Crowdsourcing Appraiser Data
Just imagine the possibilities of having a hyper-local database…
If you are not in the business of data you will be out of business. I’m not sure if I heard this somewhere or not, but this mantra has been in my head for a while now. Being in the data business is essential for every business today. We see it across all industries where the companies that embrace data are still in business, and the companies that didn’t make that pivot are out. In our profession we saw Fannie Mae get into the big data business with the creation of CU. CoreLogic took their data business to a whole new level when they bought Alamode. One of my favorite examples is sports: just in the last several years data & analytics have completely changed the way football, basketball, and baseball is played— and those sports have been around for 100 years. It doesn’t matter what business you’re in, you have to be able to capture the right data and communicate it effectively.
I suggest that appraisers start crowdfunding their data. You could start at the local level by coming together with a few other appraisers in your town and begin pooling your appraisal reports. While your appraiser co-op is amassing this data, begin aggregating the data and decide how to use it in an effective way. Just imagine the possibilities of having a hyper-local database: you could build algorithms for adjustments, formulate a legit AVM, forecast market trends, develop market studies, or even sell the data if you wanted to. You could create a whole new client portfolio with a hyper-local database. I’m not sure if most appraisers realize that “appraisals” only make up about 25% of the entire valuation business out there. There is so much opportunity for other valuation assignments. This would take a little cooperation and teamwork among appraisers that are ultimately competitors, but there is more than enough work to go around.
If we independent fee appraisers don’t start controlling OUR own data, then AMC’s and anyone else will just continue to take and monetize our data while driving us out of business in the process. It’s time for independent fee appraisers to make that pivot. I’ve already started building my database and welcome any feedback from my peers.
By Jerin Harper, IFA, ASA, CREA. Jerin is the owner of Harper Certified Appraisals, LLC and Certified Real Estate Solutions, LLC.
Is this in reference to Core Logic. Real Estate, MLS, REALIST. But at least when I check it, most is accurate
I’m guessing that is in your areas because in mine it’s trash. One Example: one of my states the assessor gives GBA without a breakdown. So when the data is observed to an untrained eye (some agents do not know this and report it wrong in the MLS) one colonial’s GLA is 2,000 sf with 1,000 sf finished basement and another colonial’s GLA at 3,000 sf and an unfinished basement with the report by assessor (Core Logic. Real Estate, MLS, REALIST) as both are 3,000 sf living area/GLA, it is not noted by that department as GBA it just states living area. When a computer runs that data do you think it will understand the difference?
As I always say junk in junk out.
Comparing the varied bpo and cma reports among competing realty brokerage brands is also illuminating. Some are 3 pages, others well over 80. I’ve found the more lengthy auto generated reports to have less focus on real property data accuracy, it’s a case of too many things to focus on. Data mapping protocol may need to be adjusted for each individual assessors presentation. It does not always work and agents don’t always figure out how to remap the end result data properly. If there is actual data entry error within the assessors body of data, the whole thing short circuits and the data entry or mapping misinterpretation is dropped into the next database creating systemic issues. Click and go cma’s.
Jerin, excellent idea. Are you building your database on your own or do you have a tech person helping you? I’m interested in hearing how you are implementing this.
In some ways Jerin, prior to HVCC many more appraisers worked together in smaller offices (3 to 10 appraisers) where in essence they pooled together market data, but also pooled together staff personal and expenses. To this day, and as an example of this data sharing, I have over 50,000 unique sketches on file where many still offer value to this day.
When Cuomo and the government blew up the appraisal system (orders to individuals / versus the company / residential loans), they truly had no idea how appraisers and their data operated then, and still don’t.
Seek the truth.
