Independent Fee Appraisers Under Attack
Appraisers, I have reached my boiling point about the negative press ‘we’ Independent Fee Appraisers have been receiving for many months – concerning supposed ‘systemic racial bias.’
It’s been done on purpose by a particular group of individuals whose main strategic objective is to keep many citizens teetering on their toes, always on the defensive, while the perpetrators claim they’ve been oppressed. It’s part of a new ‘culture’ of divisiveness promulgated by negative promoting people hell bent on disrupting society. There is no ‘unity’ in what they are doing. Only attacks.
These stories make it seem like ‘we’ Independent Fee Appraisers are the only ones responsible for housing discrimination. That is patently false. But I also don’t see very many any in our industry standing up to the falsehoods being presented.
Housing discrimination started with GOVERNMENT actions to a great deal, who forced individual citizen and neighborhood changes, perpetuated by prevailing citizen attitudes across the country. All races and indigenous peoples have been affected.
Independent Fee Appraisers did not cause housing discrimination, nor have ‘we’ selectively oppressed vast numbers of races as have GOVERNMENT officials – for nearly 2.5 centuries in the US. This has been going on between peoples for as long as humans have been on this planet, roughly 6-8 THOUSAND years.
Independent Fee Appraisers have only been recognized in this country since the 1930’s.
I want to see Rep. Maxine Waters hold another “appraisal” hearing, but this time subpoena county, commonwealth and parish jurisdiction elected and appointed assessment appraisers as witnesses. Prime people to testify are those from the cities Andre Perry and team identified in their Brookings Institution Report. Have the assessors explain how they determine the LOCAL ASSESSED VALUES across their jurisdictions, especially if there are notable differences between identifiable neighborhoods, particularly where red-lining used to be the norm.
Housing values are the result of ‘assessments’ for government taxation purposes, which began in the late 1700’s in the US. Local property assessors established the initial valuation roles, and rules. Over the years, assessed areas have had assessed values change depending on actions of people in their local communities. Independent Fee Appraisers did not cause the value change. But appraised values, when done correctly, without bias, tend to correlate with government ASSESSED values.
It should be noted that the Brookings Institution Report produced by Andre Perry, et al, uses that exact concept, “the value of assets” without specifically mentioning how local Assessors have been the primary valuers of local properties. You can read the Report here.
The 2018 report, and the subsequent testimony of Mr. Perry at the 2019 congressional hearing, cleverly, and incorrectly, lays blame on Independent Fee Appraisers, implying that it’s ‘us’ who are the wrong-doers in the property value differences. It was used to establish a policy platform for political purposes.
“Biden will establish a national standard for housing appraisals that ensures appraisers have adequate training and a full appreciation for neighborhoods and do not hold implicit biases because of a lack of community understanding.”
Really? Will local ASSESSORS also be required to attend the training sessions (like are being forced on Independent Fee Appraisers) to gain a full appreciation for the biases that may exist in their offices, and get those changed? Will they then begin to raise property values? Will they be prepared for the backlash when the assessed taxes increase in those areas? That’s the real catch 22 that no one seems to understand. Higher taxes will lead to less affordability for the affected people.
Will the GSE’s and others change their appraisal policies to allow ‘any’ property, no matter how far away, to be used as a comparable to a subject in a current “area of bias”? That’s also a conundrum no one has addressed yet.
Racism in housing has been permitted to exist because of the way GOVERNMENTS have conducted themselves for decades. GOVERNMENTS, and even biased private organizations like the KKK, HOA’s and others, are the ones who have valued areas in this country based on racial biases, NOT Independent Fee Appraisers.
Independent Fee Appraisers are observers and reporters of facts within their communities. “We” do not establish overall neighborhood values. Values are determined by participants in the selling/buying process, which is a market force, not initially structured or actually influenced by Independent Fee Appraisers.
Independent Fee Appraisers are obligated to perform their appraisals according to established regulations and lending guidelines. If ‘we’ do the work correctly, using appropriate properties in reasonable proximity to the subject, then how can Independent Fee Appraisers be blamed for not valuing subject properties higher if market trend info does not support higher values?
Secondly, not discussed often by the ‘blame appraiser pundits’, are the vast number of non-appraiser, electronic algorithm AVM’s being used for lending purposes, and for the mass appraisals jurisdiction assessors use. Where do those get their data from? Do they choose to use properties from higher value neighborhoods when establishing their computerized property value in a low value neighborhood? Probably not. And neither do experienced Independent Fee Appraisers.
All the stories I’ve seen so far are hit pieces against Independent Fee Appraisers to make it appear that housing discrimination is all ‘our’ fault, which is patently wrong and unfair.
I’m not saying that there are some appraisers who are biased and perform improperly. They should be exposed and removed as appraisers. But the rest of ‘us’ do our work properly and should be recognized for that.
The inflammatory articles which have appeared to date use race baiting and victimhood as their basis, and broad brush all appraisers into one ‘anti-race’ category, which is a false premise. It’s the same point of view Mr. Perry has taken, which attempts to correlate processes used by current Independent Fee Appraisers with governmental actions that occurred many decades ago.
