, just when the property is unique or atypical for the market. What happened to being a market expert?
I am in a similar boat. I’m the rural “go to” guy in this area. I used like doing tract house appraisals. Until I stopped getting any of them because I wouldn’t come off $300-$350 fee. I know that there are people doing them for $200-$250. At that fee range you end up with no profit and worn out equipment. I could make more money standing at a drive through window asking if they would like fries with that and would they also like to go large (sir or madam)?
Excellent post Bubba!
People ARE taking action, though it is not nearly widespread enough. Most are still standing on that beach thinking, “What’s the big deal? I can swim.” That would be those with no clue how powerful water is. I’ve seen storms put barges into second stories of hotels INSIDE breakwaters (Portofino Inn); and sailboats go over the top of 1 story buildings. You don’t ‘swim’ in that. You become nothing more flotsam.
Tsunamis are beyond most land lubbers comprehension. I think the analogy is a good one though. Most appraisers have never given much thought to how Bills become laws; and then how those in turn are bastardized by the special interests through the administrative regulatory processes. Most usually just think “Oh its those damn Democrats / Republicans fault!” Unaware that it is the nameless, faceless bureaucrat coupled with the deceitful legislator BEHIND the scenes that draft the powerful implementation rules.
THAT is why MY state has no C&R enforcement provisions in its AMC laws.
Here is another example of how super intelligent people can screw up so badly with one poor decision.
A founding partner in Kentucky’s most powerful law firm. Once a member of the Kentucky Supreme Court, a Governor of Kentucky and a confidant of President Johnson. He thought he could cross a swollen creek on the way home (a trip he’d made a thousand times before) and was swept away to his fate. Governor Bert Combs.
Sitting on the beach and taking selfies with the receding water may seem like fun folks but it’s an incredibly stupid decision.
What is the biggest problem that banks face today?
Figuring out how to send their AVMs to college for 4 years.
So I trained an new appraiser. First he became a licensed trainee (California), could do work on his own. Than he became fully licensed and still the lenders wouldn’t look at him…. Now he’s a licensed certified appraiser and the lenders are saying “well you need to be a certified appraiser for 3 years before we can give you any work!” Really! Really!. He’s been appraising start to finish at least 3 years but not as a certified appraiser. So what the lenders are really saying is it will take a person 6 years to be able to do lender work!!! Houston, we have a problem!
Yeah, but that’s reasonable. The new guys do the most harm. Their propensity for undercutting fees, shorting appraisal development details, outsourcing duties, building business support structures which are not ethically implemented, and the list goes on, are provable concerning details.
Lenders were forced to insulate themselves from the chop shopper yes man advocate appraisers. The appraiser position carries a lot of responsibility, and most do not even understand the gravity of their own position and how much influence they have. It’s easy to identify those appraisers; see addenda, outsourced typing, runners, auto algorithm analysis, mapping data entry instead of verifying manually, and that list goes on and on. Professional development requires long term connections, rather than treating apprentices like temporary resources. Call him or her back, put them on the 80% split, they pay all expenses, and farm them work orders and assignments which you’ll get to save a lot of time on. Cert sign everything until the lenders accept him on the approval lists. Even then, just move him or her to 90%, and enjoy the professional company into the future.
I’ve never understood the concept of temporary mentorship and just apprenticing here, to work there later. The long history of apprentice programs and businesses behind them, were typically not structured that way. Me and moms still brainstorm appraisal issues all the dang time. We’re valuable resources to each other. Without me feeding her leads, the amc’s would have ate her alive. Without her teaching me manual logical methods, I’d have been zombified and automated, subsequently having no positioning power by this point. Manual works, it’s effective, and it’s good. Free writing is important. If you speak the language of real estate in appraisal reports, specific to the subject, you always get approval upon review submission during application. You get less stips, and you bedazzle the reviewers whom are not qualified to sit in those positions in the first place. Appraisers whom utilize typing services, auto methods and data regurgitation techniques can’t seem to grasp why lenders whom have access to all of the same services, don’t find value in their professional appraisal reports. Perhaps it was because they were so busy with all these industry tools for sale, the appraisers perhaps forgot to include their own logic, their own individual story regarding the subject, and their own individual analysis points. Appraisers whom don’t get readily approved, regardless of age, are missing out on approval, because they’re not detailing specific logical appraisal reports as their development standard. The reports must hold water for the laymen, because that’s whom is assigning and reviewing reports lately, the non qualified laymen.
That’s my take on it, anyways. Each appraisal write up takes me minimum 6 hours, usually 10-12, + 1-2 hour workfile development pre inspect, and typically 2 total hours for inspect and comp selection and photo in the field. Never choose comps prior to inspection. My reports are 45 pages long or so, has 2x plats, 2x aerials, 2x+ market data scan ins, 2x+ free writing addenda explaining market data, environmental disclosure, index, cover, main form, mc, minimum 100 photos, my personal comp photos, and accompanying mls photos to prove I took originals, thumbs views, floods if necessary, standard disclosure, uad definitions, license, but never the eo copy. The concept of benefiting from outsourced typing, auto importing data, computerized data analysis, and mobile appraising is completely foreign to me. I’m a 100 printed pages on each workfile minimum, and I don’t keep a cell phone. I’m too busy working legitimate appraisal duties, to bother spending time on the phone or some shortcut mobile device deal.
My motto is; Don’t call me, I’ll call you. Some days I blog, just to warm up. Cheers!
D. Maison, I wish you would at least cut and paste your post above and send it to:
Email: aqbcomments@appraisalfoundation.org Thee cut off date is 3/31/2016 for submissions.
They are meeting in Phoenix next month shortly to discuss this very topic.
More importantly, they along with industry members and sponsors of AARO are meeting right afterward when the AMCs and more than likely REVAA will be using THEIR membership or sponsorship / bully pulpit to tell AARO (and indirectly TAF since some are members in both organizations) how we have such a horrible shortage of appraisers, and that they (REVAA) are willing to take on the burden of training us.
Of course what they won’t say is that will give them a never ending supply of novices willing to accept sub par fees and work for such hacks as Metro West, Forsythe and all the rest of the “National Appraiser Panelist” bottom feeders.
Every single HONEST anecdote like you cite goes a LONG way in influencing our TAF / AQB and other Regulator Members of AARO.
BTW I have an associate that was a former co worker and respected peer where he and I used to train new appraisers. He had about five years experience then, and now he has about 10-15+- years. One of the BEST appraisers I’ve ever met despite license level. He and I used to review our in house appraisers work to the satisfaction of Chase, WF, Citi, WAMU, Credit Unions across the country and a host of others.
He is ON Flagstar’s approved list, yet I cannot get him on a friends AMC panel simply because THEIR clients (including Flagstar) supposed now demand all ARs!