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OREP:
Low cost, same-day E&O Insurance
Reader
Comments
> Trainee
Trouble: Who's Training Who?- read story
> Comp
Checks: Shifting Liability to Appraisers- read
story
> Five
Suggestions for Honest Appraisals (fraud and more)- read
story
> Five Step Program for Honest
Appraisers- read
story
> Identity Theft - Appraiser Style- read
story
> Keeping Track of Work Files- read
story
> Relocation Appraisals: What’s Not
to Like?-
read
story
> Leveraging AVM Technology- read
story
> Comp Checks: Turning Requests into Orders-
read
story
> Changing Fortunes: Appraising to Consulting-
read
story
>>>Trainee Trouble: Who's Training Who? read
story
>You
are absolutely correct that we certified and experienced appraisers are paying
the trainee to learn the business rather than the other way around. It was
difficult for me to train my own son, who is a quick learner, and pay him a
reasonable wage on top of it. I can tell that other appraisers who have
"trainees" are not teaching them what they need to know but sending
them out to muddle through. I choose not to train anyone else for the reasons
stated in your story and wonder who thought of this method of business. If you
think of anyone else with apprentices, the relationship certainly does NOT work
in this way. - Nancy Quillen
> I have tried for four years to train someone. Most are not willing to work. None
have followed through to even complete the course after they paid for it. Due to
the fact that I work out of my home, I do feel nervous about who works with me.
- Vana Bailes
>
Regarding trainees and mentors, the program as currently structured is a sham.
Mentors accompanying trainees on every inspection is ludicrous overkill. For
basic, residential appraisals, any mature, intelligent adult should be able to
perform inspections on their own after three properties. This can be
demonstrated to a qualified instructor. In my 12 years of experience, I have
never seen a mentor go on more than two inspections with a trainee. It is common
knowledge that the requirements are excessive. As
far as mentoring goes, all mentors ever taught me was how to hit the number and
ignore deficiencies. This is the real world of appraisal. Untrained and
unmonitored mentors take advantage of trainees any way they can. The greatest
improvement one can make to the system is to eliminate "mentoring"
entirely, as well as the Trainee designation. Residential real estate appraisal
is a semi-skilled trade, requiring minimal education and college-level
performance testing. Any person with a college degree should be able to hit the
ground running and hire a mentor as a consultant when they are unsure of how to
proceed. It's time for the appraisal industry to grow up. Move the education to
an impartial, non-profit institution and eliminate the excessive hand-holding
requirement. In addition, independent appraisers need to be audited on a regular
basis by an independent government agency just as auto repair shops and
restaurants are. Appraisal fraud is rampant due to lack of policing and it's not
trainees who are the violators. It's time to spray the water on the fire, not on
the smoke. - Stephen G. Bishop
>
As a business owner and trainer of more than eight trainees, it would be a great
help if they had at least 50 to 75 appraisals completed before looking for
a mentor; even if they did mock appraisals in a classroom and field situation.
It would be much less time consuming to train them. - Wendy Woodard
>
I learned how to measure and inspect houses when I was hired as a county
appraiser. I had already sold real estate, had a degree in interior design (so I
knew how to read plans and the elements of design) and had worked in the
planning department. They paired me with an experienced appraiser for a
couple of months in the field, provided good continuing education and paid for
one course a semester while I worked toward a 10 course post baccalaureate
certificate in real estate and land development. I see no reason why this can't
be taught in school- how to measure properly, elements of construction, how a
house is built, etc. This seems much more sensible than having to learn as
a trainee, for the reasons stated in the article. - Catherine Baxter
Trainee’s
Perspective
> I am now a
certified residential appraiser. While doing my work as an assistant, my
supervisory appraiser would always accompany me and the other trainees on our
assignments and review our work before letting it go out of the door. At our
office, we know this is not the norm. We know many "supervisory
appraisers" who let their trainees go on assignments themselves and just
sign off on their work. We also know of several certified appraisers who
sign reports for their kids who never even viewed the property or completed the
assignment. A big problem is that certified appraisers are afraid of training
their future competition. Out of four trainees in our office, only one ventured
out on their own after getting certified. The rest of us feel loyalty to the
person who trained us and allowed us to get our certification under his
supervision. He does pay us a generous percentage of each appraisal and all
office expenses are his. In other words he puts up with most of the BS. I feel
loyal to him and I think the majority of trainees would feel some kind of
loyalty to the person who mentored them. But of course, not all will. –
Jan Andter
> I recently passed my state test. Now that my two year
"training” period is completed, I can add comments from the trainee side
when it comes to mentors. My initial contact with his firm was only with an
office manager. I received an appraisal that day and went on my way. Mr. Mentor
never went out with me until several months later when he took us on a
commercial appraisal. Mr. Mentor never went out with me on one residential
appraisal. Most of my feedback came through a very experienced but unlicensed
office assistant. Over that period of time, Mr. Mentor was rarely in the office
and rarely returned phone calls in a timely fashion, as he was too busy
with other companies he had set-up (companies that he eventually shut down due
to financial problems). He has since moved from the state but still has trainees
handling the appraisals without his input, and has no problem having his
local office sign his name as the supervising appraiser on URARs, qualifying
that he has inspected the properties. Add to that, bounced checks for work
that was done and not being paid anything for two months, and it is quite
apparent that Mr. Mentor has some serious ethical problems.
