Requests for Reconsiderations
…appraisers continue to receive requests for reconsiderations on a daily basis.
White Paper: Requests for Reconsiderations
The paper states that one factor that complicates requests for revisions is that there are no consistent industrywide policies, guidelines, or forms related to this process. Furthermore, over recent years there have been changes in statute and policy with respect to appraiser independence obligations, which has resulted in some confusion among users of appraisal services (and appraisers) as to exactly what may be asked and provided in such requests.
It is important to distinguish these requests from a request to make corrections or address errors or inadequate information in an appraisal report. As stated in the Uniform Standards of Professional Appraisal Practice (USPAP), “perfection is impossible to attain.” Therefore, every appraiser either has produced (or will produce) an appraisal report containing at least one typographical error, omission, etc. in their career. This paper does not address requests for corrections.
This paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater awareness and understanding of issues surrounding the reconsideration process and offer some suggestions for those who wish to build a more relationship-driven and consistent method.
For as long as there have been appraisals, there have been clients and other users of appraisal services asking appraisers, on occasion, to reconsider a completed appraisal. As with virtually everything, some such requests are more valid and reasonable than others. Nevertheless, across the country, appraisers continue to receive requests for reconsiderations on a daily basis. It is not the intent of this paper to either champion or demonize such requests; rather, the intent is to recognize that such requests exist, and to examine ways that might ease common stress points inherent in the process…
Appraisers have shared stories about receiving requests for corrections or clarification from a loan processor or underwriter, only to find the information already contained in the appraisal report. Many appraisers have shared a common response to such inquiries: “Have you actually read my report?”…
- Reconsider the Rule on Deferred Appraisals - May 11, 2020
- Appraisers Considered an Essential Business - March 22, 2020
- Bringing Evaluations Under USPAP’s Umbrella - September 6, 2019
Here is one I got from an AMC today for an attached townhouse: “Can the appraiser please provide a photo of the left side of the subject as this is missing from the report? Thank you.” 😕
Edit. That does qualify for stip of the week! Why do you pay your hard earned money to keep them in business? You rarely deal with such nonsense when dealing with better qualified better staffed direct assignment panels.
You’re right. That’s why I’m focusing more on private work. I’m doing 60% private and 40% mortgage. My goal is to do 100% private. There is no future in mortgage business IMHO.
I’ve been hearing that for a solid ten years now. We can’t leave the general public whom relies on mortgage servicing behind, it would just not be ethical or fair. If all you’re relying on mortgage lending for is a portion, you should have no problem swapping out clients and landing on direct assignment lists. It’s as easy as marketing down the list of top 100 lenders or however you approach it, keeping detailed sales lists with a folder for each lender, and documenting who’s using amc’s and who is not. Amc’s are a dime a dozen populated by instantly substitutable telecom workers whom read scripts off the screen. Direct assignment is the only way to go, their typical overhead fee is 100 or less so you almost always can rest assured nobody is getting ahead of you by discounting, and can also rest assured you’re getting a same fee for equivalent orders as the next appraiser on panel. “If amc’s don’t know what a fair fee for appraisal services is by now, we can’t help them.” What’s your fee and turn time?
With underwriters often being tasked with ‘reviewing’ a hundred reports every single day of the week… It’s important to remember that nobody goes to jail when it comes to mortgage loan related matters. Most crimes are monetized by the justice department. Operating under that premise will help keep you safe because you’ll only then be able to realize how broad in scope criminal activity in real estate has become, and how that is now institutionalized with no effective check to maintain balance. Be careful out there.
AMC: “LENDER REQUIRES PHOTOS OF BASEMENT”
Appraiser: “The subject is on a concrete slab”
Prof positive that the idiots don’t read the report and the software they use doesn’t read them either.
Underwriters get paid 50k to 85k a year, get weekends off, company benefits, and the glorious benefit of punch in punch out don’t bring stress of work home… I wonder if amc’s and lenders selects underwriters in a similar fashion as they do with appraisers, calling down long lists of vendors asking what is their fee and turn time…
All I can say is LOOK AT THE WAY THE VA DOES IT.
AMC’S/LENDERS….JUST DO THAT.
For doing VA….we have a guidebook. The VA mandates we follow it. We read it, we learn it, we follow it for all appraisal reports.
It makes sense. No guessing for the hundreds of lenders I submit reports to. Very few revisions unless I make a mistake.
Meanwhile, the same lenders whom offer VA loans, purposefully do not apply similar standards to gse lending. That’s why we only trust them as far as we can throw them, regardless of which access point we enter through. Illusions in mortgage lending.
The VA has a rotational system, and other checks. From time to time an appraiser and a VA employee get caught assigning some appraisers more work.
Ain’t no system perfect.
Back in the early 1970’s Lomas & Nettelman one of the big mortgage houses met their review requirements by assigning every tenth appraisal too two different appraisers. Somehow or other systems work or are worked out, and we can all look smart in retrospect.
In my county of practice, and with my eagerness to go down the rabbit hole to seek the truth, roughly 3 out of 10 assignments results in reconsideration of values or Tidewater proceedings. Not to cloud the subject, but I believe working in suburban and urban areas where at times the MC report may reflect 50 closed sales over a 12 month period, has a lot to do with it. When the appraiser uses and supports his opinion with 3 sales, the allure of 47 other sales is often to great a temptation for other parties to ignore. This temptation will be minutes on their end, but often results in hours on our end.
To this point, and before they are even requested, each one of my reports contains a few paragraphs specifically relating to post submittal value reconsideration requests. In part, and what’s funny, is that the paragraphs mention the need to confirm they’ve been read in their entirety, and to indicate as such if a reconsideration of value is ordered. In the 10 years since I’ve included such paragraphs and statements, not a single requester has acknowledged reading these paragraphs.
