Some time ago I occasionally did appraisals supporting small corporate retirement investments. One I looked at was 4 four plex’s in a large group of varied R-3 properties . My subject was at the end of an easement with separate managements. Obviously, vacancies and management practices differed among all the different owners.
Bed Bath and beyond recently declared bankruptcy, did they have those kinds of ownerships in their portfolios?
Your clients Matter, your reports matter.

Aren’t most MAI’s also REALTORS who can write evaluations..

The opportunity to cheat lie and steel is universal. The reason we trust, is because most people do not cheat, lie and or steel. Most are honest.

I’VE said before; What about seconds, thirds and fourths. Some time ago I was proposed to accept a 4th as an appraisal fee for a several properties. This 4th was after’s the attorney’s 3rd and was against the client’s latest husband’s property. I didn’t believe there was equity enough. As values increase, equity’s increase, the potential for gain or loss may be equal but for the interpretation of an APPRAISER.
In the recreational neighborhood where lenders were reluctant, sellers carried financing against their sales price as 1sts, 2nd, 3rds, 4ths and even Fifths (pun intended). Some were good investments some not so good.

Oh lord, no. Now “AI” will be reviewing appraisal reports? Didn’t Bagott or one of the other authors already cover this, that so many of the covid exception no inspection reports were being recalled by the GSE’s at a disproportionate rate? Now AI will mitigate undervaluation issues?

People are not very well informed when it comes to the capabilities of technical software programs. We don’t have artificial intelligence, not yet anyways. We have something which appears to be sentient, but really is just complex heavy coding alongside incredible advancements in processing capability, as Moores law is still effectively in place. (continuing rapid advancements in processing speed of hardware, which in turn effects software capabilities.) The actual truth about AI is that this is just a mechanism of control to bypass normal democratic process of human input, and human agreement. Rather some technical program, which is coded by biased humans, will provide ‘unbiased guidance’. It’s a total sham, don’t fall for it.

Chat GDP keeps on giving us real world examples of this concept that AI is nowhere near ready for implementation into such complex systems, especially ones which require high degrees of human interaction and intellectual judgment calls.

Your article is just a rehash of what FNMA stated right, via a sister government program? I counter with another Chat GDP article. Think twice, do you really think it’s a good idea to have software like that supplmenting if not replacing the human appraiser, underwriter, administrative reviewer, and so many other humans involved in the process of lending?
https://www.malwarebytes.com/blog/news/2023/03/chatgpt-happy-to-write-ransomware-just-really-bad-at-it

Let’s examine Freddies hopeful goals:
‘While we navigate the ever-changing landscape, Freddie Mac remains focused on developing valuation methods that provide the best risk mitigation while promoting consistent outcomes, simplifying the loan manufacturing process and reducing costs.’

‘promoting consistent outcomes’… Where does the realtor’s influence fit into that? How does commission based representation reconcile with an automatic AI based ‘valuation’? Think there might be the chance of biased programming in the code writing to ‘promote more consistent’ (lending & commission realization) ‘outcomes’? Simplifying the process; Like removing one of the last effective checks and balances in place (the appraiser).

‘A trained professional conducts a brief visit to the property and subsequently reports their findings; if the PDR meets our requirements, the loan may be originated without an appraisal. This is just another way technology and bifurcation can help alleviate capacity concerns when loan volume is high and allow appraisers to focus on assignments that require their knowledge and expertise.’
But the appraiser is the trained professional. The licensed home inspector is the trained professional. Just slap a software program on anyones phone and they become a trained professional with equivalent competence as these people? ‘technology and bifurcation can help alleviate capacity concerns’. You know what else would do that, stopping the amc industry from pilfering the appraisers income to the tune of billions and billions every single year, so appraisers could hire and train more actually properly trained professionals. My expertise, like many appraisers, comes with our senses, the feel of homes, the smell, the subtle details, observing shifting structure, poor finishing, moisture damage, mold indication, poor insulation, creaky floors, foundational repairs, evidence of concealed damage, the general estimate of wear and tear, deferred maintenance, effective ages. I’ll become a believer of this technology, only when the coding peramiters programmed into the software are available for review. But what would that look like? Static tables with predefined aging periods? Detailed databases which would supplement the appraisers rich experience such as having a lifetimes worth of information about individual jurisdictional zoning and coding rules, products associated with construction which have came and went in the marketplace for generations? Previous construction methodology? Down to collectability value of that old iron basin sink and clawfoot tub? What about care and use? How about the issues with value in use vs value in market? As I illustrated with the ‘zillow gone wild’ ‘disney house’, these avm systems can and will effect the aggregate, and confuse value in use vs value in market, simply via data input, such as a zany realtor tagging a value in use consideration on a listing for like, 250k and such. (image attached, observe the avm estimate of value jump!)

