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> The Appraiser Coach > AMC Guide > OREP E&O ★★★★★”They are knowledgeable, professional, and understand urgency.” – Joe Thweatt |
Am I Being Paranoid, or Is There Another Reason?
by Richard Hagar, SRA
Think about all the information local appraisers have assembled that state and federal governments don’t have but would like to have. 98 percent of the required data on the outgoing forms would help describe the property and relate to its value. Things like zoning, highest and best use, location, square footage, quality, condition, etc. are needed to help determine what the subject property is, what it would cost to build, and in the sales comparison approach, how it compares against other homes. Based on this basic information and market interactions, appraisers determine how the market adjusted for differences. In the UAD 3.6 version of the URAR there are numerous new fields for information that appraisers wouldn’t use to determine value. Is there some reason the GSEs need this additional new information? In the past, many appraisers failed to properly describe and classify properties. Their failures contributed to the losses lenders suffered in the 2007 wipeout and the reasons the Collateral Underwriter (CU) and the 1-6 classifications for quality and condition ratings exist today. The GSEs need more information than was previously supplied and as a result, on the URAR there are new fields for:• Accessibility features (ADA). • Type and width of the view. • If a sale: the subject’s list price, original listing date, contract date, days on the market, and the MLS listing number. • Special area for listing any personal property included in the price. • Special area to list and describe concessions paid by anyone associated with the sale and its impact on value. • Market data examples provided by Freddie Mac on the UAD 3.6 include graphs showing sales trends, median days on the market, absorption rates, and a breakdown of the year homes were built in the market area, etc. • How many pending sales and listings in the market area include:
– Lowest list price – Highest list price – Median list price
• 21 new questions specific to accessory dwelling units including—Is the ADU legally rentable? (That’s a risky legal question.)
By my count there are at least 521 boxes for unique information on the SFR version of the URAR and more if it’s located in a PUD Plat, more if the subject is a manufactured home, and far more if it’s a condominium or cooperative. (Does the HOA have any ongoing lawsuits?) They require this information because many appraisers have been skipping it in the past, resulting in incorrect descriptions and market values. So, get ready to start researching, listing and considering everything in your appraisals under the UAD 3.6 (you’re going to spend a lot of time doing this). While the GSEs indicate that you don’t have to fill out every box, you and I both know that if an AMC or bank reviewer sees an unanswered box, they will want it filled in, even if it’s meaningless to appraisers or value. The Collateral Underwriter will easily spot missing information and give the appraisal acceptance a HARD STOP. Gee, won’t that make lenders happy with your work despite what the GSEs state?(story continues below)
(story continues)
Moving forward, there are information grabs that start to trigger paranoia but still must be included as part of the URAR:
• What is the height of the front door threshold above the ground? • Is the primary heating system located below grade? • Identify the ceiling type in every room. They have nine+ different types listed including flat, vaulted, tray, coffered, barrel, etc. • Ceiling height and condition. • When requested by the client, the total square footage of the windows for manufactured homes (Some lenders may also ask for this for site-built homes). • When specifically requested by a client, the structure’s volume, including finished and unfinished space for outbuildings. • Appraisers must now segregate the property’s square footage into 10 different categories including converted, “non-continuous finished” and “finished nonstandard” (These are listed and explained in my webinar titled FNMA, ANSI and UAD 3.6 available at WorkingRE.com. I strongly suggest taking it before you provide any UAD 3.6 appraisals). • Photographs of every room and every component that impacts value in the cost, income, and sales comparison approaches (good and bad). • Many clients will avoid appraisers and use Property Data Collectors (PDC). The PDCs use high quality scanning devices (including iPhone 14+) to scan every room in the house. These scans produce 4k images of EVERYTHING in the house which will then be sent to an overseas company, converted into a floor plan, with the results sent to the appraiser. Some software can determine the make, model, and age of the appliances. (Hey, nice gun-rack on the wall in your rec. room and is that large void space behind the wall a hidden saferoom or just a safe?) Of course, you know that the data will only be provided to the appraiser and deleted after delivery…cough…cough.