It’s a sleigh of hand trick to divert criticism from where it really needs to be placed.
It’s way beyond time for the various appraisal organizations at the national and state levels, industry trade magazines, plus local appraisers in their own communities to start refuting the negative stories about Independent Fee Appraisers, and tell the real story about how appraising is done… by Independent Fee Appraisers.
Dave Towne on e-AppraisersDirectory.com
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Completely agree with you! Thank you for taking a stand.
AMEN! A thousand AMENS! But if you’re expecting those with a platform in our profession to speak up forget it. The voices in our profession WILL remain silent, save for yours and just a few others, because they’re all scared to death of losing…losing something, be it a high paying position, stature, reputation, invitations to cushy conferences, whatever, etc.,. It’s a “I better get on board or I’ll pay the price” mentality. Thank you Dave for attempting to poke a finger squarely in the eye of all the false BS being hurled at the appraisal profession.
That’s simply not true.
AI has a platform. While they took a non confrontational approach they demonstrate open willingness of the profession to help under represented POCs through scholarships.
TAF admittedly is one of the pure panderers…but they depend on the good will of Congress to continue in their overpaid positions.
By the way…IF TAF had not totally failed in their mandate to protect the public trust, no systemic racism could exist in appraisal. If they had in fact protected the public trust, then the belief we are all racist would not exist in the minds of half of America.
Their positions on the topic amount to a confession of failure for 30 years.
State coalitions are speaking out. Both they and AGA are responding to news reporters inquiries, originating articles on the topic and trying to get others in the profession to become involved in defending it.
I fully expect to have direct, personal retaliatory attacks for speaking out on the current trend of pandering by government to a tiny percentage of RACIST Black Americans and their effort to undermine my nation…let alone my profession.
Bob, this goes far beyond our profession now. Government leaders (in military and elsewhere) are being told to promote the moronic writings of Ibram X. Kendi and hus “How to become an Antiracist”…in which he admits he hates white people and believes us to be devils.
THIS is the tenor of our political leadership today.
Yes Bob. Some of us will continue to speak out. Now watch the backlash. Even in here.
“I fully expect to have direct, personal retaliatory attacks for speaking out on the current trend of pandering by government to a tiny percentage of RACIST Black Americans and their effort to undermine my nation…let alone my profession.”
So I will affirm that you are saying black people are the racists and white people and the nation that belongs to them are the victims?
You can affirm whatever you want to for yourself. Don’t put words in my mouth.
Especially not those derived from sophistry.
Obviously, I quoted you so that is not “putting words in your mouth”. A quote is “words from your mouth”.
“So I will affirm that you are saying black people are the racists and white people and the nation that belongs to them are the victims?”
Obviously, you are a liar.
Absolutely! The Government has promoted racism as long as I have been around (a long time). The entire “blame the Appraiser” litany is humorous (and blatantly false). Anyone for starting a new Country? Might be easier.
The Government is the government and has been the center of law and hopefully justice. laws changed and so did government. In the 1700’s they valued slaves as did their owners, and they assessed them as assets until the laws changed. Several States were in economic troubles because The states lost too much value after the wars and the new citizens couldn’t replace those high values they use to represent.
That changed very dramatically .
States share the responsibility of government with the Feds and those responsibilities are written into our constitution. Not all of our lands were acquired the same way we won a war against England and adopted rules and laws from them ending in 1795? We won wars against the Indian’s and made settlement contracts with them, We bought large territories from the French and Spain and recognized the previous grants and some ownerships rights. We even bought a state from Texas! was that wrong?
We are a complex society and are wrongfully characterized in any single direction.
Humans on this planet for 6-800 years ??? You mean 50,000 years at least and a whole lot more depending on you definition of “humans”
The sentence I wrote is this in the article: “This has been going on between peoples for as long as humans have been on this planet, roughly 6-8 THOUSAND years.” Not 6-8 Hundred years. But I probably have over-stated the years by at least a couple of million….per an article in New Scientist.
Thanks so much for putting this message out there.
“This has been going on between peoples for as long as humans have been on this planet, roughly 6-8 THOUSAND years.”
Humans have only been on Earth for 6 to 8 thousand years?
“But appraised values, when done correctly, without bias, tend to correlate with government ASSESSED values.”
Appraised values do not correlate in any way with assessed values. Both arrive independently. It should be added that tax assessors do not go into subject homes for inspection, unlike appraisers. Lenders use the market value in the appraisal not assessed value when making a loan.
“Housing discrimination started with GOVERNMENT actions to a great deal, who forced individual citizen and neighborhood changes, perpetuated by prevailing citizen attitudes across the country.”
What were the “prevailing citizen attitudes across the country?” Please elaborate.
“Values are determined by participants in the selling/buying process, which is a market force, not initially structured or actually influenced by Independent Fee Appraisers.”