‘Hybrid and desktop appraisals may also mitigate the risk of unconscious bias as they remove the face-to-face interaction with an agent, buyer or seller, which could lead to unfounded assumptions.’ That tired bullshit again? As if the policy makers and software coding people are simply above it all, not susceptible to this same imaginary force now coined as unconscious bias? Only through unfounded undeserved fictitious slander campaigns against appraisers is such a statement even permissible. Yet it still fails to meet even the basic premise of a logical argument. Because automation will remove face to face interaction and that’s really good for risk management and bringing superior value to borrowers? In the sales world, when you can land a whale over the phone and seal the deal in record time, that’s referred to as a slam dunk. Mark it on the board baby, another one down. Big commission check here I come.

The very end which talks about natural language processing, computer vision inspections, and laser imaging is rich. Because when I’m a borrower, ‘value’ to me is totally privacy violating 3d scanning of my interior spaces to create 3d model images which these companies refer to as creating a detailed home fingerprint. That’s what I want when I reach out to a lender to leverage my equity, a complete 3d scan of all my interior spaces and belongings. Hide your gun, and your pipe. A virtual walk through, sorry, not good enough. I’m not admiring Wright homes in far away places, as an appraiser I’m trying to competently review the entire home as the ‘eyes on the ground’ person. So much for that concept right? Define for me; ‘Natural language’. Define for me; ‘Free form text comments’.

You want to talk subconscious bias? Let’s take a step back and talk about the mindset of the lunatics whom believe all of the rainbows and pot O gold talk related to these long since in existence, yet cleverly repackaged, software applications. Because to them, tech is god, the golden idol, and they can’t stop worshiping it. Don’t look behind the curtain. Don’t ask to review the peramiters of coding. Just trust the tech because it’s conceived by people whom know more about tech than you, therefore is superior to your human judgment. Ignore the fact that these processing capabilities have not even come close to the exponential calculation of information the human mind is capable of. Ignore the fact that each one of us carries around the equivalent of 5 full encyclopedias worth of learned information from our lifetimes. When you put two humans together, you very well could now benefit from 10 encyclopedias worth of information and insight, and so on, and so forth. That humans actually perform quantum level computations at levels still not even fully realized, as information spontaneously is recalled, assimilated, reconciled, and reformed through a complex network of cellular interactions we still do not fully understand except we do know this processes at a quantum level at the speed of light, possibly even faster. (through the wormhole tv series reference on the computation power of the human mind, the century of science behind that.)

But trust the program, the government GSE whom specializes in lending has selected the appropriate software, the appropriate applications, and appropriate peramiters to bring all of that to bear to replace you, the human appraiser. Because you’re a biased racist sob whom stands in the way of their payday and their constituent lender interests. They’re repeated all the buzzwords they’ve topically understood about this ‘technology’, so you can trust the implementation will be seamless without bias and stuff. (as people whom better understand tech roll their eyes, understanding these people don’t even really understand what they’re talking about, they were apparently an easy sell for the software developers.) So much for fair representation. They’re advocating for someone, it certainly is not the consumer.

https://twitter.com/zillowgonewild/status/1639066371936985088
Hey, the avm just jumped it a quarter million, because, data input (somebody said so). And that’s all it takes to skew the entire system and effect the aggregate for everyone else.

https://www.youtube.com/watch?v=r7cYsgB4G1s
(sorry, could not find the one on quantum nano tubes within the human brain which defy physics with advanced processing capabilities, but it’s somewhere in that series. If you’ve never taken the time to watch Through The Wormhole with Morgan Freeman, you don’t know what you’re missing. One of the best developed most thought provoking and imaginative explorations of the human condition ever placed on film. It rivals the great philosophical works of history. This one is good though because it touches on belief in systems and how our own beliefs shape the systems we develop.)

