AI and Appraisal Success, Cindy Chance Terminated (Appraisal Institute CEO)
September 20, 2024
What’s in This Newsletter (In Order, Scroll Down)
- Using Trainees, the Safe Way
- Appraised Value Vs. Sale Price
- Converted $500K Minnesota Bank With Historic Vaults and Bulletproof Glass
- How AI Tech is Reshaping Appraisal Success
- From Panic to Profit: One Appraiser’s Story of Survival and Growth
- Cindy Chance Terminated (Appraisal Institute CEO)
- Mortgage applications increased 14.2 percent from one week earlier
Appraised Value Vs. Sale Price
Excerpts: Property sellers often ask professionals who are performing appraisals for mortgage lending, “Why is an appraisal even needed? The buyer and I have already agreed on a sale price.” However, when it comes to appraised value vs. sale price, they are not the same thing.
What is Value?
Value is defined in the Uniform Standards of Professional Appraisal Practice (USPAP) as:
“The monetary relationship between properties and those who buy, sell, or use those properties, expressed as an opinion of the worth of a property at a given time.
Comment: In appraisal practice, value will always be qualified—for example, market value, liquidation value, or investment value.”
What is Sale Price?
Unlike value, price is not an opinion. It is a fact. Price is defined in USPAP as:
“The amount asked, offered, or paid for a property.
Comment: Once stated, price is a fact, whether it is publicly disclosed or retained in private. Because of the financial capabilities, motivations, or special interests of a given buyer or seller, the price paid for a property may or may not have any relation to the value that might be ascribed to the property by others.”
What’s the Difference Between Sale Price and Appraised Value?…
If a property is under contract for purchase at $450,000 and an appraiser provides a market value appraisal of $425,000 for the property, the $450,000 sale price is a fact, while the $425,000 appraised value is the appraiser’s opinion. The $450,000 price is what the property is actually selling for. The $425,000 market value opinion is what the property should sell for, under the specific conditions of the definition of market value.
The Appraiser’s Role
Properties don’t always sell for what they should. Depending on many factors, including the motivations and negotiating skills of the parties involved, a property might sell for more than its value, less than its value, or right at its value.
To read more, Click Here
My comments: Short and worth reading. Good analysis – for newer and more experienced appraisers.
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Converted $500K Minnesota Bank With Historic Vaults and Bulletproof Glass
Excerpts: 1 bedroom, 1 bath, 2,530 sq.ft., 0.6 acre lot, built in 1918
The former historic bank building in Morgan Park has been transformed over the past 2 years into a turn key private residence.
All of the interior finishings & cabinetry have been custom built or made to complete this transformation along with main floor bath to include a walk-in closet.
The character of the original in-tact & functioning vaults with safety deposit boxes, gates, and their new potential uses as well as original historic drinking fountain and bulletproof glass overlook from loft above.
If you have ever been worried about the structure of a property in the past, there is no doubt that this is probably the best built building you could ever find to live in with walls that are at least 20 thick reinforced concrete! The property includes 4 city lots and part of that is a 17, 000 sq. ft. asphalt parking lot leading to so many more possibilities in the future for the next owner.
The lower level features high ceilings with additional living space, extra storage, and a large drive in basement garage with huge workshop area. Attention to detail from the on-demand wall mounted hot water tank inside all the way to the finishing tuck pointing of the exterior bricks
To read the listing, with 50 photos and a virtual tour, Click Here
My comments: Check out the photos. Very interesting home plus bank vault. In my city two former banks were converted: one to a pizza restaurant (retained the bank vault) and the other to a medical office building.
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How AI Tech is Reshaping Appraisal Success
By Roy Meyer
Excerpts: Imagine completing your appraisals in less time, with twice the accuracy, and opening doors to new lucrative markets—that’s the power of AI in the appraisal industry. But are you truly ready to harness this transformative power, or will you be left behind as the industry evolves?
The AI Appraisal Revolution: Beyond Surface-Level Use
While many in the appraisal industry are just beginning to explore AI, forward-thinking firms are already leveraging it to transform their operations from the ground up.
While many in the appraisal industry are just beginning to explore AI, forward-thinking firms are already leveraging it to transform their operations from the ground up.
