Scope Creep & the Imploding of Rules
ANSI, while certainly worthy of discussion and taking a position on, will not solve the real “appraisal problem” that we all have. It really isn’t an effective tool anyway, but what the heck do I know. Being one of those AG certified from the very beginning, too early to get trained by anyone above me, since 1992, and licensed in real estate since 1971, and a broker since 1991, in a rural and complex market where there was no building department (or effective assessor) until the mid 1960s, with a substantial percentage of homes on hillsides and built well before permits existed, we have our challenges.
Nonetheless, years ago I could tell you what a home or small commercial property (that’s all we have around here) would likely sell for within a couple of thousand dollars by walking through it. While licensing for this ability was inevitable, and probably necessary, the imploding rules then implemented, and the scope creep that evolved because the cart was leading the horse, has severely lessened the reliability of ALL appraisals in my opinion.
Think about it… how Fannie Mae will reject a loan over a missing water heater strap; or in my case feeling the pressure to always tell them in writing that this home built 80 years ago still has a remaining economic life of over 30 years (or, more accurately, exactly 30 years so that they can do their loan if I expect to keep getting assignments from them, is what has ruined the profession). Look at FHA. The concept has gone from value to health and safety, and the appraiser has gone from valuation professional to home inspector, all with increasing liability.
Now, we all know that the primary motivation for sanctions and license revocation by BREA is allocated to terrible adjustments either intentionally or otherwise, and yet virtually all policy changes trickle down to a direct influence on the risk we take doing our jobs.
Fellow appraisers, I can generally still tell you what a home will sell for in my market within a 3-5% margin in minutes without any sort of report, but I sure do notice that my reports now are 50-60 pages long with 16 pages of disclaimer and scope of work clarifications, combined with the myriad of rules having little or nothing to do with value or marketability, and that my margin of error because of all that is now 10-12% based on following the mandated guidelines that really should not be appraisal industry standards that are enforceable.
I can still tell you pretty close by reasonable observation what your property will sell for because of all the years hanging around this market area and industry, and really don’t even need to know what the square footage is. I was so hoping to be a helpful participant in this blog and to gain some serious insight into the overall impact, but too much time wondering where all this banter is coming from, and why we can’t as a large group with a substantial voice, keep things in line without blind submission. Go figure.