Are Appraisers Professionals?

By on July 12, 2024   /   ADUs, Appraisal Qualifications Board, liability   /   Leave a comment
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Valuing Appraiser Professionalism: A Blueprint for Survival

By Jo Traut, McKissock Learning

Excerpts: Having spent nearly three decades in the field of real estate appraisal, I’ve witnessed firsthand the evolution of our profession, particularly with respect to technological advancements. However, alongside these positive changes, I’ve also observed a troubling trend toward increased unprofessionalism. This phenomenon isn’t unique to our discipline. It’s permeated other careers, from medical professionals to teachers to business managers.

What professionalism means in the appraisal profession and how we can all work toward achieving it.

Integrity

Remain steadfast in your commitments, stay true to your word, and uphold your principles, even if this requires declining an appraisal assignment or future work with a client or their agent. By staying honest and true to your values, others are more likely to trust and collaborate with you or recommend you and your business.

Expertise

Professionals strive for proficiency in their field, continually enhancing their knowledge through education, webinars and personal development efforts. It’s not just about acquiring designations but staying informed about market dynamics, industry changes and emerging trends.

Commitment to Excellence

True professionals are prepared, which entails advance planning, dedicating sufficient time and giving proper attention to tasks. Before delivering work to clients, conduct a thorough review to mitigate potential errors. Acknowledge and address any skill gaps or lack of competency promptly and transparently, ensuring a commitment to excellence in every endeavor.

To read more, Click Here

My comments: I have always done “Remain steadfast in your commitments, stay true to your word, and uphold your principles.” I was first trained as a scientist, starting with my high school biology class. After graduation, I worked in labs for 7 years.

I have always been a professional appraiser since I started in 1975, trained at an assessor’s office to do what is in this article. I hate the word “industry” when applied to appraisers. I try to avoid using the word “industry”. Since licensing, residential appraising has become more of a “trade” than a professional career. I quit residential lender appraising in 2005. I know about the conflicts, which have been getting worse.

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AVM Accuracy?

By on June 28, 2024   /   AI, AMCs, appraisal business, appraisal reviews, Fannie, Freddie, liability   /   Leave a comment
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Bank AVMs Are As Wildly Inaccurate As A Zestimate – But Will Be Regulated As Legitimate Values

By Jonathan Miller

June 24, 2024

Excerpts:

  •    AVMs are incredibly inaccurate and are being misused in property valuation
  •    AVMs don’t consider the condition of a home
  •    The mortgage industry’s push toward automation has reduced valuation accuracy

AVM or Automated Valuation Models have been incorrectly seen as the human-less way to value property. The technology has been drifting into mortgage lending reliance for more than a decade because it has been marketed as having the ease of “pushing a button.”

The Zestimate product by Zillow introduced the consumer to the concept nearly twenty years ago…

The recent ruling to regulate the credibility of AVMs by the OCC and FDIC essentially legitimized the use of AVMs in lending. The driver behind this final rule was to eliminate potential bias in valuations by replacing appraisers with AVMS. Yet the Urban Institute study Revisiting Automated Valuation Model Disparities in Majority-Black Neighborhoods said: But even with data improvement and artificial intelligence, we still find evidence that the percentage magnitude of AVM error is greater in majority-Black neighborhoods. This finding indicates that we cannot reject the role historic discrimination has played in the evaluation of home values.

AVM software is built by humans who have inherent biases. The void in representation by the appraisal industry over the past decade on the AVM issue, to talk about those 200 feral cats living in the house being valued, has enabled AVMs to be legitimized by the federal government.

During my career, I have observed that valuation accuracy has become weaker as technology has expanded in the mortgage process. The wiz-bang concept that the appraisal of a property can be completed at the push of a button is missing the realities of valuation.

To read more, Click Here

My comments: Worth reading. Miller was involved in AVM history and, as usual, has some very interesting stories plus lots of Zillow comments.

For pro-AVM information from AV Metrics and to see how they test AVM accuracy, Click Here I have been following them for many years.

Miller used to send out a very long post once a week. I often just scrolled fast through most of it to get to the appraisal section, but I missed a lot that was worth reading. Now, he has divided it into daily posts.

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What is a Complex Residential Property?

