Let’s Get Back To Real Appraising!
Let’s Get Back to Real Appraising:
We have all encountered the glass is half full / half empty perspective. This perspective could be applied to everything life throws at us. The appraisal industry is no different. We are hearing a lot of doom and gloom over Fannie Mae’s Property Inspection Waivers (PIW) and Freddie Mac’s Automated Collateral Evaluation Program (ACE). On the surface the glass appears half empty. Well, the glass is definitely half full; maybe even 3/4 full.
We can now get back to real appraising…….
No more UAD, No more 1004mc, No more scope creep, No more false parameters, No more Collateral Underwriter, No more ridiculous revision requests, No more upload fees, No more AMCs! Let’s encourage Fannie and Freddie to waive appraisals on all loans! In fact, let’s encourage FHA to join them!
Real Estate is the largest purchase consumers will ever make. A home inspection is a cheap insurance policy to assure the purchaser of any issues. An appraisal is cheap insurance to validate the value of the property. Agents never let a buyer waive a home inspection nor should they ever let a buyer purchase a home without an appraisal. It all boils down to liability. A buyer’s agent is obligated to represent their client’s interest. If a home is purchased for more than its fair market value and the agent did not advise against it, the agent is liable to their client. This liability automatically extends to the broker. How many agents are willing to take on that liability? How many brokers are willing to take on the liability of their agents?
The appraiser is now the agent and broker’s best friend. Agents and brokers will gladly encourage buyers to get an appraisal to shift that liability from them. It may be prudent for brokers and agents to pay for an appraisal themselves even if their client is reluctant. What about the sellers and their agents? Are they immune from legal action if they sell a property above market value? If a customer who spills hot coffee on themselves can be awarded millions of dollars from McDonald’s, anything is possible.
It’s all about the liability!
This is our opportunity to take back our industry, re-establish our relationships with agents and brokers, and establish our fees based on our skills, experience and professionalism. In other words: our worth. Let’s start the conversation with brokers and agents and get back to real appraising.
Thank you Fannie and Freddie for giving us the opportunity to take back our industry!
- The New Con: Hybrids, Waivers & AMCs Threaten Public Trust - December 16, 2024
- VaCAP Supports Shane Lanham’s Legal Fight - September 10, 2024
- It’s Just Responsible Journalism! - February 21, 2024
I agree 100%. Now convince VA, FHA and the secondary market.
Agree 1000%. I no longer use portals and dumped mercury when I heard about corelogic; said no to amcs a few years ago and I do a lot more private appraisals. I make more money, work less and I love appraising again!
This is so true! Private work is so much more enjoyable and profitable. The biggest advantage is all the non-sense is gone. Good thinking VaCAP!
This is hilarious, I love listening to every appraiser who claims they would like to work for the “non lender” I do a lot of work for non lenders and you are CRAZY if you don’t think every home owner, attorney, divorcee or trustee doesn’t have 5 times the questions as the typical AMC. Furthermore, if you think that the average broker / sales agent is going to request their clients pay and extra $400 to do an appraisal in addition to the 6% they are already paying them, you have not worked with home owners or brokers. I totally agree that we need to keep a positive attitude and find work were we can find it but encouraging great clients to stop using appraisers is suicidal. If you want to exclusively do no lender work then go for it! just leave me out of your delusion.
Well, the majority of my work is non lender work from attorneys, agents and homeowners. I also do work for Medicaid, Medicare and only a small amount for direct lenders. I rarely have any come back with questions. Even in the court room, rarely are there questions on my reports. The one AMC I do work for on occasion is my worst client.
I do not agree with your comments at all. I pride myself in quality work and have a great reputation in the community among other professionals. Most of my business is from referrals. I know of many appraisers in my area that have similar business model. We work smart and know the value of our worth. We obtain full fees and do not have any of the issues causes by other clients.
I mean no disrespect, but if you are one of those “48 hour turn time guys” you are part of the problem and do not fully understand the value of your worth. That is why you have issues with reports coming back with questions.