So, when was the last time an appraiser adjusted for the height of the front door above grade, the SF of windows, the heating system being in the basement or the volume, not square footage; VOLUME, of an outbuilding? And why would an appraiser need photographs of EVERY room? (Cute pink pony wallpaper in your child’s room.) I know this is startling, however my examples are only part of the information they obtain or require. The GSEs’ computers review 15,000–21,000 appraisals a day. (15,000 x 260 workdays a year x 5 years = a whole lota data) The GSEs have and will continue to add to the largest assemblage of house photos, including interiors, that has ever been assembled in the history of the world. All the 521+ fields of information, plus photographs, will be delivered to the GSEs, you know the ones owned by the Federal Government. I wonder what they could do with that. Could the information be used to estimate your wealth, determine your political stance or tweak your taxes? Boy wouldn’t the local county tax assessor love that interior data? And why would there be a push to sell FNMA and Freddie Mac, with all that data, to a private company, of course after the government has that data about your house saved in a central database? Look up last year’s proposed law deceptively called the Appraisal Modernization Act S. 2322 and who sponsored it. While I’m trying to keep you safe out there, maybe I’m being paranoid. Or is there just a chill running down my spine? About the Author Richard Hagar, SRA, is an educator, author and owner of a busy appraisal office in the state of Washington. Hagar now offers his legendary adjustments course for CE credit in 48 states through OREPEducation.org. The 7-hour online CE course “How to Support and Prove Your Adjustments” shows appraisers proven methods for supporting adjustments. OREP Members save on this approved coursework. Sign up today at OREPEducation.org. Reach Richard Hagar via email at rh@richardhagar.com.
by Jim
The form is set up for property data collectors, not appraisers. It is set up for the data collectors to scan the home, then F & F will semi-automate the appraisal.
-by Mariateresa Canosa
I am not doing this. It’s time to semi-retire – just a little non-lender work. After 48 years, I have put up with enough abuse. No more! They can take 3.6 & shove it where the sun doesn’t shine.
-by Ken
There is a lot to unpack here, I will touch on some. If a field is not required, then it will not appear. So, AMC and reviewers asking for a blank to be filled in is not accurate. Surveys were conducted, and yes even with appraisers and they wanted a better way of reporting which meant the current structure was not meeting their needs. Lenders felt they could not find information easily enough to make a good decision; this is what led to 3.6. As for adjusting for front door elevation, this helps with back-end risk, but I would say that it’s a point worth considering especially in areas prone to flooding. This goes for the core heater system; this helps understand and estimate the cost of repair in case of a flood. These are indicators meant to evaluate the asset in case of disaster. In coastal areas homes on stilts are more than likely more desirable, which the two data points above lean into. Because of the expansion of ADU Information Fannie Mae has expanded its lending guidelines, this helps liquidity. This is a good thing for lending, which is good for appraisers. Better transparency into the collateral is a good thing. It feels like doom and gloom but it’s not. 20 years ago, AVMs were replacing this profession, they supplemented, they didn’t replace.
-by Michael
The 3.6 UAD is making apraisal writing much easier and faster. As for all the detail, there is not going to be any adjustments for oven or tallness of the entrance door but just an fyi to the lender. Don’t need data processor to create 3D, if lender wants could ask for video of everything instead of photo. In regards to blaming past crash on appraisers, speechless!
-by Doug
I decided to hang it up. I’ve been doing this for nearly 30 years (now basically retired). I didn’t mind doing the 2.6. But right now it is not financially worth it to be part-time after I consider expenses, taxes, etc. Cost/Benefit is just not there. I have enough savings to do just fine. But the 3.6 was definitely a factor to hang it up. This is going to be a disaster come Nov. 2. I just don’t want to be part of all that stress. I also think the profession is on a downward trajectory. It started with the HVCC and the AMC disaster syphoning away our living. The irony is they are going to let people who know nothing about construction and real estate be inspectors. But what if the property has encroachments, doesn’t meet zoning, violates building codes, has unpermitted additions, etc etc? Will that PDC capture that? Or what about highest and best use issues? Will the PDC capture that? So to all of you who are young and a long way from retirement, good luck. Be flexible and be ready to find a different profession. I did that when I became an appraiser in mid-life. Learn a new skill. Heck, become an electrician!!!
-by Jim Anderson
As Joseph Heller wrote, “Just because you’re paranoid doesn’t mean they aren’t after you.”
Who honestly believes AMCs or lenders have appraisers’ best interests at heart?
I belong to an appraiser AI group, and many members are talking about how much of the appraisal process they have automated. I understand why that is appealing in the short term, but I think it bodes poorly for the long-term future of the profession.
I’m sure lenders would be thrilled to hire a property data collector, feed the collected information into an AI system, and have it determine the value of the property. Sooner or later, a bot may even take over the property data collector’s portion of the assignment.
Remember, the value conclusion does not necessarily have to be good. It only has to be good enough for the lender’s purposes.
With enough data, testing, and incremental improvements, the process may eventually be refined to the point where the end product is superior to what any individual appraiser can provide. The question is whether appraisers are using AI as a tool, or helping build the system that will ultimately replace them.
-by Talon Redding
This strikes a major chord and it is by far my greatest concern with new UAD format (and any centralization of data for that matter). The timing of all of this proposed and unprecedented data collection under the guise of “risk assessment” and the privatization of the largest secondary mortgage holders is highly suspicious. I do not believe and act on conspiracy theories, but I do have them, and people need to be more vocal concerning invasion of privacy and individual liberties, especially in their own homes.