The
issue comes down to this: unless ethical, caring and professional appraisers
are available for trainees, we are forced to go to schmucks like this for our
hours. The many veteran appraisers who are not part of the learning process and
who allow their peers to run these appraisal mills have to share some of the
blame for the problems this profession faces. We are forced to put up
with whatever whims Mr. Mentor chooses, and our option is put up with it or
leave. But to where?
I know that there is a problem with trainees stealing clients upon licensure and
no one wants to lose money, however legal agreements are enforceable. Let's face
it, if someone wants to steal, there is usually not much reasonable people can
do about it except to protect themselves legally and rectify it legally. I
agree that something should be done. On the other hand, setting up an
appraisal school to obtain hours, likely at the cost to the trainee, will
prevent many from obtaining a license. It's been hard enough surviving
financially as it is and I can't imagine how possibly taking an extended
period of time for training school without some pay could be done. I
believe that experienced appraisers should be encouraged to take on a trainee
with the knowledge that it will affect their bottom line adversely initially but
should help it as time goes by. Sure they need to protect their
business but that is not just an appraisal profession problem but a business
problem. - Mike Hoff
>
One solution is for trainees to pay their mentors. You can't go to college or
technical school without paying tuition, why expect to get a lucrative job as an
appraiser without paying more than the nominal fee it costs to get your 75 hours
of training? My last trainee was paid $10 per hour which is not really a living
wage. He never got off the ground and I was forced to let him go after more than
a year of paying him $400 per week for doing nothing but learning how to draw a
sketch. I will be the first to say that it takes a while for “the light to
come on" but once it does the hard part is over. (In my trainee's case, the
light never came on.) A tuition type payment would help cover expenses for a
trainee who isn't producing. It would at least pay for gas money, insurance or
some other light overhead expenses. - Greg Hartley
>
We have had had about 15 trainees over the past 10 years all quit within a short
period of time, say six months to two years, and sought other jobs with
larger appraisal firms. Basically, we were training our competition. Some didn't
have the ability to appraise but most sought the higher level and larger shops
to work for. We basically were a stepping stone to the ultimate job. Get their
foot in the door, use you for a while then take a job with a larger firm that
hired them once they had some experience. We stopped taking on trainees last
Fall and plan not to take anymore on. - Larry Dobbs
>
First of all, I don’t buy the “training the competition” idea. Any
profession that can’t stand competition is a dying profession. Maybe that says
it all? I currently have one apprentice working with me and it’s true that the
current preliminary education system for trainees/apprentices does not teach
them much. Most have never seen a 1004, 2055, 1025, etc., don’t know anything
about how to conduct a sales study to determine market reactions to elements of
a property, think Marshall & Swift is a comedy team, NADA means nothing (in
Spanish) and have never been inside the County Assessor’s office!
The current system for apprentices is reminiscent of the medieval guild system;
most apprentices work for little or nothing, are more often than not used for
slave labor and have to sandwich their appraisal hours in with another job. Many
come away from the “training” experience with not much more information than
they started with. An experience school such as you mentioned would be a great
benefit to the whole system. - George Gunning
Inspector’s
Perspective
>>Your story states: “While the laws in each state are unique, many
require mentors to accompany trainees on all assignments during at least the
beginning stages of their field training (typically 2,000 hours).” Is 2,000
hours correct? That seems unrealistic and objectionable. That's just a week or
so short of a full year at eight hours a day. No single person in business could
possibly afford to train someone to that extent, especially when that someone is
not an employee but will become the competition. I sure wouldn't and I certainly
don't fault anyone else who doesn't, either. - Russell Ray, HomeTeam Inspection
Service.
> Over the years, I have had many trainees. In the old days they were
different. They came into the business to be an appraiser. Now they are
motivated by the huge money the schools tell them they can make. I have hired
two trainees in the last year. The first had started out (with another mentor)
doing residential work and soon realized that what he was doing was creating
fast reports using a template, function keys and automatic adjustments. Whenever
he questioned what was being done to create the "appraisal," he
received lame answers. The last straw came when appraising a sale and he could
not support the sale price without a Time Adjustment. His trainer told him,
"We do not make Time Adjustments, underwriters will not accept them."
It was at that point he called me. I told him that was complete BS and taught
him how to do pairings and/or use published statistics to prove or support the
adjustment. Within days, he realized he had to leave in order to learn
appraising. -Steven R. Smith, MSREA, MAI, SRA
> Sometimes I get
discouraged because I know that I am taking my trainees down a path that not
many appraisers go. I know how we prepare reports is time consuming. It will
always be a balancing act when trying to obtain information as to what is
important to know and what is not. Read USPAP and FNMA to know what standards
you will be held to. Do not go by what I say! While I always believe I am right,
the ultimate test is always USPAP and FNMA because those are the standards you
will be held to, not mine. You must decide for yourself about just about
everything I have taught you.
- Leslyn Georgis
>
I have read with great interest the story on trainees followed by the comments
from mentor appraisers. I wondered what world some of the mentors came from.
