Restoration Value Magicians!

Restoration Value Magicians! And just like that, real estate appraisers from across the country have now added a new line item to their résumés, websites and marketing material: RESTORATION VALUE MAGICIAN. Oh wait, haven’t some AMCs and others already claimed to be such magicians when it comes to this topic? The pandering and save face attitudes of some of these organizations is concerning.

Instead of looking at the big picture of infrastructures, the neighborhoods, the cities and more, to determine what sort of things can help areas identified as “Black neighborhoods”, they want to blame the appraisers.

Here is a thought. How about we investigate where those tax dollars are going and what’s being done to make areas identified as “Black neighborhoods” better compared to the so-called “white neighborhoods”? Maybe investigate and do a study on the effects of past redlining initiatives by the government, states, lenders, and how their actions in the past have have caused this issue today. How about we investigate and do a study on why homes in “Black neighborhoods” are of lesser value than in an area further away? Oh my bad. That would be too much hassle and expose the real truths that may go against the political narrative.

What a shame that National appraiser organizations are more focused on reputation than actually explaining the facts and educating others. What’s next? Are these organizations going to sell more courses on restoration value? Maybe a new USPAP section on how to be compliant in restoration value? Fannie Mae gets in on it and creates a new restoration value section?

I can see the AMC BIDS NOW: “We need an as-is, as repaired, and a restoration value, for $350.”

How about this? How about RESTORING the appraisal profession back to what it was prior to the crash and allow appraisers to do what they do best without more laws, regulations and 3rd parties. And, instead of talking to National appraiser organizations that only care about themselves and saving face, how about we start including the boots on the ground independent appraisers serving these areas on a daily basis, in the discussion?

By NL, Certified Real Estate Appraiser
Image credit flickr - Glen Bledsoe

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44 Responses

  1. Avatar Kimberly DeFilippis says:

    Amen

    9
    • Avatar don says:

      Lots of differing Market Value definitions.
      As is
      As repaired
      As repaired, minus the cost of repairs FHA v VA? The VA recognizes entrepreneur losses of the market, the FHA and others doesn’t
      Estimate of the costs in marketing, & repairs.
      Fees are what you contract for

      0
      • Baggins Baggins says:

        I just like the authors speculation on this being an additional value type which could be stacked on to order requests. Had not thought about that but it makes perfect sense. Market value as is traditional local location based value. And market value restorative purpose, an absolute illusion and lie, like an additional analysis in an entirely different location. It would be an entirely different appraisal.

        Now, who’s excited to pay a higher tax basis based on richy rich land instead of where they actually can afford to live… Will someone please explain to me what exactly is wrong with lower prices and better housing affordability?

        4
        • Avatar don says:

          I don’t know a number of things, a few things I do.
          California passed a tax basis in about 1978 as proposition 13, it assured the voters that the state wouldn’t eat itself with taxation. The 50 states have a differing view of RE property taxes:
          Some appraise every 5 years, every 2 tears some wait for voter action, some use outside private contractors to reassess, and few consider a version of Prop 13. Does Colorado use a Tax with differing ratios for SFR, and mining, or commercial, industrial, etc. does the druggist down the street pay a different percentage for his mary-jane sales office than his ranch, or his abode?
          I once appraised a house with sick dog in the back yard which was named mary-jane, the dog was bright green and tall.
          I remember years ago when San Franciscans voted to pay their trash collectors higher wages so they could live in town and get to work early. Blessed be those who get to work early.

          0
  2. Avatar Eric Kennedy says:

    Scopa Creepin Up with Compensation Dwindling. That’s the AMC bidness model. Yay

    5
  3. Avatar Midwest appraiser says:

    Maybe we should not support appraisal organizations like the AGA that are affiliated with and support LABOR UNIONS that helped the current administration get elected. The AGA is directly responsible for the current attacks on our profession because they helped elect the attackers (labor unions support Democrats). If the AGA was a serious organization they would cut their ties to the AFL-CIO. But money and union health plans over what’s right for appraisers, right? Their ad banner is supporting this very blog. So don’t post about what the “appraisal organizations” are doing without mentioning the one appraisal organization most directly responsible for creating the issue- the AGA. The AGA needs to pick a side – labor unions that elect radical Democrats (the kind that create false narratives about appraisers), or choose working appraisers. You can’t have it both ways.