Is it even legal for CoreLogic to take the data from our report and use it? They are not the client nor are they an intended user. I pay for the software, I pay for the deliver system (MN), and I pay for them to deliver the report. Now they use the data from my report to make even more money on the backed. CoreLogic is taking over, what was this called again? Ever since CoreLogic took over Ala Mode they call me every week wanting me to buy stuff that I do not want. I never pick up the phone, they just keep calling. The also took over FNC AppraiserPort and the delivery fees have doubled.
alamode doubled too
Is it our data, or market data? Who owns the confidential unique portion of data regarding the state of an individuals private property? Can it be owned, should it be owned? Crowd sourced data may not meet a reasonable definition of validly sourced and verified third party data. The problem with data brokerage is the monetization itself. Someone will find a way to take advantage of that for a dollar, that’s why big data is rife with data uncertainty. If there is opportunity to game a system for profit, companies and persons whom care nothing about privacy or data integrity will get in on the action. Perhaps FOIA freedom of information act requests for the entire CU database would bring more meaningful data to a visible state for appraisers? Just a thought. Why build that database again, it’s already built and in place.
CJK, you need a call blocker. I run the appraisal number through a landline with a simple 2 way line splitter, one to my trusty made in USA Bell phone, and one to a 10,000 number capacity Sentry call blocker, $40 one time cost physical item which is purchased online. When any entity abuses the privilege of contacting me, I block that number and it’s 1 ring auto hang up indefinitely in the future. No company or person can buy past my analog manually controlled number list. It has hard coded firmware and will not accept any updates. If they call from another number, that gets blocked too. It is the best robot pal I’ve ever had, it hangs up on solicitors and bots, does exactly what I tell it to do, and is capable of nothing else.
And this, unrelated but developing. “Honk if I’m paying your mortgage, again.”
https://fortune.com/2019/09/23/repo-market-big-deal-400-billion-bailout-unnerving/
The problem with this (really great idea) is that technology is not there yet. Even companies that are spending millions and millions of dollars are not there yet. This was the same idea with autonomous vehicles. The technology just is not there. Beyond technology it’s a hard work thing. The amount of time and energy it takes to have an accurate database and make sure some muppet isn’t putting in data wrong that everyone else is the relying on is also another factor. Finally and something we see everyday now, who owns it and who’s managing it. From what I’ve seen over the past few decades, eventually….someone will monetize it, throw in some terms of service and people who don’t read them will agree and eventually be priced out of the monthly subscription for their own data.
The silver lining is that our industry is not going anywhere. When the next recession hits which is relatively soon, another year or so, we’ll see the same crap all over again. I hope that appraisers protected themselves this time around. A millennial software company who rides scooters to work and hires a few MAIs still cannot crowdsource the massive amount of data that is needed. Just look at Zillow (who have spent millions if not billions over the years) to create AVM which still are flawed. Critical thinking cannot be replaced yet by computers. When that (and only then) happens, we’ll all be having a different conversation.
It’s important to understand what you’re seeing when you view ‘avm databases’. They’re just scraped and re assimilated data sets taken from assessors rss feeds, coupled with real time listing data which agents inadvertently place in the public information sphere merely by listing homes in the online environment. Anyone can take in rss and assimilate data, mls ancillary public data sources like realist just makes that somewhat automated for the laymen while coupling with current scraped or legitimately shared online data. The crowd sourced data is already in place, courtesy of our tax dollars. The assessors real property database. Use it how you will, invest in it how you see fit. That will not change the reliability of the data itself. Appraisers finding individual valuation in a singular home deal with micro. We’re the end of the line data clean up crew. Appraisers seeking mass valuation modeling experience are more likely to find positive value in selling a varied implementation of restructured data on the macro level to various interested parties. Again, the macro approach won’t change the reliability of the data itself. The x factor is the human injection of interpretation which is likely to cause the data to have increased bias when assimilated on the macro level compared to simple standardized and limited real property assessor data. They list data however they want to and we clean it up in a variety of often unpredictable ways.
