Posts Tagged bias

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NAR Member Survey on Appraisal Data Collectors

Appraisers and Property Data Collectors

By Ann O'Rourke on November 17, 2023 / appraisal business, bias, modernization / Leave a comment

Tags: appraisal business, bias

4 Myths About Property Data Collection

By McKissock

Excerpts:

Myth #1: PDC is the same thing as property appraisal

As a professional appraiser, you know very well that what a property data collector does is not the same as what you do — even if your clients don’t always understand the difference. While there is some overlap, being qualified to perform an appraisal requires much more training, education, and expertise, and the job goes far beyond gathering physical data.

Myth #2: Data collectors are going to replace appraisers

There’s a lot of buzz right now about PDC possibly replacing traditional property appraisal, but the intent of this service is to fill a gap in the lending process. The job assignments given to property data collectors are often the types of assignments that wouldn’t come across an appraiser’s desk. For example, property data collectors (PDCs) may be engaged by lenders for very low-risk loans where an appraisal is not required.

Myth #3: PDCs are not properly trained or qualified

While there isn’t a license, PDCs are still required to be trained and competent to do their job. Both Fannie Mae and Freddie Mac require that PDCs must be professionally trained and vetted. They must adhere to Fannie Mae or Freddie Mac’s property data standards which set forth the minimum requirements for collection of the subject property data.

Myth #4: PDC is bad for appraisers

Probably the most prevalent myth is that PDC is bad for appraisers and bad for the profession in general. But in actuality, it may offer some significant upsides for appraisers. In particular, becoming a property data collector may be beneficial for:

Appraisal trainees in need of extra income
Busy appraisers who are looking to delegate tasks
Older appraisers who are looking to reduce physically demanding tasks or may be transitioning into retirement
Any appraisers wanting to grow their bifurcated and hybrid appraisal services

To read more, click here

My comments: We all know that appraisers would be the best PDCs. My article in the November issue of Appraisal Today has lots of information, including lists of which AMCs use PDCs. “Property Data Collectors (PDCs) Will Be Widely Used by Lenders in the GSEs Value Acceptance + Property Data Option”

This is an excellent diversification opportunity while business is slow. Trainees can do them.

Data Collectors: Appraisers vs. Uber Drivers

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NOTE: Please scroll down to read the other topics in this long blog post on Liability, Bias, reviewers with little experience, GSE modernization, unusual homes, mortgage origination stats, etc.

Appraisers: Be Careful with Your Words

Freddie Advice: How to Avoid Using “Bad” Words

By Ann O'Rourke on November 10, 2023 / bias, FHA, liability, real estate market / Leave a comment

Tags: bias, FHA, forecast, Freddie, liability

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.

Fannie: Words and Phrases in Appraisals

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2024 USPAP Changes Clarify Nondiscrimination

By Ann O'Rourke on November 3, 2023 / bias, desktop appraisals, Economic analysis, hybrid appraisals / Leave a comment

Tags: bias, desktop appraisals, Economic analysis, Hybrid appraisals

Changes to the 2024 USPAP Improve Clarity Surrounding Nondiscrimination

Excerpts:

Revising the ETHICS RULE with a Nondiscrimination section

To provide clarity and eliminate concerns, the ASB removed the previous ETHICS RULE language regarding supported and unsupported conclusions, and crafted a new Nondiscrimination section which clearly indicates to appraisers and stakeholders that discrimination is prohibited.

Advisory Opinions

For 2024, the ASB has retired Advisory Opinion 16 (AO-16) and replaced it with two new Advisory Opinions, AO-39 and AO-40.

How do the USPAP revisions to the Nondiscrimination section affect appraisers?

Appraisers were also always prohibited from performing assignments with bias. These requirements are carried forward in the 2024 edition of USPAP. The primary difference is that the new USPAP contains clear and concise language regarding an appraiser’s ethical obligation not to engage in discrimination.

To read more, click here

My comments: Be sure to read this blog post. USPAP 2024 is effective January 1, 2024. You may, or may not, take the mandatory USPAP class prior to this date.

2024 USPAP for Appraisers

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ChatGPT for Appraisers

By Ann O'Rourke on August 13, 2023 / appraisal business, appraisal how to, bias, liability / Leave a comment

Tags: appraisal, appraisal business, appraisal how to, bias, liability

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.

Fannie: Words and Phrases in Appraisals

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Appraisers: Be Careful with Your Words

By Ann O'Rourke on July 28, 2023 / bias, Fannie, Fannie Forms, george dell, non-lender appraisals / Leave a comment

Tags: bias, Fannie, mortgage lending

Pesky Words. Keeping Appraisers out of Language Purgatory

Appraisers: Be Careful with Your Words!

by Dave Towne

Excerpts: Appraisers, on July 17, 2023, a document from Freddie Mac was circulated to numerous appraisers around the US which identified certain words and other info that can be considered to be ‘BIASED’ in appraisal reports. Here is the Link to the Bulletin.

