Hybrid Appraisals – Why They Are Impacting Appraisal Employment

Hybrid Appraisals – Why They Are Impacting Appraisal Employment

How hybrid appraisals may impact your future


A day or so ago, I found out about the rebranding of ZAIO into Clarocity, and their purchase of Valued Veterans AMC.

The ‘new’ CEO of the Canadian/USA company, formerly ZAIO, now named Clarocity, was recently interviewed. Take the time to actually read this interview. If you have forgotten, ZAIO came into the US in about early 2008 or so with the intent to develop property data bases in most urban areas – with photos, that could be re-used by various entities. They sold ‘zones’ to a number of appraisers, expecting them to gather the data. Ultimately, the concept went bust. And various on-line web based “property value” services took hold.

Now Clarocity is developing, and rolling out a new proprietary valuation service which combines a BPO & public data with appraisal. Clarocity has purchased Valued Veterans AMC (near Kansas City, KS), rebranded it as ValVets, and is using their stable of vendor appraisers to complete this new valuation product, which is basically a ‘desktop’ appraisal, or hybrid appraisals. The claim is appraisers can earn ‘more per hour’ than what they presently earn doing our existing appraisals on the GSE forms.

As would be expected, the CEO claims this new type of product is revolutionary and will become the accepted ‘norm’ for appraisals as time progresses. That of course, remains to be seen. But everything has a “life cycle”, and I do agree the present appraisal forms are woefully outdated, which tends to slow down the appraisal process.

I wanted to dig a little deeper, and have found this ‘white paper’ written by a key person at ValVets (the new name for them), which explains what Hybrid Appraisals are, and why some lenders are using them. I suggest you take the time to read this info so you know what these are and how they may impact your future.

What are hybrid appraisals?


looks like, feels like and acts like a 2055 exterior appraisal form. There is one main exception: A local real estate agent, not the appraiser, conducts the exterior inspection. The form has the same comparable sales grid as the 2055, including line item adjustments and photos of the comparable sales and is completed by a licensed, local appraiser. The appraiser’s value opinion is provided without AVMs or suggested comparable sales. The real estate agent has no say on value and the appraiser can override or reject elements of the inspection and/or even reject the assignment based on the inspection or complexity of the assignment. The form used in these cases also contains appropriate USPAP disclosures and limiting conditions, including the fact that the appraiser is relying upon a third party for the inspection results.

Clarocity is not the only company pushing these valuation products on to lenders, and asking appraisers to assist the process. They need an appraiser’s license (and E&O) with reports in compliance with USPAP to comply with federal lending regulations. But since there is no requirement that the appraiser actually do an on-site property inspection, they can use real estate agents who do the exterior/interior inspection for $40 or so. The BPO is handed off to the appraiser, who then determines an ‘appraised value.’

However, in my shoveling today, I also learned that Clarocity has another associated company – Valuation Vision, which is set up to provide BPO’s, among other products, to lenders. While digging around the edges and a bit deeper, I came across another web site, RipOff Report, with posts back into 2015 from many real estate agents who stated they have not been paid for the BPO’s they did for Valuation Vision.

Another puzzling issue is a private company, KeyLink Family of Companies, is somehow tied to Clarocity and Valuation Vision. Not sure how they fit into this business total operation.


Dave Towne
Image credit flickr - Christian Kanzian
Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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27 Responses

  1. Avatar Chris says:

    They can try, real Lenders wont lend on these. I know large banks trying and trying and still tying to get realtor BPO’s up to speed with appraisals. They fail all the test ALL the time. I know reviewers tasked with this. Out of 50 BPO’s, they have disagreed with 49 of them. They been trying this for 20 years.

    Realtor measuring homes, doing inspections, etc….no field inspection by the appraiser or driving comps….NOT GOING TO HURT US.

    Don’t forget, its the investors calling all the shots these days, Not banks.

    • Chris but it is bank /sellers (securities bundlers such as FNMA) that are trying to cut THEIR costs while still fooling investors into thinking they have been protected by competent appraisals.

      There are so many layers between the actual appraisal and loan decisions and the ultimate investors that  there is only a pretense of them calling the shots.

      It is still the commission incentivized “bank” selling its insured or guaranteed loan to the unwitting international investor that has the motive to continue to create new forms of fraud.

      Investors wont call the shorts until or unless insured/guaranteed loans are eliminated.

      • Avatar chris says:

        I agree with you Mike. But with all the buybacks, do you really think an inferior appraisal product is going to be allowed. Let me know, I am not as wise and informed as you. I am only 50. With an effective age of 70 doing this job for almost 25 years.

