Certified Appraisers vs. Unlicensed Data Collectors
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- čas přidán 28. 08. 2024
- What are real estate property data collectors?
Should you be one?
Should you let one into your house?
As a real estate pro, it's important to stick to what you know and insist on a certified appraiser for your clients. Don't let the banks be in charge of everything.
In today’s Hot Take Thursday, I delve deeper into the real estate data collector controversy and what you need to know, so be sure to watch and share it with your colleagues.
What's Hot Take Thursday all about? I take a subject suggested by YOU, the viewers, and provide my take on it. Through education, I give real estate agents the confidence and education to reach greater heights. I provide you with all the tools necessary to create a life and career you can feel good about.
Got a burning question? Comment below, and I'll be happy to answer it!
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Maybe the Realtor lobbyist needs to step up and shut this down in Washington . As appraisers we.have no one stepping up for us in Washington. The ASB has been SILENT.
Thank you for the update!! Wow!!
Well said.
There are TON of problems with this whole data collector process. As a 20+ year appraiser, I 100% agree and totally appreciate your video. The problem is that other agents and loan officers may not be looking out for their seller or buyers best interest. They are just want to close the deal, get their check, and move on to the next one as smooth as possible. I have already seen that the buyers at still paying the same amount for the appraisal and the AMC is the only one that makes any money. Thank you again for your video, I will be sending it to any agent I know.
You are so spot on and make the points some of us Realtors, Brokers, and Certified Appraisers have been saying for years! It’s always funny to me that people feel they can do the same job in a day as a licensed professional whose learned by schools, classes, and many hours and years even of experience. Great points on Government regulations in their right place! You want unlicensed and unregulated coming into your house these days 😬, not me! Thank you Leigh!
Great video! Spot on!
FNMA and FHLMC, GSE (Government Sponsored Enterprises) were part of the problem back in 2008. Ask the Securities and Exchange Commission. You know your stuff. I am a State Certified Residential HUD/USDA Roster Appraiser and have been for 25 years and before then worked as a real estate paralegal for a large law firm. I've seen alot. Thanks so much for your video.
Thank you! what a wonderful post and summary of what is going on. Certified Residential SRA appraiser here, we've been fighting the AMCs since HVCC, its been horrible for us, these last moves by Fannie/Freddie is just over the line, no accountability. You used a word which is a perfect description of the data collecting initiative to appraisal, Nebulous - which means an unorganized cloud of gas, good luck nailing them down if something goes sideways. Appraisals require highly skilled and experienced people to do the job properly. There is no shortage, only a shortage of quality appraisers willing to do the job for the small fee the AMCs pay [the AMCs now take a very large percentage of the fee, and basically do nothing to earn it, they add little or no value to the process.
Thanks so much for this. Very informative.
Thank you Leigh for this great video. I am a REALTOR, Instructor, Home Inspector and am currently working on my Appraiser Certification. I agree with you 100%, there shouldn't be any other choice but an Appraiser to value a house, although it is becoming more and more common for banks to use BPO's for the loans. I disagree with this practice because they are cutting the appraiser out, the one person who has gone through and trained and trained in field and taken data analysis classes, far more advanced than basic high school/college classes. I have to do a minimum of 1200hrs of training after my basic appraiser classes and then sit for super hard test to get certified.
Thank you again for your video!
Thank you so much for making this video. I am a certified appraiser for 38 years and FNMA and Freddie MAC have made a skeptical of this industry, all I can ask is why.
Wow! You hit it on the head here! We could not have said it better! This is Mel and I Appraised for a major lender for 10 years then independent ran my own appraisal company, until being hired during the great recession, to review 10 to 12 Appraisals a day for quality assurance. Then, the AMC creation and things got even more crazy! But now the banks getting even more involved in valuation for the loans is berserk!!! You explain the need for independent Appraisers, as well as Licensed REALTORS, so very well!!! Great job! I just hope people really pay attention to this!!
Thank you Leigh! You are the sweetest, so happy you have shared this information!
Thank you for helping spread the word.
As a Certified Residential Appraiser with more than 20 years of experience I applaud you for this video. It must be tempting for agents to want less oversight over appraisals, faster turn times, and more chances for a property to appraise at contract price. But all of us licensed professionals in real estate have a higher ethical obligation to act in the best interest of our respective clients, and to ensure public trust. The property inspection is a critical part of the appraisal process, not just some insignificant data collection step.