They pay me to learn the business? In my case and many others. . .I don't think
so! All my work is checked and rechecked by my mentor. I have to make all
my own corrections and return the work for final check and signature. I was
constantly grilled on where I got my information and have to support all of my
adjustments. Sure, I make my share of mistakes but finding them and pointing
them out to me is the mentor's job. If a mentor doesn't want to do this, what
are they teaching me for? Apparently, many of the mentors commenting in your
story are teaching for all the wrong reasons. (It's the money, stupid!) The
mentors griped about the costs involved in hiring a trainee. Who are they
kidding? I had to set up my own office at home, buy my own computer, supplies,
software, use my car, gas and insurance. Nobody is giving me a free
ride!!! The mentors get 60 percent of the profit, even on accounts I own
and have set up myself. It is ludicrous to state that the mentor pays me. n
fact, I pay the mentor 60 percent of all the work I do. I work hard and have learned
the trade. I know of several trainees who have learned the trade under similar
conditions. I put in a huge amount of hours for the 40 percent I receive. Sometimes,
in the beginning, I couldn't break even with the costs involved in
operating my own business on 40 percent of the billing. But I was taught that
anything worth doing isn't going to be easy!
For
the most part I love every minute of it. I was raised to work for my share in
this world and didn't expect anyone to hand me my license on a silver
platter. However, I am glad I have had the great experience with the two
mentors that I work for. I pity the trainees who had to endure the 2,000 hours
working for the whining, cheap, unappreciative mentors in your recent
story. These mentors are the true embarrassment to this great field, not
the trainees who have fallen victim to them. - Thomas G. Sadler
> I enjoyed your article and the responses
regarding trainees and did not realize how fortunate I was to be employed by an
incredible mentor. When I decided to
get into single family appraising after a 25 year career as a pension fund
consultant, where I invested billions of dollars in commercial real estate, I
thought I knew everything there was to know about real estate. After all, in
addition to my professional experience, I had majored in real estate in college,
and had taken five Appraisal Institute courses. The
best thing that ever happened to me was to be employed by a State Certified
Appraiser who had been trained to do appraisals "by the book."
There are no such things as "automatic" adjustments, and even
after completing approximately 50 appraisals, it still takes me several
re-writes to have the appraisal pass her standards. As for inspections, she
accompanies me on every one because that is what is required (at least in
>
I enjoyed the comments from both mentors and trainees. In
I
try to give my students some practical knowledge along with appraisal theory.
I get them started on things like inspections and drawing sketches, comp
searches and tell them to go out and practice all these things on their own.
The motivated ones do this; the ones who will only do it if someone is paying
them won't be a good employee prospect. - Janine Campeau Ewald
>
Appraising has the same problems as other businesses/vocations. Some
supervisors don't know how to supervise. Some instructors don't know how to
instruct. Some students have no idea what they are doing or where they are
going. The licensing rigs and rules assume that both mentors and trainees are
basically stupid, slow learners, and corrupt. There is no flex in the
program: one size fits all. If
we cross trained many competent appraisers to be instructor pilots, no one would
ever solo, and few would ever accept student pilots. And, there would
still be some who simply handed keys to the student and said "YOYO" -
you're on your own. Having trained both pilots and appraisers, I can assure you
there are no cookie cutters. Each student is different and requires
different emphasis and attention to different aspects of the job. Some are
a long term danger to themselves and should be "washed out" of the
program. Some are fast learners and it's a challenge to refrain from boring
them. The push for more hands on instruction is a great idea. However, it would
work better if we had courses for some of the mentors on how to supervise and
instruct while increasing profits. - Walter H. Humphrey, IFAC
>
Too many people are attracted by the huge $$$ they hear being bragged about by
ignorant form-fillers. When I was in my first year of appraising, I was really
fast. We were expected to do three per day and were paid incentives to do more.
In my 13th month, I did 129 reports (before drivebyes), SFR's, Condos and 2-4s.
>
I am a certified residential appraiser with a company in
>>> Comp
Checks: Shifting Liability to Appraisers read
story
> I found your
article interesting but let me answer one of your questions for you. You asked:
"Why do lenders even bother with a comp check or other appraiser input if
they don't need it to close the loan?" I think you missed the point on why
comp checks are ordered in the first place. The broker KNOWS the lender WILL
REQUIRE an appraisal. They send out a comp check call/fax/email to appraisers to
see which appraiser will 'get them what they need to make the deal work'. Then
they order the appraisal from that appraiser. And 95 percent of brokers asking
for comp checks are for maximum financing, poor credit, no equity borrowers.
And, even if a lender (not a broker) is requesting a comp check, it's because
their desktop underwriting told them they needed an appraisal from an appraiser.
- Thomas J. Kirchmeyer, SRA
>
Your article offers good advice, however, lumping all appraisers as being
"easily hood-winked into inflating values" is extraordinarily
misleading. I have been reviewing appraisals for the past 15 years and it is not
ignorance or naiveté that inflates values. It is a defined intent in order to
meet a certain point. The system offers almost no penalty as USPAP cannot
be significantly enforced and making the "point" brings in more
business. Inexperienced appraisers may not be as thorough as one would like
but the majority of the problems resulting in inflated values are pressure from
mortgage brokers and the appraiser's lack of ethics, in addition to their desire
for the business. It's a bad combination. Although I see so many
unacceptable appraisals, I believe that many very good appraisers are true to
their ethics and not unaware of flips and highly inflated prices imposed by a
mortgage broker.
