Other Appraisers Peer Reports
Now Appraisers Must Conform to the Opinions of Other Appraisers/Unknown Persons of Unknown Competence!
Many of you know I scan various sources for appraiser/appraisal related info, and send out items I think are important.
Well, today Collateral Underwriter (the extraordinarily SECRET process developed by FNMA and given ONLY to LENDERS for report review) started.
As predicted by many appraisers, it already generated responses appraisers are forced to deal with, primarily because the reporting appraiser’s data (in the report) is different from “peer” reports.
As a poster to one of the forums said:
“Now appraisers must conform to the opinions of other unknown persons of unknown competence!”
Here are several CU Quality Assurance Notices received by the ‘offending and apparently deficient (per the CU)’ appraiser today:
- The condition rating for comparable #3 is materially different than what has been reported by other appraisers. Please provide supporting commentary for your data on this condition
- The quality rating for comparable #3 is materially different than what has been reported by other appraisers. Please provide supporting commentary for your data on this condition
- The quality rating for comparable #2 is materially different than what has been reported by other appraisers. Please provide supporting commentary for your data on this condition
- Sale #4 has a view of “B”, however, other appraisers have reported the view for this property as “N”.
- From an appraiser with first-hand knowledge of a particular comp: “Comp in the MLS says 2 car garage and [other appraisers] would have no idea unless they inspected the house. I previously appraised the house so I have a slightly different GLA than the MLS and know it has 3 car garage. My peers will all have different info than me. Once again, I have the poorly scored appraisal.”
- “Had one come back from a client. Stated prior appraisal reports by peers indicated the subject was located in a rural area, please correct or explain. Subject is suburban per my report. The subject’s area has not been anywhere near rural area in at least 40 years, maybe close to 30 years if you really stretch it.” (I think the numbers are reversed, but you get the point.)
Some appraisers are inserting language such as this into their reports:
“The Uniform Appraisal Dataset (UAD) mandates classification of property characteristics (for the subject and comparables) using a standard response and rating system. The UAD is not flexible and employs a “best fit methodology” (from limited choices) as opposed to user defined terms. In some cases, the appraiser’s rating from the UAD list may be different from another appraiser’s opinion of the same attribute. The appraiser completed the report to comply with the UAD while considering the observed characteristics of the subject and comparables (from a distance) and factored those into the value reconciliation.”
Prediction: much extra time will be spent by appraisers writing responses to CU generated alleged deficiencies.
What fun this next few weeks, months and potentially years will be for appraisers.
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corrected it for you.
“Now appraisers must conform to the opinions of other unknown persons, from unknown locations, of unknown competence.”
meaning, we also have (someone), from (somewhere far away from me), telling me they know my market better than me.
wait. i am sorry. i forgot. every market in the country is the same.
But I read an article yesterday saying there were not going to be any major impacts?!? Appraisers everywhere are going to be a lot busier with corrections, clarifications, and revision requests. Let the fun begin!
You are absolutely right. Corrections, clarifications, revision requests, and keeping your AMC informed will take up the vast majority of the appraisers time from here on out. Like I said before: You are playing a game of chess against a super computer with your daily bet being your license and your livlihood. You can win in the short term but not over the long haul. If you aren’t blacklisted first, you will either burn out or go bankrupt doing the additional work. Nobody will survive this long term doing only residential appraisal work.
If you compare this to the U.S. manned space program of the 1960s we are now in the Mercury stage of allowing AVMs take over the profession. On the flip side, you may one day be able to tell your grandchildren that you were the last appraiser standing.
Best of luck guys! You’re going to need it.
Marching on to Idiocracy! So honored to have been here for the ruination of a long standing, proud industry! Damn every one of the scum that did this to the appraisal industry.
Great observations David.
Personally I think the ONLY proper response to the CU generated “underwriter” questions is as follows:
“I have no idea why the adjustments or rating vary from your secretive processes weighted averages or regression data. When I inspected the comparables I developed my own opinions based on ALL available data. In making comparisons, I compared the comparables with the subject – not some unknown database.”
In the event that a human being has read the appraisal report and has a specific, legitimate basis for asking a question please let me know.
Otherwise, ask the CU why IT has failed to accurately measure data relevant to the subject and comparables.
Like I have said several time before, we have forgotten what the purpose of the appraisal report is. If 5 appraisers complete an appraisal on the same property and 3 show a C3 rating and 2 show a C4 for the subject and all comps and they all value the property at $220,000, apparently the property is worth approximately $220,000. Who is harmed? Who is right? Who is wrong? Do we really care?
Now to get to the crux of the matter regarding this blog and many others regarding CU. First I want to state I am not a sexist, racist, bigot or any of the terms that some will accuse me of, but I am not political correct either. Everyone must realize that appraisers are no different than anyone else, they are a product of their environment and upbringing which influences their views and perceptions. We all see things from a different prospective. If one appraisers has a background in construction and another has a background in interior design, it is very likely that they could disagree on the “Q” & “C” ratings of the same home. If one was raised in the inner city in a poor neighborhood and another raised in an upscale suburban neighborhood they could have different view of what a Q2, Q 3 or Q4 property or a C2, C3 or C4 rating is. This does not make either of these appraisers incorrect, it is just their opinion from a different prospective. The most important facts are knowledge of your local real estate market and the selection of good comparable sales and making the proper market driven adjustments.
Appraisal are about comparing the subject property to comparable sales of similar properties with similar amenities and market appeal within a similar market area. No one is better qualified to do this than a well trained professional with knowledge of the local real estate market in the local area. Let the appraiser do the job he/she was trained to do.
Dave remind me to send you a copy of FNMAs patent application for the CU process. It’s far worse than you ever imagined.