    9
    • Avatar PJTMC says:

      Well said. I hope someone, somewhere, in a seat of political authority, that is not afraid of the status quo is reading this, see it for what it is and takes an active role of turning this mountain back into a mole hill. Hmmm, chances of that happening are regrettably “0”. We are all doomed.

      6
      • Avatar Midwest appraiser says:

        Because the appraisal institute didn’t get anybody elected or unelected. The AFL-CIO certainly has some influence. I don’t give a flip which organization you like or don’t like. Facts are FACTS. The AGA is affiliated with and supports the AFL-CIO. That is an undisptable fact that cannot be denied. Deflecting the issue onto another organization you don’t like doesn’t change these facts. If the appraisal Institute contribution was 100% to Democrats with that then make it still acceptable for the AGA to be part of the AFLCIO?

        2
        • Baggins Baggins says:

          Taking a bite at the only appraiser based organization in america whom dares to stand up to the abusive practices of the appraisal management industry and their corrupted REVAA trade group? If we’re casting stones, don’t forget to mention the most destructive force in this entire industry, which is the appraisal management amc companies under revaa whom take everything, give nothing, and cast all of our votes for us. We did not vote for these corrupt companies and people whom are not even appraisers to represent us, or our industry. Who put those idiots in charge?

          Appraisers are absolutely despotically systemically under represented so the AGA at least trying to help a few of the individuals whom get railroaded by these systems is at the very least, one honorable act in a sea of malicious intent and systemically applied restraint of trade against nearly all appraisers. I’m sure Mike can chime in with exact numbers but it’s doubtful that very much of the appraisers meager financial contributions to that group go to fund the issues you mention.

          The appraisal institute should allow every single licensed appraiser a free membership and access to all it’s resources. The AI needs and deserves substantial re organization and reform immediately. The appraisal institute should allow every single appraiser to vote for every single member manager or leader who’s in charge of the organization and we should have elections like once or twice a decade. We should be able to form promote and take appraiser only surveys so we could all collectively steer the course of this industry, rather than having to blindly accept the will of those pandering for donations and favors to cast our votes for us despite the long standing objections from the majority body of licensed appraisers. If the AI was completing it’s stated mission appropriately, protecting appraisers instead of abiding our constant exploitation, there would be no need for groups like the aga in the first place. Fixed it for you.

          5
        • Avatar Mark skapinetz says:

          Midwest, Once again, you appear to be affiliated with the AI. You are very angry and upset. You have 0 facts as you claim and 0 facts to what we do. SO in response to this comment I will state the same, I will be more than happy to educate you on true AGA, and what we do. You seem to know it all however your claims are so far off. We will take it as opinion and not fact.

          4
    • Avatar JC says:

      How about the Appraisal Institute? Their contributions to dems was 60% vs 40% to republicans in 2021-2022.

      6
    • Avatar Mark Skapinetz says:

      “So don’t post about what the “appraisal organizations” are doing without mentioning the one appraisal organization most directly responsible for creating the issue- the AGA.”

      Quite the statement here… DO you have definitive proof of this? Or is this just your opinion? DO you know for a fact where our dues go? Where they are spent? Where we allocate them too? If the answer is yes.. Please do tell. If NO, I don’t owe you anything.

      The only reason I am responding to this is because I am the current president of the AGA and we have helped many of our members with state issues, claims, appraisal issues and more. We have also been very vocal about the proposals created by the Fair housing groups, HUD and the PAVE Task Force for making changes in the profession as well as many other matters. We have also been involved with our members on such cases. We are doing a lot in this space and well while we may not promote it or make it shine like others… I ask this simple question.. Are you a member of any organization, willing to donate your time to help, free up your time for others OR are you just upset here with your own beliefs?