- Carol Wolfe, SRA
>
Makes your blood run cold, doesn't it? It's been obvious for about 50 years that
the problem is regulating the lenders, not the appraisers. If brokers have no
one to answer to and they're just salesmen, who can blame them? What's the
difference between a loan broker and a car salesman? Selling is selling. – Nancy Quillen
>
Good article on comp checks. Just had an
email from a lender looking for appraisers in the area (for single family). As a
commercial guy I did not respond for the work but I did respond to the ad;
hoodwinked is a good term. They were looking for general fee quotes and asking
if the appraiser did pre-comps before went to
the property or taking the assignment. Smart guys. You are right; they are
shifting the liability to the appraisers. Unfortunately, as I wrote this lender,
the word pre-comp should not even be used and
the appraisers that fall for this deserve to get into hot water. In the old
days you took the assignment, looked at the property and analyzed what it’s
worth, like a professional. We have succumbed
to being virtually a low-end service provider, not professionals, always hungry
and competing for fees that seem to be continually falling. After 22 years
I am ready to get out, go to something more lucrative, probably commercial
brokerage. There cannot be anymore litigation worries, paperwork or headaches
than what I am currently doing. - PW Dils, MAI
>
Yep, folks are dumb and dumber. Simply
quote a fee that is two or three times the appraisal and the callers disappear.
- Dave Hamel
>
My experience with comp checks is that the client wants you to commit to a
specific value. I have always refused to do any kind of comp check and was
instructed to never do comp checks in my classroom training.
Of course, I don't do appraisals any more because I couldn't attract any
clients without doing comp checks.
> Comp checks demean the appraisal profession. Appraisers who complete comp
checks encourage loan officers (LOs) to continue demanding guarantees of target
values prior to assigning an appraisal. Comp checks are the primary tool of LOs
who shop for appraisers who will report target values. Based on the
increased frequency of comp check requests, there are many appraisers who
comply with such requests. Appraisal orders should omit values,
unless there is a pending contract price. Otherwise there should
be no value provided to the appraiser completing the assignment. Telephone calls
asking for comp checks typically start, "Hello Ricardo. I am with Anyval
Mortgage out here in
Faxes titled "Comp Check/Appraisal Order" usually instruct
me to verify value before proceeding with the assignment. Discussions with
other appraisers in
>
Handling the “Comp Check” dilemma has turned into a real PR challenge.
Having headed up several mortgage operations in the past I can understand the
loan officer’s situation and know for a fact that they regard the whole
appraisal process as a major pain. In an attempt to balance their needs, my
needs (income) and USPAP, I’ve begun to respond as follows:
Here
is what I can do for you. I will give you all of the
information I can find out about the subject (Auditor’s data, MLS, etc.) and
let you know what I know about the general market factors impacting its
location. Hopefully that will give you enough information to decide if you wish
to place an order.
If
not, then I can perform a “Desk-Top” appraisal for you. This will take a few
days but should be done by the time your check arrives. Should you wish to
proceed at that time with a more in-depth report, since I will already have the
research done, I will credit you 50 percent of the Desk-Top fee towards the
final report. It’s important to
understand, however, that the Desk-Top is only considering raw data and that an
inspection of the property could have a significant impact on the value
conclusion.”
I’ve
had several respond with, “Well at least you didn’t yell at me and hang
up.” And they seem to appreciate that I’m trying to do what I can for them.
I’ve just started this and so far haven’t gotten a Desk-Top order yet but
have turned a number of the requests into full orders by keeping the lines of
communications open. To the best of my knowledge this approach keeps me
compliant with USPAP but I would appreciate any other opinions or
findings. - Dan Feasel
> Excellent article in your May issue regarding the Five Suggestions
for Honest Appraisals! I have found, however, that there are not enough
investigators to adequately police the industry. If there were, I believe, we
could drastically reduce the rampant fraudulent activity in a very short amount
of time. I have personally made numerous attempts to turn in dishonest mortgage
brokers and have never even received a return call, I assume, because of the
lack of investigators. There is a great deal of mortgage and appraisal
improprieties in my area. However, I see no solution if we have insufficient
will or inadequate funding to correct the problems. Thanks for your efforts to
call the problem to the forefront. - Dave Conant
Another
challenge is that most clients are paid on commission and really don't
understand what we do and what our role in the transaction is. As a
result, the only value of an appraiser, to most clients is (1)
how fast can you deliver the report (2) can you get the value needed
to make the loan. If you aren't fast enough and don't get enough
value, they just find someone else. Often, they find someone who works on
their own, out of a bedroom in their home and with no overhead. This
"appraiser" then cuts the fee and takes all the shortcuts. Therefore,
rather than being a respected professional who is seen as someone who
protects the interests of our clients, we are reduced to order taking, form
fillers. Hence the lower fees. I know that many of today's
technologies save us time and money with respect to 10 years ago. But
has any one checked the price of gas lately? -Michael J Geis
Rather than “Five Suggestions for Honest Appraisers,” why not
"Five Suggestions for the Professional Appraiser." I realize that
we've got problems, nearly every industry has. If you don't believe that, take a
look at the accounting industry and the number of major corporations that have
recently been cited for "creative bookkeeping." My point is that
rather than airing our grievances in public, we ought to concentrate on
promoting education, training and informing each other, like the other articles
in your magazine such as "Speaking like a Pro," "Understanding
your Market" and "Moisture and Mold." All of these are
informative, positive and helpful to the experienced Professional. - David R
Phillips
>
With respect to the lenders' overt pressure on appraisers that I read
about, I keep coming to the same conclusion: Conflict of interest is not a
complex idea. Anytime the person who buys the appraiser's services stands to
benefit from a higher valuation there is a conflict of interest. Also, the
person who orders the appraisal is not really the intended user. Who
actually uses the appraisals we deliver? Who really wants to know if the
property is not worth what someone is paying for it? The answer is the lender.
