$50 to $100 Hybrids?

Rationalizing accepting $50 to $100 hybrids because you’ll get volumeHere’s the sales pitch being sent to appraisers:

MCSV is currently offering a distinct hybrid product to our clients that involve a restricted report. We would like to extend our hand – beyond the product types that you already cover, to determine if this is something that you would be interested in.

I have provided useful information and attachments below regarding the RESIDENTIAL EVALUATION REPORT (RER).

An RER is a restricted appraisal report that involves a Broker Price-Opinion completed by one of our BPO vendor/Brokers for the purpose of providing an inspection – as interagency guidelines require evidence of an inspection. If the BPO completing agent happens to provide some credible data that an appraiser finds useful in their appraisal development that is fine. Appraiser is expected to develop an opinion of value in accordance to USPAP standard 1. We provide AVM’s and sales data when available and this data could potentially be adequate to provide a credible report. That is up to the appraiser to make the determination. Again, this is a desktop appraisal product with an inspection. When the client places an RER order, we engage a real estate agent or broker that works in the immediate area of the subject property. They will visit the subject property, take photos, and describe their observations about the subject property’s condition and features. They then complete a Broker Price Opinion or Competitive Market Analysis. The BPO or CMA report, including the inspection information is provided to the appraiser along with AVM’s and alternative sales in the area. The appraiser reviews this information and any other information that the appraiser needs and has available to develop the appraisal.

The BPO report and other data that has been provided to the appraiser would not be considered as appraiser assistance. The scope of the appraisal assignment is for the appraiser to complete the appraisal report as a desktop. Inspecting the subject property is not within the scope of work for these assignments. The scope of work determines what is and what is not appraiser assistance. Any information used in the report is data, not appraiser assistance. To illustrate, let’s take a more familiar example, the scope of a 2055 exterior appraisal report is to inspect the subject property and the comparable sales from the street. Other information such as size, year built, room count, etc. will be used from other resources deemed credible by the appraiser to use in the analysis with an extraordinary assumption that the information is correct. If someone who is not the appraiser does the exterior inspection for the 2055 exterior assignment, they are providing appraiser assistance, because an exterior inspection is in the scope of work for the appraisal assignment. The county assessor providing the property sketch, square footage, room count and the listing agent that described the subjects interior condition on a recent MLS listing are providing information that the appraiser may be using, but they are not providing appraisal assistance because measuring the property and inspecting the interior of the property are activities that are outside of the scope of work. Again, if it is a task the appraiser must perform because it is in the scope of work and it is performed by someone other than the appraiser, the appraiser must disclose it as appraiser assistance. Any task that is outside of the scope of work would not be performed by the appraiser therefore would not be appraiser assistance. I hope this answers any additional questions you may have.

There is some room to negotiate the fee based on the market rate other appraisers charge for the product, the scope of work, complexities, and time involved.

We have access to 94% of the MLS systems nationwide and our access to public records is even higher. We provide any relevant data in the subjects’ area that we have available including AVM’s and sales. We also organize and present the data using 5 different perspectives. When there is a lot of credible data, appraisers are able to quickly develop their appraisal opinion using these tools. When the data is more limited and more efforts need to be made to research, it could take much longer. The fee that will be quoted to you is the base fee. If you are assigned an order that will take a lot more research than typical, you are welcome to come back to us with a fee quote.

Another advantage to including a BPO report is that it gives you access to someone that buys and sells properties in the subjects’ specific market area. If you are assigned an order in an area that you are less familiar with you can contact the broker/agent directly and associate with him or her to help gain competency.

The Data entry for the RER is only a free form text box and a place for you to put your value opinion. As far as filling out the form it is not labor intensive at all.

We are experiencing an increase in volume in your state and would greatly appreciate your participation. We also strive to keep our RER panel smaller to help increase individually assigned volume. If this at all makes sense in your business model, we could certainly use a good appraiser in your area. I would encourage you to sign up. If at some point you decided it is not working for you, you can withdraw without any effect on your regular work for MCS Valuations.

No wonder the Appraisal Institute is pushing evaluations at every public forum out there: You’re future is based on $50-$100 assignments, not the $25 assignments you thought were coming. Boom times?!?!?

Some appraisers might think you can bang out dozens of these products per day. I contend that you’ll end up doing 1 or 2 if you are actually doing credible work versus form-filling. Am I way off here?

Take a look at the information and forms you’ll deal with – good grief.

RER-Appraiser Signature, RER Appraiser Facing Presentation and RER Sample

Someone familiar with this told me that $50-$100 is now the value of your certified signature and wondered how E&O Insurance providers will view these assignments? Are they even covered in the current insurance binder?

Seems like a legitimate concern.


Jonathan Miller
Jonathan Miller

Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts.

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21 Responses

  1. Rachel Appraise on Facebook Rachel Appraise on Facebook says:

    No thank you, pass

  2. Don Donk on Facebook Don Donk on Facebook says:

    Grrrrr…Fast and cheap BS

  3. Avatar Pam E. says:

    What crap this is

  4. Kathy Hubbard Bright on Facebook Kathy Hubbard Bright on Facebook says:

    Lenders, you get what you pay for with one of those products.