Just wanted to tell you that you did a really nice job explaining the process. I have forwarded this video to all of my realtor friends so they understand the process so they can protect their sellers.
Thank you for your support!
Thank you as always Leigh for your support of appraisers. We are lucky to have you in NC.
Very well stated! Thank you!!!
The first part where you stated the crash because of inflated appraisals....was due to lending to people who couldn't AFFORD the loans they were given and defaulted. Secondly, the data collectors aren't insured if they get injured whether by accident or by purpose in the house!!! Realtors, tell your sellers DO NOT let them in, the buyer is paying for a professional appraisal and they should know they ONLY want a professional, not a "data collector". We need this at YOUR level, talk to your buyers and sellers. The rest was awesome. Also you didn't mention the AMCs take half our fees!
Also, all Appraisers are bound by USPAP, which has an Ethics rule similar to the Realtor Code of Ethics. We can be sanctioned or loose our licenses for violating the Ethics rule.
There shouldn't be any option other than a licensed independent appraiser. He or she is trained to deliver a best opinion of value based on market conditions. Appraisers are essential.
My only complaint is that it took a real estate agent/broker to so eloquently and informatively explain why the data collector process is such a bad idea. As usual, the appraiser profession that I am a member of seems to have industry "leaders" and spokespersons more interested in speaking out when it means lining their own pockets and not advocating for the profession, Hamp Thomas excluded.
Thank you. Great informative video.
Just awesome! Everyone has a role and a license for a reason. Lenders want to take the control away from appraisers, and the appraisal fee. Thank you Leigh!
This video and message are on point. Every one in Real Estate needs to watch this and hear the message. AMC's (Appraisal Management Companies) are lobbying FNMA to corner the market on Independent Appraisers and their fees and good luck challenging their AVM value decisions. Dodd-Frank needs a re-write and soon!!! Thanks Leigh - I would support you for Governor 😉
Thank you so much for breaking this down for people!!! The public is getting bamboozled by these AMCs and this data collection push is such a terrible idea.
Thank you for breaking down these processes, great video. We need more advocates like you, and I hope your continued work leads to more of us joining the fight to protect our professions.
Excellent video. I appreciate your thoughts on this data collector issue.
As a Certified Real Estate Appraiser, thank you, thank you, thank you! You have perfectly described what is going on in our industry. If only we could get the powers who be to listen.
Hi Brenda, I am a Mobile Notary and 1 of the title companies I contract with sent me a link to learn more about becoming a property data analyst and listening to the webinar it felt like we would be amateur appraisers didn't seem right offering $100 per job
In your opinion what's going on here because I would think they would have reached out to you guys as appraisers to conduct this kind of work
Thank you Leigh Brown for spreading awareness on this unregulated data mining initiative. Homeowners' privacy and safety is at stake along with the other obvious concerns you mention.
I'm not a fan of this model, but why wouldn't appraisers be used as data collectors at the least? I've been skeptical about the training and safety aspect here - not to mention valuations like this.
Because appraisers know our worth. Years of education, knowledge, etc. We are not about fast and cheap, quality and ethics matter. AMCs/Lenders are looking for CHEAP so they can rip off the consumer.
Ryan, veteran certified appraisers will not play a hand in this game designed to destroy the system as we know it. Personally, I did not spend 36 years of my life working to be the most educated & dedicated appraiser I can be ro be relegated to a $50 property inspection so an AMC can take a larger market share. Mark my words. Consumers will be the big loosers here!
@@drewbarnes3143 I get it. I would very likely feel similar if I was still doing lender work. But backing up, it doesn’t make any sense to me to not offer stuff like this to appraisers. And I bet there would be some appraisers doing this right now in light of the beating mortgage work has taken. Right or wrong. Again, I’m not a fan of this system, but it just seems off that the property inspection part wouldn’t at least consider appraisers.