Sure, it’s possible, these systems could one day actually replace humans. Do you really believe now is that time? As these people dial it in, punch in and out, can’t even balance a budget, and leave a trail of destruction in their wake? Riots in the streets, rising crime, homeless people everywhere, rampant inflation, unaffordable housing, excess regulation. And they’ll make it all better by eliminating the unconscious bias of face to face interactions with real estate appraisers, driving a few more thousand people out of jobs? As if the guy holding the app on the cell phone or 3d scanning device will not in any way express any subconscious bias? That’s literally impossible, and they won’t be accountable to anyone other than their paycheck. Don’t forget to slip them a 50 to point that device away from known deficiencies, if you want your maximum ltv.

These people are not acting in the greater good for posterity of our society and human culture in general. They’re getting paid, proponents of, advocates of, mouthpieces for. Everyone is biased, it’s just a fact of life. It’s not necessarily a bad thing. “The world is what we make of it.” Releasing control to a software is no different than bowing to the king or accepting servitude, because a human created that software, and a human controls it. It will always be that way. There is no such thing as AI, not yet anyways. There is only advanced coding.

The closest thing to AI is something like the Dwave (although there are many different similar ones). Actual quantum computing through hardware requires something like a honeycomb processor design which requires quadrillions of gallons of cooling constantly or it would become so hot nuclear fusion and subsequent explosions could occur. Cern systems are theoretically producing strangelets which fall undetected to the center of the earth which could spontaneously transmorph all matter into a solid non organic one of these days. They found the god particle but still can’t entirely explain it as we now re examine the concept of dark matter and even entertain the notion of the electric universe providing more rational modeling than quantum mechanics which were built upon the superstring theory. They still can’t fully explain what the most advanced systems on this planet are actually doing. But now they’re going to implement ‘artificial intelligence’ to solve the inequality gap which humans created, and humans perpetuate. Because, like, science and stuff. We believe in the science, because we are followers of scientism. Deal with it or you will be labeled a racist.

These people are not morally or ethically capable of developing or implementing what they claim. They’re too busy slinging mud and disparaging others, jockeying for the position and the sale, to get what they want. These people answer to corporate interests, not borrowers. Any labeling about value to borrowers or better working conditions for vendors is just lip service. Why doesn’t their same logic apply to their own paychecks, their own inefficiencies, their own subconscious biases, or anyone elses? Only the appraiser right? That’s how these things start, with one, then the next. It’s a complete logical and intellectual fallacy for these people to state, automation for thee but not for me. As if they’re above it all and are not equally responsible for any and all faults in the systems they manage.

Being the managers and policy makers so far above the appraiser, the more logical conclusion is that if these institutions want to eliminate bias, they should eliminate their own positions first and learn to trust and treat better the people whom exist further down the ladder than them. But that’s not how power and greed actually functions. They’re talking total systems reformation for the greater good. It’s like an intelligence test if they can convince people to actually buy it, because it won’t end well. The end result is one less check and balance, one more silenced voice, one less human interaction, one contributing unit less in the grand scheme of human ingenuity and how all our actions shape and form the society around us. These considerations are similar to the free speech arguments. We don’t conquer bias by censorship, we conquer it by having more contributing voices. Central planning never works and that’s all these modernization schemes are; yet another iteration of central planning. It’s got a new sales package but is the same old thing as before, now with updated processing power! Be careful what you wish for. Because the people implementing these systems may not be smart enough to even understand what they’re putting in place, and what they are trading away without concern. Automation! Equity! Buzzwords of the day which have become peoples personal religion.

I breath in depleted uranium as I stare out over the vast ruins of a failed world. Finally, we have achieved equity.