I’ve spoken before on this relative to the State of Wisconsin. The Property Assessment Manual treats second (and additional upper level) GLA as a percentage of first floor area as opposed to the ANSI Standards appraiser’s should be measuring by. You can’t “clean up” apples and oranges. Assessor’s are commonly charged with seeking market value but, in the end, what they really seek is reasonable parity as opposed to supportable indicated values as of a specific property at a point in time. This can be debated 68 ways from Sunday, but I’ve walked in these shoes and been kicked out of the Secretary of the Department of Revenue’s office for voicing my opinions. While both valuation professionals, assessor’s and appraiser’s rarely, if ever, end up with a significantly similar indicated value. This is commonly predicated upon statutory issues as opposed to the banking/GSE regulations appraisers encounter. This said, the “crowdsharing” issue goes significantly deeper.
Having conducted numerous revaluations and having been charged with the oversight of valuation of tens of thousands of properties by virtue of development, modeling and calibration of numerous Computer Assisted Mass Appraisal databases, I can unequivocally state it’s the “human factor” that needs to be reigned in. Wisconsin is currently 1 of only 3 states that currently statutorily mandates a full physical inspection of the property for assessment purposes. Regardless of how much time and/or effort I put in to training my certified field inspectors, keeping on the same page relative to their inspection conclusions relative to ratings was a “herding cats” proposal. Nevertheless and, fully aware of this possibility, prior to undertaking I’d first delineate jurisdictional neighborhoods and assign the appraiser a specific neighborhood they’d remain in for the entirety of the project. This allowed me to apply neighborhood modifiers for any differences between appraisers conclusions relative to quality and condition and thus render a more statistically supportive total conclusion of value. Obviously, as is the case with any statistical modeling, there are outliers that must be individually valued.
Interesting insight into something I at least had a reasonable degree of control over. Enter alamode (CoreLogic) with their new “Smart Exchange” whereby you can view a comparable cited by your peer(s) to include their UDC ratings. There isn’t enough room for my rant on these ratings, but it’s clear nothing has changed. What’s crystal clear is that most aren’t on the same page. Many don’t realize a conditional rating is relative to chronological age, especially in light of the fact most lender’s and AMC’s don’t want to see an age adjustment. And to see one of the highest quality Log style dwellings rated as a Q4 suggests either incompetency, a concern for UAD appraiser auditing, or both. In all instances, none are either right nor proper.
In sum, crowdsharing what effectively amounts to opinions is utopian at best and unsupportive at worst. While sharing objective data predicated upon similar data collection such as GLA predicated upon ANSI Standards is a good thing, subjective data such as quality and condition commonly renders that acceptable 10%+/- “difference of opinion” found in reviews and assessment appeals.
I’m not an advocate of AVM’s for lending purposes, especially after seeing how many have been developed, calibrated and applied. Yet, humans have their deficiencies as well. Personally, I advocate for using the most consistent data available in any specific assignment that produces the most significantly supportive indication of value. Going to be a fun ride into the “future’ of property appraisal.
Outstanding post and observations. What MAY work for controlled limited geographic area mass appraisal models, does not work at all for an entire nation of individual properties being appraised for Market Value.
FWIW I concur re assessors ad valorem often being different than defined MV…even though by law they are intended to be the same. The comparisons are often apples to oranges.
Most assessment jurisdictions nationally allow for the use of sales up to 36 months old with no time adjustments. In the case of extraordinary and/or unique properties and, in the absence of similar sales, the depreciated cost method is a statutorily acceptable valuation method. Most assessment jurisdictions will look no further than that specific jurisdiction for sales and simply revert to the cost method. FNMA will lend on no properties where the indicated value is reconciled solely based upon the cost method.
There’s a rather valid and obvious reason why virtually all lenders won’t loan on property based upon assessed values. But that’s probably mute when you don’t need an appraisal at all. Guess we’re going to wax nostalgic circa 2007. Bifurcated REO’s anyone?