      • Baggins Baggins says:

        Chris, sadly possibly yes. It’s the pass the hot potato argument. When the bubble pops the typical move is to pass the buck. In technical terms this may be called offloading risk? If appraisers agree they’re taking on excess liability? I don’t know but those are the concepts which keep me personally away from that type of work. Not to mention I never was able to reconcile how I could claim independent unbiased non advocate positioning when I was directly following and single realtor whom functions as an advocate bpo as an integral part of my base analysis. An open market sale with contract and 2 advocate parties opposing is not the same as following up a single. Imagine being a buyer and the seller says we already did that appraisal for you, just have your agent line up the contract at this predetermined appraisal figure and that is your buyer position, sorry no negotiation room here, excluded by predetermined results. And then I’d bet the catch 22 is negative ‘performance grading’ if you fail to have strong correlation of your end value vs the bpo. Then icing on the cake, how does this relate in the state to state consideration where appraisers can run bpo in some areas but not others? It’s all so complicated just better to stay back from them. So I fall back on my old tag line; If anyone wants to save the borrower and/or client a dollar and a day they are free to do so from their side of the desk but that has never been and never will be the responsibility of the appraiser. Cheers.

      • Avatar chris says:

        Thank you !

  2. Avatar jack connor says:

    These guys were clowns back then and they are clowns today. There are other companies that are leap years ahead of them already. They will die on the vine just as they did before but without fleecing so many appraisers as once was the case.

    • Avatar chris says:

      I talked to them, it was a joke, take pics of 10,000 properties. Take notes in their machine. The owner actually told me the beauty of it all is first they would order a 2055. I told him they were not doing 2055’s anymore. He said that is the beauty of it all. They will then order a full 1004. So double the money. I laughed right in his face. Why order a 2055. At $10,000 a district, if I remember right. I was told there were appraisers who bought 10 districts for $100 k. I laughed my ass off again and told him good luck. Appraisers are the smartest dumb people out there.

  3. Avatar G says:

    So when Fannie dissaproves later and wants the lender to repurchase, who will defend the appraisal?  Who will be at fault for the info: the appraiser, or the real estate agent submitting the exterior report?

  4. Highly newsworthy and timely Dave. Thank you for all your research.

    When ZAIO first came out I attended a presentation along with my business partner. Using many of the EXACT same claims as noted in the article above about this being the wave of the future, that foreign originated firm completely disregarded the constraints of USPAP. Most attendees rejected it out of hand for that reason alone.

    They even had a former high level (Ass.t Secretary?) U.S. Government Official on staff to lend credibility to what was otherwise a ready made vehicle for appraisal fraud.

    How does the product above differ from First Americans previously proposed PACE PRO product which pretends to act like an appraisal but had disclaimers throughout saying it is NOT an appraisal BUT DOES comply with USPAP? That form alone was so bad that the Feds got concerned enough to address it when increases to the de minimus limits were last being proposed.

    IF lenders and GSEs (you know the ones; those that FAILED TO PROTECT THE TAXPAYER already) consider USPAP compliant appraisals too burdensome for ANY reason, then let them obtain Congressional approval to make loans without them. Period.

    FIRREA Act of 1989 recognized the need for a uniformly regulated appraisal profession after the S&L Crisis. USPAP are the standards deemed to be the MINIMUM acceptable standards for an appraisal.

    If they do not want to meet MINIMUM standards, that’s fine. Just end all pretense of responsible lending and cease government loan insurance, guarantees and implied or explicit support (financial backstopping) for all national or international reinsurers dealing with ANY product arising from non appraised property lending transactions.

    Require disclosure that in the interests of processing speed for the benefit of securities sellers, and reduction of costs for those same sellers have completely eliminated anything except a cursory pretense of value confirmation which should not be relied upon by investor purchasers.

    If there is really a market or “demand” for such a product as these ongoing criminal enterprises claim there is, then their investors will accept the disclosures readily ad with no more discounting than is traditional for “A-Paper” loans.

    As a concept, there is nothing wrong with a ‘hybrid’ as long as it truly conforms to USPAP and no one is being mislead that it is anything other than what it is. But if this were the case, the 2055 would never have been made to look like a URAR form would it? It would be no more than the OLD style 704, which was at least an honest presentation of data.

    The 1991 ‘cost’ for such a form was typically $150 (down to $110 through title insurance companies when combined with $100 limited liability policies of title insurance for HELOCs). Adjust THAT fee for time and inflation and just do old style 704’s with no property inspection required-extraordinary (default) assumption everything is “average” and charge $250.


    • Baggins Baggins says:

      Mike you are the man. One day when I catch up from this previous decade of deferred income (ha!), and finally manage to get through this 20k something bill for necessary home upkeep and maintenance services I’m regrettably dealing with, I hope to be able to pay your yearly dues and join. Thank you for your dedicated efforts.