Not the loan officer, broker or processor but the larger company. For
example, whenever I appraise something for XYZ Bank, it was probably
ordered by a loan officer or processor at the local branch. They want a
certain value because they make commissions on loans. However, they are not the
intended user. The intended user will be the large lending institutions:
Chase
Taking the responsibility for ordering appraisals out of the hands of loan
officers and processors is a good start to obtaining objective values on
appraisals. Large institutions should have a system in place whereby appraisals
are ordered based on overall quality and objectivity first and then turn time
performance second. Of course, value should not even be on the list. The
department responsible for ordering appraisals should demand good appraisals and
should assure its approved appraisers that they will not be penalized for
appraising less than sales price or desired value. For many lenders the
loan officer or processor can order appraisals from whomever they want and can
stop using them for any reason they want. Fear of losing business because of low
values is very real and appraisers have the right to be worried and upset
about this. Make no mistake about it, if you consistently appraise for less than
sales price or requested value you WILL lose business and it's not illegal or
unethical for them to pull it from you. They have the right to order from
whomever they want for whatever reason they want. It's a very difficult
situation and will never be resolved until this inherent conflict of interest is
addressed. - Steve Flanagan
>>>
Five Step Program for Honest Appraisers read
story
> I am an independent fee appraiser
working four large, sparsely populated counties in
> After working as an appraiser for more than 18 years, I’ve encountered
all of the changes in the industry from the days of hand-written reports to
AVMs. During all this time, I haven’t met a mortgage broker, originator or
agent who doesn’t want the deal to work. Being that an appraisal is one
person’s opinion based on the best facts available, it comes down to how
stretched your conscious has become as an appraiser. Do the years tend to break
your resistance to: “I have a qualified buyer, ready, willing and able to pay
this amount?” “Who are you to dictate a low value?” Or “Come on, you
can’t find another $5,000 in there somewhere?”
After
enduring many years of this torture, I found going up a little in my prices
taught my less than perfect price seekers to look elsewhere for a number. Doing
first class work and the proper due diligence takes a bit longer than it used
to, so when you have become comfortable with your own talents as an appraiser,
you realize that your work is worth a bit more (just don’t price yourself out
of job).
Get
to know your clients. Don’t be afraid to ask questions ahead of time. Be
specific in what you will and will not do and gently say what you can’t do,
like guarantee a number. If you pick your clients carefully and ask around about
what others think of them, you will stand a better chance of having a long-term
and positive relationship.
Lastly,
give more than your competitors do. One thing everyone wants now is great
communication; with email this is easier than ever. Beef up your report with
better and more up-to-date details and demonstrate your higher technical
ability. Don’t forget that you are in the service business and apply the
golden rule. - Jim Thompson
> You would be surprised how much of this article fits the inspection
industry. Me? I'm too damn slow and thorough. I've lost a lot
of agents but you know what, I put out a damn good report and I'm not going to
half ass it for anyone. Thanks. I enjoy your articles and your
attitude. - Gary Powell
> We at the American Guild of Appraisers OPEIU AFL-CIO contacted
everyone that we could regard the inflation of values and the pressure put on
appraisers to inflate. We spoke to Fannie Mae in direct meetings with them. We
spoke to major banks, Congressmen and Senators about inflated values and the
ethics of agents, mortgage bankers and banks. All turned a deaf ear to what we
had to say. This includes AFL-CIO pension fund administrators (who are
bankers hired by AFL-CIO). We also spoke to the FBI on a number of cases and
they didn't want to hear about it. Several turned into major scandals that
could have been prevented if the FBI would have done something. In a single
family sale, the bottom line is that greed prevails. Agents control the broker
in the deal by threatening to take the business somewhere else if the value
doesn't come in. The broker who works on commission also bows to the agent who
works on commission and they both control the appraiser’s living.
The honest appraiser doesn't receive anymore work and the appraiser who plays
ball gets the work. Thus, a pool of bad appraisers who come up with the value
that the agent, broker or banker wants are the only ones left. The broker/bank
sells the loan to one of the wholesale money people - Fannie, Freddie or a
private group. They have washed their hands and go about doing business as
usual. The American people are left holding the bag. (What’s new?)
- William Sentner, Past National President American
Guild of Appraisers OPEIU AFL-CIO
>>>Five
Suggestions for Honest Appraisals read
story
> I take exception to item #5. To say that an appraiser “always hits the
value” when referred by a real estate agent is off base. I agree there are
unethical real estate agents out there, just as there are unethical appraisers.