  5. Avatar Diana N. CREA,CRA,GRI says:

    Wouldn’t touch them with a ten foot pole and shame on anybody that does.

  6. Avatar Pat says:

    I wonder how investors are going to be willing to invest in this stuff?

  7. I have heard of appraisers banging out a lot of these in one day, but I do question if such a report would truly withstand scrutiny and really be USPAP compliant. How do you have time to verify anything? Many of these products the AMC/lender supplies the data. How do you know if valid comps are missing or not if you are not consulting your local MLS?

    I also think the amount of cognitive demand is underestimated. I’d rather work on one really hard file than do 10 easy files in one day. Suits my neural architecture much better…

    • Mike Ford Mike Ford says:

      Such reports as advertised, would NOT comply with SR 1 (or 2 for that matter). Reread the introduction / explanation IF the appraiser finds (purported) ‘BPO’ inspection data helpful WONDERFUL! But whether you do or not, you are required to conform to SR1. And all for $25 to $100!

      Every single one I’ve reviewed falls far short of any degree of credibility or compliance. Think abut that. Tossing your license away for under $100 bucks.

      Anyone that does these is a damned fool that is also destroying their own profession. No exceptions.

  8. Avatar E J B says:

    53 pages of what? I’m not reading all that. Plus, I’m not into pretty pictures and graphs in my rural area. I don’t think brokers & realtors in this market know the difference between average and excellent condition. Almost every listing in MLS is described as excellent.

    No thanks!

  9. Gregory Beck on Facebook Gregory Beck on Facebook says:

    go shove those appraisals you know where!

  10. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    I feel the same as most of you, however the big bank executives are pushing these behind your backs. Cheaper

  11. Avatar John Galt says:

    I will go out of business before I do any of these bullshit hybrid crap evaluations.

  12. Vincent R Simon on Facebook Vincent R Simon on Facebook says:

    It’s coming weather we like it or not. Sorry to say , my part time job is now Real Estate Appraiser. Good luck, I’m moving on .

  13. Well done Jonathon!

    Readers should also view http://www.clarocityvs.com/

    WATCH the “News”  banner that updates as viewed, and read about ALL the new contracts they claim they’ve signed with federal agencies, some of top ten credit unions, and ESPECIALLY Ernie Durbins UBER analogy.

    Much like Uber, Clarocity’s complete disregard for existing rules enable it to also profit at the expense of professionals and others that abide by established professional guidelines.

    No Earnie, the electronic equivalent of horse manure that your firm is specializing in are NOT ‘appraisals that simply have a different scope of work.’

    Yet one more reason the Appraisal Foundation needs to be disbanded. Charged by Congress to preserve the public trust, they have virtually destroyed any semblance of trust in the appraisal process among the public.

    Of course, just like UBER, those that choose to ignore laws have great opportunities for profit.

  14. Just an idea for replacement clients & income stream folks;

    Start marketing to buyers and sellers who have been taken advantage of and suffered loss do to the use of an inherently deficient “appraisal product”.

    They can sue their lender; their loan officer, their agent(s) or even sellers in lieu of when they now sue us. Can also market directly to trial attorneys.

    Make form letters and follow all new recorded trust deeds in your market area each day.

    1. Were you over charged for an appraisal? Pad $650 for an appraisal only to find a waiver was used, or a hybrid desktop alternative costing only $50 was paid for?

    2. Was you property over or undervalued affecting your sale price, cash out, rate of interest, or  requirements for Mortgage Insurance?

    3. Did you pay to much,or sell too low as a result of reliance on one of these misrepresented ‘valuation’ products?

    4. When you appealed the low value, were you given a fair hearing or alternative valuation options?

    Haven’t given all the possibilities a lot of thought yet, but Im guessing $1,000 to $1,500 fees may not be out of line; plus  subsequent expert witness fees.

  15. Baggins Baggins says:

    Observe the ‘livable square foot figures’. Corelogic strikes again with combined total gla and no proper distinguishable entry for agla vs basement, and was a ranch or a bi or tri or what?.

    Not surprisingly, the variable avm range is $80k on a $540k to $620k property. Or whatever, numbers. 15 percent non confidence score is pretty good for corelogic products.

    pg 39. # of homes for sale; 150. Low $:65k. High$: 2m. Sure! Thanks for all the hard work, I’ll take it from here.

    pg 46; “land price”. For an already built property… Oh yeah, that’s a bpo you can rely on.

    Hybrids; the blind leading the stupid. The initial premise is what gets me, gain competency from the realty agent. Um, newsflash; wrong direction on that one. The hubris of these companies is shocking, those poor appraisers they just need some help.

    “There is some room to negotiate the fee” The primary question is of course; How much is the lender paying for this service? It’s obviously a pay to play approach. Cost savings from reduced costs of appraisal services will not be returned to borrowing consumers. Thanks for playing.



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$50 to $100 Hybrids?

by Jonathan Miller time to read: 4 min