  5. Avatar Mark Thomas says:

    “Hybrid Appraisals – Why They Are Impacting Appraisal Employment”

    Appraisal Employment? Is that a common term?

  6. Avatar Wayne says:

    I just love all of these “companies”! I  received an order by email two days ago. The “order” told me what type of report they required. They also told me what fee they paid ($400.00). They gave me the borrower info and told me to contact them within 24 hours. I must provide X number of closed sales and a listing or two. I must provide my E&O information and license in the appraisal. I must pay a $10.00 technology fee as part of the transaction.

    Today these idiots sent me another email requesting a status on this assignment. I am just curious as to how long it will take them to figure out that I am not taking this assignment. They never asked if I was willing to accept it and of course I will not. I do not work for crap companies like this! You would think that they would catch on after a while. Am I under some type of obligation to respond or can I just ignore them and let them figure it out over time?

    I do not consider companies such as this to be my client. I wish they would all go away. Why should I do anything to assist them in any way?

    • Baggins Baggins says:

      This is my argument from the article immediately prior to this. They’re behaving like marketing companies not vendor management companies. They will put you on the approval list and roll the appraisers contact info and such right in without permission. Appraisalscope, mercury, various records checking companies, they all do it and share information while simultaneously not allowing the appraiser to maintain control of where their information goes and whom may and may not deal with them. I went on long term Mercury vacation, pumped Appraisal Port fees to 1k for every single product, and regret ever giving appraisalscope my contact info when they were a startup whom promoted direct assignment (bait and switch in the long term consideration). Funny thing is they all advertise like 40k or more national appraiser vendors available. They seem to have forgotten simple math and the need to divide the number of appraisers by the number of amc’s whom may work with them, also forgetting to cut out the base which refuses engagement with amc’s in the first place. The actual formula for amc’s appraisers servicing base would be; appraiser base populace count less hypothetical 2/3rds whom refuse service, divided by number of competing amc’s, then further parsed by the individual companies distribution volume. I assure you, that’s nowhere near close to 40k appraisers. This is looking more like professional harassment than anything else. And since the amc constantly brags about the panel size they typically use that in arguments with appraisers as a leverage point to force our engagement. But the response is so obvious; Well if your panel is that large, call the other guys what are you doing on the phone with me. “If they call you, they need you, price accordingly.” Your question if you are obligated to respond to the direct unsolicited orders begs an answer but I have none. I just constantly deal with time drain bucking off the unsolicited orders and bids.

      In a single day last week I deleted over 70 unrequested individual order bid emails. I have a foot high stack of unanswered and answered solicitation panel requests over a few years. I’ve had to resort to threats of ethical complaints to the state agencies to get them to stop emailing and have had to buy a call blocker device to keep them from calling. As a group, amc’s have tanked most appraisers operational efficiency. Their client is the lender. Their customer is the appraiser.

  7. Avatar Ms.J says:

    These products aren’t new, but they are not a first mortgage product. A boatload of Lenders are already using “hybrid” products to loan on Helocs, etc. Valuenet does a tremendous volume and pays Appraisers $50 a pop. No E&O required. And they scoop them up.

  8. Ross Grannan on Facebook Ross Grannan on Facebook says:

    Bartending pays more, liability may be less

    • Baggins Baggins says:

      But either way you slice it; bar tending or being the bpo appraiser, you’ll probably still be drinking on the job! Some of the glassdoor earnings reviews of those companies were pretty harsh 1 stars.

      Here you go, it’s a massive company play. But same old story; They sold the product based on an expectation, not necessarily a reality. Taking me back to the argument of who’s responsibility it is to save a dollar and a day, and that’s certainly not the appraiser.

      ValVets Appraisal Management, A Proposed Zaio Company, Awarded Nationwide Appraisal Contract with U.S. Federal Agency

      If you wanted to dig, you are able to do so but why bother. Learning they are a traded company is enough for me to turn and run. Care to be more competitive to help the companies traded shares increase? And whom would the investment body (bodies) turn to if this went south? Take a wild guess. It’s true, they’ve commoditized the appraisal service. Just one problem, I’m a 1099 disinterested party whom does not share in company gains and does not produce widgets.  Would it be ethically allowable to own shares in the same company you provided this service for? If you provided the widget and owned shares would you have to disclose that? Food for thought but dang, I’m just a one man show and appreciate the simplicity of my low level simple working man status. Now I never deal with this level of business, but click the all button for the graph chart. Projections did not seem to line up with reality then, and probably won’t now. I’m thankful to not have to consider these things with regular every day individual appraisal services.

      Clarocity Corp (CVE:CLY)

  9. Baggins Baggins says:

    We’re up against a never ending stream of this. Foul and perhaps we do need a union.