Per my lengthy post which I recommend you read.... Some states have laws that do not allow unlicensed or certified people to perform.... "acts that would be perceived by 3rd parties as being part of an independent analysis of a property for appraisal purposes". In other words the acts of a PDC by definition require analysis of condition and quality of a home. These are the actions of the performance of an "appraisal assignment" and in some states can ONLY be performed by a Licensed/Certified appraiser, so anyone watching this video needs to check their state laws and find out if that is a requirement.
@@tarbaby315 yeah, appraisers have been doing this stuff for many decades. Exactly my point here. I mean, I would be OK without the hybrid model. Don’t get me wrong. I wonder about insurance and liability for unlicensed people also. I think Leigh has some tremendous points in her video.
Leigh, thank you for being advocate of the consumer and fairness as it applies to Lending, Appraising and Listing and Selling homes. As a 46 year Appraiser I have seen a few changes. On day 1 46 years ago, my Chief Appraiser taught me, you are the "eyes and ears of the lender." Now it appears that they want to eliminate both of those. An Appraisal is a "Risk Assessment Tool." The Appraisal, what is referred to as a "full Appraisal" benefits both the consumer and the lender and ultimately the taxpayers to reduce loss if a default occurs. I have seen reports come back ordered by lenders with incorrect information, incorrect flood hazard certifications and many issues over the years. The Appraiser often (not always, as it is not a home inspection) identifies repairs and other issues needed to a home. Will a data collector, realize the risks and dangers associated with many likely asbestos products, mold, dampness issues? Are they trained in fair housing/fair lending issues? Did they take rigorous training and education, tested multiple times both at course level and state licensing levels? I have in the past actually had lenders pressure me to ignore needed repairs, telling me the repair is no big deal. If it is not a big deal, then I shouldn't need to remove it. The lenders do not want repair requirements, they don't want me to report observed shoddy work, leaking roofs, leaking foundations. Why? It slows down and/or reduces/inhibits their ability to lend. If the loan defaults and the lender takes the property back and Fannie Mae bails them out, when Fannie runs out of money, just like they DID in the "great recession" we the taxpayers bailed out Fannie Mae. Policies like Fannie Mae's to reduce or eliminate the involvement of a Certified Appraiser INCREASE RISK. There will be another bailout. The only question is not if, but when it will occur? We've already seen two large banks bailed out this year. There are hundreds of banks on relatively insolvent ground. The elimination and/or reduction of the Appraiser's role will fuel larger bailouts. It will also cause many consumers to pay for repairs that could have been addressed and taken care of prior to a purchase, or at least they might have a better idea of what they are buying. Other proposals in front of the Appraisal Foundation for PAREA that may reduce apprenticeship, required education, etc... also WILL reduce the training and thus quality of Appraisals. There currently is no shortage of Appraisers...NONE. There is a shortage of paying a decent fee. What we do NEED is increased education, not less. When it gets busy again we will need more Appraisers, so to accomplish new Appraisers coming in, we may need grants to assist to provide the funds to educate them. If they are unable to afford the classes, you don't eliminate them, you provide a way to fund them, just as we do in the University setting. Create programs with grants and stipends to get the same or BETTER education, not less. What fair minded consumer, would want a lesser trained Appraiser? What purpose would that serve? The Appraisal business requires more education and training than ever before, not less.
"There currently is no shortage of Appraisers...NONE. There is a shortage of paying a decent fee. What we do NEED is increased education, not less." - well said! Many long term, and well trained appraisers will not work for low fees with a 1-2 day turn time. It takes time to prepare a quality appraisal for many properties - not a factory operation.
Thank you for putting this out there. You are awesome!
Somebody give this PROFESSIONAL a bigger microphone - We all work together, and if you’re cheering the potential “doing away” of appraisals, check your mirror because you’re next.
Thank you for fighting for consumer protection!
I love your passion here! I don't think people actually understand how important this issue is. There was a time I was hired as an appraiser to review, even other appraisers work, because the loose lending and lack of checks and balances got us in trouble, part of which ended in Great Recession. Great video!
The big thing from my perspective is what incentive do data collectors have to do a good job (even assuming they can with no training).
Leigh I just want to say this was refreshing to hear. I have been a certified general appraiser for about 35 years and have spent many many hours during that 35 years trying to get our significance to be understood. When the HVCC started, it was, in part, to avoid appraiser collusion with the banks and lenders. Now almost 15 years later, I wonder how much good it did. I think it just sent us down this path as you explained it. Public trust seemed to become a secondary thought. Thank you for reminding the consumer they are important.