We need to step back for a moment and carefully analyze and consider why that was done, and what it means to appraisers.

In many ways, appraisers forget the purpose of the appraisal assignment – which is to value real estate. In other words, the physical structures tied to the land.

But too often, elements of personal or neighborhood demographics or other comments seep into the reports. Maybe not consciously or on purpose, but because appraisers are not critically reading what they write and may not realize the implications of how what they write can be interpreted.

To read more, click here

To read the Freddie document, click here

My comments: Well written and worth reading. Thanks to Dave Towne! I have subscribed to his emails for a long time. To join his list, send an email to dtowne@fidalgo.net requesting to join. I wrote about the July 17 Freddie announcement in this newsletter’s June 16, 2023 issue. Guess it finally got out into the appraiser internet world.

Fannie: Words and Phrases in Appraisals

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FHA: Cosmetic vs. MPR Repairs

By Ann O'Rourke on May 26, 2023 / bad appraisers, bias, FHA, lender appraisals, USPAP / Leave a comment

Tags: bias, FHA, mortgage lending, USPAP

Cosmetic vs. MPR Repairs: Guidance for FHA Appraisers

By: McKissock

Excerpts: If you are appraising a property that needs some cosmetic repairs but meets FHA minimum property requirements (MPR) in its current condition, you should make the appraisal “as-is.” Here is some guidance on cosmetic repairs vs. MPR repairs.

Topics include:

When can an FHA appraisal be completed “as-is” vs. “subject to”?
Cosmetic repairs Examples
MPR repairs Examples
Conditions that require inspection Examples

To read more, click here

My comments: If you do FHA appraisals, read this blog post. Photos and lots of examples. I quit doing FHA appraisals in the mid-1980s because of the inspection requirements compared to conventional appraisals, that did not have the requirement.

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Appraisers – The Past and The Future

What Are Fannie’s New Appraisal Online Formats?

By Ann O'Rourke on May 5, 2023 / appraisal business, Fannie Forms, state appraiser regulators / Leave a comment

Tags: appraisal business, appraisal fees, bias, Fannie forms, non-lender appraisals

Fannie’s New Appraisal Online Formats

By Brent Owen

Excerpts:

To Be Or Not To Be (a form), That Is The Question

The first thing to notice is that the ‘form’ isn’t really a form anymore. It is more of a complex decision tree or flow chart, where ‘yes/no’ questions trigger new sections and required data and supplements. For instance, answering ‘yes’ to a question about noted deficiencies will create a new section where details are needed regarding the deficiency which include further questions about whether or not repair is required and if so, the estimated costs of those repairs and section to provide a photo of the deficiency. All of that is integrated into the URAR itself. It is through the use of this decision tree model that the GSEs are able to use the same ‘form’ for almost any residential property type conceivable.

The Never-ending Story

It is also apparent that the report will be far longer than its predecessor. Appendix D-1 contains a sample URAR of a simple single family residence with no site value, cost approach, or income approach, with only 3 sales and very limited commentary and no additional addenda (with photos, maps, and graphs integrated into the URAR). The report was 21 pages, and would still be at least double the length of the current URAR without the integrated photos, map, and graphs.

That in and of itself isn’t necessarily a problem. After all, my typical reports are more than 40 pages long. It’s not the length of the report which is of ultimate importance, it is the time necessary to develop the appraisal that is key. My sense so far is that there will be some additional time necessary (beyond the expected additional time necessary to become proficient with the new format and associated technology).

To read more plus appraiser comments, click here

My comments: Read this article! A good analysis in one location. I have read lots of very short comments, but this one is much longer. Unfortunately, Fannie has not provided separate information for appraisers. The announcement included many pages as it was for everyone: appraisers, forms vendors, lenders, AMCs, etc., with lots of very detailed information.

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State Appraisal Boards – What Do They Look For?

By Ann O'Rourke on April 21, 2023 / bias, Fannie, liability, non-lender appraisals, state appraiser regulators / Leave a comment

Tags: bias, Fannie, liability, non-lender appraisals, state appraiser regulators

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 vs. the Public Good?(Opens in a new browser tab)

Appraiser Adjustment Tools

By Ann O'Rourke on March 3, 2023 / adjustments, appraisal business, bias / Leave a comment

Tags: adjustments, appraisal business, bias

What Tools Do You Use to Support Your Appraisal Adjustments?

McKissock Survey

Excerpts: Here’s a tally of the most popular answers—tools that were either selected or written in by multiple respondents. We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or software tool, because it was mentioned by so many appraisers.

In addition to the top answers listed above, we received many other write-in responses. Other methods and tools that our survey participants said they use to support appraisal adjustments include:

- Market knowledge/research
- Market extraction

Manual sales comparison
Regression analysis
Segmented market analysis

To read more, click here

My comments: First survey for this topic I have ever seen. Very interesting. Don’t miss the appraisers’ comments!

Using home’s previous sales in appraisals(Opens in a new browser tab)

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