Appraisers report if the seller of the subject and all the comparables are “typically motivated”. “Blockbusting” was a common and widespread practice for decades done by realtors. Sellers in a “blockbusting” situation are not typically motivated and this affects value.
And BTW Mr. Towne, I’ve never seen you mention “blockbusting” in any of your posts. Do you even know what “blockbusting” is?
In California except immediately after purchases (reassessed under Article 13), the assessed value is rarely indicative of market value.
Assessors are always in the arrears. They re assess on their own schedule, often years apart. That’s the game with taxation and assessment, drive the people in, then drive up the tax after they’ve landed. The perception of weak value corelation with assessors is often a misconception. Understanding arrears and typical land to home value ratio relationships is helpful towards identifying if assessment relationships are reasonable, often guided by density of housing and usefulness of land. If assessors are too far off, that’s where the cost approach can rebuild the data to form more comprehensive conclusions, forming a more meaningful and true to actual real world building costs, which then may lead to a more realistic land value estimate. Assessors use categorical ratings, so do residential appraisers, the primary difference being a macro or a micro analysis with varied language in rating scale descriptions. But in the end, it’s all just market measurements. Assessors are also appraisers, but they often have the benefit of many other appraisers hands, depends on the size of the county. Some assessors figures where I’m at are very helpful, and mostly accurate, just in the arrears.
“Some assessors figures where I’m at are very helpful, and mostly accurate, just in the arrears.”
“Assessors are always in the arrears.”
“Understanding arrears and typical land to home value ratio relationships…”
Please Google the definition of “arrears” and “How to use arrears in a sentence.”
Assessors generally use “mass appraisal” techniques. Appraisers generally appraise individual homes.
The biggest difference: appraisers typically inspect the interior of the subject property. Assessors do not enter the subject home.
Its important to Know how assessments work as States can influence change and turnover or can reinforce a comfortable static.
Some states hire independent assessment contractors, do it from the county level and some don’t trust their counties and assess from the state level
Some really interesting appraisal assignments were based on history before USPAP. our sixteenth Pres authorized military’s pay with forty acres and a mule, he also declared $2.50 an acre as a base.
Before (13 in California) the assessor was influenced by the State Board of Equalization in UPDATING values. Seems that government had a taxing conscience, BUT a need for operating capital besides floating Bonds
Now Government floats bonds and then tries to find stuff to do with the money.
A homeowner contacted me recently about a tax appeal. They had successfully appealed so many times, they were enjoying a pretty low taxation rate. As a condition of the appeal this time, assessor said they needed to visit the property in person with an interior look. They then declined to go forward with the appeal this time around. Methods continue to change. In CO, some assessors now subscribe to MLS and review every single sale to see if they should update size records, quality ratings, and use sale prices as the basis. Rapid integration of technical systems continues on every level.
Independence v Advocacy are adventures into dangerous areas. I appealed my own taxes and later my sons taxes as property owners I spent 25 years as political appointee to the Board of supervisors as a assessment appeals officer. I listened to many accountants and appraisers testify to (proprietary) information that simply was not available to the MARKET place
I also listened to many advocating Appraisers testify to issues that the assessors had overlooked OR? Advocating a Value is a violation of many of the definitions of value and a contradiction USPAP. Another County Supervisor was elected and I am old & not politically active I am no longer in judgement. In California they try to follow USPAP’s rules, not lenders.
True. Reasons why I just redirect people to publicly available forms and politely decline assessment appeal work. Appeal away, an exercise in futility, it’s impossible to beat the tax man with real property. At best one can achieve temporary relief. Some would have better luck arguing for district line movement to live in unincorporated areas.
A sound money system may help keep the rising costs down. They’re burying QE in real estate but there needs to be limits. I like to tell people, don’t celebrate rising pricing just yet, what follows is the gift that keeps on giving, higher taxes and increased service costs across the board which will never relent.
When your story is that of coincidental landing in one of the last industries to actually understand what practical moral ethical principals are, and even then, fewer and fewer people adhere to the principals voluntarily.
People these days object to governance on one hand, with their other hand requesting some form of subsidy. In their failure to understand complex systems, understanding they got exactly what they asked for with big government, many look for individuals to blame. Coronavirus highlights these principals yet again, if government would have done absolutely nothing, it could be over already and we could have skipped all the petty rules.
Now the bureaucrats are forming committees to examine systemic racism. I say; look no further than the federal reserve. One day, the invisible hand will emerge from the shadows and wipe them out of the way. It’s all just political theater to skirt away from fiscal accountability and continue to spend other peoples money without restriction. Government is always bi partisan on the point of spending more of your money. What they spend examining these issues could have built up whole communities, but then who would pay the bureaucrats?
look around, go to Mass on Sunday, look in the parking lots of other on their day. Judging by what you think others ought to dooo is limiting yourself.
When you talk yourself into a funk you become funked and to no use to anybody.
Smile don’t appear puzzled, look good and you will feel good
Is value always in arrears. Your report was dated yesterday? Unless ??? you dated it at its completion, the Market which existed tomorrow or yesterday. Or Maby with some other idea or projection.