I would rather not debate the virtues of specific clients with you @Mike via the Internet. I also appreciate the fact you would rather not work for an AMC. However, speaking to the article author, getting on a nation stage and telling the world that you don’t think appraisers need their business is, in my humble opinion, … presumptuous and ill informed.
DAX. Nice website (seriously).
Private attorney work; non GSE work replacing nearly all is possible and MUCH more desirable. At least it is in larger urban or metropolitan regions like Los Angeles. I appreciate it may not be as easy in more limited population markets like Utah. For those areas appraisers may not be able to dump the GSEs, and that is truly too bad.
If I’m doing an appraisal intended for court it usually starts at $1,500 plus $500 an hour EW fees (includng deposition fees). I don’t mind spending the time needed in advance of the assignment to clarify the assignment and any relevant information. I expect to discuss it with the attorney or client after its done. Again, I built that into the fee.
I LIKE talking appraisal to my clients in legal cases and other non lender work. Some think appraisers dont like to talk to folks or answer questions. That’s not so. Most of us just resent being told what to do by the morons at AMCs or those that purport to speak for underwriters when we know the don’t.
Thanks @Mike Ford, I do think that there is some work in this Utah market in the “non lender” arena. I believe all business owners / professionals need to keep an optimistic eye out on the horizon to be successful. We as business owners need to keep all options open and activity look for opportunity. Limiting clientele to one or three clients is most likely not advisable in any industry. Cutting off clients or telling clients you are not willing to work for them is the prerogative of the company. However, when someone with a national platform stands up and says “go away” to an entire industry, especially when they are in my industry bugs me. I would hope that someone on a national stage would act more responsibly. Sure, being an appraiser is going to get harder and work is going to thinner and we need to look on the bright side, but there is no need to yell for the “bone saw” because you have a cut on your wrist.
Dax, The point of the article is to point appraisers to another avenue of revenue. The article was written after a conversation with a long time broker and sales agent. The broker specifically stated,” we have to protect our clients. If Fannie and Freddie are going to start this nonsense, we must protect the public as our license dictates.” If the purchaser receives a PIW or ACE approval, the cost to them is the same. The purchaser will pay the appraiser directly instead of the lender. The liability to agents who would allow their client, the purchaser, to proceed with a purchase without an appraisal is huge. It simply is putting back checks and balances that Fannie and Freddie have removed. Our licensure dictates that we protect the public. Every agent I know who has a cash borrower advises to obtain an appraisal, especially in fast appreciating or depreciating markets. It is nothing more than doing their job, protecting their client.
From an appraiser perspective, completing an appraisal on a General Purpose Form, or even a short narrative, is much easier than dealing with a UAD report and all the quirks that go along with them. The fees will be higher and there will be no AMC to take a cut. This type of work is more profitable. I don’t think you will find too many appraisers that would disagree.
We are sorry you misunderstood the intent of the article and we are certainly not telling anyone to stop doing work for Fannie and Freddie, but if you can shift just a small piece of your business to a more profitable avenue, aren’t you better off?
Just so you know, VaCAP is a group of independent appraisers in Virginia. We have a strong membership that fights everyday for the independent appraiser and the industry. We have gone head to head with AMC’s and their trade group at our state legislature and have accomplished many changes that help the industry. We are grateful to Appraisersblogs for reposting our articles and newsletters that go to our members and others on our database. We now have followers throughout the country that benefit from our leadership. Appraisers helping appraisers, that is what it is all about.
Thank you for the great work over at VaCap!
The glass IS half full when it comes to getting more appraisal work from agents and brokers. They have been relying on the financing contingency in the contracts for years. The appraisal has always been a part of the financing contingency if it isn’t a cash deal. That is why agents or brokers don’t have a problem offering inflated offers just to “win” the contract over other offers.