But most real estate agents who I work with would rather have a qualified
appraiser who knows the local market determine the value, regardless of sales
price. Besides, any qualified real estate agent should be able to re-negotiate a
missed value or sale price. - Tom Troll
> I hear many appraisers complain about this problem but rarely any solutions. Mr. Quenzer presents a solid and well-organized article on how to the address the problem. I would hope that our professional organizations would consider working on all or any of these items. - Betty Phifer
> The remark at the end of the first of "Five Suggestions for Honest Appraisals" is an unwarranted slam of hardworking volunteer review boards, state licensing boards and ethics and review and counseling committees across the country. I personally know most of the board members in my state and know how hard they work, that fines are levied and licenses revoked. I have served as an Assistant Regional Member for the Appraisal Institute Review and Counseling Committee and can assure you that referrals are taken very seriously and that panel members spend a great amount of time investigating referrals. - Brent Thompson
> You left out the single best way to foster honest appraisals - simply
patronize the honest appraisers, no matter if that means that some of the time
the loan amount will have to be adjusted or the loan will fall through. Every
time a bank or mortgage broker uses a “make the numbers appraiser” we pat
that appraiser on the back and say “good job, go out and do more like that!” It
is a vicious cycle that will never let the honest appraiser come out on top
until the circle is broken. -
> Let me give you a sure-fire way for practitioners to retain and
add clients. Follow the simple advice of Richard U. Ratcliff, PhD,
MAI, who said: “I urge that you have faith in the power of excellence. For
those who excel in professional knowledge and skill, there need be no concern
for competition, for excellence is itself a monopoly.”
- George K. Cox, MAI, SRA
>>> Identity Theft -
Appraiser Style read
story
> These Trainees should
be thrown in jail for fraud and never be given a state contractors license. -
John Hartig
> I am a state certified appraiser in the Miami-Dade county area who was a
victim of appraisal fraud last year. The culprit was my ex-employer who would
manually (not electronically) sign my name on appraisal reports which had
inflated prices or for lenders who did not accept his own reports because he was
black listed, or when the orders were generated by the mortgage company he
and his partner owned so it would not show the conflict of interest. I
immediately reported it to the state, provided the state with all the lenders I
received reports from and even made a police report.
I provided the state with the false documents I had obtained from the
actual lenders who had requested the appraisals from my ex employer’s firm.
The lenders/mortgage companies even had the appraisal request forms on
file further proving what firm was sent the appraisal request and the actual fax
number it was sent to. Some mortgage company employees who were involved
and some who were not aware of what was gong on came forward. His mortgage
company business partner came forward as well, only to get a letter at the end
from the state saying that the probable cause panel found that it did not
warrant the commencement of formal administrative action, and accordingly, the
petitioner dismissed the complaint and closed the case.
This letter was signed by the acting chief attorney for the division of real
estate. After receiving the letter I immediately called the state to speak with
this person to no avail. After a month of leaving messages explaining that
all I wanted to know is who I refer the bank/lenders to if I ever get a call
from a bank with a falsified report that may be in foreclosure or if I end up
getting sued by a firm who lost money due to the false reports sent out. I
ended up getting another letter in the mail from the same acting chief attorney
thanking me for my recent telephone communications to his office but
unfortunately he cannot discuss the particulars of the above case matter of
which I refer, as it is confidential per
> Read your article on signature fraud with great interest. As a newly minted
Trainee Appraiser I can see why I had so much trouble finding a Certified
Appraiser to review and sign my work. I am sure there are other problems that
could also occur to cause the Certified Appraiser much grief. Please let anyone
know to keep their digital signatures safe with a password to keep
unscrupulous trainees from using it.
If their digital signature is used without their permission it would not only be
considered fraud but forgery and should be reported to their State
Appraisal Board but also to their local law enforcement agency for
prosecution. Such unlawful action by anyone involved with appraisal work not
only has ramifications individual appraisers but our profession. I urge anyone
with such problems to report it to their appraisal Board and to the police or
District Attorney and follow up to make the guilty party pay for there unlawful
acts. - Bob Smith, Robert Smith Appraisals
> The first thing is to reduce the number of trainees per certified REA to
two (2). Next, require all sponsoring REAs to become licensed instructors.
Assign trainees to one (1) office where the sponsor is a full-time worker (you
can't train someone if you are at your other office one, two, three or more
counties away). Then, I would create a state-approved syllabus and require
reporting to the state. Finally, anyone who improperly uses (forges) another's
signature should be reported to the police; forgery is a crime, conviction might
prevent the offender from becoming licensed.
- Arthur T. Nickel, MBA
> Your recent articles about trainee misconduct and fraud were
interesting but not surprising.
What is likely occurring
is that very few if any state has a "trainee" category. Based on
how the appraisal regulations are written, each state's appraisal board only has
jurisdiction when a licensed or certified appraiser violates the law. What
appears to be happening is that the individual state appraisal boards are
concluding that their authority is to regulate licensed appraisers, and
regardless of what a trainee may or may not do, they are powerless to act since
they don't regulate "trainees."
The reality is that no
state law can prevent fraud or abuse by a trainee. However, it would be
very helpful and help minimize this problem, if each state had the proper
charter and tools to address this problem. As long as each state is
going to consider amending or improving their appraisal laws, there are a few
other problems that need addressed, including:
1. Addressing penalties
for individuals who prepare appraisals without the appropriate
licensing;
Current appraisal
licensing laws are not perfect but should not be abandoned. Rather, we
should assess their effectiveness and take steps to improve the laws in order to
serve the public interest.
