Chat GPT For Fannie Form Appraisal Reports

Chat GPT For Fannie Form Appraisal Reports

By Dustin Harris

Excerpts: The world of real estate appraisal is constantly evolving (much to our dismay sometimes), and as professionals in this field, it is crucial to stay ahead of the curve by embracing innovative tools and technologies. ChatGPT is an advanced AI language model developed by OpenAI that can be used to streamline the appraisal writing process.

Can ChatGPT, and other AI models, actually assist appraisers in writing summary appraisal reports? The answer is, Yes! Here are some examples of real-life prompts I have used with success.

“Rewrite the following description of a house and property using brevity and professional language”

“Summarize all of these property descriptions into one, easy-to-read format with a professional tone for a real estate appraisal report.”

“I am a real estate appraiser completing an appraisal. For my square footage adjustment, I used a combination of paired-sales and sensitivity analysis to determine $65 a square foot was appropriate, but I did not adjust for differences between the subject and comparables if the difference was less than 100 square feet. Write a description of where the adjustment came from that I can use in the report.”

To read more, click here

My comments: Thanks to Dustin for writing this! I have been reading about using Chat GPT for appraisal marketing and narrative reports, but this is the first I have read about form reports.

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Data Collectors: Appraisers vs. Uber Drivers

Certified Appraisers vs. Unlicensed Data Collectors

By Jonathan Miller

(13-minute video) Here’s a great take on the difference between Certified Appraisers vs. Unlicensed Data Collectors by Leigh Brown, President of the NC Association of REALTORS. Fannie Mae has been working hard to get rid of appraisers for years. Their latest twist is to re-categorize many appraisers as “Unlicensed Data Collectors.”

Fannie Mae will end up creating more instability for the trillions in the bond market – investors will have to process millions of valuations with the physical attributes of the home collected by unlicensed, uninsured, and unprepared individuals getting paid $10-$25 per inspection.

This is to follow up on a meeting Appraisal Institute representatives held in Washington, D.C. with members of the Federal Housing Finance Agency Divisions of Housing Mission and Goals and Fair Lending March 8 to discuss the new Value Acceptance program released by Fannie Mae…

Of particular concern is the encouraged development of an alternative workforce of property data collectors that may negatively impact aspiring appraisers’ ability to enter the appraisal profession…

To read more and watch the video, click here

To sign up for his weekly Housing Notes, click here I have been a subscriber for many years.

My comments: Miller tends to be negative about the AI, but this excerpt from his weekly email is worth reading especially the video!

This is the future of GSE using appraisers. Inspection or desktops are fine, but fees may be low and many don’t want to do them. Full appraisals only on the “though appraisals” where Fannie’s AI does not work.

Many appraisers are retiring or quitting. If you make it through this downturn there will be few appraiser competitors left for the next big upturn in business.

Appraisal vs Zillow vs AVM which is best

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State Appraisal Boards – What Do They Look For?

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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Appraising Fixer Uppers

Appraising Fixer Uppers

Excerpts: We’re all familiar with the term “fixer-upper.” For many different reasons, properties can come on the market in less-than-par condition. The degree and cost to cure becomes an issue to buyers and sellers, and a challenge for appraisers. At some point it’s no longer “normal market value minus cost to cure equals as-is value.”

The terms “entrepreneurial incentive” and “entrepreneurial profit” are typically discussed in terms of investment property, but the principles involved can also be applied to the many fixer-uppers—whether the buyer is a “purely investor type” or an “owner occupied investor type.” Maybe a couple new terms should be discussed: “sweat equity incentive” and “sweat equity profit.”

The rest of the post is a very good case study

To read more, click here

My comments: I have appraised many fixer-uppers. My overall ratings are: Unlivable with holes in wall or ceiling, kitchen, and bath not functional, not lendable, etc. ) In my MLS “contractor special” is often used.  Liveable: needs work but functional kitchen and bath.

Most of my appraisals are for estates, and fixers are relatively common. There are few comps as almost all homes are fixed up for sale. There are some good ideas in this post. Even if you have comps, there is often a very wide range of conditions.

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Appraisers: How to Manage Your Emails

The Mailbox is Full and Cannot Accept Any Messages at this Time. Goodbye. How to Manage Your Emails

By Paul Ryll

Excerpts: My mother told me today that she called last night and was greeted with, ‘The mailbox is full and cannot accept any messages at this time. Goodbye.’

