What Is My Incentive?
- What Is My Incentive? - September 20, 2022
- Fraud Facilitating Misleading GSE Products - February 18, 2022
- HUD Dismisses Claims Alleging Racism - December 2, 2021
Why would I bother taking on the added risk of an inconvenient process? Where is my incentive again?
As an appraiser, I have to ask (seriously) why should I care if the profession has a shortage of skilled appraisers?
Logic dictates that If there is a shortage, then I will remain busy. Even if waivers (another ruse to eliminate appraisal work) increase, I’ll be busier with fewer appraisers. Especially with so many of them “trained” under PAVE or PAREA programs.
If there is an adequate supply of appraisers, then users of appraisals will continue to seek cheaper alternatives from them arguing there is a glut and everyone has to now settle for less. What is my incentive?
MISMO has clearly stated that its objective is ultimately the complete elimination of human appraisers in the mortgage process.
Given the above I would STILL take on trainees. I like to teach. I can even earn more money by taking on trainees, IF I can also set the conditions under which I accept them. For me, I would be raining future sources of business referrals rather than future competitors. No trainee is going to be capable of ‘stealing’ my market niche from me for several decades. I have over 35 years of experience. UNLESS low fees or willingness to perform hybrids becomes the new GSE norm.
The states have said we need to take a supervisors course in order to have a trainee who wants to be given credit for experience. Some states even dictate how many hours they will “allow” a trainee to claim for each type of assignment (based on property type, as opposed to actual assignment time necessitated by its specific complexity).
Taking on a trainee whereby MY work samples and work files become fodder for prosecutorial-minded state regulators to review work that they would not otherwise have, is another disincentive. Why would I bother taking on the added risk of an inconvenient process? Where is my incentive again?
The only thing the now obsolete TAF and states are leaving for me to decide anymore is whether I take on a trainee or not. Today, I choose not too. Not for trainee credit anyway.
I also have a conscience. When people ask me if this is a good profession to get into, my honest answer is: “No. It used to be, but it is not anymore.” If you have the professionally unnecessary, but regulatory required degree for certification, then become a lawyer instead.
We used to be able to earn respect for the quality of our work. That no longer exists outside of our peers. Our clients certainly have no respect for us. They go to great lengths to circumvent customary and reasonable fee laws (Dodd-Frank is such a law). The president of the United States also said initially that our profession had historic systemic racism in it. Then he clarified the statement to suggest individual appraisers are currently guilty of racism. The irony is that a guy in elected federal “service” for 47 years is just now noticing systemic racism in a fully federally regulated system that he helped create!
He is joined by Maxine Waters in that claim who herself cites as ‘proof’, that HUD has joined in settlements for such allegations. I’ve seen those letters. They state “There is insufficient evidence to proceed with the claim against you (the accused appraiser) so we are dropping our case.”
As a separate issue, they (HUD Investigators) then point out that the accusers have indicated a willingness to settle the claims for reimbursement of the appraisal fees. What appraiser would not elect to do so faced with an alternative of fighting the federal government at a cost of tens or hundreds of thousands of dollars?
What is my incentive in reducing a perceived or falsely claimed future shortage again? So again, would someone explain to me why I should care IF there is a shortage of appraisers? The market for residential appraisals has once again dried up. It is more than the usual annual disruption. Today we no longer have any shortage. We have AMCs claiming if we don’t take the lowest imaginable fee offered, that they can easily find someone who will accept it. What is my incentive in reducing a perceived or falsely claimed future shortage again?
I also do not do bifurcated hybrids or so-called desktop appraisals with interior floor plans required. (It ceases to be a desktop appraisal then folks). Also, I am not accepting responsibility for some third-party low bidder property measurement service, or the accuracy of someone’s latest snake oil software ‘measuring’ systems.
If such systems and services are so reliable, then users have no need to make ME accountable for their results, do they?