By on June 21, 2024   /   AMCs, appraisal, Appraisal fees, liability   /   Leave a comment
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How to Identify a Complex Residential Property

By Dan Bradley

Excerpts: A complex one-to-four family residential property is defined as a property that meets at least one of the following criteria:

  •   The property to be appraised is atypical
  •   The form of ownership is atypical
  •   The market conditions are atypical

Some of the key physical features that can make an appraisal assignment complex include:

  •  Size (significantly larger or smaller than typical for market)
  •   Floor plan (there may be functional obsolescence)
  •   Unique custom features
  •   Quality of workmanship or construction (higher or lower than the norm)
  •   Architectural design
  •   Adequacy of HVAC, electrical systems, well and/or septic
  •   Additional living unit(s)
  •   Non-conforming zoning
  •   Mixed-use property (for example, it is used as both a business and residence)
  •   Waterfront properties

Keep in mind that what is considered a complex residential property in one market might not be considered complex in another market. For example:

  •  A mansion in Beverly Hills is not atypical; a mansion located somewhere in rural America might be
  •  A log cabin in the mountains of Virginia is common; a beach-front log cabin in VA, not so much
  •  Manufactured or mobile homes with additions are common in rural areas, but generally not in cities

To read more, Click Here

My comments: Read this short article and keep it available. Very good lists of the factors.

Why do you want to know about this topic? Business is slow now, which is a good time to try appraising unusual homes. But, a fast turn time is not a good idea unless you are very familiar with the subject’s complexities. Do you have another appraiser who can help you? Don’t risk your appraisal license by getting in “over your head”. I get regular calls from appraisers who said “yes” but did not have anyone to advise them.

Very few appraisers, if any, would have experience on all these types of properties. For example, I have appraised many life estates, but no homes with a leasehold (ground lease) in a market area where such interests are uncommon. I have only appraised homes where the subject and all the nearby homes are leaseholds. I get advice for appraising it.

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Low Appraisal Fees in 2024

By on June 7, 2024   /   appraisal business, liability, real estate market, state appraiser regulators   /   Leave a comment
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CFPB Crackdown: Unfair Practices Hurting Consumers

This includes Appraisal payments to appraisers by AMCs

by Josh Tucker, June 5, 2024

Comments must be received on or before August 2, 2024

Excerpts: As we all know many AMCs are not paying Customary & Reasonable fee as required by TILA. They have consistently pushed down the pay of Appraisers while making undisclosed profit off consumers and prioritizing cheapest and fastest over quality and competency. The CFPB has been in communication with individuals behind the scenes and are concerned with what has been shown enough to include AMCs in their data collection process.

Now is the time to send them everything we have. To drive legitimate change, we must encourage as many appraisers as possible to submit all relevant information to the contact details provided below.

CONSUMER FINANCIAL PROTECTION BUREAU

[Docket No. CFPB-2024-0021] NOTE: USE THIS LINK TO READ THE DOCUMENT AND THIS NAME TO USE THE COMMENTS PORTAL BELOW.

Request for Information Regarding Fees Imposed in Residential Mortgage Transactions AGENCY: Consumer Financial Protection Bureau.

ADDRESSES: You may submit comments identified by Docket No. CFPB-2024-0021, by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments. NOTE: THE SEARCH WAS NOT WORKING ON JUNE 6. MAY WORK LATER. CAN USE EMAIL.

Email: 2024-RFI-ResidentialMortgageFees@CFPB.gov. Include Docket No. CFPB-2024-0021 in the subject line of the message.

Mail / Hand Delivery / Courier: Comment Intake —Residential Mortgage Fees Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.

To read more, Click Here

My comments: DO SOMETHING. YOUR VOICE MATTERS. Let CFPB know about the amount of AMC fees for appraisers, plus other problems. In my opinion, AMCs are ruining residential lender appraising. I have never worked for an AMC, but I’ve been appraising for almost 50 years and understand the problems.

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Appraisal Fees & Value: Lessons from Picasso & Steinmetz

By “Apex Appraiser” June 3, 2024

The Appraisal Institute has been a source of frustration and criticism within the appraisal profession for quite some time. I must admit that I have also expressed my dissatisfaction with them. Nevertheless, I must acknowledge that the new CEO, Cindy Chance, appears to be a positive change and is making some valuable points about our profession from her new position. In particular, she recently discussed appraisal fees in a piece she wrote.

In this excerpt, she shares two stories that provide valuable insights. These stories, one involving art and the other science, highlight the fact that appraising is a combination of both.

