Fundamental Risks in Doing Hybrids
…the intent is to caution all appraisers about the fundamental risks in doing these…
Hybrids – As if another reason for not doing them was required!
Regular AppraisersBlogs readers are well aware of the controversy associated with doing bifurcated hybrids.
Extensive information as well as disinformation has been spread by the hucksters that promote them, and those few management or owner-appraisers of such firms that benefit from them.
This article is not to debate whether they should be done, or even if they could theoretically be done in anything resembling a USPAP compliant manner.
Instead, the intent is to caution all appraisers about the fundamental risks in doing these.
Please read the redacted findings of Virginia’s DPOR investigation into a particular case in which I was asked to file a complaint on behalf of an appraiser fearful of potential retaliation.
The immediate takeaways should be:
- No fee; but especially not $25 to $225 appraiser fees are adequate to properly complete one of these. That fact alone leaves appraisers at risk.
- All of the short cutting inherent in doing these, leave appraisers exceptionally vulnerable.
- The hybrid marketing and management system DOES NOT PRODUCE CREDIBLE RESULTS!
- To date, not a single USPAP compliant completed bifurcated hybrid has been seen by us or published as a sample of how they would really look like when done.
- Separate from the inconvenience & costs of hiring an attorney to deal with a state complaint, the original appraiser (OA) may also find him or herself liable to the buyer and or lender if the postulated size errors resulted in over valuation.
- AMC promises to maintain adequate work files and make them available simply aren’t demonstrated by the facts in this case.
- Limited SOW comments are not adequate protection
- Apparently, the third-party inspectors “deemed” to be reliable or credible, aren’t.
- See the state investigators concerns. These are the reality of state board complaints and investigations. DPOR appears to have been very thorough in their research and analysis. How many readers would or could have made some of the very same errors noted? Food for thought.
- Still think 100% paperless work files; partially maintained by others are all you need?
Please read the investigators findings in their entirety; keeping in mind of course that the OA has still has formal rebuttal opportunities. From the written statements though, they don’t appear to withstand real scrutiny.
Also note who the client and AMCs involved were. Those people are NOT looking out for appraisers!
- The New & Improved Fannie Mae “FRAUDULATOR 2.0” - May 15, 2023
- The Scam of Racial Discrimination by Appraisers - May 10, 2023
- What Is My Incentive? - September 20, 2022
Scary. What’s even scarier is the work file violations. That’s an easy to avoid violation.
I found hybrids to not be on the type of properties they claim they are for. It took me 4 hours to do one that was relatively non complex to comply with USPAP. I had to write a 3 page narrative. I was paid 150. When I was done, I decided to never do them again. They just are not worth it. We offer to do restricted appraisals when asked. They don’t require all the FNMA scope creep, they don’t need or want a 30 page full appraisal and for the same price they pay for a hybrid, they get the appraiser inspection and analysis. I can do an appraisal using data from another appraiser, it’s how I was taught to appraise. But I am way more confident and can complete the analysis easier if I go to the property.
Seeing the property is my best analysis tool.
It’s easy.
Unless you want to be a sucker… Just don’t do them.
Boycott all AMC’s, Lenders and Software providers that promote them.
NEXT………
Since when did anyone ever look out for we appraisers?
Appraisers are a necessary evil to lenders, Realtors and buyers. Just the final hurdle everyone needs to jump over.
We are all Rodney Dangerfields, we get no respect! lol Been doing this for 34 years and it ain’t gonna get better folks.
Love the “inspector’s” outline of property characteristics. Reads like it’s written by a 10th grader trying to pick up a little Saturday night date money. One would need extraordinary interpretive skills to complete a valuation opinion based upon an “inspector’s” provided “data” like “Well, it sorta looks like one of them kinda reeeel luxurious doohickeys that’s in kinda like a middle of the road type condition but in real shiny-like shape when the light hits it….”
The appraiser got what he deserved. I have no sympathy for him or her.
This isn’t one either side should feel good about. It’s unfortunate the appraiser has placed his credentials in limbo while the AMC barrels on recruiting the next one. The lender/client should also hold responsibility. Charging the borrower a full fee for an appraisal and allowing an AMC to divvy it up between themselves and the lowest bidding appraiser is a great disservice to all parties.
My state has a section in this Qtr’s news letter about Burb it Up Reports. They made a point that you the appraiser should know WHO the Inspector is, not just his/her name. Just like you can contact the Realtor, OR County GIS, OR Deed Room, you should be able to contact Harry the Inspector. AMC-will not tell you, nor let you contact the inspector. They also made a point that the Inspection Date by the Inspector MUST be known. http://www.ncappraisalboard.org/bulletins/Winter2020.pdf