      While we are a Guild under the OPEIU/AFL-CIO UNIONS, we also act and conduct our business the way we deem to be fit for the profession, our members and have been very successful in doing so.

      While this Blog post talks about other organizations and what they have and have not done… I cannot speak to that. I can only speak on behalf of the AGA and what we do and will continue to do going forward.
      I respect your opinion on this, but its just that.. your opinion. If you would like to know more about the AGA and what we do and how we do things, I’d be happy to assist you in that.

      But i have no idea who you are Midwest Appraiser but you can certainly find me since you know who i am from this comment

      5
  4. Avatar Mary says:

    Amen! But they don’t want to ask the hard questions as to why buyers are paying less in one area over another. Fix issues buyers have and you see values rise. But that takes way too much hard work and looking in the mirror to see the issues slapping them in the face!

    5
    • Baggins Baggins says:

      Here is one helpful research tool. I would have preferred for this to have better crime and public safety stats though. Research however you want the metric, by state, county, city, etc. As our family seeks to escape the misery, crime, constant dangers, and radical liberal politics associated with being anywhere near the Denver area, we’re constantly looking at this tool and data therein on our road trips to find a new safer more affordable place to live. Also suggested is the Strategic Relocation North American Guide to Safe Places book by Joel Skousen. That book is like nothing you’ve ever read, and tackles the hard issues. Everything from nuclear strike maps, hypothetical societal breakdown, weather maps, to detailed policy allowances and local law details, quality of life factors on a state by state basis with a rating and scoring system. Suggested resources for anyone serious about escaping liberal policies. Trying to find a new home, one where our vote actually matters and we can send our children back to public schools.

      We all know why some areas track lower than others in terms of price and value. If people within community segments want more out of their local area, that responsibility falls on them. Such needs are in no way shape or form, the responsibility or obligation of the real estate appraiser. Are there any tools such as credit ratings and crime maps out there if one simply wants to review one location vs another under such a narrow spectrum of consideration?

      http://www.datausa.io
      https://www.amazon.com/gp/product/1735015407/ref=dbs_a_def_rwt_hsch_vapi_taft_p1_i0

      5
  5. Avatar PJTMC says:

    Observation. How on earth are they going to address Realtors, taking a listing on a street with 3 comparable sales that just sold for “x” and list it for “xxx”. What they are trying to do defies logic. No Realtor in their right mind is going to list a property based on that premise however that in comparison is what they are forcing an appraiser to do. The market dictates not the Realtor or the appraiser. Hasn’t the NAR always been about “location, location, location”? Applying that to the current appraisal profession atmosphere might as well read “racist, racist, racist” That said, they probably won’t bother the NAR….too big a PAC and too many members.

    6
  6. Avatar Bryan says:

    Listen – way too much of our emotional energy wasted on this ridiculousness. Why is it always us! Demand the Realtors overprice everything. That should fix it. Demand the lender loan 125%. Great idea. Read the definition of FMV. It’s not rocket surgery.

    3
  7. Michael Swaim on Facebook Michael Swaim on Facebook says:

    How about restoring the appraisal industry back to what it was prior to the 80s

    6
  8. Avatar Kevin Flankey says:

    I challenge the writer of this story to post one or two appraisal-requests calling for three value-conclusions.

    He or she is presenting a false narrative for some unclear reason, other than to complain about hypotheticals.

    0
    • Avatar JC says:

      Kevin, the main point of the story is that many are pushing for restorative appraisals.

      “National appraiser organizations that once pioneered analytical techniques like discounted cash-flow models and regression analysis have been recently flogging webinars by an organization called ACTION, which calls for “restorative appraisals” in which appraisers are taught to use comparable sales from so-called “white neighborhoods” when appraising homes in what are identified as “Black neighborhoods.” Using comparables from distant neighborhoods is how a dishonest Ohio appraiser, working with Countrywide, was able to appraise Polk’s home for reportedly twice the home’s market value. With the implicit full faith and credit of the U.S. government, Fannie Mae then guaranteed Polk’s loan based on the inflated appraisal. This led to Fannie’s eviction of the elderly widow.”