My suggestions would be to
amend state laws to establish stiff criminal offenses for: 1) Individuals
who prepare an appraisal without the appropriate appraisal license:
2) Individuals who forge an appraiser's signature, or otherwise modify an
appraisal without the express written consent of the original licensed
appraiser; 3) Mortgage loan officers or agents who purposely attempt to
compromise the independence of an appraiser, including the threat of withholding
payment until a desired value is achieved. -
Thomas J. Inserra, SRA
> I have not had signature fraud in the appraisal business but did in a
previous line of work. I made a couple of different signatures that would tell
me if on that day or that week it was my signature. I might use the
digital signature "Margaret Sheppard” in certain instances, or
"Margaret A. Sheppard" or a third for real safety, "Margaret Ann
Sheppard." If a trainee leaves and you had been signing his/her
appraisals "Margaret Sheppard," for the next month or so, I would sign
"Margaret A. Sheppard" which they would not have on their computer. In
that way I would be able to substantiate that I did not sign the reports in
question because of the discrepancy in the signature for that time frame. -
Margaret Sheppard
> Call your local FBI office and get them involved. Unlike state
Appraisal Boards, the FBI has a budget for investigations. :-)
- Michael J Kaminski
> I’m wondering why the trainee had access to electronic signatures. I
employ one trainee (who is great) and he has access to nothing other than the
appraisal software itself. All signatures go though my computer only and while
he does have access to it, he has no codes for signatures. Poor security
measures seem to be the problem. My trainee signs the jobs he works on after we
review them together. However, I put the signatures on. No one else has access,
period. - Kevin McNamara
> I think we should do away with the trainee program, increase the education
hours and make them sit for the state exam. If they pass, they must have
E&O insurance for themselves and be allowed to do their own work as an
apprentice. They would be liable for their own reports, have someone to
help answer questions but the person would not be liable for their reports. If
they "choose" to not follow the rules and regulations, they will be
the one fined or removed from the Appraisers State Licensure Board.
The appraiser should not be the person who is liable for the trainee. You
cannot make people ethical. If they haven't learned ethics by the time they
enter a profession do you think they are going to change just because they are
supposed to follow rules? I don't know who thought up this program but as
licensed appraisers we are supposed to take on this problem; I don't think so.
For every problem there is a cause and effect. The cause would be that we have
swallowed the fact that someone at the Appraisal Board decided to institute
these trainee programs. The effect is that now appraisers who have taken on
the burden of the liability and a trainee who is unethical must pay the piper. While
I am sure most trainees out there are ethical, the question is still- do you
want the liability? Let the trainee take their exams, be liable, market
themselves and prove their strengths, just like we had to do. -Sharon Dunn
> Don't ever give them your signature password or change it when they
leave... and know who and where these people come from. Before their
final pay check, you need to see them delete your software off any and all
computers they may own.
> Those appraisers have missed the point. Forget the licensing board, call
the police and press charges. Forging someone's signature is a crime. Let
the district attorney and prosecutors work it out and let the trainee go to
jail. Then give interviews to the local paper so that the next wanna bees
know what happens when they screw up. - Chris Richardson
>
Unfortunately, I find the article accurate as to what some trainees is doing –
choosing income over professionalism. I find training appraisers commonly guilty
of similar negligent practices. I hear about or see cases where training
appraisers are having trainees, and in many cases non-licensed persons, doing
the inspection of the subject property but with the licensed appraiser signing
the report without having seen the subject. Seeking economic gain appears the
issue.
As
an instructor of USPAP and college level licensing courses, it is important to
impress the student that ethics is a significant professional requirement - to
know right from wrong and execute the responsibilities of the job properly and
ethically.
> Here in
> I have had several
trainees, I just don't give them my signature, I review then put both our
signatures on the report and send it to the lender. They don't even have
access to their own signature's codes. Because I know that this would
happen, I made sure I had the only access to all signatures. By the way, I
no longer use any trainees. I found myself working for them, rather the other
way around. They would push garbage reports at me and would not hear my
requirements for better reports, so I stopped using them. The industry is
too often about how fast and how cheap you can do it. Training anyone is just
plan silly to do when you’re trying to put out quality work first! - HR
>
I read your story. I just had a conversation with my apprentice on Monday. She
does and will keep a copy of each file she works on even if it's a hand written
copy. I also printed it out for the monthly meeting of appraisers at the local
board. - Otis Key
>
Relocation appraisals are one of the most challenging, yet fulfilling appraisal
assignments an appraiser can undertake. They are challenging because you will be
tested and evaluated on your ability to predict future events. Fulfilling,
because the terms of the assignment generally require you to really examine the
market, get paid enough to do a complete analysis and also because the
relocation company will generally follow up with you with a 'report card' of
your track record for accuracy.
Generally, relocation companies are not interested in market value. The purpose
of the appraisal is usually to develop an opinion of the 'Most Probable Sales
Price' under specific circumstances. The specific circumstances usually include
considering a marketing time not to exceed XX days.