1st, thank you for editing your original post. I was worried you did not know how collateral worked. If you lend 50% of the value of something and the loan defaults, you can foreclose and get the 100% value of that something. Even the last major crash only dipped 33% in most markets, some were 50%, but only a few. I would be more concerned about Loan officers/lenders fudging credit scores to get people into loans they can’t afford in an effort to acquire property they know is going to have a high probability of being defaulted upon

2nd, IMHO cash “transactions” would be something that would be highest on my list for requiring/needing an appraisal. A cash transaction is a 100% LTV out of pocket loan for the buyer and a 100% opportunity cost for the seller. A cash transaction will not have the AVM data or analysis to show what the property is worth to either the buyer or seller. Sure, the parties can go onto redfin or zestimate to get some data, or “know” the sales in their neighborhood, but a Cash sale is different than a lender posting a 50% Loan…. way different.

Yes certain transactions already do not require an appraisal.
Those are called “cash” transactions. 🙂

https://sf.freddiemac.com/articles/insights/how-less-risk-more-flexibility-and-a-better-borrower-experience-are-driving-the-future-of-valuation

Their AIN’T One truth.
Say it; do it, sign it. then defend it.

That’s a new take.

https://en.wikiversity.org/wiki/Fundamental_attribution_error

Would you call my detailed explanations under emphasis of situational examples? You might want to brush up on your clinical diagnosis. I’m only fitting a portion of that profile. lol. Nihilism sounds even more exhausting than fighting for truth, justice, accountability, and freedom. If you don’t care, why are you here? When three out of four licensed appraisers suddenly develop actor-observer bias. That explains it; our observation of what these people are doing is the actual causal factor for their behaviors.

Nietzsche has entered the chat.

How good are AVMs at assessing various waterfront and golf course frontage properties?

Excellent. Ignore the data. I understand the rules of providing appraisals. And have a clear understanding of how and why these rules and format for doing so constantly change. You’re being myopic. There is a bigger picture.

Sure, self serving BS. That’s what the now absent nearly two hundred thousand appraisers were doing when they refused to acclimate to corrupt amc industry practices and were either forced out or quit this industry. They were being self serving. It was not the amc’s at fault, it was the misguided appraisers. It was not erroneous over regulation, it was the misguided appraisers. The appraisers goal is to place an accurate number on the collateral valuation of real property. If that is sellable on the secondary market is not our concern. We don’t control the market, or the properties, we only provide appraisal services for them. Pepsi challenge dare you to walk into a room full of lifetime career professionals or service workers, about to be laid off or replaced by some less skilled body of workers, listen to their complaints, then boldly proclaim they are acting in a self serving manner for daring to take the position their jobs and skills matter. That the quality and reliability of their working efforts is inconsequential.

Remember that question appraisers are asked fill out on the yearly EO insurance, something about has your income came from providing full time appraisal services? Appraisers whom operate outside of their license with evaluations and such, should stop answering yes to that question. Or they will be committing insurance application fraud.

I saw this article on the television news this morning, the disney house as seen on zillow gone wild. Also this particular twitter feed makes for a great highlight how technical avm programmers may not be following proper industry standards on recognizing what is real property, what isn’t real property, alongside providing unique values to unique properties, which potential reviewers are unable to recreate the valuation development methods. Because there is no appraisal grid or any clear indication of how this automated value utility derived it’s figures. There is no accountable individual tied to the value statement, just the nameless faceless Zillow corporate branding. How they got to the ‘value number’, you don’t need to worry about that. Because it’s automated it’s automatically more trust worthy. Because you’re a mere Luddite whom does not understand tech, which is why you maintain so much faith in the amazing sparkly tech systems. (as a 3d holographic imaging device beams dollar signs into peoples eyes.)

The disney house. As seen on Zillow gone wild. 7779 Spruce Ct, Thornton, CO. 2,295 agla ranch, similar full sized basement, built 2016.
https://twitter.com/zillowgonewild/status/1639066371936985088

Zillows statement for 7779 Spruce Ct – $1,100,000 (With a $20k listing price cut. What do you want to bet Zillow will be reactive to the price reduction, and it’s ‘value statement’ will change?) Oh wow, photo clip attached, look at the trending chart on the bottom. An instant hundred thousand jump, due to what? Popular demand? Fanfare? Recognition? The listing price? Does that jump in an individual property affect the aggregates and neighbors zestimate values?