It’s always difficult. You can’t forecast but you can talk about the writing on the wall, aka current market happenings and climate. And the market is reactive not pro active, so sometimes as trends change such as rising rates, the appraiser will not be aware of the market response to that until some time later.
I’m going to start changing some of my language based on things I heard just like yesterday or the day before. That’s kind of normal though, but we need to have this anecdotal data confirmed by more than just one agent. And I personally do not fish for the sentiment but rather just talk freely about market happenings. When all the agents say the same thing, that’s how I know. The latest sentiment is a hard step back from consumer purchasing confidence. I ran some mortgage calculators on what may very well be a 3.5%+ or more point rise on a fully leveraged $500k, vs yesterdays which went as low as I think it was 2.5% for many. The difference was over a thousand dollars a month for the same amount. Cost of money, not price, people have a hard time getting their minds around it. If the whole show bounces back to an reo market I won’t mind, it’s about time we got some sideways or even upward mobility around here. We could withstand a shock which wipes out 75% of our equity and we’d still be able to make a move, perhaps more than one. The same can not be said of the refried refi crowed or overly leveraged people. Of course we don’t want to see it happen and if it does, it will be gradual as foreclosures build, confidence fails, credit extension gradually restricts, and the inevitable bail outs devalue both the money and the holding at an yet to be determined pace.
Get ready for it. I just stocked the freezer on credit, every single product, minimum 10% price rise compared to just last month, others notably higher. The full cart that used to cost me $300, now costs me $500. It does not feel like hedge purchasing, but it is still hedge purchasing. Hard for people to get their minds around that one too. People need better insulation from market shocks but they’re simply riding too high on the hog. They don’t know how to stop, inadequate financial education on the merits of thrift confirmed by a coordinated system of big corps whom do nothing but solicit and pander in every waking moment and every possible commercialized area us humans may frequent.
I don’t know where you are but in my city in CT assessors are supposed to inspect the interior of at least 10 percent of the properties and definitely if it’s new construction or remodel. This is in response to 2021 post regarding Assessors vs appraisers
Only 10%? What is that, like what they can see with their normal drive by routine? I’m getting a job at the assessors one day, need a paid day off. Nothing on the desk, it’s a whole new ball game and I’m running out of back log chores. Except taxes, I’m still putting that off.
10% is the typical annual sale rate for a residential trailer park, six to seven percent turn for entry level housing. Mobil home inhabitants are less stable.
Societies movement differs from age group to social group to whatever dictates.
Three percent Ain’t a small amount in this comparison.
These figures are easy to measure and knowledgeable to the appraiser
Assessment practices are different across the nation. Before “thirteen” CA’s 57 counties were dictated by the State Board of Equalization. They reviewed the counties for their efficiencies and accuracies. Some assessed every 3-4 years or less often. After 13 they still do but MKT value is measured MOSTLY by verified sales price when sold and factored thereafter, limited by another factor.
Some states hire outside contractors occasionally or when evidence dictates the necessity. I understand one state no longer trusts it county officials to assess.
Maybe we should declare Appraisal Independence Day from July 4th through July 11th and all take time off with Family. Maybe then they will notice and we would get some respect and treated as a profession.
You are right on the mark.
Dave, as always, great article.
The current issue being touted nationally is not that assessors were wrong. It is that under specifically ‘set up” circumstances, multiple appraisers produce different results. Ostensibly after “whitewashing” the decor.
Considerable research was done by a California appraiser (Initials MC) in the 100% Appraisers FB Group yesterday concerning a news article by Julian X Glover of ABC7 on a property by Mr. (Thaddeus) Shaheed of Sacramento CA. The address is withheld here for his privacy but it is very easy to look up from information in the article.
He had 2 such appraisals after buying a property for $430,000 a year before. One was for an FHA refi and the other for a conventional refi. About a $190k difference between the two.
I looked at old listings and pictures of the house. Size discrepancy in a multi-tiered neighborhood with speculative flipping or other corporate purchases was noted. He bought it as a 1,349 SF 2 BR 1 Bath; the second refi had it as a 1600+- SF 3 BR multiple baths.
The upper level is a fully sloped roof with two dormers. Note current FHA guidelines for calculating GLA of such areas. Then consider the lack of consistent policy for conventional loans. Looks like 2nd appraiser included upstairs (attic conversion? ).
I’m not commenting on the propriety of that. Simply that PERCEIVED guidelines for each GSE vary slightly on this. Conventional practices are to include such areas ‘as the market recognizes them’ even if outside FNMA guidelines.
Default search parameters for RealQuest (CoreLogic) Comp checks for 1349 sf produce mixed range from low $400s to mid 700’s; Comp check for 1600 sf yields indications from $430k (his prior purchase) to mid $900’s. Ages of houses from 1919 to 2002. All under 3/4 mile distance. Most under 6/10ths.