The sheer time-killing idiocy of current AI-generated revisions or observations makes me less inclined to take on trainees.
Instead, I’ve opted to discontinue doing almost all GSE appraisal assignments. I can make more, with less interference and associated risk from non GSE clients.
Instead of training new appraisers, perhaps we should focus more on abandoning GSE work before MISMO and the GSEs get their wish and fully automate the system with no regard to what happens to us or our many years of training and expertise.
For my part I see great potential in appraising for all of the inevitable lawsuits that will result from automated valuation incompetency.
You are remarkable man, a skilled appraiser-advocate and what you have written hits the nail on the head. There will always be a need for experienced, qualified, ethical appraisers. Those words, however, are disregarded, in fact, purposely obfuscated by state and federal regulators as they make every effort to pander to special interest groups.
Well said Mike!
And so we agree on this topic, Mike. Good article that needed to be said.
Before HVCC and Dudd-Fwank I had a firm with 4 Certified and 2-3 trainees working a 10 county area. Each appraiser lived and worked in his own area and we had a central office with manager. I was basically a small regional AMC but with ethics… After Dudd and the AMC takeover my business model was destroyed and we went our separate ways. Since then it’s been me and my old car, the office is for sale and I can’t imagine how I can afford the time and effort of training someone in this environment.
Your written words speak the truth! I will never and have never taken on a appraiser trainee. Why would I train someone to take my clients and eventually compete with me in the market, and don’t even talk about liability. I have been appraising for 32 years and it took me about 10 years to really understand the nuisances of appraising. Do I get paid for my experience? Get on the VA appraisal panel, they pay $700 a appraisal for about anything you do. No hassles and normal fees. They might be hiring in your area and adding to their panels. No trainees, no desk-tops and no AMC work, they are all just crooks.
Remember this about MISMO:
MISMO stands for Mortgage Industry Standards Maintenance Organization.
MISMO is a subsidiary of the Mortgage Bankers Association. (Let that sink in)
As for trainees, I’ve never had one and never will. My children in college have shown interest in becoming an appraiser, and I told them to find another career path. This one is dead, and rife with over-regulation and never ending liability. I’ll be doing appraisals until the cows come home, but our time on this farm is very short.
Fox guarding the henhouse. GSE is sort of a misnomer these days. This is a private consortium of international lenders and investors which is subsidized by taxpayer dollars and subsequently drives the majority of American real property lending policy. It would be better at this point to wind down the GSE’s and decentralize lending. They blew right past the charter and then some.
Artificial Intelligence (not to be confused with today’s AVMs) will replace most appraisers (residential and commercial) within the next 10 years. I used to think it would take decades for this to occur, but research spending in AI is yielding amazing results.
According to IDC “Worldwide spending in the artificial intelligence market is set to grow in 2022 to $432.8 billion on its way to breaching the $500 billion mark by 2023.”
If you have a young family member or friend who is considering a career in appraising have him or her watch this YouTube video which has over 4.2 million views. Allow them to draw their own conclusions as to whether or not this will be a viable career choice over the next 30 years.
And there it is, remote inspections for $20 a pop. Specific for appraisal.
That is a site ran by appraisers supposedly partnering with Freddie Mac. Consumer protection you can trust.
I checked with a few big box companies like MCS, they indeed only pay $7 per property inspection photo set. Radian Homegeneous pays appraisers $50 for a hybrid third party inspector report that you sign with your own million dollar insurance policy and license. Mowing a lawn pays more and the same companies know this, as they order a wide range of services. The time saving junk they’ve been doing with the insurance industry and field services oversight is now supposedly the new reliable standard for appraisal.
Anyone have hot leads on forensic review firms hiring remote? For getting away from GSE work, have to disagree. Well over 300 million American consumers deserve fair protections. Their financial safety and well being, is our financial safety and well being. Their risks imposed by this ‘restraint of trade’ and destructive re organization are our risks. We must continue to fight for fair reforms for appraisers, and consumers. As a home owner it is frightening to think my next valuation request for mortgage lending may be completed in such a careless manner absent of meaningful safeguards and attentive professional service, aka third party inspectors and hybrid reports.