Assessment appraisal and market value appraisal have almost zero in common beyond textbooks which are routinely ignored on the assessment side. My experience in L.A. Market area is post sale reassessments of land values tend to be pretty decent. Otoh, the improvements appear as if they are backed into. Part is Prop 13 related. Part is just crappy work.
Like all big environments, there is good, medium and bad. Calif. Cheer on 13, it screws up M.V. interpretations. Not the worst, My daughter works in a non disclosure State where the State took over the counties responsibility. Because of incompetency?? What circus!!
Some time ago the less populace counties shared only the ownership books. Sales indications was based on the old book Vs the new. That was tedious. In the 1970s a group of assessors petitioned the P.U.C. and the State to allow greater access assessment information. This BIG DATA allowed individualizes, and assessors to stabilize their opinions with verifiable STUFF for all 58 counties.
Even at that Lenders, Banks etc greatest guarantee of a loan WAS the Borrowers integrity. The security (property) was secondary. Then along came the governments insurance. President Johnson’s pressing for greater HOME OWNERSHIP went for the high 50+ low 60s to around 65%. What Leadership!?
Never worked for any assessors office past present or future. Made political contributions, so should you.
Not quite sure I’d make political contributions. Most elected (not appointed) statutory assessors I know are pretty good golfers and can party like a rock star, but couldn’t appraise their way out of a paper bag.
In 2004, a pretty good year by most everyone’s standards, I completed 238 HUD foreclosure appraisals. Respectfully, some folks don’t deserve home ownership. Because the stock market had a “hiccup” in 2001, HGTV amongst others (flip this, that and the other house) was all the rage and lending criteria was “fog the mirror” qualifications (stated income), so called “investors” were paying ridiculous premiums for distressed properties. Basically translated into job security circa 2007 to 2009. By 2011 HUD, and the rest of the GSE’s for that matter, got wise to the exceptional expenses related to foreclosure and started bundling and selling non-performing paper to hedge funds. Who needs a bifurcated appraisal when you’re paying pennies on the dollar for the assets? Maybe the American taxpayers who fund this racket.
It’s kind of akin to being a weather forecaster in many parts of America; You continue to get paid for being wrong 80% of the time. However, it’s hard to be wrong when the statutes are written in your favor.
Louder for the people in the back
Life is a challenge best met with a smile and friendliness. My mentors didn’t have databases, they entered the appraisal business because of the back doors of mass foreclosure.
Most States had public records which disclosed (prices) and the appraisers worked from that. some stepped off the buildings, and or the land, some asked to measure, some asked what the buyer bought some what the seller sold. All of these older methods required friendliness, personality and dedication.
These appraisers and bank agents developed methods which turned into a uniformity and the tools which were accepted.
Thru various organizations we have received a professionalism which has compounded our abilities to use the recognized business tools so helpful to scientists, physicians, engineers and industry everywhere. Shouldn’t we rejoice in the BIG DATA, or the little data, and use it!!.
If your using wintotal aka corelogic and storing all your reports in their cloud…Well they are chewing at it like busy little beavers. I do not participate in corelogic-Alamode Cloud…Even if they offered it for free. Wait, they charge you to give them your data. Thats like getting slapped on both sides of your face.
Don’t be a fool and make it easy for them
“The cloud”. On site, offsite, where is it hosted, who as access to it? The more pertinent question is if an appraiser wanted off site remote storage, why don’t they just upload the data to their own proprietary access personal cloud account, rather than selecting ready made data sharing clouds instead.