Let’s check out a neighbor’s zestimate whom has a similar home.
7759 Spruce Ct. Similar sized ranch, off the golf just like subject. Wow, 2,723 agla ranch, full finished basement, same golf course location immediately next door. Wonder if it has a walk out basement too, in those ritzy developments they often do, especially when they’re off the 18th hole and such. Even if we did not, I don’t think we can attribute $150k to the walk out basement. Actually more than that because it’s got 500 more sq ft, up and down, a thousand more total usable sq ft than the above disney home.
Zestimate: $945,300.

Just for kicks, go ahead and calculate the ‘avm value’ difference between these two similar homes, which zillow now attributes well over 10% boost for personal property and unique design of ‘the disney house’ which certainly carries a more limited range of buyer appeal.

There is value in use, and there is value in market. But the avm just lumps them together. Oh it’s going to be so easy to game the lending system with avm’s, just do something nutty to get your home some recognition and voila, items which should not be recognized as contributing to real property value will suddenly boost your avm score, and subsequent loan amount. I’m going to go with a thousand pink flamingos, the kind you stick on poles in the grass of your front yard. You can go with the 50 ft burger guy statue or perhaps something nascar or perhaps get zangy with some movie theme dress up of your property.

Let’s use the nifty overhead zillow map with the price bubbles to look at home values on this same block, same golf course location, same or similar competing builders, likely all similar design and style, likely all within similar sizing ranges over all. To the left of the subject, first one I reviewed above, $945k, then $660k, $749k. That’s quite the spread. Let’s scroll to the right: $872k, $818k, $944k, $812k, $822k, $891k, $860k, $819k, $881k, $854k, $846k, $896k, $854k, $784k, $849k, $809k, etc.

Wow! Well I know if I need a lending boost or some flex cash before I walk away, which ‘valuation service’ I’ll prefer. If bankruptcy is in my future, I’m going out with style and panache, gift myself an extra 10%-20% on the way out. Themed houses, popular listings. Just one of a million different ways people can and do game Zillow.

Last year shortly after I turned in a refinance report, borrowers wanted more, rov time. This is rare for me so of course I looked into the details. Please consider this sale example, zillow reference provided by the lender, which of course, the borrower sourced. But this sales example was only mysteriously available on zillow, and nowhere else. Because someone had understood and learned how to enter fictitious high sales data, for an actual existing real property, which had not actually sold or been listed in MLS. Zillow said it did though. I actually did run across borrowers trying to game the lending system for more cash out, by manipulating one of the biggest most visible avm’s out there. One can only imagine how many tricks will come about, or perhaps are currently already in use, gaming lessor avm systems which are already in existence.

If this contractor dude whom barely spoke english knew these tricks, how widely understood is it, the ability to manipulate avm data? Certainly prospective fix and flippers, investors, and a wide range of other people understand this as well. The only people in the dark about the porous unreliable insecure nature of avm systems appear to be Dave Bunton, Andre Perry, the entire staff of REVAA, and the FNMA crew. They’re probably too busy watching made for hollywood documentary movies about fictitious boogie man appraisers whom secretly wear white pointy hats in between appraisal inspections.

I researched that up and down it was a fraud. I used the pro tools advisor deal from within zillow, to ‘request a correction’. Which is quite possibly how the fictitious entry was fabricated in the first place. All you have to do is send in the request, which you can do so anonymously or with a fake name, submit some fraudulent paperwork, and some desk guy at zillow will change the public data entry for a property. This of course, effects the aggregate avm values for the entire area. Imagine doing that consistently how much cumulative effect this could have on avm results.