      https://appraisersblogs.com/racial-targeting-masked-as-a-virtue-under-the-heading-diversity-equity-n-inclusion

      7
      • Baggins Baggins says:

        Kevin, coming soon to a CE class and underwriter standard near you. This is not a false narrative. This is why we need a voting system in place for the AI and a total reform, the vast majority of all other appraisers do not agree with what these guys are pushing from positions of power and influence. Scroll down, read the whole page to get a better understanding of where this issue is coming from and why.

        https://challenge.economicarchitectureproject.org/featured-innovators/rosalind-williams/
        Our 3-member team is a unique combination of an urban planner, real estate person and an appraiser. Each brings to the challenge over 30 years of experience, skills, and perspective to address this challenge and carry our innovation forward.

        Can anyone say conflict of interest? Think of it this way; they’re trying to force appraisers to be advocates for their specific housing interest efforts. As if there is no opposing force or market competition, we’re supposed to pick a side and give certain groups a value boost based on socio political beliefs we may not share or agree with. Those properties are probably empty for a reason and it’s not our responsibility to correct whatever is going on down there.

        3
    • Avatar New Level says:

      Question?? Did you even read this or did you just go by your checklist? It’s clear you didn’t read it all. I challenge you to prove otherwise. What False narrative am I promoting? Explain? Did I hurt your feelings? And If so how and why? Most agree with me on this. So I will ask you… are you ready to become a restoration appraiser? How are you going to charge for this? Do you have the experience? Because none of the 3 value methods matter now when you have to give a restoration value. But you knew this right kevin?

      1
      • Avatar Kevin Flankey says:

        I’ll simply decline the assignment. I am able to pick and choose my assignments. I think lenders would have problems with a restorative-value used to determine the subject’s suitability as collateral.

        But again, if you or anyone else has been formally asked for this kind of value in a letter of engagement, blur what you feel necessary, scan and post it.

        1
        • Baggins Baggins says:

          A brilliant shining bright coming soon sign backed by congressional, big corporate, trade groups, and government funded think tank advocacy. As some propose it’s just fake news. Missing the IVPI proposal yet? Those independent privileges you currently enjoy. They won’t last long under the newly proposed total industry reformation program. And you’ll never leave the desk either, eventually wondering why you don’t get benefits, paid days off, a raise or any other working benefit, eventually. I believe appraisers have already posted stories of this content being pushed in continuing education and appraiser based seminars. If I recall correctly, one of the ‘teachers’ got up and left in a huff as all the area appraisers droned on about valuation theory derived from the past few centuries of actual market valuation practice, refusing to accept the premise that restorative value is a valid concept to begin with. But what happens if such an approach becomes the industry standard? Will you decline all ML assignments? Would that not be yet another verifiable example of restraint of trade? As if holding orders hostage until appraisers slash the fee in half, while not returning cost of savings back to the consumer was not enough or an ethical challenge…

          My position, like many other concerned appraisal industry advocates whom actually understand and abide ethical guidelines is simple; When do our voices get to be heard by those driving this industry? When do we receive fair representation? When will the systematic exploitation of this industry and stated end goal of eventual abolishment of our hard earned careers be halted? My question to any and all appraisal industry applicants (which call up often as I’m sure any licensed appraiser knows about from personal experience), is simple; Why volunteer for the abuse? We will continue to refuse to train as long as REVAA has sway over this industry.

          https://www.workingre.com/wp-content/uploads/2013/08/IVPI-Proposalfinal.pdf

          4
    • Avatar PJTMC says:

      I think he is speculating of what may be coming down the road. He may be painfully right and it does raise a legitimate concern

      0
  9. Avatar Eric Kennedy says:

    If the Feds and lenders want to lend extra $$ to minorities then let THEM decide on how much risk to take. WE should only be tasked with establishing a current market value for the dwelling using proven principles – the rest of the story they can make up themselves since they never asked us how to do it to begin with.

    3
    • Avatar Bryan says:

      But aren’t we the Feds? Don’t we own Fannie and Freddie?

