OREP: Low cost, same-day E&O Insurance


Remember the slogan: A $500,000 loan decision shouldn’t take all day?  Is it heresy to suggest that it should?  

Reflections of a Life-Long Appraiser: Time  
by Frederick E. Hankins, III

One of the most important factors for the modern real estate appraiser to consider in the day-to-day operation of his/her business is the element of time. While it is not one of the 12 basic appraisal principles that we learned in our “Introduction to Real Estate Appraising” classes, it has a tremendous impact on virtually every aspect of our profession.

I have been a residential real estate appraiser all my professional life. It is the only job that I have had, and for the past 28 years I have seen many changes in the role that the element of time has played. We are currently experiencing an evolution, some might say a revolution, in the appraisal business and it is enlightening to view the crucial impact of time from a slightly different perspective.

Good Old Days?
We need go back less than 15 years to a day when we spent a lot of time typing reports, pasting pictures and maps on addendum pages, calling tax assessors for data, looking through MLS comparable data books, copying the finished reports, going to the Post Office to snail-mail the finished product or even hand-delivering them to the lender. Those who have entered our business in the last five years cannot comprehend the way we used to do things.

Before fax machines we would get an appraisal order called into the office and would have to take down the information manually. Before laser printers we would spend hours trying to line up the continuous forms for the dot matrix printers. Driving to the photo developing store for drop off and pickups was not considered to be a time waster as there was no alternative; it was what we did to complete the assignment.

Many of us did not regret the time we spent in the learning curve because in the end it saved us time. How much time do we really save? Some of the time saved at the photo lab is now spent at the office supply store buying ink cartridges; time saved at the post office is now spent on the phone with technical support trying to learn how to “minimize” images, and time saved by floor plan drawing programs is spent “gray scaling” exhibits before sending the reports via a dial up service. It appears that in many instances, time is not truly saved but merely re-allocated.

It can not be disputed, however, that virtually every aspect of real estate appraising has benefited by these innovations and breakthroughs, which in turn, benefit our clients and the general public. No one can deny the tremendous advantages of a finished report that is delivered to the end user in a matter of seconds via a high-speed connection, instead of the three or four days it used to take to go through the mail.

Gone are the days where an addendum request would force us to make a change, initial it in blue ink, put it in an envelope and mail it to an underwriter who would receive it several days later. Now we simply access our appraisal file, make the correction, save it as a pdf file and attach it to an email that takes about three seconds to appear on the reviewer’s computer screen. The competitive nature of the mortgage industry has placed such an emphasis on time that a shortened turn-around time is often crucial to lending institutions and the public and affects our client retention and livelihood as well.

Unintended Consequences
Although the tools of our trade have advanced to the point where they are actually saving us time, there are other issues which continue to plague us and sap our productivity. It is interesting to note that some of the time-saving “advancements” in some ways cost us more time than they save.

The proliferation of appraisal management companies makes it seem that large lenders are not able to deal with the appraisers on a one to one basis but instead must form a management company as a go-between. One of the benefits of these third parties was supposed to be to speed things up and save time for everyone. However, in many cases I have found the opposite to be true.

Here are some five examples:

1. Trying to get new contact information is a time waster, as we have to call our “state representative” or leave a message on a website, where someone has to call or email a processor who has to call or email a loan consultant, etc., etc, and then follow the chain back to the appraiser.

2. Every morning we have to update several different requests to not only schedule inspection dates but to report the actual time of day of the appointment. Ten years ago we would receive an order to do an appraisal and be trusted to accomplish the task from start to finish in a competent, professional and timely manner. Now we have to provide progress reports or status updates along the way, taking time away from actually doing the work on the report.

3. It seems that every lender/appraisal management company has its own underwriting modifications to the form reports. It may save time for them but this customization serves to make us spend more time rewording our standard reports just to please each individual underwriting preferences.

For instance, with one lender I can’t indicate that a single family home is “Detached”; it has to be “Det”; the house is not 15 years old, it is 1990 (the year built); there are not 2.5 bathrooms but 2F1H, and our invoice has to be either (pick one) a) sent with report, b) not sent with report, c) sent at same time as report but separately d) sent in a monthly invoice. Changing a standard form report to conform to arbitrary guidelines for various lenders within the same industry is counter productive and another time stealer.   Full Story   Subscribe  

Working RE Home