Over the past couple years, my team and I have been at the forefront of this revolution, developing customized AI agents that don’t just automate tasks—they enhance efficiency, save time, increase income, and streamline processes in ways previously unimaginable.
AI Agents for Compliance and Operational Excellence
AI FHA Guidelines Advisor: Your team’s go-to assistant for comprehensive FHA guideline guidance, from questions to image feedback to lender revision requests and more. This AI Agent is trained on and powered by the current “FHA 4001.1 Handbook.”
AI Agents for Business Growth and Client Engagement
AI Client Communication Manager: This agent handles routine client inquiries, schedules appointments, returns emails, and manages follow-up communications, freeing up time for more critical tasks while ensuring consistent and professional client interactions.
To read more, Click Here
My comments: Definitely worth reading. The best I have read for how to implement AI in your appraisal practice. The author has done it in his business. Roy Meyer has been on the forefront of how appraisers can have a successful business. I have been following his ideas and what he does for a long time.
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The Generative Shift: A Thorough Examination of AI in Appraisal by Jim Amorin, CAE, MAI, SRA, AI-GRS, CDEI
Book Review by Craig Gilbert, ASA, SRA, CRP
Excerpts: On the Future of AI in Appraisal:
“Imagine an appraiser working on a valuation assignment and, with a simple
query, receiving instantaneous insights into current market trends, recent sales in the vicinity, or even predictive analytics about future property value fluctuations.” (Chapter 7)
This excerpt vividly illustrates the prospective advancements in AI-powered
appraisal processes. Amorin imagines a scenario in which AI tools deliver instant analysis of market data, offer reporting guidance, and perform language verifications, greatly improving both efficiency and precision while reducing bias.
Example: Custom GPT: UAD RealView Analyst
Amorin presents a tangible example of a custom GPT named “UAD
RealView Analyst,” crafted to assess the quality and condition of residential
properties in accordance with the Uniform Appraisal Dataset (UAD) Specification Guidelines. This GPT exemplifies how tailored models can specifically target appraisal tasks, significantly improving both the efficiency and precision of the valuation process
In summary, custom GPTs are a formidable resource for real estate
appraisers aiming to utilize AI to boost efficiency, precision, and tailored insights. As AI technology advances, custom GPTs are set to become increasingly influential in defining the future landscape of the appraisal industry.
My comments: The book focuses on ChatGPt and explains how and when to use it .
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From Panic to Profit: One Appraiser’s Story of Survival and Growth
by Tony Jones, Senior Editor, Working RE
Excerpts: The first time Mitchell Simonson experienced an extreme slowdown as a real estate appraiser, he experienced a line-in-the-sand moment that profoundly altered the course of his personal and professional life. This was in 2009 in the throes of the Great Recession. Simonson was just five years removed from college, working as a junior associate for a commercial appraisal firm, with aspirations to someday own his own business.
He began working at age 11 doing part-time jobs, and for 14 straight years his income had increased. “I always thought that everything just went up and up,” recalls Simonson.
But in 2009, Simonson bought a house. He and his wife had a 1-year-old and 2-year-old, with No. 3 on the way. His firm was doing a lot of bank work at the time, but then fees started to compress and demand for appraisal services slowed way down. Sound familiar?
On a hot July day in Minnesota, with his two sons nearby on the floor, Simonson sat on his couch contemplating his income—which had fallen about 30 percent—and decided to take matters into his own hands.
“I remember sitting on that couch,” says Simonson. “I was kind of scared, and for whatever reason, something triggered inside of me. I told myself that the one thing I could control was my actions and moving forward. So, I committed to better health, reading a lot of books and changing my mindset. Instead of worrying about the market and the negativity that was coming at me from the real estate space, what could I do proactively that was in my control?
When appraisal work slowed when he was a junior associate, Simonson pushed to find appraisal opportunities rather than wait for work to be assigned to him. He adopted a proactive, entrepreneurial spirit that helped the company he worked for win new business as well as begin to sharpen his relationship-building and networking skills. This included bringing in two national banks based in Minnesota that wound up being his first two clients when he launched his own business in 2012 with a local partner in the Twin Cities.