How long it will be before the entire corelogic cloud account set is penetrated and most likely it has already been sniffed and spoofed and hacked and cracked, but the company is not compliant with required disclosure. Do appraisers qualify as ‘consumers’ of the service, or are we providers of data? That’s a distinct difference regarding the legal ramifications and requirements to comply with data breach disclosure laws. We’d all probably provide much better GLB compliance if we could simply opt out of proprietary XML MISMO mandated avenues of transmission. Raw uncoded xml data in the cloud, crowed sourced and widely shared through government, corporate, and private channels. Surely that’s more secure than encrypted pdf’s with password locking sent to individual parties by email. Roll with it, the fraud comes from the top down.
https://en.wikipedia.org/wiki/Cloud_storage
The point of my post was to remind appraisers there are other very low cost ways of backing up their files and stay in compliance with Appraisal File Retention requirements. Its very simple to copy a completed report to a Memory Card. Does this prevent the data collector thieves? Not really, because of the way many appraisers deliver their reports via most if not all AMC/Clients grabs the data anyway. Why would any sane person pay someone to store the files? Especially Corelogic, who charges something like $300-$400 dollars a year for Cloud storage. Corelogic was smart enough to buy the Largest Appraisal Software Provider. They captured a whole lot of appraisers data all at once. Literally all of the subscribers data for the past five years or more(assuming the individual appraiser cooperated).. They should be giving it to us for Free! I actually think they will do that in the near future as more an more Appraisers get wise to what and who Corelogic actually is: The Ultimate AVM company!. I will go a step further: Our data is so valuable to them that I foresee them eventually giving the Software and Cloud Storage to appraisers for FREE! That will be a temptation very hard for appraisers to resist.
They’re all that way and recently we had discovered a trend of many of the big box amc’s having been actually spin off shell companies from larger Canadian and other international title companies. There was also a ruling in Canada that something akin to the CU system would not be legal over there because they’re still recognizing data ownership and reasonable chain of ownership down the line. So, additional incentive for those companies to exploit the American systems instead. Oh Canada! + black tar and spilled beer in a language you can not understand in a culture increasingly alien to itself.
When it comes down to it, in this industry, I don’t share. Not unless I’m forced to. Pressed the easy button on all of it. I don’t share, I don’t buy, I don’t participate with most programs or startups. They may have merit but like argued in these posts, it’s the skill I personally bring to the table which keeps my personal paychecks rolling. They’re trying to get in, many of us are trying to get out. At least I keep my data away from the amc’s on the front end, more than many appraisers accomplish. There is no winning play though, lending clients turn around and use those companies anyways on the back end for overnight reviews and other pick up non assignable work. Amc appraisers sign up for abuse at the end of the line. Data sourcing, integrity, and clean up actions are old hat and I don’t need help with that.
There is a reason amc’s make limited to no traction with the second largest body of clients out there, lawyers. Think about the contrast, there are two major bodies of clients out there, mortgage lending and legal. Then ask yourself why nearly the entire body of qualified lawyers out there don’t bite the amc and outsourcing hooks, and disregard appraisers whom do.
I’m serious, does FOIA apply to the CU database? Use the tools already available.
“Hey You! Put that coffee down! Coffee is for closers only! “
I do a good share of reviews. Awful what half of appraisers put out there. I don’t want your data.
I agree, BUT, if you get enough samples of a particular property in a data base they will be able to balance it all out on whats credible or not. Is that perfect? No, but with advancements in technology, the Data thieves will be able to reject or at least Rank certain imputed data on a specific address.
That raises another serious issue all by itself.
FNMA and AMCs, HUD/FHA are already using database information to refute or rate appraisers as being out of range, or worse producing reports with “increased risks of fraud” ratings.
They are often, if not usually wrong when viewed by human beings. But even that step is being done away with. These ratings are now resulting in suspensions of appraisers!
In areas where go along to get along appraisers cave into pressures to misreport or downplay negative issues, the one honest appraisers that reports properly down the road is the one that is deemed to be ‘high risk’.
The ONLY ones in the entire system that judge appraisers work quality that conforms with USPAP SR3/SR4 are other appraisers. Yet the bulk of negative and adverse actions are originating from automated software; coupled with incompetent desk reviews (lowest bid wins).