I get a few telemarketers’ messages. Rarely is there a message from a friend or family member. I would say about 90% of the voicemails that I receive are from an irate homeowner worried about a rate lock or a stressed out realtor wondering if they are going to close on time.

AMCs

Assuring that the appraiser has the correct contact information for an inspection is very important. There have been numerous instances in which I have not been able to get ahold of a contact for an inspection only to find out weeks later that the AMC gave me the wrong contact information.

Communicating quickly with the lender is an issue with the appraisal process. I’ve requested guidance on assignments from the lender in which the answer came after the due date. Most recently, I had a detached condo that was ordered on a 1004 which needed to be switched to a 1073. The closing date came and went before I got the go-ahead from the lender.

Have one point of contact for an assignment. Nothing is more frustrating than 17 people calling me on one revision because the employees of the company don’t research to see if I have been contacted or read the notes in the assignment.

To read more, click here

My comments: Slow now? Work on organizing your emails. I have many email folders with automated inbox filtering, which helps a lot. Very good tips in the article. Written in 2-22 but is still very relevant today. I don’t see much written about appraisers and emails. I have always had a landline for business calls and a cell phone for personal calls. Having both on one cell phone is chaos, IMHO.

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What Do Appraisers Look For in a Sales Contract?

What Do Appraisers Look For in a Sales Contract?

Why must an appraiser be given a copy of the sales contract? First and foremost, Standards Rule 1-5 in the Uniform Standards of Professional Appraisal Practice (USPAP) states that we are to: “analyze all agreements of sale.” That’s the real reason why—because USPAP says so.

Secondly, the appraiser is likely familiar with the local real estate contract forms, customary terms, and conditions of real estate transactions in the area, and might be able to identify irregularities and comment on them.

Thirdly, and more importantly, there may be provisions in the contract that identify concessions, non-real property items included in the sale, or other unusual conditions that would give the appraiser the opportunity to comment on or explain in the appraisal report as to why there is a difference between the indicated market value of the subject property and the contract price.

To read many practical tips, click here

My comments: Worth reading. Answers a lot of appraiser questions. Of course, I have always preferred not knowing the sales price as it seems like a conflict for an objective, unbiased appraisal.

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The Power of Praise for Appraisers and Clients 3-24-23

The Power of Praise

By Rachel Massey, SRA, AI-RRS, CDEI

Excerpts: …I received a really nice compliment from a reviewer with the Farm Credit Bureau. I had completed a complex appraisal assignment and was expecting multiple revision requests, but instead, got a note saying how thorough my appraisal report was and thanking me for the work. A couple days later, I got a call from a relocation company reviewer on another mind-boggling relocation assignment. Again, I was expecting multiple questions about the report since it was complex and atypical for the area. Instead this reviewer proceeded to tell me that it was one of the most detailed and well-developed reports he had seen in all his years reviewing relocation work. Boy I wish I had that one in writing!

Granted, I tend to be a bit verbose because I like to write, and I believe that it is important that my work be understandable, and not just now but in the future. I tend to put a similar amount of effort into the communication side for all clients, and like to think that my work product is solid. This begs the question of why two reviewers went out of their way to compliment my work, when it seems that almost every mortgage assignment that I complete for a production group, comes back with stipulations.

Stipulations that I forgot to add a listing which was a requirement of the engagement agreement (yes, I missed that) or that I didn’t put a sketch of an unfinished basement in the report (yes, I missed that as well). No words of thank you for an otherwise job well done. I missed something, fix it.

To read more, click here

My comments: Rachel is one of my favorite appraisal authors. She has seen all sides of the residential appraisal profession. Rachel has shifted between lender staff appraiser and reviewer and fee appraisals. Currently, she is a reviewer for a large lender. You could send a link to this article to a Very Picky or Very Supportive reviewer.>

Why Appraisers Love Appraising!

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Appraiser Gets Subpoena – What to Do 3-17-23

Appraiser Gets Subpoena – What to Do

Excerpts: As an appraiser, you don’t have to be sued or be facing a lawsuit to find yourself on the receiving end of a subpoena—staring down a lawyer who is peppering you with questions.

Appraisers are often subpoenaed in legal disputes involving third parties, usually being tied to the dispute for no other reason than having appraised a property involved in the dispute. If the appraiser is not a party to the lawsuit, then typically they are being subpoenaed for documents and/or being called as an expert witness, sometimes without pay, to testify regarding a past appraisal.