      1
      • Avatar Eric Kennedy says:

        Haa Haa Haa!! Sorry to laugh but… you’re correct but… DC is practically their own country, especially considering who is running these “committees”. The last public meeting I saw was a true crap show and that was 3+/- years ago. Watch this hearing – at your leisure. Hybrid Hearing – Devalued, Denied, and Disrespected: How Home Appraisal Bias and… (EventID=114561)

        and this classic from 2019..

        3
        • Avatar Bryan says:

          Oh I understand the ineptitude of the ruling class. Giving up is sad but I’m there!

          2
          • Avatar Concerned Appraiser says:

            The only place for a “restorative value” would be at the Mortgagee level.

            They could develop a factor for the variation between higher priced and lower priced neighborhoods call it a restorative factor. They would then develop their “Restorative Value” and offer a borrower the ability to borrow based on th Restorative Value

            This would eliminate the push on Appraisers to mislead clients on the value of the collateral.

            2
            • Baggins Baggins says:

              Sure. But who’s going to foot the bill?

              The heart of the matter is that certain people are trying to force an entire industry to accept and adopt a position within entitlement and welfare programs.

              Call me old fashioned, but I thought that was someone elses department.

              2
              • Avatar NL says:

                BINGO!! And while I’m not sorry and may offend Mr. Midwest appraiser and his AI allegiance…. Show me where these organizations as they were under oath and more or called out that didn’t put their heads down and just decided to do what others told them instead of sticking up for the good of the profession? It’s clear in all the immediate diversity and training and more that’s now out there. Yet they had a chance to take a stand and failed. They instead saw this as an opportunity to save face.

                AI+TAF+ASC = collusion. Simple.

                What’s funny is everyone looks at AI as being the Gold standard and all they continue to do is nothing but make sure they are accepted and create new scholarships, new programs and more. Easy way out. Simple . Shame that so many bright people would rather pander and give in than speak their minds. Not surprising.

                2
                • Baggins Baggins says:

                  It’s confusing and I was conflicted about responding to Mr Midwests position. He has valid points but also it’s not quite as cut and dry in this particular profession. We appraisers as a collective group basically have no representation anymore, although interesting groups like the aga have come forth to plug a portion of the gap. Whatever great focus the AI used to have, appears to have been co opted. They appear to answer to lenders tech companies and the amc trade group lobby now. When an entire industry has no effective representation and is constantly forced to defensive positioning.

                  Please advise when the fictitious cfpb interpretation of a safe harbor rule pertaining to dodd frank reg z on appraisal independence, customary AND reasonable fees will be rescinded. Amc’s should bill separately and apart from the appraiser for their alleged service contributions. The ultimate magic trick; slash licensed workers fees in half, co opt their entire representative body, employ more managers than those performing the work; job creation. When will the crucial contribution of the only non advocates in the lending process, the appraisers, when will we have our contributory value restored?

                  0
  10. Baggins Baggins says:

    https://www.youtube.com/watch?v=UdgmR6qgmow

    Perhaps watch this if you’re not too busy while you’re working. Found this randomly but it’s fascinating. Topics include; rapid unraveling of the housing market, ibuyers throwing in the towel and price slashing in unprecedented short periods, how corporate holders will influence the market in novel ways we’ve never seen before, softening rental which may also crash, cash flow analysis for investment, jumps in listing volumes, trends, etc. Everything they said could not and would not happen, but we were always worried were real possibilities.

    Basically it’s not looking good and realities of the ‘restorative value’ hypothesis is that there will be restoration but not in the ways these pundits presume. We’re on the verge of restoring affordability and consistently lower price and values across the board as this bubble deflates. Think 2019 values as just the starting point for necessary market corrections, and then incredibly dynamic and challenging conditions after that with growing market uncertainty. Pump, dump, rinse, repeat. See it yet?