Your opinion is developed by consideration of comparable sales and competitive
listings. Verification of data, especially terms of sale along with interior
features and decor is of the utmost importance. A good relationship with a
number of real estate brokers and salespersons is a plus. Finding the
neighborhood specialist will work in your favor, along with examination of
interior photos and virtual tours from your MLS.
It's common for the relocation company, at least in my market, to obtain at
least two independent appraisals. The opinions of Most Probable Sales Price must
fall within the company's accepted range. If they vary by too much or if there
are significant differences in gross living area calculations and market data,
you will be getting calls from them.
In my experience, the folks at relocation companies are real pros. They know
their business, they know appraisals and they want accuracy. I generally insist
on twice the amount of time they expect for turnaround (I'm a slow and thorough
appraiser) and usually I negotiate a fee about 25% to 30% more than they expect
to pay. Because of the time involved and the length of the appraisal report,
your minimum fee should be two-three times what you charge for a Fannie Mae
1004. Take a relocation appraisal course from one of the relocation companies or
the ERC. You need to become familiar with forecasting and
"neutralizing." - Francois K. Gregoire
>>> Leveraging AVM
Technology read
story
>
The authors have incorrectly stated that AVM offers support for a time
adjustment. This is false.
What
the AVM offers is evidence of price trends. This is very different from a time
adjustment in an appraisal of real estate. The correct way to do a time
adjustment for appraisal purposes is to look up recent sales of houses in the
subject neighborhood. Out of these recent sales, find the ones that also sold
over the past two years. Lookup the MLS listings for both sales and see what
contributions the latest seller has made to the property.
$240,000
with the seller paying for $40,000 in upgrades and remodeling, there is a zero
time adjustment. However, the AVM price trend would say 20%. If the first house
sold for $200,000 a year ago from a bank as a repo without being listed and the
next sale is for $212,000 with normal marketing and no work done to the house,
there would be a zero time adjustment. However, the AVM price trend would say
6%. All of these items take research and analysis. They can not be done with
public sales data.
> Fore the past month
or so, I've been a little bit more "lenient" with my saying no to
comp requests. Say, for instance, lender wants to know if the property is worth
$350,000. While we are on the phone I'll run a check of recent sales back to six
months. I'll get, say, 89 sales from $200,000 to $750,000. It only takes me
30-60 seconds. I'm finding out that more of these calls turn into orders which
didn’t used to be the case. In the end the value sought may or may not be what
they are looking for but now they now.
>>> Changing Fortunes: Appraising to
Consulting read
story
> I just read you
article in Working RE. You make a good point; answering the question raised may
not require a market value appraisal. Do you think there are enough
possibilities doing this type of consulting work for lenders? Enough to make
part of a living doing it? - Ron Borree
Response
from Author Don Swenson, MAI
Ron,
The problem we have with the lending community is that so many lenders are
programmed to request the old appraisal dogma (a market value appraisal) with
all the standard data, charts and language. Lenders need to be educated on the
concept of "scope of work" and also the underlying problem at hand.
For example: Why do I (a lender) need the old appraisal dogma when I am making a
loan on an income property where no transfer of ownership is involved? What I
need is a report that helps me fund a prudent loan on this property. And the
most important item is underwriting the stabilized NOI to determine the income
available for debt service. I can then derive a maximum mortgage loan that this
income supports. I may need other information also to accomplish my underwriting
requirements, but all this can be discussed and outlined in a "scope of
work" agreement between the lender and the consultant/appraiser. You can
help with this education when you talk to lenders.
> When
Bad Things Happen to Good Appraisers read
story
> I have noticed
a trend among certain groups (especially media or "news oriented"
groups) to predominantly report on NEGATIVE issues. I've come to refer
to these groups as "Merchants of Chaos." I don't know why this
negativity is so appealing, except as these people and groups make money by
pushing the "fear buttons" of normal, hard working, honest citizens;
those people who actually have REAL, actual products to exchange with the
society. These merchants of chaos have a vested interest in purveying
negative information. It could also be that (likely, in fact) these negative
media groups have no innate ability to produce a valid, exchangeable product.
And it's a real pity, too. Because in any field, predominantly, most
people are honest, hard-working and are doing a good job (or trying
to, in spite of the bad news and danger and imminent peril spooned them in their
dose of daily news).
Somehow,
these harbingers of bad news somewhere fail to see all the good done by people
and groups. Be careful that your publication does not fall into this
predominantly bad-news trap, as it appears to me to be dangerously close to
doing. I personally am becoming fatigued by reading from yours and other sources
about the "bad things that happen to good appraisers." How we
appraisers are in peril of being replaced by machines...how easy it is to get
sued by someone who doesn't like our work....how easily devastated our lives can
become for little reason, etc, etc. ad nauseum. If you can't appraise or don't
want to appraise, then don't. But don't infect my life and chosen career
with an incessant stream of near pointless niggling negativism.
- Bruce Dilgard
>
The thought occurs to me: 30 years paying over $1,000 per year of E&O
insurance premiums, would pay for the new roof, should the appraiser be found
to have been completely negligent in his duties as an appraiser - which I
sincerely doubt, having been supplied with the disclaimer argument. Which
leads me to believe that the premium is too high compared to the actuarial
risk - for good appraisers. Like car insurance: No incident experience,
lesser premium cost would equate. - Ted Norbert Jr. MAI/SRA