In best-case scenarios, specific property ‘absolute’ conditions change over time (remodeled, additions, torn down, new externalities discovered or allowed to be developed nearby). Databases can’t collect or analyze this kind of information accurately. The appraiser that identifies these anomalies would be the one deemed to be non compliant.
In the early 1970s I started a proposed construction appraisal of 40+-? condo units in a pioneering alpine recreation area. Data was scarce, there was a lot of make do. data form telephone records, etc. There was no condo data and MLS was primitive. Overall price from typical buyers was important to set pricing and construction costs. A leading sales broker volunteered a year of sales records, and I accepted guaranteeing anonymity. My report used ratios, percentages and sale dates to illustrate the needed stuff. My contributor was protected, my records were only available on special demand, and the data was innocent to all but my client.
Appraisers have been required to use only REAL STUFF verified by at least two agreeing sources. The details of any, or the averages of many collections of stuff may be held exclusive to your clients trust held in your account. If he SHE pays you, he she trusts you and a loan may be made, An appraiser or any other contractor must stand up to his client His scrotum must not be empty.
I don’t see how multi-billion dollar investors will agree to buy large mortgage backed securities packages with valuations solely based on AVM’s…
If there is a bad appraiser out there, then the effect on that batch of securities is close to 0% overall..
If the entire bond package is filled with mortgages that were valued based on an AVM, then all it takes is one error in the algorithm to grossly effect a large percentage of the loans…
Whole technology is certainly changing things, I still think it will be many years before appraisers are noticeably eliminated from origination work
There is a reuters piece a few days ago which chronicles a number of automated car companies which have shifted to a different business model because society and technology is not what they thought it would be. The companies that have not shifted…well most of them went bankrupt because they couldn’t deliver. A bad appraisal means increased risk, a bad self-driving car means dead people. That said, self-driving tech/industry is much more advanced than appraisal and origination work. I think it’s the boogieman, and it is coming, eventually. I suspect it will take a lot longer than most estimates.
Some years ago a cooperative was formed. California Market Data Cooperative or CMDC. Back then it was a hard copy booked-source based on Thomas Guide pages. What the author suggests goes far beyond that. I’d love to see a commercial equivalent today. Compstack tried it. Not working very well.
Is it possible? Yes. To the extent envisioned? Doubtful. We have allowed others to take control of our own data and our rights to its use (confidentiality rule and some AMC agreements).
Additionally, it is a full-time job for someone. possibly ‘many someones.’ I’m an appraiser. Not looking for another uncompensated PT job quite yet. Additionally, I am shocked that an otherwise intelligent-sounding appraiser would suggest cooperative algorithms for making adjustments; or AVMs.
It’s difficult for me to see how paying a fee to someone else to have that someone capture, record and analyze my data benefits my profession…OR myself. I KNOW how to determine market adjustments in my market areas. If I ever get too lazy to do it myself, there are plenty of existing regression programs available to do it for me.
Heck, I can even get others to inspect the property for me; outsource the raw data overseas or use automated systems to even conclude adjustments and values for me.
I’m not sure what thats called, but it would not, in my opinion, be competent professional real estate appraisal.
We have been doing this in the Augusta, GA MSA since 1976. It is the CSRA Appraisal Council. There were paper data input sheets and we received a print out of the last 12 months sales once per month. In 1998 we went live with our website where all data was entered online into a form that follows the FNMA 1004 SCA grid on page 2. All of the subject information including address, list price, contract price, seller concessions, legal, Subdivision, Map and Parcel, and subject property information is entered. We can search by address, county, design, sales price, Map and parcel, GLA, Date Range, houses with pools, manufactured homes, etc. There are 38 appraisers that participate……out of +/- 52 in the area (9 Counties in 2 states and 2 MLS systems). The others don’t participate for various silly reasons……..
I read these comments and there are so many people across the country who have an active interest, I don’t know why we can’t organize like other organizations.
AI has really changed in the last decade, it’s not the same as it was when I was young. Perhaps it doesn’t matter as I get closer to retirement.