First is the story about a young woman who encountered Pablo Picasso one spring day, in a park, sketching. She begged him to sketch her. He graciously agreed, and following a few moments of study and drawing, handed her a sketch of herself. When she asked what she owed him, Picasso answered “$5,000 madam.” “But it only took you five minutes.” “No, madam, it took me my whole life.”

To read more, plus many appraiser comments, Click Here

My comments: Worth reading, plus the appraisers comments. I have been following CEO Cyndi Chance since she started working for AI. It’s definitely a “breath of fresh air” for the AI!

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Paperless Appraisal Office?

By on May 31, 2024   /   appraisal how to, bias, HOME INSURANCE, liability   /   Leave a comment
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10 Steps to a Paperless Office

By Mike Fletcher

Excerpts: If you’ve talked to appraisers who have gone digital, you know they love not having boxes of old reports and workfiles cluttering their offices, homes, and garages and not spending money on paper, toner, and other equipment. Even better, appraisers who run a paperless office often enjoy increased productivity and efficiency.

If you’re ready to enjoy the benefits of getting rid of paper, I’m sharing 10 steps to switch to a completely paperless office. While you may need to tailor this blueprint to your preferred methods and workflows, this will help you get started.

Summary

Switching to digital files and a paperless office saves you time and offers better protection for your files. Making the shift to get rid of printed documents and handwritten notes isn’t easy at first, but by going one step at a time and relying on your appraisal software’s tools, you’ll be paperless in no time.

Topics with detailed and practical advice:

1. Why do you want a paperless office?

2. Commit to change – Be aware of wanting to stay in the familiar

3. Identify your paper and how to go paperless

4. Obtain needed equipment for your paperless office

5. Determine your storage needs in a paperless office

6. Establish a new workflow in your paperless office

7. Going paperless starts small

8. Add another paperless item

9. Get trained

10. Seek out your peers

To read more, Click Here

My comments: What appraiser does not want to go paperless? No one. Read this article with lots of good advice!

Business is slow for many appraisers. Going paperless is an excellent option to consider.

This is by far the best article I have read on going paperless. It is written for appraisers, is understandable, and is not too long. The author is a veteran residential appraiser and self-proclaimed “Data Nerd.” He is currently a Senior Data Steward at Corelogic.

I have a home garage and business office full of appraisal files, plus my business records for taxes. I keep hoping someone will come in and steal all the paper and the filing cabinets

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Tools To Support Appraisal Adjustments

By on May 17, 2024   /   data, liability, real estate market, state appraiser regulators   /   Leave a comment
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What Tools Do You Use to Support Your Appraisal Adjustments?

By McKissock

As part of our monthly survey series, we asked our community of real estate appraisers, “What tool(s) do you use to support your appraisal adjustments?” Respondents were allowed to make multiple selections and write in their own answers as well.

Popular tools include Synapse by Spark, Solomon Adjustment Calculator, and Redstone by Bradford Technologies. The majority of respondents said they use a combination of various tools and methods, such as paired sales analysis.

We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or appraisal software tool, because it was mentioned by so many appraisers.

A few sample appraiser comments:

“I am capable of determining the adjustments without any software. I look at the MLS data and am able to determine appropriate adjustments. I would need to know all of the assumptions the software takes into consideration before I would trust the adjustment with my signature.”

“I use Synapse by Spark for typical property adjustments and Solomon for more complex properties.”

In addition to the top answers, we received many other write-in responses. Sample responses:

Allocation method

Depreciation

Cost to build

Sample appraiser comments

“Due to rural location, there are no algorithmic tools to be utilized for adjustment data. I utilize paired and grouped data analysis and experience and knowledge.”

To read more, Click Here

My comments: Short, well written, and Very Interesting, especially the appraiser’s comments! I quit doing adjustments a while ago. I always do market conditions adjustments (or explain why not) and for views and other factors that significantly add to value.

I have never used any of the appraisal software listed above. I use Excel and MLS data. I often go back in time for comps with views, etc. I also interview agents to see what they say. Not for a number, but about marketability.

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Appliances for FHA appraisals

By on February 9, 2024   /   bias, liability, real estate market   /   Leave a comment
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How does the FHA define appliances?

By Daniel A. Bradley, SRA, CDEI

In September of 2015, FHA revised Handbook 4000.1 to provide a specific definition, which includes:

Refrigerators

Ranges/ovens

Dishwashers

Garbage disposals

Microwaves

Washers and dryers

It’s important to note this does not include garage door openers, swimming pool pumps, intercoms, sound systems, and security systems.