“I also continued to invest in myself,” he explains. “I think that’s the important part, even if it’s in a down market. Obviously, things can tighten up on the financial side, but what are you doing to make investments in your career? What do you want to create, not just for your business, but for your lifestyle?”
To read more, Click Here
My comments: Worth reading. He focused on marketing and changing his business and mental attitude.
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Cindy Chance Terminated (Appraisal Institute CEO)
Editor Note: Below I have several news sources plus my own opinion as a member since 1986. There is no information available about why she was terminated.
Why should you care about this if you’re not an Appraisal Institute (AI) member?
With over 16,000 members, AI is the largest real property professional association. If the AI advocates for residential appraisers, they would be the only large voice for us. It happened once with Cindi Chance. Hopefully, it will happen again. Cindi wrote about AMCs and bias and how they affected residential appraisers.
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Cindy Chance Terminated
By Dave Towne in Appraisersblogs.com
Editor’s note: I have included this link so you can read other appraisers comments and write a comment yourself. There are also comments on appraisersforum.com and Facebook appraisal groups.
Excerpts: On September 13, 2024, the Appraisal Institute President, Sandra Adomatis, SRA, announced that Cindy Chance is no longer the CEO of the Appraisal Institute.
“We are writing to inform you that as of today, September 13, Cindy Chance is no longer in her role as CEO of the Appraisal Institute.”
In an interview published by HousingWire, Cindy Chance disclosed that the Board of Directors had terminated her.
Rumors that this was pending have been circulating around AppraiserVille for several weeks.
I’ve been reading comments on various forums asking “will we be told the real reason for this?” My answer: Nope. It will never be discussed publicly.
To read more, Click Here
My comments: Worth reading, plus the appraiser comments.
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Appraisal Institute CEO fired following ‘secret’ board meeting
Cindy Chance said she received no specific feedback from the board prior to her dismissal
September 13, 2024, By James Kleimann, HousingWire
Editor’s Note: This HousingWire article is behind a paywall. Several articles were written by reporters who interviewed persons for more information, are also behind paywalls. There are a few other articles online which took quotes from the HousingWire article, which I am doing below.
There are many posts and comments on linkedin from AI members and non-members. Search for Cindy Chance, who has an active linkedin account. Part of this article was posted on James Kleimann’s linkedin account.
Excerpts from HousingWire article:
Cindy Chance, the CEO of the Appraisal Institute, was terminated during what she described as a “secret board meeting” on Thursday night that she was excluded from.
The Appraisal Institute now faces a backlash from members who support Chance, a veteran nonprofit leader who joined roughly a year ago and pledged to make governance reforms and support the work of on-the-ground appraisers.
Chance told HousingWire on Friday that she received “no specific feedback” prior to the termination notice. She said she was terminated without cause.
“People have been saying this would happen since the Q3 board meeting,” she said. “I heard about them planning to fire me through leaks and innuendo, not from the Board itself or any of the officers. I’m very proud of my work and my focus has always been the welfare of the members and the appraisal profession.”
Asked why she was terminated and if there were any disputes, Chance replied, “You’d have to ask them.”
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Appraiser (ASA) Designation for SRAs
A Quick Guide to ASA’s Real Property (RP) Accreditation Program for SRAs
For more information (PDF) Click Here
ASA WEBSITE: www.appraisers.org
My comments: ASA has many types of appraisers, including business valuation, personal property, etc. with over 5,000 members.
In 2018 ASA merged with NAIFA (National Association of Independent Fee Appraisers) with mostly residential members. ASA was popular for commercial appraisers in the past due to hassles getting an MAI. There were also residential members. Now there are more.
(From 2017) “The merger will add nearly 800 new members to ASA’s more than 5,000 multidiscipline credentialed valuation professionals in over 75 countries and 63 chapters throughout the world, creating one of the largest networks of U.S. professional real estate appraisers.”
My comments: I have never been an ASA member, but have attended local ASA chapter meetings. My favorite speakers were personal property who sometimes spoke on appraising very unusual “things”. I spoke once at a national ASA conference and learned a lot about ASA.
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What I Think About AI
If I had an SRA or was member without an SRA, I would definitely consider quitting AI. But, my MAI is very valuable so I will remain a member. Also, I love my local chapter, which has always been very supportive of residential, with regular residential CE and events.