-by waynelovett21@gmail.com
These exact thoughts have ran through my appraisal mind many times
-Wayne Lovett.
by David Buckley
From what i have seen from software providers, their work is just barely out of the “beta” stage and is being presented and promoted by non-appraiser techies. This software is NOT going to get off the ground in a meaningful way this year. It is not about how much market data, it is about the BEST market data which too often is very limited.
-by Laura Cromer
Appraisers were not to blame for the housing market crash in 2007. Lenders were to blame. They gave loans to every buyer disregarding their own lending guidelines. They allowed concessions that created a misleading market. They were bailed out by the government while appraisers were left to take the blame. If an appraiser had the comps to support a sale then that is what we did. Most of the appraisers I knew saw what was happening but were powerless to stop it. May be there were a few bad appraisals but I can honestly say we just did our jobs and were scapegoated and are still paying the price.
-by Pray Hard
Exactly.
-by Danny
Stated income loans!!!
-What could go wrong?
by trish Wright
appreciate the info. But in my opinion, the appraisers have done their job. It is the real estate agents who have not done theirs. They don’t measure the homes , don’t know how to measure, don’t enter data correctly, have price fixed their commission, don’t show houses don’t provide specifics about features, mislabeled basements garages, carport , and mislead the public. they have helped National builders inflated the housing market since 2022. So, how does these new requirements help with any of that. I read between the lines that AI will be used for market values and the inflated prices will continue and real appraisers are out of business.
We are seeing the effects of lender making appraisers home inspector now. They want to know the cost to repair, when we don’t know what is needed. We are seeing real estate agents not properly entering data or even understand the data.
-Bottom line – we research buyer behavior and what they pay for houses based on features of the house. This new 3.6 is far from any of that. This is the result of appraisers being accused of racist, incompetence, etc, when all we do is review sales that have sold and come up with an opinion of what the house is worth. I hope it is not too late to stop this government fiasco.
by Randall Thomas
The unspoken truth is they want you to be an unlicensed home inspector. Has anybody figured the extra time this will take? All I hear is how much faster this will be. How can this possibly be faster? I’ve been doing this for 41 years, those were the days when the gov’t wasn’t involved. Data will show foreclosure rates were reasonably similar then as now. Can someone tell me why anybody (young) would even want to get into this industry? Sorry to be so negative but somebody has sucked the enjoyment of this so called professional.
-by RST
AMEN! I took a 7 hr course on the 3.6 UAD yesterday and was pissed off at the ridiculous changes that do not assist in coming up with an estimated value! It’s a nitpicking abuse of us Appraisers! I’m going to focus on doing private appraisals instead of purchases/refis when this debacle goes into effect! Who decided to make these unnecessary changes anyway?? They are the ones that are paranoid! Time to BOYCOTT!
-by Pattee Spott
I am doing so little lender work, and since I have enough private appraisals, I do not plan on doing ANY 3.6 work. The AMC’s have been sending out messages asking who’s ready for 3.6 and my responses “hell no”. Also, they want to know what we’re going to charge to do 3.6. From what I’ve been told you would have to charge them more, which is not what they want to hear and they’re not wanting to pay my fees right now anyway so, good riddance to my AMC and lender clients. I wait 45 days for payments from lenders/AMC’s right now. My private clients pay at the time of the inspection or shortly thereafter. This is a no-brainer after 35 years in the profession!
-by Pray Hard
Faster? Well, they’re lying. It’s just more anti-appraiser propaganda and more evidence of their disdain for appraisers.
-by Jerry Allegro
Not going to do them.
-by RST
Me either!
-by Pray Hard
Likewise.
-by Deborah M. Kirby Richter, SRA
I have been thinking the exact same thing about UAD 3.6. Someone is going to make a lot of money selling this data. In addition, and most important, I think consumers need to be aware of this. This is very invasive to the homeowner and they need to be informed.
-by Pray Hard
I’ve not done an appraisal in over a year and I don’t plan to ever do another. Good luck to you guys and gals who try to carry on. I put pencil to it about a year ago and if they’re not paying you at least $650 to $950 for a typical appraisal, you are simply going broke. At the $350 that most AMC’s don’t want to pay, you are only making about $150 in year- 2000 dollars. I’m certain that this new 3.6 thing would entail at least another $300 per appraisal so that you could actually make a living/stay in business … maybe.
-I will say that there are now some very good, very expensive 3D scanners that might make your work a little easier. Leica makes some that range from about $5K to about $20K. There’s also this new thing called Moasure (I think it’s made in the UK) that would make measuring concrete site work, pools, etc., much more accurate and quicker. I think it pushes about $1K. And frankly, I don’t trust ANY property data collector except me, considering that I’ve spent decades and 1,600 hours of property inspection education from the best engineering company on the planet. Remember, if you get a junk property data collector and you use the bad data that YOU are still responsible for that other person’s stupidity. Anyway, best wishes to all of you. It was an honor being in your company.
by Angie Miller
Exactly!
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