If there is a PIW or ACE that makes the transaction not require an appraisal. Paragraph #4 of the CVR MLS contracts state, “This sale is or is not further subject to Property’s appraised value equaling or exceeding the Purchase price…”. If the agent or broker advises his client to make the contract contingent on the appraised value, then an appraisal is ordered. If the agent or broker advises or lets his client not make the contract contingent on the appraised value, then the agent or broker will be taking on the liability of the contract price being too high. It won’t take long before they rewrite the contracts and give the Appraisal contingency its own paragraph with its own number.
I would think that Brokers would require their agents to include an Appraisal contingency for the sake of liability…but I am not an attorney.
By the way, I have spoken to several clients that don’t even know what a PIW or ACE is. They are loan processors, but still, they should know about these things.
Dax, thank you. A reminder to periodically get out of our negative bubble IS a good idea. Otherwise we could be blind to opportunities. On the other hand, ignoring exceptionally serious and equally unfair abuses in our profession is not an acceptable alternative.
Fighting to correct identified problems in a bureaucratic environment is not an overnight process. Simply writing a single letter and asking the appropriate agency to ‘fix it’ does not work. The larger the governmental jurisdiction the more difficult it is. If it did we’d all be earning $580 to $1,000 per common order now. Read C&R fee proposals in this blog… sent to feds almost two years ago?
As bad as Dodd Frank was, it still took those that came before most of us almost ten years to get it passed (ok – so it was more like 7 or 8). It did little to nothing to help us- though it took great effort to get our part of it passed. Our ‘abusers’ (the collective groups from self serving appraisers, AMCs, GSE’s, state agencies, Feds of all flavors and some peer associations with their own agendas) kept creating new abuses faster than we could challenge them.
VA; NC; & LA & GA have all passed some degree of decent legislation but look at the challenges to it.
I appreciate the perception of never ending doom and gloom is depressing. Whats even more depressing is that it is allowed to exist in the first place. It won’t go away if we don’t keep poking at it.
So, remind us periodically of the positive, but please respect that there is still a need for the doom and gloom messages too.
Did you just state Fannie and Freddie are great clients? Please tell me I am misunderstanding what you are saying. Seriously, I don’t think that is the message of the article. And I don’t think the author is delusional either. Fannie and Freddie have been working to eliminate the appraiser for a while. The wheels are already in motion and it will happen. If you don’t take charge of your business model and change, you will not have a business” Phil Crawford said the very same thing this morning on his podcast. Every appraiser needs to seek good clients. If you think Fannie and Freddie are better clients, with better fees and more respectful, by all means continue as you were. I will gladly take the full fee respectful clients any day, all day.
Should the GSE’s lose their sanctioned position, the free markets would merely copy the selling guides, a few minor changes, and it’s business as usual. Now who can answer this question? Will loans sourced via appraisal wavers be bundled alongside loans which had appraisal requirements, or how will the investors be able to make quality decisions? In this instance isn’t the investor the free market participator whom would drive the market changes? Why would they want junk waivers instead of validated and thoroughly reviewed products?
Per the article itself, it would appear that a well written article to NAR requesting such a new standard approach to client advisement could go a lot further than letters to the gse’s. Usury fees, there is always some sort of complex scheme behind them.
As an aside, related to PIWs and “Big Data”. In this instance CoreLogic via RealQuest and Realist/Matrix.
I’m doing an assignment for a court case. The RealQuest property profile incorrectly reports property condition (recklessly so). I refuse to refer to it anymore as ‘public record’ since too much of the information has been reinterpreted to suit CL’s “Big Data” business pretenses. In this case I also reviewed the Realist information (CoreLogic provided tax and mls data extractions that contradict each other).
The property is reportedly CoreLogic rated condition “EXCELLENT”. Most of rear and significant portions of side stucco was never finish coated or sealed. In fact stucco gaps exist between addition and old house where interior is exposed. Eaves and flashing are rotted. Property could not pass FHA/HUD inspection as is. That’s “excellent”? Great job CoreLogic!