Cindi Chance was the first AI CEO, President, Board of Directors member, etc. to try to address the most significant problems today in residential appraising: AMCs and Bias accusations. She wrote long articles on those topics. Many individual members have spoken out, but AI support is needed to show that more than a few appraisers are very worried.
Termination of Cindi Chance sent a message that AI does not care about residential appraisers. I have no information from AI on why it was done.
The most valuable “product” AI owns is the MAI designation.
I am not quitting because my MAI is very valuable. Many years ago, I went to the local chapter’s AIREA very small office with one person. I imagined that maybe the ultimate AI future would be keep getting MAI dues until they all retired or quit. No education, no new members. In the past, lender appraisers, even chief appraisers, could not get an MAI.
When I started my business in 1986, I joined both AIREA (American Institute of Real Estate Appraisers (mostly commercial) and Society of Real Estate Appraisers (mostly residential). Both groups had monthly meetings at a restaurant in a nearby city. There were many appraisers who were members of both, like myself. When they went to AIREA meetings most wore suits. At SREA meeting most wore business casual.
I had never seen a Fannie appraisal or done non-lender appraisals. They helped me get started doing appraisals and were available for help when I needed it. I did residential and commercial for many types of non-lender uses. I was very lucky.
In the San Francisco Bay Area, AIREA was a large chapter and employed a staff person. SREA had smaller chapters in the same area. I was active in SREA and was chapter president in 1990 with about 250 members. It was volunteer run.
Because of my previous positive experiences, I supported unification of the two groups into the Appraisal Institute (AI) 1991. Big Mistake.
Unfortunately, after unification of the two organizations in 1991, AI was rapidly dominated by MAIs. When I started appraising in the late 1970s, residential appraisers were often seen as “inferior” to commercial appraisers. AIREA did not have many active residential members, especially at the national level.
I went to the first AI national meeting. It was very different than national SREA meetings. People were running around going to committee meetings. I joined the seminar committee as I had a CE business at that time. The committee members were mostly appraisers who did AIREA seminars and were trying to get more. I quit the committee.
I saw very few SRA and/or women presidents from AIREA and AI. No Blacks or other minorities. I got the message about who was in charge. Cindy was the first one who tried to help residential members. She lasted a year.HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.
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Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.
My comments: Rates are going up and down. Many appraisers are not busy. Some are busy, usually with non-lender appraisals. WE ARE ALL WAITING FOR MORTGAGE RATES TO KEEP GETTING LOWER!!
Mortgage applications increased 14.2 percent from one week earlier
WASHINGTON, D.C. (September 18, 2024) — Mortgage applications increased 14.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 13, 2024. Last week’s results included an adjustment for the Labor Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 14.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 26 percent compared with the previous week. The Refinance Index increased 24 percent from the previous week and was 127 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 0.4 percent lower than the same week one year ago.
“Application activity was up significantly last week, as market expectations of a rate cut from the Fed pulled mortgage rates lower. The 30-year fixed mortgage rate, at 6.15 percent, is now at its lowest since September 2022 and is more than a full percentage point lower than a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were up 24 percent – more than double last year’s pace, with both conventional and government activity jumping to the fastest pace of refinancing since 2022.”
Added Kan, “There was also an increase in purchase applications, and it is notable that conventional purchase applications increased to a pace ahead of last year, which also drove overall purchase applications very close to year-ago levels. Homebuyers are seeing improving affordability conditions, sparked by lower rates and slower home-price growth.”
The refinance share of mortgage activity increased to 51.2 percent of total applications from 46.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9 percent of total applications.
The FHA share of total applications increased to 15.2 percent from 14.7 percent the week prior. The VA share of total applications increased to 16.8 percent from 16.4 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.15 percent from 6.29 percent, with points increasing to 0.56 from 0.55 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 6.41 percent from 6.56 percent, with points increasing to 0.55 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.12 percent from 6.24 percent, with points increasing to 0.81 from 0.76 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.42 percent from 5.71 percent, with points decreasing to 0.70 from 0.73 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 5/1 ARMs decreased to 5.66 percent from 5.85 percent, with points increasing to 0.49 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.
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Ann O’Rourke, MAI, SRA, MBA
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