Mr. Shaheed’s property also fronts across the street from the expanded classrooms of a large elementary school. Impact unknown. There is a fully fenced park 1/2 block northerly. Impact unknown. Other relatively minor impact omissions were claimed. Aside from size, most weren’t significant. A new roof wasn’t separately reported but the lower concluded amount was still sufficiently higher than the prior price to indicate it was factored in condition.
The lower, FHA appraisal was turned in to the State Board (BREA) as a complaint. The higher conventional one was not…though there is clearly an issue with whether or not the reported/considered gla was permitted area or had adequate head height for consideration as living area.
PM me for the address. I don’t want to disclose it in a public forum where it has not already been disclosed (its in the 100$ Appraisers Group via its original listing from when Mr. Shaheed bought it.)
I emailed the above information to the author at julian.x.glover@abc7.com but it came back as undeliverable. Mr. Glover is also on linked In. I’ll try that next.
The article was unclear. Refers to whitewashing but suggests it was NOT done between appraisals. Just considered. Racism is concluded by the owner, because he could not understand such a huge discrepancy otherwise.
I just offered a possible or probable explanation above. Also, in this instance, the property is not a cookie-cutter nor is the neighborhood comprised of cookie cutters. Lots of higher-end sales taking place well above Mr. Shaheed’s original purchase price. I hope the second appraiser was certified due to the property valuation complexity.
Separate from above. AGA President, Mark Skapinetz attended the CFPB Webinar or zoom call yesterday. One HUD speaker (Elena somebody) indicated formal complaints to HUD alleging racism are up 19X !!!
She didn’t indicate if that 19x is 19 x 1 from prior years or more. Exceptionally disingenuous without specifying how many there were in prior years in my opinion. My suspicion is prior years may have been none to one; and 19x’s was pulled from you know where.
In any event, we have at least 19 before HUD now if her math is correct…to possibly 38 if only two complaints years before. It starts getting scary if there were more than 3 in prior years.
Even 19 now should be a giant warning to all of us. Thoroughly document your work files! Also ensure no silly oversights occur during an inspection. Take LOTS of pictures but be very careful to avoid anything suggestive of ethnicity. Don’t blur them out – avoid taking them in the first place!
ALSO, (not legal advice) IF HUD contacts you investigating a complaint, they will ask for all your workfiles for the prior six months, or at least copies of reports for prior six months.
DO NOT GIVE THEM TO THEM UNLESS YOUR OWN ATTORNEY SAYS TO! Not without a very specific subpoena. HUD does have ambiguously defined authority (as does the Department of Justice) but do NOT voluntarily give them the ammunition they need to manufacture a “Disparate Outcome” case based on your own work!
These complaints are much more serious than state complaints, which are bad enough. There is a political agenda driving these complaints, and you cannot be assured of fair or impartial treatment.
I have been a senior review appraiser for a large government agency (IRS). They have a LOT of leeway.
Unlike state complaints which are usually USPAP limited, DOJ complaints can go criminal very easily.
PROTECT YOURSELVES ALL the time!
PS 100% posted above as 100$ it is 100 (PERCENT) Group using the symbol for percent.
Posting glitch.
“A new roof wasn’t separately reported but the lower concluded amount was still sufficiently higher than the prior price to indicate it was factored in condition.”
This is actually a large omission that would impact Effective Age and value. Given the appraiser didn’t even bother to include a rather large maintenance item in the report, I have no reason to believe Effective Age was recalculated at all. And how can you possibly know that the “lower concluded amount was sufficiently higher than the prior price to indicated it was factored in condition?” On the contrary, I would assume that the appraiser did not factor the new roof at all given he did not mention it.
May I ask which appraisal report you are referencing?…and if it is one of the reports in question?…and if you are a Professional Appraiser?
I’m referencing the report he is referring to in the quote.
Yes, I am an appraiser.
Possibly. In any event, without actual copies of BOTH appraisals, neither of us fully know what was or was not done. Appraising the property for $60k MORE than was paid for it a few months earlier suggests some consideration may have been given to the condition. Then again, it could simply be a market increase.
It’s one thing to say “GOTCHA’ over lack of detailed “upgrades” (as opposed to just considering it in overall condition …where a roof is expected to be serviceable) and jumping straight to an accusation of racism. Who knows?
That’s not my market area but I pride myself on being able to handle tough assignments. This one would have been challenging because of the very significant differences in immediate area price trends, & in gla & apparent spec activity; age range, as well as the proximity of two very significant immediate sub-neighborhood, features so close (school and park). BOTH could go either way or even be neutral in many markets.
He may also have been swayed by the prior price and rate of inflation/market trends. Again-self inflicted wound if that’s the case.
You can read between the lines in the article. They went from FHA to conventional for a reason. Was it because the FHA appraisal stays with the property for too long a period, OR was it because they believed they could get the ‘suspect’ area included as gla in a conventional transaction?
One thing the appraiser COULD have done (should have done) might have been to explain the sloped roof ‘living area” exclusion better and in more detail. He may still have had an upset borrower, but at least it would have highlighted WHY the rooms and gla the owner believes he has weren’t counted.
In California, the size disparity coupled with room count disparity from public record is usually indicative of an unpermitted area. Not always, but more often than not.
