Appraisal News and Business Tips

E&O

7-20-17 Newz// Fannie data, USPS gyrocopters, Costar data

When the U.S. Postal Service Used Gyrocopters to Deliver the Mail The flying machines hopped from roof to roof of post offices.

Excerpt: Sensing opportunity, the United States Postal Service-then the U.S. Post Office Department-decided to invest in the new technology. In 1937, Congress appropriated money to fund a series of experiments on autogyro mail delivery, and within a year the first flight-from Bethesda, Maryland to Washington, D.C.-was made.

My comment: Check out the photos (no videos in 1937). Very interesting!!

Why Fannie Mae Shouldn’t Keep Data Secret

Excerpt: Today’s lenders have access to massive amounts of data. According to (Richard) Hagar, government lenders have access to every recorded sale in most every county across the U.S. via information providers like CoreLogic. He believes appraisal adjustments should be cross-checked against sales metrics of the five million home sales that occur each year.
However, appraisers typically use Multiple Listing Service (MLS) for residential appraising. Data provided by MLS may vary from information shown by providers like CoreLogic. MLS has more detailed information that county records don’t contain. Oftentimes, though, MLS contains errors or missing data. In other words, both types of systems have errors, but not necessarily the same errors.
My comment: Controversial topic!! Fannie says that they want appraisers to be objective, not using Fannie’s data. For example, appraisers changing their building sketches to match public records sq.ft. to avoid underwriter/review hassles. I remember CMDC books (in california) back in the 1980s where appraisers submitted the first pages of their appraisals to go into a shared appraiser database. Before appraisers could get MLS access. Seems like that was okay…

Read more!!

My appraiser E&O story

I always advise appraisers to contact their E&O insurance company when they have questions. Many are worried that if they call their insurance will be cancelled. I don’t know how often this happens. Probably not very often.

I had not worried much in the past. But now, I really worry about losing my state appraiser license. I don’t need my professional designations to do appraising but I need my state license, even though I don’t do any work for lenders. If you’re not licensed, you can’t get appraisal work.

I have only called my E&O company, Liability Insurance Administrator (LIA) twice. I have been with them for over 20 years. The first time was many years ago when I took interior photos of a property occupied by an attorney who had not paid rent for a long time. The appraisal was for legal purposes. I forget the details. The attorney demanded that I return the photos and the negatives. I called and they told me what to do.

The second time was last month. I appraised a 10 unit apartment building for an estate. The executor had called me a few months previously but decided to go with an appraiser who had a significantly lower fee. She wasn’t happy with the appraisal and decided to get another one from me. She was comparing my appraisal with the other appraisal. It got very awkward for me as the other appraiser did not appear to have much experience appraising apartments. She kept calling me with questions as she was trying to reconcile the two appraisals. She was nice and not aggressive but was a math major in college and didn’t understand why there would be differences. I was getting very uncomfortable. I decided to return the fee.

I had returned fees a few times over the years because of a non-lender appraisal that got too weird (crazy people mostly). But, I wanted to be sure I did it legally correct. I called Liability Insurance Administrators and spoke immediately with one of their attorneys who sent me a form letter asking for a signed release of the appraisal and that it would not be used. The client sent back half the fee and said it was for consulting as I did help her understand about appraisals.

What’s the business lesson for me? I now know to screen out anyone who is getting a “second appraisal” because they did not “like” the other appraisal. In a strange coincidence, a few weeks ago another executor called me for the same reason. I told her I was too backed up. I had never had anything like that happen before. Always something new. Appraising would be great except for those darn clients!!

What does this mean for you? Shopping for appraisers’ E&O insurance is not like shopping for car insurance. Don’t choose it only because it is the lowest cost. It is not worth risking your license. I know that appraisers get into into awkward situations regularly when doing lender work. Who will you call?

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