Foundation reported as raised is a slab. Probably no impact on costs or value, right? Great job Corelogic!
The two car garage CL reports is non existent though there IS a questionably permitted CP2. Probably doesn’t affect regression analysis based value guesses, right? Great job CoreLogic (GJCL for brevity from now on)!.
The covered patio RQ reported? Non existent. GJCL!
Type Heat? “Heated” (GJCL!) ; Sewer Type? “Unknown” Its in the N. Hollywood area of Los Angeles in a 67 year old post WWII suburban sub division built in 1950 OF COURSE IT’S ON A CITY SEWER you nimrods! Even Google streets shows the sewer covers. GJCL!
Roof type-gravel & rock – we laypeople technically call that ‘all flat built up’ …or we would if it were not actually a lightweight aerated cement tile roof! (lest I forget – (GJCL!), They also got the ‘roof shape’ wrong its a hip roof.
Original house in 1950 had stucco walls but in 1973 remodel and since then ALL have been resurfaced with drywall. They DID get the kitchen equipment right (I mean aside from the personal property f/s 4 burner ranges(2); and they omitted the central air conditioning that went along with the forced air heat they also missed! It was 108 degrees in the San Fernando Valley yesterday – probably no big deal right?
..and HOW could they possibly know about the Bob Hope International Airport 2-3 miles due east with with runways aligned for jets to pass directly overhead on landing or alternate wind, take offs? Y’all don’t expect computers to be able to read maps do you or rate influence of flight path proximity?
OK, lets see how “BIG DATA” does, given all the data accuracy they have to work with compliments of CoreLogic (GJCL!)
CoreLogic RealAVM =$636,000 in a range of from $540,779-$731,642; confidence rating of 75 (whatever the hell THAT means)! Forecast deviation 15. (GJCL!) The concluded value for this “excellent condition, larger than average size home with pool and spa is only guesstimated at $59,000 below your RealQuest default comps average sale price of $695,000. I’m certainly convinced! (Need I say it again?)
OK, I’m convinced.
Big Data, FNMA, all GSEs and regulators that think its safe to waive appraisals because they only use PIWs where there is 80% equity; your sound logic and spiffy advertising campaign should reassure ALL taxpayers just as it does me. No risk at all anymore. History can’t repeat itself with all these fancy, wingdangledo state of the art SCIENCE based computerized checks and balances in place, can it?
Why, only an absolute Luddite like that ignorant Ford guy could find fault with such a fool proof system; and policies that are backed up by their even better Collateral Underwriter Quija Board based “process”.
Hurray for CU #2 which is probably much better than the number infers.
Now is that ‘safe’ 80% LTV at the $541,106 end of the range or at the $759,172 end?
(GJCL!)
PS – Go ahead and tell me how FNMA ‘leveraged 40 years of statistical data to come up with their Number 2 super-duper CU process and how much more reliable it is. I dare ya!
It’s the reliability of profits that matters most to them. Taxpayer backed and all. I object, it’s taxation without representation. One person, one home, one risk factor, not shared. When FNMA and HUD back 750k loans, they’re disproportionately sharing risk.
Let’s get down to stone cold facts; A person who can afford a half million dollar loan does not need the government to back their financial position, or financial risk taking efforts through acquiring new mortgage debt. It’s time to wind down the gse’s and audit the fed.
Of course it is! As a good Republican union organizer I have NO objection to them making profits; even obscene profits…if they do it honestly, fairly, above board and without taxpayer risk or assistance.
Mark Skapinetz
Playing softball. Comments to come
If we had an appraisers union we wouldn’t be in the pickle we’re in right now. We would have collectively gone on strike and shut lending down until OUR demands would have been met. It really could have been done.
David, really?
Perhaps if ALL the members of the appraisers union that we already have, were as actively involved in volunteering their time as the few who currently carry the entire workload do, more problems would be resolved.