In any event it’s unfortunate he had a complaint filed with BREA over something like not explicitly stating the roof ‘was new’. To some extent a self-inflicted wound, though again, doubtful it was racism-related.
“”…as well as the proximity of two very significant immediate sub-neighborhood, features so close (school and park.”
In appraising, we call these “external influences” which can be either positive or negative and need to be explained in the report. I’ve never heard of “sub-neighborhood features”.
I don’t know about the GLA of the attic. If the attic is too low, it may not be considered living area. There is not enough information to go by for me to comment on.
Regarding the omission of the new roof, this is a major defect in the report. You could never get away with just saying that a roof only needs to be “serviceable” and rating the subject “average” (C4). The roof is a major component that is used to determine “Effective Age” which can significantly deviate from “physical age”. In all reports, the appraiser needs to explain how he determined “Effective Age” and mentioning the new roof would be important especially if “Effective Age” deviates from “physical age” by a wide margin. In the Marshall and Swift physical age chart, you will definitely see replacement of a roof on the chart as a factor for determining “Effective Age” and this chart could be used in arbitration.
To my knowledge, I’ve never left out in any of my reports when an owner has recently replaced a roof, not only because it is important for determining “Effective Age” which will affect the comps chosen and, consequently value, but because the owners (and listing agent if the house is being sold) will never fail to mention it due to the high expense of replacing a roof!
This black owner is absolutely entitled to make a claim of racism in this case. The board will have to determine if that is the case based on the available evidence. Frankly, due to this appraiser’s unforced errors, he deserves all the scrutiny he gets. I haven’t made the mistakes he has made so I have little sympathy.
Condescending sarcasm aside, you don’t know what you are talking about.
Any appraiser with one week experience can look at the mls photo of the property and see there are no sidewalls all around due to severely sloped upper level.
You seriously think an owner is entitled to make claims that appraisal error (and we don’t KNOW he made errors). We only know errors are alleged.
Further that the owner believes nothing except racism could account for the errors…which of course must be the lower value appraisal rather than the one that seems to have included unpermitted attic area as gla is sound cause for a state complaint?
I sincerely hope you have the opportunity some day to experience defending yourself against false allegations for yourself.
Better yet, perhaps a HUD/DOJ investigation for an appraisal with “Disparate Outcome” being alleged. Even with your perfect appraisal history it would prove interesting for you.
If you have verifiable support and analysis that is reproducible by a reviewer or state board for every aspect of your report where analysis is required and facts are reported, you will always be one step ahead of any homeowner, realtor, or reviewer who files a complaint with the board or threatens legal arbitration. For this reason, for the few complaints that I have had, my reports have been unimpeachable and survived every complaint.
In contrast, reporting a roof as “serviceable” without mentioning that it was recently replaced sounds suspiciously like you are using boilerplate or a template to describe condition in all your reports. To the extent that your boilerplate deviates from the facts, you will be guilty of malpractice and will likely get sanctioned whether the complaint is lodged by an aggrieved owner for racism or just sloppy work.
The roof is merely one of many components to a home. Got to review the big picture to maintain an accurate logical inference of fair categorical placement in the price and value spectrum. Adjust it out from there. One presumes benchmarks to value are consistent, but that’s not always the case. Speculators have a habit of shaking up the benchmarks. Some are good at driving the market, others are reckless.
The most effective resource for determining “Effective Age” (and the only such resource I am aware of in existence) is the Marshall and Swift lifespan of a building chart. Replacing a roof makes a pretty substantial change to the “Effective Age” on the lifespan of a building according to the chart. I use the chart for determining “Effective Age” for most of the residential assignments and include it in the workfile. That is more due diligence and proof than what 95% of residential appraisers do for determining “Effective Age”. Bracketing “Effective Age” on the sales grid will determine if any adjustments are necessary.
Im glad you go to the stated lengths. I agree with that part 100%
…as for the rest you are conflating who did what. I am not advocating one way or the other. I am pointing out possible explanations short of racism, that may have produced disparate results
PS- I’m not big on boilerplate. Certainly not for explanations of what I did or didn’t do.
Unfortunately, Professional Appraisers have no organized voice and I don’t see that we ever will. There is no one to defend us. And that has been used against us for years.
After all that Appraisers have been through over the last 15 years, THIS will be what is utilized to remove us from the lending equation, just as the GSE’s and especially AMCs have wanted for YEARS now. We have never been more than a hindrance that is in the way of their predatory lending practices.
Removing us will finally put the FOX completely in charge of the HEN HOUSE.
While we can certainly improve our Profession and our Appraisal Process, what’s being proposed will not accomplish what they are “saying” they want.
As Appraisers, WE have failed miserably in educating the public about the appraisal process and exactly what we do. They are not aware that WE are the only party in a lending transaction that is TRAINED to be neutral, unbiased, and not an advocate for ANY party.