    0
  11. Avatar Bryan says:

    I read an article this weekend in the local newspaper titled “Real Estate 101 – pricing your home”. No where in the entire article does it mention utilizing an Appraiser! The interesting part is the recommendation to use https://www.fhfa.goc/datatools/tools/pages/HPI-calculator.aspx or https://www.realtor.com/guides/home-selling-guide/how-much-is-is-my-house-worth/. So – are these algorithms taking the “new” valuation methods in to consideration since one of them is designed by the people (government) proclaiming the problem? Is their website saying one thing and then they dictate you do something different?

    0
    • Baggins Baggins says:

      Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 requires that any appraisal used in connection with a federally related transaction must be performed by a competent individual whose professional conduct is subject to supervision and regulation. Appraisers must be licensed or certified according to state law.
      ___________________

      Interesting links. I had to google the link to make them work, odd, but they worked with an additional step. Per the copied statement above from the websites you linked; Except if you’re a tech company whom millions of people rely on your avm utilities, no license necessary. Except if you’re an individual owning or managing the unnecessary third party amc companies promoting alternative valuation products, running unlicensed inspectors, unlicensed administrative review, no license necessary. As the Appraisal Institute is currently forming an ‘avm certification program’, to assist with illusionary compliance, promoting the total destruction of what independent full service appraisers remain.

      I’m convinced the majority of agents are overly reliant on avm utility, which all the big brokerages have some form of that. I’ve seen auto generated cma’s which were 80 pages long. And now they’re price slashing after only a week or two on market, having been mindlessly conditioned for many years to expect 10 days or less in the age of tech. The faster they scramble, the faster the market falls. It’s the pending i buyer and corporate investors dump of housing stock which will really get the water in the bowl swirling faster. This will harm residential interests but the big corps will achieve calculated profit via write offs which will be helpful and necessary to them as other instruments fail as well.

      There is no such thing as residential housing anymore, it’s all commercialized. Automated time saving inventions in realty have been devastating to the well being and financial security of individual American home owners. They should be slowing this down not speeding up the process. Trust the algorithm, just like they do on wall street. The bureaucracy is not confusing, when one grasps the excess size of these government systems in the first place. Does government even need or deserve to have any influence in the housing market? Their involvement acts as a liability shield for all this corporate exploitation. The people whom set up and subsequently direct and manage these government systems were never qualified to manage them in the first place. They have no skin in the game, as it were. Somehow I think we’ve seen this cycle before…

      0
      • Avatar don says:

        Market Street doesn’t need M.L.S., even TWS journal doesn’t advertise everything. Our local M.L.S. reports a local market.
        Banks and S.& L.s reflect our national financial market. Remember If R.E. is location, location, location, then housing is local, local, local.
        Keep paying your REALTOR DUES and receiving M.L.S.
        Remember China and other aliens bought financial bonds and stuff, now they are selling them, and regretting them. Remember when Japan bought all the expensive property’s and couldn’t take them home.

        0
        • Baggins Baggins says:

          That’s what the guy in the financial update video was saying. That when it comes to these new players in real estate like ibuyers, investment holders, rental holders; that they will not be hesitant to dump all the stock in a downturn like this. So just wait for it, the free fall is just getting started.

          What concerns me is the apparent need to list and sell now, in anticipation of getting a better deal later this year or next. That’s a risky play but if we really do get back to a glut of available units with continued free falling price and value, actually realize a 1.5 year marketing period need as he speculated, it’s going to be messy and possibly impossible to simply trade to another home for many people.

          This appraisal industry is going to shed half of the remaining people here before too long, volume will not return to previous levels for a very very long time. This is why the appraisal industry has been a consortium of small scale family businesses, which allows us to weather the up’s and downs. Also why the dreams of big money earners, automation focused players, and amc’s are destructive because it was inevitable that growth would stop and the fat need chopped off. I just hope that most of the amc’s will get wiped out too.

          0
          • Avatar don says:

            Who was Archie ?? a Light heavy weight who fought at both weight classes. after he retired, he used his popularity to assemble a huge group’s of sfr’s for rentals in the 1970s. The failure of these groups wasn’t as popular as the assembly. Isn’t that happening again?

            0
          • Avatar Bryan says:

            So exactly when do they start blaming Appraisers for the higher values in the past year?

            0

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Restoration Value Magicians!

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