    HousingWire appraisal management company

  10. Avatar Ralph says:

    There are already alternative products being used, such as old 2055 form for HELOC’s where the clients allow the use of all MLS photos and public records/assessor info for the subject, these are ordered as a drive by and if the subject has plenty of equity it’s simply risk analysis for the lender. They get the report back much faster than a full 1004. The old 2055 is a great form and I still use it often on private work where in depth full appraisal is not needed. I LOVE THAT FORM!

    Appraiser’s need to get out of the mid set that a full 1004 needed for every order, especially when 95% of appraisals meet the sales price. It is just a matter of time before there are new forms and products where the appraiser may simply be in the office reconciling a report with photos already provided by an property inspector.

    I hear you old school appraisers already screaming at me! “How can you do that if you  did not do the inspection” Again, it’s risk analysis and if you receive photos of every room, a sketch/floor plan etc. and you can check the comparables by Bing/Google aerial and street scent maps you should be able to derive a reasonable value range, maybe not as precise as if you did the actual inspection, but a range that allows the lender to make a risk assessment. Maybe FHA/VA/USDA will still require a full 1044, since it’s low to no down payment, but if a borrower is putting down 50% is a full 1004 really needed? You better bet that’s what the banks are asking and with the number of appraiser’s continuing to decline each year it is only a matter of time before we are seeing new forms or products.

    • Baggins Baggins says:

      Ralph, I hope you did not break a leg jumping so far with those conclusions.  Have you asked your EO insurance carrier what they think?  You’re posturing as an advocate of the lenders interests and have overlooked the question if this activity is even covered practice.

    • Avatar Clint says:


      You should not use a 2055 form for personal clients. The Fannie Mae forms are designed with Fannie Mae as an Intended User for the purposes of lending. If you are using a form that specifically states Fannie Mae as an intended user, and lending as an intended use, you could be in serious trouble by the licensing board as this is a direct violation of USPAP. Your appraisal software has forms for personal clients. You should be using those, and amend them for your limited scope of work if you choose to do an exterior only inspection. There might be a form for a personal exterior only report, but I’m not sure.



  11. Avatar CYAssets says:

    Working in mortgage & finance biz in many positions over 30 years I’ve seen it from inside banking. Everything is about $ period. The hustler snakes working in BC lending went to Countrywide & the banks like WAMU pushing in-house appraisers to their wits end failed with portfolios of garbage loans. The AVMs were used on 80% Ltv and 2055’s for 75% or less way back in 1990’s  End of the day ask yourself if what you’re doing keeps your license in good standing without recourse from legal ramification. The ones doing low fee work & DeskTops are desperate and trainees with little work or much security.  Where there is a willing body….. Don’t forget attorney’s find every loophole to get you on especially GLB Act ‘Gov Requirement’ which strengthens their case for a settlement against you. Did you encrypt your PDF & email service when you received any assignment info & sent that report which must disclose GLB?  ha ha, The DT is being marketed hard now as a Collections/REO product with no lending decision attached -but does that excuse your liability or USPAP? No !  Do you know if you get a claim on your EO insurance the premium literally doubles if they will still insure you.  The more appraisers allow themselves to be bullied into their license being used for a low fee with all the liability, the more it will continue. CYA


  12. Avatar Milton P says:

    Just read in 100% Appraisers on Facebook some appraisers are having trouble getting paid by Clarocity. Reports of 60+ days past due with no communication. One of the comments stated a factoring company no longer accepts their invoices.

  13. I made the mistake of becoming a zone photographer for ZAIO when they first started. I couldn’t see the business model, so I never bought any zones. But I know people who did and lost a lot of money.

    I would definitely steer clear of Clarocity as it’s probably not much different. ZAIO disappeared owing me over $10,000. I shot over 170,000 photos for them. They were protected by being based out of Canada and also having their headquarters in Arizona.  As if they knew what would happen.


    • Roger, I’m sincerely sorry they conned you and about your loss. I knew others that fell for it too. They did have a pretty slick presentation back then…right up until one realized they were flat out lying about USPAP compliance…then everything else about the fraud pretty much fell right into place.

      Any of us can make a mistake, but you know what’s REALLY galling? That the Sausagemaker was given awards as man of the year and that ANYONE in government agencies didn’t send out widespread notices saying in effect “The Emperor’s not wearing any clothes!.”

      Their scams, just like the hybrids were so blatantly in violation of every real ethical consideration of USPAP and just plain honest behavior that it’s hard for people to accept that such bold lies can be blindly accepted by the government regulators.


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Hybrid Appraisals – Why They Are Impacting Appraisal Employment

by Dave Towne time to read: 3 min