It takes real work David-not some magic pixie dust or euphemisms being thrown around. The reason that no one has called for a shut down or strike so far is that there was no viable single entity to strike against; and there is no great support for any kind of a strike. There is no modest support for a strike. There is probably no more than token support for a strike. When a majority of members and potential sympathetic non members don’t support a strike, then the union does not call for a strike.
So we attempt to work within the constraints we have. Our real power is not in mythical strikes with no participation. It is through our parent unions other lobbying efforts, and our ability to call on them when we truly need them. When we speak or write to state legislators or federal agencies I promise it is not the ‘power of AGA’ that influences them. It is the power of OPEIU and AFL/CIO standing behind us that gets us desired attention.
One thing that we ARE considering doing is to try traditional union collective bargaining with the banks that we have some influence with to agree to minimal C&R fees with a fair provision for upgraded fees when legitimate circumstances warrant. Right now legal issues & questions have to be answered first. Would such activity be covered by national labor and collective bargaining laws; or by other state regulations?
Right now AGAs strongest direct ability is helping members that have been unfairly treated. That does NOT mean we can get someone back on a list with one hand and then beat up the lender or AMC we are seeking voluntary resolution from with the other.
So far we have had a much better than 90% success rate. We haven’t won all our battles, but not one member we advised or assisted has lost their license or been substantially fined. Not one. One that Im aware of received a lowest end of spectrum fine once letters were sent highlighting mitigating circumstances. One is still being appealed and we are helping that member & his attorney to appeal it.
And, yes, there have been 3 to 4 where we simply could not meet the members less than realistic expectations involving reinstatement PLUS fines, penalties and or jail time for the offending banks and AMCs.
David, there already IS a union. The degree that you choose to support it or volunteer to help it is up to you.
On other matters:
Anyone want to know what you can do right now to help? Our parent union has put out the call to us seeking help this time. The level of support we give them, may impact the ongoing level of support we receive from them in future years. (Those discounted dues I keep arguing for, come directly out of the funds that are normally forwarded to parent unions). Now OPEIU is asking ALL of us for our help.
Donate Now to Help Texas Families Affected by Hurricane Harvey
OPEIU members have always been there to help their sisters and brothers in need. From the devastation in Louisiana caused by Hurricane Katrina in 2005, to the destruction caused by Hurricane Sandy in 2012 in New York and New Jersey, we are proud to say that OPEIU members came forward and did all they could to help those affected.
Now our sisters and brothers in Texas need our help. Hurricane Harvey is probably the largest natural disaster ever faced in Texas. The resulting downpours have caused untold damage in Houston, Galveston Island, Corpus Christi, Beaumont-Port Arthur, parts of central Texas and many areas in between. And, as we all know, things could get much worse over the days ahead as heavy rains continue to fall.
You’ve all been extremely generous in the past and we’re asking you to be equally generous now to help our OPEIU members in Texas. We know we won’t be able to fully compensate them for everything they’ve lost, but we can provide them with some relief and, hopefully, the strength to meet the challenges that lie ahead. This message of solidarity will let them know their union stands strongly behind them in these most difficult times.
We are asking you to be as generous as possible and make a donation to the OPEIU Relief Fund. All money collected will be sent to OPEIU members and families in Texas affected by Hurricane Harvey.
Checks can be sent as follows:
Mary Mahoney
Secretary-Treasurer
OPEIU – Relief Fund
80 Eighth Avenue, 6th Floor
New York, NY 10011
Updates will be posted on the OPEIU website at http://www.opeiu.org.
Thank you in advance for your kindness and generosity.
In solidarity,
Richard Lanigan
President
opeiu:153
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Thank you…Mike
this may be off point, but another reason i no longer seek AMC work, is because there are so many groups (many former appraisers) out there that develop courses and/or seminars on how to deal with amc appraisal work. IMO, they are expensive, useless and lack any real benefit. Its all all about making a $, as if AMC appraiser are high paid professional, LOL. i.e. http://www.appraisaltool.net/Appraisal-Analysis-Tool.html
Excellent point.