Good News for Appraisers
by David Brauner, Editor
Just as the seasons turn, so do markets and perceptions. There seems to be good news for (ethical) appraisers this season. Many I spoke with at the recent Appraisal Today show in San Francisco say fear of fraud is driving lenders away from number hitters and toward appraisers known for professionalism and integrity. For many, business is returning.
Brad Ellis, Chief Appraiser/Valuation Quality Assurance at Indy Mac Bank put it this way, “Better appraisers may be seeing a return to grace as more and more (bad) appraisers are added to ‘exclusionary lists’ due to questionable appraisals. The list at Indy Mac is getting larger and larger.”
Advice we heard more than once: become a local expert; use technology to increase productivity, expand services, increase education and training; sell what you know, not how fast or how cheaply you can complete a report. New areas to explore: economic forecasting, CPA and attorney-driven consulting work (divorces and litigation). Need ideas for reaching out to Realtors? Try creating a seminar for agents on local economic trends or explaining the new Fannie forms. Seminars are a good way to establish yourself as a local expert.
Pressure, Trainees, Taxes
Lender pressure is still foremost on the minds of appraisers: House Bill 1295, now being considered, makes pressuring an appraiser for a value a violation of federal law. We’ll keep you informed of the progress of the Bill. Other issues of concern: the new Fannie Forms, fear of fraud and identify theft (most appraisers have had a brush with them by now or know someone who has), appraisal mills and the fast-buck appraisers whose churn-and-burn practices make it hard for those who play by the rules to compete.
The use and misuse of trainees continues to be a concern. Frustrated trainees complain that they can’t find mentors willing to teach; seasoned appraisers explain why they can’t or won’t help. Several rose to say how rewarding mentoring is: teaching, they say, is always an education. (They did caution, however, that they will not pick up a trainee if it looks like the market is headed for a slow down.) Several appraisers report that at least two large lenders no longer accept appraisals that trainees have worked on, creating one more hurdle for mentors and newbies to clear.
One speaker proclaimed that appraisals are still the gold standard and that lenders aren’t using AVMs for first mortgages not because they don’t want to or can’t, but because rating companies remain wary of AVMs and will charge lenders a premium if use them. It was theorized also that refis may continue to be strong even as interest rates rise because vast numbers of borrowers with interest-only adjustable loans may scramble to lock in a fixed rate.
Several appraisers share that in California they see the Employment Development Department (tax collectors) targeting the appraisal industry in certain areas looking for shops with independent contractors. The EDD, allegedly, believes that trainees are employees, not contractors, and they have begun knocking on doors to collect unpaid payroll and other taxes. Always a dicey subject for small businesses, IRS guidelines concerning employees and contractors are more fully explored here:
Employee or Contractor? You (Don’t) Make the Call – IRS Does
Theirs is the only opinion that counts. The consequences are back taxes owed that can easily bankrupt a small business. Consider yourself warned.