Appraiserville – Just say NO
…Multiple Wall Street and other large financial institutions have approached my firm this year after they neutered their AMC vendors, requiring that they use our firm for high-end work. We are to be paid our fee and allowed to provide our reasonable turn times. I was told many horror stories by those institutions who came to realize we are not robots, nor are we widgets. By taking this step, they invested in risk management.
However, their initial stream of new business was met with 3-4 addendum requests per assignment that had nothing to do with any requirements, repeated prior requests or had no relationship to the credibility of the value. We nicely complained to the AMC and their institutional clients as to why this was a problem for us, indicating the relationship won’t work unless this is fixed – the idea that we are not to be treated as if we have no experience in our market. To their credit, they escalated the issues and responded with the utmost professionalism. Suddenly all those requests for clarifications stopped coming, but the new assignments didn’t stop. Win-win. We have one last new Wall Street client who is resolving their internal issues now and I am hopeful that they will make the necessary corrections. If they don’t, we’ll simply drop them.
I do understand the default thinking behind superfluous addenda requests – Typically, AMCs are forced to rely on appraisers with no local market knowledge because most of the better local talent has other clients paying full fees and demanding reasonable turn times. As a result, AMCs often lose their muscle memory to engage critical thinking in their reviews. The idea that my high-end Manhattan property appraisal can be reviewed by an appraiser in Kansas who has never been here, for a California bank and the AMC engages in scary big worded USPAP talk that isn’t accurate is completely inappropriate. I’m not saying pushback always works but AMCs seem to be recognizing that their time is up for business as usual and are bringing outsiders with actual valuation experience to fix what’s broken – at least in my small window of AMC interactions.
Life is too short. Don’t put up with what isn’t right. That’s how the appraisal industry killed the “appraisal shortage” lie in 2017. Do the best appraisal you can, operate with professionalism and integrity and know when to say “no.” After what happened in 2017, I think the few AMC clients we are engaged with are seeing a little bit of this light…
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AMC – Appraiser to comment if the subject property is impacted by the airport (a small airport two miles away).
Me – (what I wanted to say). Look at the freaking map, which is crystal clear, and unless you are blind, you can see that the runways are located where the planes don’t come anywhere near the subject. And if it was an issue I would have mentioned it!
I got “dinged” for not commenting.
Next time make the comment, saves everyone time. They have to have that comment in the report. Investor requirement.
I think it’s more like being a pain in the butt to the appraiser, and justifying your existence.
Not at all, get to know some underwriters. Most of the questions that need to be answered are investor requirements. Shows investors the lender is doing their due diligence. Asking for better, less adjusted comps is the same thing, that appraiser letter saying there are none, sits on top of the appraisal report and shows the investor the lender asked for better comps.
Shame none of us in this biz don’t talk to each other anymore !!! We all used to learn from each other….Not anymore more with AMC dogs blocking the gates !!!
The issue with asking for better comps Chris, does not in itself disprove what’s already in the appraisal relating to a 30 page supported opinion of value. We are in the business to provide support for our opinion (via a few comps), and not in the business to address 20 other sales the lender received via collateral underwriter that were not used. Disprove my opinion will locally used, equally qualified licensed professionals, versus not reading my report and using 4 bedroom homes while the subject has 2 bedrooms, etc in support of you wanting a higher value..
Seek the truth.
Please do not confuse what I am saying…years ago, before all this technology, when we received those asinine letters asking for 3 better comps, less adjusted within 1 mile….remember those…..I used to have coffee with underwriters and I used to laugh…they told me they have to ask, cause that appraiser letter goes on top of the file and lets the investor (or whomever) know that the underwriter asked for some better comps…they all knew we didn’t jump over better comps just to drive further to shoot pics…
Today is different I am not taking about collateral underwriter…they came out with collateral underwriter because some of our peers where calling all renovated sales as average (or even worse) so investors/lenders could get A paper lending and not riskier renovation loans.
Every change that has been made TO us for the past 20 years, has been because our so called peers were not doing what they were supposed to be doing !!!
you know what they say about bad apples…..
