Don’t Fence Me In
We truly live in an incredible world. The age of information and technology has given us more freedom than at any other time in the history of mankind. Just in the last few years, the mobile office has become a reality in such a way that it would be nearly impossible for our clients to know much about our physical office at all. Since most of us have little to no walk-in traffic, running an appraisal office from a spare bedroom at home or even from the lanai of your Belizean condo is not out of the realm of possibility.
Technological advances in VoIP phone systems, high speed internet, cloud storage, and lightweight laptops allow for a professional office to be controlled and managed from just about anywhere in the world. A few weeks ago, I assisted a new neighbor as he moved into our subdivision. Naturally, I asked him what he did for a living and what brought him to Podunk, Idaho. He informed me that he was a staging manager for a team of trainers. In other words, he helps with the logistics of setting up and running business conferences. He went on to say that just a few years ago, he had to live and work in the city where his company’s corporate offices were housed. Due to the incredible advances in technology however, he can now live anywhere in the world as long as he has high-speed internet and is not too far from a major airport. My good friend recently told me of a man he knows who just moved his entire family to Puerto Rico. His job is the same, but he now does it from a lovely tropical island.
Yet, as appraisers, we are fenced in geographically in many ways. Due to the fact that our job requires a physical inspection by the licensed appraiser, we are mostly confined to the areas in which we live and work. Or are we?
Most of us are fee appraisers. Most of us get the majority of our appraisal work from AMC clients. We do a lot of what we do for federal financial transactions. Due to the current makeup of regulations, we find ourselves somewhat stuck geographically. For most of our clients, we – the licensed or certified appraiser – must be the one to physically inspect the property. I have written before about how a change in this one regulation could be the thing to turn our profession around. Yet, it continues to be the climate we live and choose to work in. That does not mean we all have to work in that environment.
There is nothing in USPAP or the state laws that I am familiar with that require the signing appraiser also be present during the inspection. For many of you, having someone else do the inspection is not good business sense, but it is not illegal. I personally believe that most thinking adults can be trained in and do effective work as on-site information gatherers (including notes, pictures, and sketch) in a fairly short period of time (usually 2-3 months or 100-150 supervised inspections). Using today’s technology, that information can be relayed reliably to the appraiser in a Caribbean island (or just back at the office 20 miles away) almost instantaneously. Body cameras could also be used to assist in the process so oversight by the signing appraiser could be improved even more.
In today’s environment, this kind of setup is only possible if you do mostly non-lender work or choose to work for a company (such as Red Sky Risk Services) who allows those, other than the appraiser, to do inspections. Now, if we could just get other lenders and AMCs to follow suit. My condo in Belize is waiting.
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Dustin, I have a hard time reading the requirements written into the forms and saying that I don’t have to be present for the inspection. The Scope Of Work states, THE APPRAISER must (1) perform a complete visual inspection of the interior and exterior areas of the subject unit. (2) Inspect and analyze the condominium project. Without being present, I also have difficulty in signing my name to say that I certify all was done to standards.
When many of us received our training under the old pre licensing Class I; II, III & IV rating system, our mentors sued to do just that. Send us out by ourselves once we demonstrated field competence. They signed behind us indicating who did what. Most lenders accepted it and the system worked well in terms of economic business model viability.
The problem today is the ever increasing ‘direct’ obligations placed on appraisers by the order / Letter of Engagement to personally inspect. It ceased being so much of a lender concern as a competitive ‘benefit’ of using XYZ AMC over ABC AMC. The former might advertise “an all certified appraiser panel and require onsite inspection by THAT specific appraiser.” Its a huge time burden to overcome when I have to personally inspect the property (as I ALWAYS do). Clearly it limits my income. It also acts as a disincentive to take on trainees.
MANY in our profession simply ‘cheat’ in this area. They’ve simply chosen a business model under which they LIE to the clients about who inspected the property. In fact, once they decide to lie its almost safer for them to have NON APPRAISERS with no licenses to lose, do the inspections using lots of pictures as you noted. We all either know of or have heard of those that operate this way. No wonder so many don’t fight over C&R fees. They are paying $75 to $125 for someone else to inspect the property an taking $175 to $225 for themselves to write up reports without ever seeing the property!
Dustin is not in any way suggesting the dishonest practice would ever be acceptable. What he is suggesting is AUTHORIZED use of qualified trainees.
Such use would have to be ‘free’ and flexible enough to be economically viable as a business model. The second the lenders or underwriters step in to micro manage the process, we will be right back on the same road that lead us to doing away with trainees in the first place. Let US decide when an appraiser or trainee is competent to inspect on their own. We are placing OUR reputation on the line when we co sign behind them.
While I’m still skeptical of “big data” (like the FNMA CU database that they ADMIT is built on data that was wrong), the practicality of Dustin’s solution could in fact revitalize our entire industry. It could help keep fees lower for lenders and AMCS (Did I just say that???), by allowing the honest appraisers to legally & properly do what the dishonest ones are already doing. It shouldn’t keep fees down to $350 or $400 but it might keep them down to $500 or so.
The real problem is that until a major GSE or regulators specifically AUTHORIZE use of qualified licensed trainees to do the inspections without supervisory onsite oversight inspection nothing will happen to this common sense suggestion.
FNMA, FreddieMac, VA, FHA, FFIEC, the ball is in YOUR court. A simple one paragraph addition to guidelines and regulations is all it would take. In the meantime, lets go after REASONABLE fees until the regulators & GSEs see the light of day. http://mfford.com/html/c___r_fees.htm
USED-not sued. Apologies!