*Basically…WE are in place to keep everyone else honest.*
For those that sincerely believe that the Appraiser is the one that is your “enemy”…be careful what you wish for. Without US, borrowers will be completely at the mercy of lenders, and guess what? They are only trying to make money off of you, and will NOT present you with neutral, unbiased information on which you can make your borrowing decision.
Let’s all repeat together….”Unintended Consequences”. That’s what’s ahead for all of us, not just appraisers, but the borrowing public and real estate brokers. Realtors have been attacking Appraisers as well, because they also see us as a speed-bump to get over.
NAR has a “Valuation Section” and has published an official policy that states;
“The National Association of REALTORS® represents approximately 25,000 state-licensed and certified appraisers throughout the country. NAR’s Responsible Valuation Policy states that “persons who perform appraisals of real property shall be licensed or certified by their respective state regulatory agency and the appraisal shall be conducted in accordance with standards established in the Uniform Standards of Professional Appraisal Practice (USPAP).”
An appraisal is an important part of the home buying process because it assures the lender the property has adequate collateral to make the loan. NAR closely monitors federal legislative and regulatory issues related to appraisals. NAR has long advocated for an independent appraisal process and enhanced education requirements that allow appraisers to produce the most credible appraisal reports possible.”
https://www.nar.realtor/appraisal-valuation
Yet has anyone seen any “article” from NAR’s Valuation Section defending their “25,000 appraiser members”??
NAR is a powerful lobbying organization and if these accusations were being levied against Realtors, NAR would have responded by now.
We all should understand that this narrative has been formed at least since June 20, 2019 when Maxine Waters / US House Committee on Financial Services, held the hearing titled;
“What’s Your Home Worth? A Review of the Appraisal Industry – June 20, 2019”
Watch it HERE – https://web.archive.org/web/20211010091904/https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=403835
If you haven’t watched the entire thing, you need to. NOTE: At the end there was a plan proposed to put together another hearing in order to form a “committee” that would include Professional Appraisers to check into the information they were given by Andre Perry and the Brookings Institute.**You can see the documents at the link above. ** Keep in mind that Mr Perry is NOT a Professional Appraiser and the data utilized in the Brookings Institute Report was put together using data from Zillow. However….THE PROPOSED HEARING WITH APPRAISERS HAS NEVER HAPPENED THAT I AM AWARE OF. If I am wrong, then please send me a link to the info.
In addition, various “powers that be” are jumping on board to help spread the “racial bias” narrative and prove that they are good guys and are joining the effort to prevent it. So we as Appraisers, WILL be subject to new requirements and regulations…they are coming. Be prepared. Since no one has actively sought input from Appraisers up until now, I have no expectation that we will be consulted going forward.
If the public AND these Legislators really understood USPAP, they would all be aware that we are ALREADY under Standards of Professional Practice and Ethics that are more stringent than what LEGISLATORS must follow.
Additional information we ALL need to be aware of;
The US Congress is currently considering this legislation;
Read H.R. 2553 – Real Estate Valuation Fairness and Improvement Act
https://www.congress.gov/bill/117th-congress/house-bill/2553
**I encourage ALL of us to contact our Legislators, State and Federal, in order to let our voices be heard. ***PLEASE*** don’t send a ranting letter filled will profanity and complaints against a specific political party. This issue is way BEYOND that. If you are not able to write a professionally put together letter, then don’t do it at all.
We need to be able to be proud of our Profession, not be embarrassed by letters that may end up being online somewhere. ***Write your letters as if the world will read them…because they may.***
Note that financial companies are coming out with their own commentary;
JP Morgan Chase is calling for reforms to stop racial bias in housing
https://www.cnn.com/2021/06/16/business/housing-market-bias-jpmorgan-appraisal/index.html
And if you missed it, NOTE; the Consumer Financial Protection Bureau / CFPB also held a “hearing” just 3 days ago;
Virtual Hearing on Home Appraisal Bias / Consumer Financial Protection Bureau
https://www.consumerfinance.gov/about-us/events/archive-past-events/virtual-home-appraisal-bias-event/
Although this entire narrative could very well end up costing us all our way to make a living, THAT is not the worst part of it to me.
To me, this feels like a PERSONAL ATTACK on ME and the way I do my job, not to mention the kind of person I am and the way I’ve always lived my life and treated people.
That’s why I’m ANGRY…and why I can’t just be silent. I understand that there are those that are leery to get involved in this issue and voice their concerns. They are leery that they may be labeled a “racist” and that it may just cost them clients. I honestly don’t know how this will all end up. But if I must go down as an Appraiser…and no longer be able to do my job in a neutral, honest way….then I don’t want to go down silent, never having defended myself and those in my Profession.
I’ll go down fighting for the TRUTH.
We must remember that the origin of the negative publicity is from black owners themselves which started gaining media attention from a Facebook post from July, 2 2020.
facebook.com/abbbbbbSH/posts/10157315957283671
To date, the post has had 26 thousand shares and 2800 comments mostly from other black owners who posted comments that they experienced biased appraisals. The top comment from this post is the following:
“I am an appraiser and this is going around our boards and most of the appraisers don’t want to admit this could be true. Because it is illegal to do this they act like it can’t happen. But this doesn’t surprise me at all. I also have issues with a lot of male appraisers when they deal with an educated female. So maybe you got the double whammy. I have seen some crap appraisals and in many areas, appraising is subjective which allows for implicit bias.”