Remember, although individual properties and small collections do contribute in helping to establish overall market trends (market value), singular of small groups of properties by themselves will be compared to the greater collection of data points from within the subjects given market area. These individual properties will be weighted accordingly, and will thus often times have limited to no impact in moving the subjects overall final market value.
Seek the truth.
Regardless of what may be in the request for a “Reconsideration of Value” the appraiser should keep the following in mind when making changes to the completed appraisal report. If the appraiser decides to add or subtract some information or comparables to the report it is up to the appraisers however if the appraiser then changes the opinion of value he/she could be in for major problems. If the report is reviewed by the State regulators they will require your complete workfile which should include both of the reports. You now have 2 reports on the same property with same effective date, different signature dates and 2 different values. The regulators are going to ask you which one is correct? No matter what your response is the regulators will say that the other report was incorrect by your own admission and you are now in trouble for completing and incorrect report. You can’t win if you have produced 2 reports on the same property with a different value, one of them is incorrect. I never change the value when I receive a “Reconsideration of Value”. If what they want is a new value then the lender should order a 2nd appraisal report from another appraiser.
I to have never changed a value. Not because I’ve never made a mistake, but rather the appraisal (a few comps) is just a snapshot of my work file. A mistake on a single comp or a few comps, does not wipe away the scores of data in my greater file, nor sway the final numbers in a significant way. Often times if mistakes are made, and updated post reconsideration request, additional comps from my work file are added to lend additional support for my original conclusions.
ROVs are a giant waste of time.
Seek the truth.
Related. It’s all codes and alerts now. The ‘reviewers’ are not reading the reports.
We create one thing for mortgage lenders, but are held to a more traditional report review standard by state authorities and legally related events which may arise afterwards. One time I was allowed to view the distribution platforms rule sets as if I was a lender. Just a bunch of checkboxes, what rule to hold firm and hard stop, what rule to let slide, only alerts, etc, etc. Of course the tech guys give reviewers too much credit and none of them actually know who’s job is who’s, because they’ve never carried individual licenses themselves… Welcome to the brave new world of technology in real estate.
And this is exactly why those periodic rating reports I get from AMC’s go straight to my trash! The computer keeps count of how many times the report gets sent back, and 98% of the time its because the reviewer didn’t read the report, or doesn’t know anything about valuation or USPAP guidelines. An adequate amount of explaining is required. But in no other profession is the professional required to “teach” the basics of their profession. Which raises yet another point to how is an appraiser supposed to remain profitable.
This takes me back to classical advice from the appraisers forum from right around the hvcc implementation period. “If you’ve charged enough to make it worth your time, what’s the problem? If not, make better business decisions and charge more.” When it comes to amc’s, they have a financial incentive to drive the appraisers fee down for variable profit, appraisers can not win when dealing with amc’s and maintain a high ethical standard, so why even try.
What did I tell you guys, I just received my 3rd reconsideration of value (ROV) request this week! It’s the same formula, they provide no educated proof to discredit the appraisers opinion, but rather supply a few new sales (unadjusted), that they want you to respond to.
So urban and suburban appraisers have it easy you say. I bracketed all characteristics with three closed sales, and added 2 pending sales as additional support. This issue is, that within 0.75 miles of the subject (2 Br, 2 Ba, condo) my report reflects 37 closed sales (12 months), that in essence gives them 34 to use against me.
What a joke.
Seek the truth.
Bill, they obviously aren’t happy with your value, SHAME ON THEM. You did your job correctly.
Did you see the google congressional hearing? Worth the watch. “inherent bias”. You’re obviously dealing with CA based amc’s.
I have been on the VA panel for many years. I do think that most of their rules and requirements are fair and even great in many instances. I just want to say that their policy of dealing with payment for the appraiser rates an absolute ZERO! The VA will deal with the most deadbeat mortgage brokers that have ever walked on this earth! Once you have one of these deadbeat lenders drag their feet to pay you the VA can be contacted for assistance. The VA will send a request to the lender saying such as gee….do you mind paying the appraiser…gee, have you forgotten to pay the appraiser…Gee would you pretty please pay the appraiser. Gee we would appreciate if it is not too much trouble could you please pay the appraiser? Really it is silly to watch a US government agency crawl and beg a stupid crook of a mortgage broker to pay their bill. Yes, the VA is a good client but they are a joke as far as assisting you in collecting your appraisal fee! Just be aware of that fact!
I have semi-retired now so I can speak freely. I spoke out about the VA not assisting the appraisers in obtaining payment for appraisals and gee…I did not get another assignment for about a year. Like I said…I am semi-retired and could not care less about any of that stuff…However the truth is the truth!
Another Tuesday and another VA reconsideration of value request. A guy buys a property for $500,000 on 05/21/2018, does nothing to it besides live hard and messy (wants loan repairs/landscape / hardscape), earns a market value increase of $10,000 (market value $510,000 / 9 months), but yet they want $540,000. As support, the 3 sales I get are all located East of the subject and ACROSS a major Frwy, two of the three have market value solar panel systems (-$20,000), one is an investor flip ($360,000 to $565,000). I love supporting veterans, and working with the VA, however there might be an over promise (expected higher values), and a problem with the system.
Seek the truth.
I recommend you all read APB Valuation Advisory #8 including Mr Brenan. At issue is “unattributed” data. When unattributed it is raw data outside of the scope of your research. This often happens when a unattributed party does a price search. Good Luck all – I’m getting this stuff too! And remember we have no obligation to address sales unless the client formerly asks for a reconsideration of value.