If you’re an agent who wants to protect your clients in the context of mortgage lending, you should pre-screen your lenders with one question, and treat that answer as a “go” or “no go”. The question is: “Do you work directly with your appraiser panel, or do you outsource to an AMC?”
You see, AMCs play lots of games. They’re basically the used car salesman of the real estate world. They charge the lender (ultimately the buyer) outlandish fees, often times roughly twice what might be considered “market” for an appraisal report. Then they go out and seek - like for days and days and mountains of emails sent, by AMC folks who’s job it is to do just that - the appraiser with the cheapest fee. And cheapest fee has a pretty strong correlation with worst or most inexperienced appraiser. AMC charges bank/borrower say $800, finds desperate appraiser at say $250, and pockets the balance for doing nothing outside of being a go-between. Like modern day robber barons. The banks that use AMCs could care less too, as the AMC simply outsources a degree of cost and liability from the bank’s process.
Contrast that with banks that contract directly with their panel of appraisers. The bank has chosen those appraisers to be on their panel as trusted professionals. Bank sends appraisal request to next-up appraiser (goes in rotation), at full fee of $400 or $500 or whatever, to the trusted professional. Bank has skin in the game as well, which is good because that scrutiny means more regulatory eyes watching in the post-HVCC era.
AMCs are not always what they are promoted to be - they try to manipulate values (reconsiderations), or blacklist someone if the value doesn't come in. They take much of our appraisal fee and do minimal work. Banks can be in compliance with the regulations by just having their own panel, and randomly choosing the appraiser to be assigned. The bank gets a quality appraisal, the consumer is protected by an independent valuation, and the appraiser earns a reasonable fee. We have lost too many good appraisers due to the debilitating practices of AMC companies.
As an appraiser I cant trust anyone i dont know to collect my data. Therefore I cant build a report on this and put my signature on it. I know so many appraisers that feel the same way. If you want to loose your license then do it. I don't see how any appraiser with good sense can trust these collectors.
This is not all that accurate. You are assuming that these data collectors are in the home making decisions that affect the value of a home. But In reality, many of them are only there creating a virtual tour of the property. Once complete, a certified appraiser evaluates the property remotely using that virtual tour. And if the appraiser sees anything concerning, they can request a follow up. Not saying this system is perfect, but neither was the wait times required for a certified appraiser from this past decade. Anyways, just be aware there is some false information in this video.
There’s just not certified appraisers
There are also licensed appraisers
Thanks for posting this. Spot on. We are heading in a very bad direction.
As an appraiser for nearly 30 years I appreciate your honesty and support. I have done many assignments where I am given data from a property data collector. Most of the time the data is not correct or has such obvious errors and omissions that I know the data collector has no real estate experience.
The borrower or seller is most likely under the impression the data collector is the appraiser or works for the appraiser. I have gotten calls from angry borrowers wondering who came into my house and why they are asking questions like what style of house is this? Is this a bedroom?
I think some of the data collectors are employees of the AMC(or subcontractors). I have fought with them over the quality and experience of the work provided to me. I have made comments in my reports questioning the data presented. I get push back saying we can't let the lender know this and you can't make any negative comments in the report questioning any data provided. Work with us to get the data right. Well, I can get the data right if you send me out!
Thanks again. Please stand up for us. We don't have any lobbying power. What little we do is fractured and weak.
So the AMC is working to deceive their client, the lender.
@@dbb1064 from the conversation I had with the AMC you could draw that conclusion. They are covering for themselves and giving the lender the impression that the 3rd party data collector knows what they are doing. A lot of the time I have to supply the assessor's sketch because the 3rd party sketch is wrong. We are not talking rounding differences. I have to send back for other errors and omissions as well. Never in the report can I say my assistance was critical in getting the data collection right.
It is a dangerous game putting one's name and licence on the line to accept these data collection reports.
I've been an appraiser for 20 years and This is the best explanation I've heard of what is happening in real estate. The lenders and GSEs are trying to push everybody out to create a lending super highway with no accountability. They don't want oversight, competition, or impediments. It's as though the regulators are in cahoots with the people they're supposed to be regulating. I'm sure they will have their hands out for taxpayers money the day it all collapses.