How many times have you had an irate BUYER when the valuation comes in below the amount they have offered? Think about that. They don’t want protection – they want to close. It’s farcical. How many times have you been thanked for protecting a buyer……………….29.5 years and ZERO. Hope my second generation Appraiser has an alternative plan.
It’s not a good fit for everyone to be truly independent. How many times must the GSE’s fail to provide liquidity protection before people finally understand how valuable the appraisal service really is? Poisonous protectionism is when central planners and bureaucrats, in an attempt to mitigate risk, actually create vastly more complexity and risk than would have been present in the absence of government planning and centralization. With government insurance to boot.
Bear in mind that during the last crash when appraisers were still primarily on 1004 time consuming reports, we lost tens and tens of thousands on lengthy suspensions and revocations lists. Somehow over the course of a few years a hundred thousand appraisers vanished and never returned. Sued out, washed out, kicked out. Now with half as many appraisers alongside increasingly exponentially concentrated workflow, those caught in this mess could get absolutely slammed.
I was on an inspection recently and a guy approached and started asking questions about the profession. He’s already has a degree and when I explained the process , well, he laughed . You can get an IT cert and make double what we make well within the apprenticeship. So yes I agree with the post.
Learn to code? Deal with SQL and calling massive troves of data into unique organizational patterns for meaningful insight reform and advisement to systems and business structure managers using C++ & Python and the likes? Meetings and daily zoom calls… Looked into it and even brushed up on syntax. The thought of being tied to the desk staring at code all day long.
Is there anything the board can do concerning this???
Is there anything more clichè than an older appraiser telling a younger one “how good it used to be.”
Not sure – ask a stockbroker.
You do not need GSE work. I guarantee if you try just a little bit, you will be just fine. It is incredible how many people get divorced and die that need appraisals. Well, if you are dead, I guess you don’t need an appraisal, but your family does. I got an order today. It was an identity theft assignment. I could turn my back on all GSE work today and be fine.
APPRAISERs follow this guideline, and you will be just fine.
You need an actual website. Not an Alamode sh*t website.
Basic SEO that’s all you need.
Register your address with google and bing maps.
Pay google ads the minimum and ensure you only target your market area. $35 a month.
You are the expert in your market, and let everyone know it. Agents are a gold mine for making money. Partner with an LO reach out to agents. Just call the Broker and let them know you want to be a part of their Tuesday morning meetings. I estimate five new non-GSE deals for every 45-minute agent meeting I do.
I have made a hard six figures with this site, and it’s only a few years old. You are welcome to poach from my technology.
I have as much work as I want. I just trained my 27 and 21-year-old sons and their friends to take over my firm. I do not care if rates are at 9%. It does not matter. If you need an appraisal, you need an appraisal.
My acceptance contract was sent with every BID included the phrase (Liability limited by the fee paid) I didn’t even believe that. I also stated the job would begin when the fee was received. I relented on that, but it did limit the clients, and collection fees. I enjoyed my business for 57 years.
I too have over 35 years experience and I agree with most of your observations. I will add that our profession has too many carpet baggers who would sell their mother for the right price. There is no unity to say enough is enough. Some will do a job for ten cents on the dollar just to get the job and its each man for himself (or herself). The systemic problem lies within and that is where.the buck stops. Problem is they don’t get they are cutting their own throats for the immediate and not thinking of the long haul.
There is no current shortage. The question is why are AMC”s charging $900 for an appraisal and trying to find the cheapest appraiser on the planet to send the order to.
One of the first desktop assignments that I saw had and appraiser fee of $45. The AMC has to disclose their fee, which was $255. I spit coffee out my nose laughing.
Its all about their fee and turn time, quality be damned.