I see this gaming of avm systems data routinely when I’m reviewing these various sites for rental data. You know, you think it’s the easy part of the job, check MLS, if nothing is there, check zillow or apartment dot com or whatever, find some rentals to work with. I’m so sick of having to review the same rental unit twice, each with it’s own different rental request number and slightly different geo marker, even though it’s the exact same unit. Landlords have long since learned how they can increase their market exposure by way of double listing the same unit. Sometimes they even triple list them. It’s like a hook, see if they can get someone to bite the higher rental asking price, or if they do their homework and go for the lower. I’ve seen this so many times, I stopped even caring about filling out the data correction tool. Mostly because the process is so slow, and unreliable. There is nobody to call, there is no individual person in charge of oversight or data qualification. Zillow is a nameless faceless corporation with a million employees, whom have interchangeable duties and highly variable skill levels. Data is rarely corrected and if it is, never corrected in time to matter, the damage is done. They’re all like that too. And then they turn around in the quest to have more data population, with less expense and human manpower cost, and they scrape and borrow each others systems data.

In centrally managed systems, even small errors or mistakes have much greater and much more immediate potential to cause systemic risks with the snowball effect, which accentuates both the risk and unreliability of the data system as a whole. Which is why qualified skilled human appraisers matter.

Can you imagine the tricks which will come about if realty, appraisal, and lending, were all automated? That’s where all this is heading and it’s a pipe dream by technocrats. Real people with real financial concerns still want traditional redundant checks and balances systems, because that’s in our best interest as responsible consumers. Lenders departure from sound practices represents the moral hazard and poisonous protectionism concepts which inevitably ride in when all the risk can be passed to taxpayers. They cash out when they win, and charge the losses and debt back to the public when they lose. The entire American populace is subsidizing and providing financial backing to these digital value appraisal modernization experiments, which are just but one of a long line of irresponsible practices lenders engage in, because they’re backed by the taxpayers dime. Your tax dollars, hard at work. In this case putting several more hundred thousand people out of work so that income can instead be funneled to their special interest amc buddies. Progress! Equity!

Well, I check emails and only stay subscribed to articles for so long. When the next one comes out I’ll drop out of real time notifications. It’s all swirling the bowl. One presumes the insurers were consulted if insurance would be applicable, prior to pushing eval related legislation. And no, I don’t think it’s a good idea to extend the group umbrella policy coverage to services which do not fall under ‘appraisal practice’. Unless you want to add a zero to your yearly insurance cost, as you’ll be sharing the risk and coverage with every single independent contractor whom completes any work product which in any way integrates into evaluation services. Let’s have the appraisers shoulder a substantial portion for the avm industry, third party inspectors, 1099’s without appraiser licenses whom pretend they are qualified home inspectors, why not let the avm tech programmers buy in as well. Let’s indemnify the appraisal management companies, cover their losses, and share insurance related risk costs simultaneously. Be careful what you wish for.

Regardless of the intention of the client or employer, if the appraiser would be perceived by third parties or the public as acting as a disinterested third party in rendering an unbiased analysis, opinion, or conclusion, the work is classified as an appraisal assignment

and by law an “appraisal assignment” must meet USPAP guidelines in WA and does not have to have a value conclusion.

Now apply your 1st sentence of the 2nd paragraph to the above statement and you will get an idea where my research is taking me.

quick edit – add on
I concur with your E&O comment but given the change, I believe that the E&O companies are going to have to adapt also and offer that as possibly an additional form of coverage. Not positive, but I think it is a reasonable evolution for them as well.

We need a national rule that only appraisers can complete valuation service requests, regardless of type. Avm utilities should be required to be managed and succeed valuation analysis authority to a licensed appraiser. They should also be completely transparent with methodology and approach methods, able to be subjected to scrutiny and review just like appraisals today. We need accountability increases not decreases.

The very argument of the WA bill is restraint of trade. Appraisers do indeed need relief form the imposed restraint of trade on our positions. Well, it does not take Albert Einstein rising from the grave to figure out which major player within the mortgage lending realm has imposed said restraint of trade and working limitations on appraisers. You’ve all got stockholm syndrome, now passing bills to appease your amc captors. If I’m reading it wrong let me know. What appraiser in their right mind, whom is not capitalizing from the amc industry, would want to complete evaluations instead of full appraisals? I know when I make the biggest investment of my lifetime, I’d rather have the tenth rate contractor guy from the day labor line on the corner, than engage with an accountable, licensed, insured real estate appraisal professional. Who’s actually buying this? People are so easy to sell lately, they don’t understand what they’re supporting.