How do appraisers consider appliances?

FHA Handbook 4000.1 also clarifies when appliances are required to be operational by stating, “Appliances that are to remain and that contribute to the market value opinion must be operational,” and, “The Appraiser must note all appliances that remain and contribute to the Market Value.”

FHA requirements for appliances: Is a house required to have a stove?

To read more, Click Here

My comments: Worth reading if you do FHA appraisals. Short and understandable. I did FHA appraisals for a few years in the mid-80s. Too many requirements so I quit doing them, but they helped me get started in my appraisal business.

 

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Freddie Advice: How to Avoid Using “Bad” Words

By on November 10, 2023   /   bias, FHA, liability, real estate market   /   Leave a comment
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More Objective Appraisals: A Practical Guide for Appraisers

By Scott Reuter Single-Family Chief Appraisal Officer, Freddie Mac

Excerpts: Changing the Mindset – Facts First

What’s the number one thing appraisers should be doing when they develop an appraisal? Stick to the facts. Here are a few more best practices that can help appraisers achieve more objective appraisals.

  • Don’t think like a salesperson – avoid words that may be common in Multiple Listing Service (MLS) and used to help sell a home.
  • Don’t use shorthand – both ‘123 Church Street’ and ‘123 Church’ could refer to an address but might come across differently in an appraisal.
  • Don’t copy and paste – avoid copying from Wikipedia or old appraisal reports or commonly used templates when providing neighborhood descriptions for similar communities.
  • Use pre-screening practices – while you can implement your own pre-screening process, some appraisal companies can implement them too.

To read more, click here 

My comments: Read this article! Not just a list of words and phrases. Excellent examples and analysis. The author started as a second-generation practicing residential appraiser. He knows what you want.

 

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ChatGPT for Appraisers

By on August 13, 2023   /   appraisal business, appraisal how to, bias, liability   /   Leave a comment
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ChatGPT: Valuable Tool or a Replacement for Real Estate Appraisers?

by Dustin Harris, The Appraiser Coach

Excerpts: ChatGPT: A Game-Changer for Appraisal Work

For those who have embraced it, ChatGPT has been transforming multiple aspects of appraisal work, such as:

Appraisal Work:

  • Writing narrative
  • Market analysis
  • Market-specific information
  • Descriptions of adjustments
  • Terminology
  • ResearchMarketing:
  • Creating lists
  •  Writing emails and messages to current and potential clients
  • Crafting blogs
  • Strategizing networking and relationship development
  • Writing presentations for ‘lunch and learn’ events with real estate agents
  • Crafting the perfect apology letter when you upset a key loan officer in your small town
  • To read lots more, click here
  • My comments: Many thanks to Dustin for writing this article! I have not had time to use it, but have been reading and watching demos about how it can be used for appraisers for awhile. It definitely can be very useful, as Dustin explains. It can be tricky at first to use, but Dustin explains it.

I recently had to renew my California Driver’s license, as I am over 70 and had to do a written exam and eye test. I had difficulty setting up an appointment and clicked on “Chatbot”. It was much friendlier than any other Chat support I have used. I recognized the use of software similar to ChatGPT.

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State Appraisal Boards – What Do They Look For?

By on April 21, 2023   /   bias, Fannie, liability, non-lender appraisals, state appraiser regulators   /   Leave a comment
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The State Appraisal Board Wants to Throw Me Under the Bus, Right?

by Barry Phillips and Tim Andersen

Excerpts: So, what do the investigator and the state board look for as part of their investigation? Again, simply put, the investigator and board look to see if the appraisal meets the requirements of USPAP’s Standard 1, and if the report meets the requirements of USPAP’s Standard 2. Everything else in such an investigation is merely an elaboration of the answers to these two questions.

Nevertheless, there is a warning due here. Increased numbers of state appraisal boards are looking at complaints against appraisers from the standpoint of the consumer, rather than that of the client and/or the intended user(s).

This, to a great extent, is a function of the current political climate. As all appraisers are aware, the consumer has no standing with the appraiser (assuming the consumer is not the named client or intended user). Nevertheless, state boards tend to favor the consumer (the complainant) over the appraiser (the respondent).

To read more, click here

My comments: Good analysis of how state boards work and what they look for. Tim Andersen, MAI, is definitely “The” USPAP Expert.

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