Chris – not every change. Certainly some like 1004MC was because appraisers were boilerplating market conditions and if one read a report for a multi million dollar house it had the same comments about neighborhood market conditions as the one for a $250K house.
Many, if not most changes were for the convenience of the clients – like the FNMA revised cert & limiting conditions with unlimited expanded intended users including the great grand children of an investor from Algiers that bought the loan from a traveling salesman in Brussels, who took the note in trade for a Vespa franchise in Milan… ten years after FNMA sold it as a bundled security.
I just love the have to have a comment in the report Chris. If appraisers included everything in their reports that weren’t worth notating, then in theory it would nearly be impossible to complete them. Why if present (CO detector, duel water heater straps, etc.,.) is it tradition of the day to call out what’s not an issue? Should we include the millions of other potential things in the world that are not an issue related to the subject property? As it specifically relates to location, if the appraiser selected the no box in the site section of the report, driven to and through the subjects neighborhood, viewed and inserted maps into the report, and indicated perhaps a neutral residential location designation in the report, how many different times and ways must the appraiser explain there is no issue. By the way, the condo I’m working on is not located within a nuclear toxic waste dump site.
Seek the truth.
LOL, I love you guys !!! If you see a small airport (or ANYTHING else for that matter that the underwrite COULD question) within like 1-3 miles or maybe even in 5-10 miles away, and you are in a great mood, make a lot of money or have a lot free time…..etc….don’t bother commenting on it in your report.
Its o.k…..No big deal…right???? Common for the area and any idiot can see that….right????
Than 2 weeks later, when you have to stop what your doing, (which for me is either making money or making love to my women) stop what I am doing, open the report….change the signature date, add the comment to the addendum….spell check the report, sign the report, and then send the report……
Don’t get mad at the request…cause you should have seen it coming….
We literately determine our own reality, every minute of every day of our lives…..physics 132….not for the faint hearted !!!
Chris, are you really saying that within 5 – 10 miles of the subject that you are able to determine any and all external factors, or environmental conditions, etc.? Please don’t tell me that you have some blanket statement where you are taking on the liability of identifying any and all issues, and giving a green light while saying all is well. Good luck with that.
Seek the truth.
talyor this how you need too…….at the end in a separate line….I simply type….the airport seen in the overhead map…..bla, bla, bla
Yes its a blanket comment to keep all those sex deprived underwriters from breaking your stones…..
LOCATED IN THE SUBJECTS MACRO NEIGHBORHOOD AREA ARE LIGHT AND HEAVY MANUFACTURING FACILITIES, PARKING LOTS, COMMERCIAL STORES, RAILWAYS, SMALL AND LARGE AIRPORTS, OIL STORAGE FACILITIES. THESE USES ARE CONSIDERED ON THE MACRO SCALE, COMMON TO THE AREA AND DO NOT ADVERSELY AFFECT THE VALUE OR FUTURE MARKETABILITY OF THE SUBJECT PROPERTY. ALL COMPARABLE PROPERTY’S NOTED IN THE APPRAISAL REPORT ARE SIMILARLY AFFECTED BY THESE FACILITY’S UNLESS OTHERWISE SPECIFIED IN THE APPRAISAL REPORT.
Chris, I have encountered situations similar to what you are describing. It is extremely rare to run into that type of stuff now. It has taken some effort but I have managed to replace nearly all Pain the A** clients. I started with refusing to work with any AMCs. I only work with local and regional banks and credit unions as far as mortgage lending. I also do non-mortgage work. There are still plenty of good clients. It does take time to market to the good ones. It really is worth the effort!
Right, Glad to hear, I only do VA….All AMC can go to hell, I don’t care who they are.
When we all can say NO to them…they will be gone….Its just a shame some appraisers have to work for them,
All the gov. had to do was follow the VA way of appraising !!! Problem solved !!! But no…they gave away billions to the banks and the banks want us gone !!!
Pay your house off, save your money !!!!
Disagree Chris – not over whether the airport should or should not have been addressed in the original report, but because every single revision is counted as a separate report by state regulators.