First, subpoenas are court orders and you must not ignore the subpoena or you will find yourself in contempt of court. Tim Andersen, MAI, MSc, USPAP instructor and CEO of TheAppraisersAdvocate.com, says that if an appraiser doesn’t want to comply with a subpoena they can try to fight it, but that requires hiring a lawyer, which can be costly and has its own challenges. “One approach is to protest the subpoena to the judge indicating that your records are private, and requesting that your records be treated as confidential and not be made part of the public record. The judge, however, will do whatever s/he chooses to do,” reports Andersen.

To read more, click here

My comments: This is an excellent article on this topic. Read it to find out the issues. If you lost this link later, when you need help, Google “Dealing with a Subpoena Workingre”. This is specifically for appraisers. If you find other links online, they are not as useful.

I have never been served with a subpoena, but this is a regular topic among appraisers. I get calls occasionally from appraisers about this.

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Fannie Mae: No Appraisals Required? 3-10-23

Fannie Mae: Appraisals are no longer the default option: Value Acceptance replaces Appraisal Waiver

Fannie Mae updated its Selling Guide on March 1 to include more options for property valuations, saying that they are “moving away from implying that an appraisal is a default requirement.”  Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals.

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Fannie Mae – No Appraisals Required – The End of Appraisers?

Hamp Thomas 12 minute video – my favorite commentary on this issue!

Fannie Mae took a direct shot at appraisers today with the announcement of changes in their Selling Guide. Two options for the future, both of which do great harm to the appraisal industry.

First, “third party” inspections. Appraisal trainees aren’t good enough, so now we will have unlicensed inspectors going through the homes of unsuspecting homeowners. And, with this inspection a traditional appraisal is no longer a requirement for the mortgage loan.

Secondly, the 3rd party inspection is sent to a licensed appraiser. FNMA wants an appraiser’s signature so the appraiser can be held responsible if there’s any problem in the future. Both options say they are good for consumers and both options are filled with fabrications and misinformation. At the end of it all, it’s about control and profits. Why trainees can’t provide the data is simply because big banking and AMC’s don’t make profit from the inspection part of the process.

If appraisers don’t stand up and say no, right now, the running joke of the appraisal industry could be gone in five years; well, it just very well may come true. Ok appraisers, it’s time to speak out and stand together.

The only reason for these changes are about a piece of the 11 TRILLION dollar mortgage market. And that’s the way it is – March 1, 2023.

To watch the video, click here

My comments: Worth watching the video. Call to Action. Hamp is an excellent speaker and teacher.

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Fannie Statement: “Value acceptance + property data has arrived”

“This new option reduces cycle times and may reduce borrower costs, promotes safety and soundness by obtaining a current observation of the subject property, and provides operational simplicity and certainty at time of loan application.“

To read what Fannie says, click here

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Link to Fannie SEL-2023-02: Selling Guide Updates PDF

To read more, click here

My comments: Lenders Are Happeeee! Those darn appraisers and appraisals have always taken too much time. Fannie sells their loans to investors. The more loans, the more money Fannie makes. I did not include links to what the happy lenders say. You already know.Clear the Tracks!

Fannie Wants Desktop Appraisals

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AMC Alleged Violations of Appraiser Independence Requirements

Fastapp AMC Alleged Violations of AIR (Appraiser Independence Requirements)

Excerpts: The following court documents in the case Naftali Horowitz v. xxx, Fastapp AMC founder v. Fastapp AMC president, confirm what appraisers have been saying all along, that if you want high-volume AMC work, you have to lower your fees to 1980’s level, have 24 hour turn times, and, above all, be a number hitter.

Horowitz claimed that Andrews engaged in conduct constituting potential violations of the Appraiser Independence Requirements under the Dodd-Frank Act of 2010 (“Dodd-Frank Act”), including unlawfully seeking to influence an appraiser to encourage a targeted value to facilitate the making or pricing of the transaction in violation of 15 U.S.C. § 1639e(b)(3).

… it began to become apparent to Andrews that Horowitz was not complying with appraisal independence standards. Instead, Horowitz would personally select one of a small number of his preferred appraisers for any given appraisal request… It thus became apparent to Andrews that Horowitz was engaged in a widespread scheme in violation of federal law by assigning appraisals to appraisers who would appraise values at requested values in exchange for order flow.

To read more plus over 50 appraiser comments, click here

My comment: Copies of the emails tell the story of “cooperative” appraisers getting most of the assignments. Very similar to the old mortgage broker days. A primary reason for Dodd-Frank.

AMC Fined for Appraisal Order Blast Violation

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