The present negative publicity did not start with Maxine Waters, Joe Biden, or a small number of pundits as Mr. Towne asserts. The negative publicity came from black owners themselves. Politicians and trade organizations have been reacting to it ever since the controversy came to the public fore.
My prescription for these criticisms (or “attacks”) of alleged bias is the opposite of Mr. Townes. As appraisers, we should be listening to the public without lashing out and embracing process improvement instead of fighting it. We certainly should not be air grievances against the public as would happen with a union as that would only subvert the appraiser’s mandate to be “non-biased”. The “unintended consequence” of “fighting back” is to reinforce the view in the eyes of the public that we are biased flawed humans.
PANDERING to false claims of racism is never a solution. Let the accusers hold up the reports to professional scrutiny from appraisers with no political agenda to promote. Heck, let them be reviewed by Black appraisers if that’s a concern.
Woo hoo! Looks like someone is using a VPN to give lots of thumbs to Tammie!
Nope, this site drives a lot of traffic, but most just read and watch.
What’s important to understand about Brookings, is they were working with lenders to do loan modifications in urban locales for struggling borrowers, on a pro bono advocacy type basis. And they were then often successful. So why not codify that into another government program and profit… It’s going to be a cash cow and instead of those advocates dealing with lenders for writedowns on a voluntary basis for loan restructuring, it will now be the law, lenders will have to participate, and people will be paid with taxpayers dollars to be advocates for one segment of the population, and not the other. The largest body of impoverished people in this country is in rural areas, but they will not have access to this specifically tailored new program. Fair minded people would call this taxation without representation. These color coded policies will play out as all expost facto interference with private contracts do, they will create more problems than they solve. Article 1 Section 10.
No, the thumbs went up in just a few minutes for Tammie and only for Tammie and then the thumbs stopped like a divine miracle. It is extremely unlikely that if these were different readers, they would not have also thumbed up the other comments that are in agreement with Towne.
Didn’t one our Most Nobile presidents queer the GOLD standard in the1970Ss
Repeat after me: Defamation lawsuit.
EJ, Not feasible. Exceptionally unlikely to be able to prove intentional harm. Also, when complaints are made at the state level, then ANY finding of a USPAP violation (even minor ones) could negate the ability to sue. On HUD complaints, it may be different. Thats a whole other level of nasty being pursued. One that could be argued to run afoul of Dodd-Frank. Have to check with a good attorney I guess.
WELL SAID!!!!!!!!
[PANDERING to false claims of racism is never a solution. Let the accusers hold up the reports to professional scrutiny from appraisers with no political agenda to promote. Heck, let them be reviewed by Black appraisers if that’s a concern.] (MF)
http://appraisersblogs.com/the-other-side-racism-in-appraisals/#comment-32037
This. Thanks. The broken record skips on.
The use of the word ‘arrears’ is proper when dealing with the assessors, it’s common nomenclature in their offices. Google that again and put assessors after it. “taxes are billed in the arrears.”
Great article Dave! I got kicked out of FB groups for stating this moron is a fake president, and appraisers were literally in tears (i’d say mostly women and men w/no balls) Keep up the good work and all you groups get over yourself!!! yeah I have a group!!!
I get suspended by FB periodically too.
Something to keep in mind. For whatever reasons, fully 1/3 to 1/2 of our respected peers support the other guy or other party. Always.
We have to find solutions to APPRAISAL problems without kicking sand in our peers faces. Otherwise we accomplish nothing.
Two thoughts;
(1) oppose dishonesty everywhere its found, &
(2) wherever possible try to keep the purely political separate from the appraisal issues.
Admittedly there is a LOT of cross over. Also consider the ante or risk to our licenses just went up tenfold. Fed agencies are purely prosecutorial. USPAP is only an afterthought.
You could win against state and still lose against feds.
There was this article; ‘Appraisers can consider themselves on notice. Undervalue our houses and we will take your license away.’ Some people demanding we follow the rules are in turn, breaking the most vital rules of unbiased participation in our industry. Clearly that is a threat of applied pressure. Most people do not understand the appraiser provides a critical component of consumer protection, that government insured lenders would rather not use us as the risk factors are offloaded through government insurances. The people whom may feel most harmed by an appraisers action, are often unaware they received the most benefit, saving them from landing in negative positions at the starting line.
I removed the big cities from my coverage areas. Problem solved. That and I don’t like big cities for a multitude of reasons anyways. But I was willing to, chase the work and help those in most need. Tack on safety concerns, homeless encampments, rampant crime, and now a defacto accusation of racism looming, what is a humble sole proprietor to do other than simply opt out? Almost every single borrower I deal with earns substantially more than I do. Catch 22.
Just perfect.. Well said.