It sets a premise that there was obviously a mistake by the appraiser in one version or the other. So if three is some unrelated complaint or issue later (like declining to ignore the closest comps and use those out of the area in a value dispute; OR non client buyer says you did not adequately determine if the Porter Ranch Gas Spill had residual effects like ongoing leaks not known on the date of inspection – and where you disclosed secondary testing and inspections are recommended); although scenario is made up for this analogy the appraiser is already vulnerable.
No, it does NOT matter if there is a great big text cover page attached to the report in front saying this is an addendum to the attached appraisal of the property located at xxxx, dated YYYY. This is not a new appraisal report. It is an amendment to an original report from which a question has arisen. (State specifics)
You now have TWO report versions the state will consider. If there is an unrelated issue that has no impact on value, marketability or the clients intended use the state will charge you with SERIAL violations. If there is an issue like the analogy above, it will be alleged to be indicative of ongoing practice of ignoring significant conditions. (remember the addendum was just for the airport or correction of buyers name AFTER the assignment was completed).
So when the state gets hold of it – they cite the one or two issues found (x2!), then allege violation of competency rule (x2!); and Ethics provisions (it was unethical not to be competent, and you weren’t competent otherwise you would not have made a mistake); misleading report gets tacked on as well (x2!) because EACH offense warrants an extra $1,000 in the fine.
I am not suggesting we never write addendums or make corrections. When you do make a mistake, the solution is to fix it! What I AM suggesting is you fight unnecessary revisions tooth and nail. Additionally when at all applicable Start addendum comments with “Based upon information not previously available to the appraiser in the normal course of business…”
It may not stop the unrelated complaints, but at least it starts right off by setting you defense related to whatever the issue is that caused you to write an addendum. (Serial violations comments are not my own opinion – they are from actual cases reviewed by AGA)
With due respect, I am completely confused by what you are saying….Are you saying that a revision to a report…because the appraiser failed to mention a small airport or anything else…leads to the “Government” thinking there are 2 reports on the same property and the appraiser is an idiot and should disciplined ????
Please let me know !!!! I dont get bothered by collateral underwriting at all, Not once…
All of these changes were made for 1 reason and 1 reason alone…..And I did reviews for 5 years and saw absolute FRAUD. The past sales was because the idiots were using flipped houses that were renovated and calling them in average condition….That later lead to the c ratings, as if one of us good ones calls the comp a c2 and here come the idiot and calls it a c4 to appraise his house higher…..the number of active and settled at the top of page #2 was due to the appraisers only using the 3 highest sales they could find to make their deals.
The past sales history to the subject was due to flipping with no improvements and the appraisers went along with the fraud and never mentioned it was just purchased…
The distance rules…cause appraisers were going to better areas to appraise higher jumping over closure comps.
Bracketing…cause the appraisers used younger homes versus older ones to get a higher value..
GLA bracketing….same thing.. using larger gla houses and making small gla adjustments.
The list is endless and is ALL due to OUR peers committing fraud trying to keep their clients from stop using them.
I could go on and on and on…….. We both could !!!
Chris, Mike is illustrating likely from direct experience with his members, how the state may operate when dealing with revisions. They treat the revised report as separate, therefore mistakes made qualify for elevated penalty matrix and additional fees via redundancy. Reiterating the point the appraiser must disclaim disclose the previous report as now being invalid.
Regarding complaints about process; welcome to bureaucracy. Investors although dealing with fractional lending, are still dealing with real money. I try to include all likely answers to likely questions ahead of time. Disclaim disclose, if there is a possibility of valuation, obsolescence, condition, or selection question, I strive to answer that in the initial report. Most reports leave me knowing less about the real property, which is the problem. See addenda, again? Disappointing reporting. Some appraisers could not define value to the dirt under their feet without some sort of ancillary or automated assistance. Hell, some of them don’t even know how to drive themselves around or do their own typing anymore. Dependence is crippling to independence. How anyone on either side ‘feels’ about engagement is immaterial. We provide a legal service with consistently limited scope regarding valuation practice.
There is entirely too many feelings floating around this industry lately. If only the people distributing orders were less testy, had more patience… Miller stepped in to save the day though, he took those dogs to the vet and they came back with better temperament. Genius!