Thanks!
Thank you!!
I am a Certified Real Estate Appraiser and must say that you are right on! Please continue to speak out against Data Collectors. Appraisers are required to undergo years of training and courses and education. Additionally, most appraisers are required to complete regular background checks for many different AMCs and Lenders. These Data Collectors are unskilled, unlicensed, and there has even been a recent incident of a criminal Data Collector who had just gotten out of jail/prison for theft.
Our state requires a background check for our appraisal license. After over 20 years as an appraiser, it is amazing how much one learns by inspecting a home and asking questions. Appraisers are the agents balancing and offering an independent opinion of value, and when the lender takes over the inspection process, that violates the whole reason to have an indedendent appraisal report. What's worse, they are apparently requiring these "reports" to be signed off by an appraiser, after review, which is also a violation of USPAP. We are required to make an inspection, and I for one refuse to sign an appraisal that I have not personally inspected - I know what to look for and what questions to ask - every property is different. This is a dangerous new program that has the potential to cause serious damage to the market. I agree with this video, and agree with her summation of the problem.
Nice content
We appraisers need to go on strike nationwide.
Numerous states require anyone "analyzing" real property condition, are required by state regulation and law, to be licensed. Also, will uneducated PDCs cause more fair lending and bias issues? Numerous issues that the gov sponsored entities may have overlooked...
I don’t even know where to start. So much misinformation in this video. Typical Realtor understanding of the lending side of the industry - a lot of assumptions about how mortgages are manufactured , sold and securitized without any actual knowledge.
Don’t forget that just because an appraisal is not REQUIRED, doesn’t mean that a buyer should not or cannot get one.
I appreciate your efforts, and I agree with much of what you say, but there are some significant errors in your presentation. The most important comes at the end.
Appraisers are NOT under the guidelines of the Appraisal Institute. Only appraisers with statements of affiliation or that have designations from the AI are under their guidelines. Appraisers must comply with USPAP - the Uniform Standards of Appraisal Practice. Also, note that the guidelines of FNMA, Freddie Mac, FHA, VA or any other entity are IN ADDITION TO, but must not violate or contradict USPAP.
A little prior to that you go through the process of a listing through purchase. Within that statement you comment that an appraiser does an independent appraisal (correct) to see if the #s makes sense or is correct. I understand what you are trying to say, but it needs to be clear that the appraiser is not there to verify your contract price. There are many reasons why a contract price may be above or below the supportable market value indicated in the appraisal. Sellers could accept a contract below market value because of a relationship with the buyer or may need a quick sale for a sudden move. Sellers could accept a contract price over market value because at that specific time there is no other property on the market, or the buyer outbids everyone because a relative lives down the street. The value conclusion of the appraisal is used by the lender for the loan decision, not whether or not the contract represents market value, which is what leads me to my most important point below.
First, let me say that I would never let a PDC into my own property. That said, you were on track until roughly the 5:54 minute mark. ….. What are they (the PDC) going to come back with with a number…. The PDC is not there to “value” the property, only to photograph and report room count, quality and condition. If the information is inaccurate, it can easily be disputed with additional photos, list of improvements including remodeling and updating. Yes, they may not understand the C & Q ratings very well, but I don’t know many real estate agents that even know what a C or Q rating really is.
You then make some leaps of assumptions, some of which may be very valid, but it leads to the biggest issue about the change in policy for FNMA and Freddie MAC that nobody in the appraisal industry is arguing because they are all arguing emotionally about the loss of work.
Appraisers and most in the Real Estate Industry are arguing that every loan should have an appraisal, and that is just not true.
Do you need a Certified appraiser to perform an appraisal for your buyer with a 50% LTV loan with a 750+ credit score and with good employment history? Especially when the land alone constitutes anything more than 50% of the total land value. No…. An appraisal for that scenario does nothing to lower the risk of the lending decision.
The issue that needs to be argued & answered is at what point in the lending process is it decided that a loan proceeding up the ladder of the 4 levels of the Value Acceptance program is an appraisal needed.
At a 50% LTV, does the credit score even matter? IMHO, nope just do the loan.
