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.

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.

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.

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.

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.

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?

Louder for the people in the back

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.

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.

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! “

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.

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.

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.

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

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.

alamode doubled too

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.

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.