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Comment

I am certified general appraiser and have tried to stay current on where the industry appears to be headed. I do more commercial than residential, but do both. Let me say first that I want the appraisal practice to continue to move forward. I am concerned about fewer people entering the profession and the fact appraisers keep getting older. As of now there is little reason to bring on a trainee due to the loss in time and money to an appraiser. So that is concerning, and something must change.

I understand that there is logic behind “hybrid” appraisals as one option for change, but we (appraisers) are concerned about it. I am concerned about it decreasing the quality of the appraisals because our appraisals depend so heavily on information gathered during the property visit. I am open to using other people’s data, but there must be protections in place to protect us. It seems that we are typically the ones who get in trouble (AMC’s and lenders can pressure us with no penalty for them, brokers can get the GLA wrong and they do not get in trouble, etc.). It seems that we are the ones who are brought before a board and have our livelihoods put on the line. Many lenders and AMC’s want our E&O form in the report so we get sued before they do. So if we use information from someone else, we have to be assured that we have protection if that information is wrong. Better yet, I hope a person who inspects a property has some level of credentials and are held accountable in the same way appraisers are. But protections in place and extraordinary assumptions are the only way we’ll feel comfortable with some 24-year-old broker who sells 1 house a year giving us our data.

I also believe that there are times for an appraisal waiver. If the loan to value ratio is low, then an appraisal is likely not needed. Also, if an appraisal was recently performed, a simple inspection to verify condition may be reasonable. However, broad waivers concern me because I am continually surprised at how quickly a market can change and how some owner poorly maintain their properties. Waivers are risky, so they should be issued case-by-case with clear criteria.

I think that appraisers should have access to the data that FNMA and others have. What if there is a log-in provided to state-credentialed appraisers (maybe even a paid service) as another source of data? We could search that and the MLS, and this system could be a source of verification of details, condition, GLA, other improvements, etc. I believe that the MLS will continue to be used regardless, but access to data which did not go through the MLS or where the MLS was wrong would help us arrive at a more credible value. More data = better values.

As for the UAD and forms, I believe removing un-needed fields is helpful. Streamlining is great. I don’t see the point in bathroom wainscoting. It is also tough when a property has been partially renovated with rooms being C2 and another room being C4. We arrive at a C3 overall, but that just tells part of the story. What if we could just discuss the condition of major rooms (kitchen, living, bedrooms, bathrooms) with its own condition and then arrive at an overall opinion. That seems more helpful than bathroom flooring and other fields.

I would also personally be in favor of more options for condition because I often am torn between a C3 and C4 condition in a house which is 20-30 years old. Another option could be helpful (C4+ or something). But I am fully in support of any effort to streamline these forms to get to the parts which affect value.

I do not have experience with alternative appraisals, hybrids, etc. I have completed very few exterior only appraisals, and the one I did sold for a much higher price than I expected (although it was almost a year later). I’ve not done these plainly because I don’t want to be wrong in my assumptions and my value be incorrect. I want to be as credible as I can, and these alternative appraisals seem to open me up to liability and error.

It drives me a little crazy that the forms are not USPAP compliant. I know the USPAP is my job, but this really gets hard with a checkbox for Highest and Best Use. I just appraised a house with a vacant lot used as a horse field. Is that the HBU of the lot? No. It would be better to have a house on it (maximally productive). But I can’t check no because the lender will reject the appraisal. So I have to check yes and then explain the concept of interim use and maximally productive use when demand increases. It feels dishonest when the truth is that the HBU is to improve a lot, or renovate a house in a growing submarket, or divide a larger lot, or something, but we are forced to check yes. I wish there was space to explain the HBU (I explain it on page 3 with all 4 tests) and another option for “interim” or option which isn’t binary (yes/no).

Thanks for this RFI. I hope this helps.