At a 65% LTV, what is the min credit score for no appraisal, for just a PDC, a PDC + desk appraisal, or for a full appraisal
At a 80% LTV, at 85% LTV???
Do I think any loan with an LTV of 80% or higher should have a valuation of some form by a L/C appraiser? Yes.
Do I believe that someone who bought their home in 2015 at a 3% interest rate with a 70% LTV that has experienced 80-100% increase in value and wants to pull out another 10-20% in a HELOC need an appraisal? No I don’t. Maybe have someone drive by and take a picture to verify the property is still standing, but a “valuation” is not needed.
Until the appraisal industry can come up with a rational and credible reason as to why an appraisal is absolutely 100% required to make a loan decision for a 50% LTV loan, they are going to be shouting in the wind, because there comes a point when an appraisal just isn’t needed anymore, we just need to make sure that the lenders are using reasonable and rational decision points to denote where that line is. That is the argument that the industry should be making.
One last thing. and this probably should be stated at the top. Some states have laws that do not allow unlicensed or certified people to perform.... "acts that would be perceived by 3rd parties as being part of an independent analysis of a property for appraisal purposes". In other words the acts of a PDC by definition require analysis of condition and quality of a home. These are the actions of the performance of an "appraisal assignment" and in some states can ONLY be performed by a Licensed/Certified appraiser, so anyone watching this video needs to check their state laws and find out if that is a requirement.
Todd Redington, SRA AI-RRS AGA
35yrs as a Cert Res Appraiser - CA, WA, OR, FL
Former Sr Residential Risk Analyst - Regional Bank
Former Fraud Investigator for FNMA as a 3rd Party contractor
Accedited Green Appraiser
FHA Roster since 1995
One supplemental question asked to both you as the presenter and the appraisers responding to your post
How many times over the last 3 years were you a party to a transaction where either you presented or accepted on behalf of your clients an offer that waived the appraisal contingency, but required that an appraiser be allowed to perform an appraisal? a scenario where the buyer had sufficient money to close regardless of the approved loan amount, but did not want to pay 100% cash
Appraisers..... How many appraisal assignments did you perform where the appraisal contingency was "waived" and you thought to yourself... Thank goodness, cuz the market is screaming up so fast there is no way I can justify this contract price and now I won't have to worry about a reconsideration of value request? and besides the buyer is putting 40%, 50% 70% down, my appraisal is just folder fluff.....
As an Appraiser I want to say thank you for your response. These are some things I was also thinking about when watching the video. Especially the guidelines we are required to follow with USPAP and not Fannie/Freddie. Also thank you to Leigh Brown. Glad to know there is a Realtor out there who is concerned about the system and possible ramifications, not just looking for an easier way to make a paycheck.
How do you know its 50% LTV without the value which is part of the ratio. There need to be products that are more suited for things like this. Sometimes properties attractive to first time homebuyers skyrocket up while high end custom homes do not move much if at all. Seems zillow went out of business with their home flipping using their own model in the areas they thought were increasing the most.
@@dbb1064 my example assumes the use of an AVM in a highly homogenous suburban tract of homes with good market data, resulting in a high confidence score for value and an estimated margin of error of +/- 3% in order to arrive at the 50% LTV.
Of course, this is another area where we need to get some answers. The more heterogeneous market segment, and the lower the AVM confidence score the less reliable the valuation is. In a highly customized Heterogeneous neighborhood with site characteristics that include views or properties on waterfront, etc. the AVMs are going to be less accurate and have lower confidence scores. That said, even with extremely low confidence scores, with low loan to value ratios, The credit score, employment, history, and other factors may warrant funding the loan. The bottom line is that the value of a property is only one of a multitude of factors in approving a loan.
If Appraisers want to stay in business longer, maybe they should consider moving to markets that are less homogenous, areas that have factors that would result in low confidence scores for AVM valuations. That may be specializing in waterfront properties, or it may be specializing in semi rural or rural properties. These are types of properties that require much more nuanced understanding of market data rather than just cookie cutter appraisals.
I think every loan should be backed by an independent appraisal (former banker here). If you’re using someone else’s money, mitigation of risk should be priority ONE, regardless of how small one loan is in the portfolio.
Math nerd 🤣🤣