Chris, what I am saying is that no matter what the reason for a revision, IF the report later becomes the focus of a state investigation every single iteration of that report will be subjected to the same scrutiny and treatment as if it were a completed, stand alone report.
Make five revisions? Five reports as far as state enforcement boards are concerned.
By the way Chris, FNMA NEVER HAD DISTANCE RULES according to them!
C ratings were crap from day one. The argument that they made more sense than +-, superior, inferior, average+, avg-good, avg.- etc was a lie from the beginning.
The ONLY reason for C ratings is because they (FNMA) & MISMO advocates need something a computer can read.
Erik, I get your frustration, I really do but we need to remember that we are the experts and as such you know the airport is tiny, probably private and has little traffic and/or noise but that lender, underwriter, etc doesn’t have a clue and they rely on us to provide the details which is understandable. Besides, by providing that tidbit, you ease their concerns and makes you look like the professional, competent and credible appraiser you no doubt are. Carry on….
Two miles away? If it is in the glide path or take off patterns – yes. If not – probably not. Infamous in California is the Santa Monica Municipal airport. Several crashes over past few decades. Small Torrance, CA airport had plane crash into Farrells Ice Cream Parlor on major street 2 blocks over from my old house…40 years ago. How long do we report?
I recently got dinged by an established AMC that changed their name. The original AMC is on my do not work for list. They asked that I put my phone number on the report, and I unwittingly added the lender’s suite # to the report when it wasn’t on the request. Now I have two “do not work for” entries for the same AMC. The leopard changed its spots.
That’s great news Jonathan. Refreshing to hear. Niche lenders engaged in very high end transactions have often been among the first to adopt pragmatic approaches. Lets hope it catches on.
AMC : “Sales one and three were newer but got a negative adjustments? Logically, a newer home would have less depreciation, right?”
So glad the industry is looking for the best and brightest…
AMC: “Can the appraiser please provide a photo of the left side of the subject as this is missing from the report? Thank you.”
Appraiser: “Well if you actually read the report you will notice it is an attached townhouse. Thank you.”
How about this one for a a proposed construction per plans and specs?
AMC: “please include front, rear, sides & interior photos of the subject property.”
AMC: You report the subject is located in a De Minimis PUD, is there a yearly fee.
Appraiser: Did you look next the box check PUD where it shows the $300 yearly fee.
AMC: Well I “review” many reports daily.
Appraiser: Well THAT’S YOUR JOB!
Wanting all this information from us because it’s sooo important, but now will forgo an appraisal all together and use an AVM…hahaha JOKE!
There is one valid shortage in this industry. The shortage of qualified residential licensed appraisers whom work in the appraisal order distribution industry. Individual appraiser licensing requirements for ALL distribution workers would clear up a lot of issues in a short amount of time. Amc or not hardly matters, when you separate from loan production you often end up working with less qualified people. It’s as easy to walk as it is to sell, appraisers who feel trapped should simply walk down the line. There is no greater objection than absence. There would be no greater correction here, then for these people to be licensed and held to similar ethical standards as us.
If you don’t like amcs don’t work with them, no?
George, only some of us are in a position to do that. Actually I have one I do like working for but I only do a couple a year for them. I Usually just go visit; mooch coffee, make fun of their (own personal) reports and let them buy lunch. Oh yeah, they agree – a cost plus system is needed.
Free enterprise was severely wounded when all our existing relationships built up over 20-25 years went out the window with HVCC. If all you do is residential work (SFR and 2-4 units) and AMCs control all loan production work in your market, you either wok with them or teach your family how to eat on a diet of cardboard.
Purely a guess, but my best guess is that only half the appraisers in the country are currently able to ‘just not work for them.’
If it’s an issue, Whatever it is, It’s in my report. If it’s NOT, I’m not going to change from a summary report to a narrative report to cover ALL POSSIBLE QUESTIONS ANYONE COULD ASK. I’m being paid for a summary report and hired because I do have a license, insurance and experience.So, to all of you who have 5-10 page addenda attached to each report, stop righting so much your killing your own profession. If it’s a problem it’s addressed if not, I’m not waisting 10 more minutes and a paragraph explaining that there is no problem.