OREP/WRE Bifurcated Appraisal Survey
This survey is sponsored by OREP – Supporting Appraisers for over 18 years.
Appraisers…Save on your E&O insurance AND your CE in 2020!
OREP members now enjoy 14 hours of Approved Online Continuing Education, FREE! These courses are designed to improve your professional skills, lower your liability and help you protect your business. Appraisers must be currently insured with OREP at the time the class is begun and be enrolled in the OREP RPG/Risk Management Program. Click here for a list of Approved states.
Current OREP Members: Email firstname.lastname@example.org for enrollment instructions.
Click Here to Begin the Survey!
by Kenneth Bush
The author states that the consumer demands speed. No, the AMC’s and lenders demand speed as a way to promote their loan products. He even states that “appraisers need to find innovative ways to deliver our irreplaceable analysis and opinions with improved support and at lightning speeds”. Truly good analysis does not happen at lightening speeds. He also suggests the use of trainees to do inspections, which is fine. However, the appraiser will take a cut of that fee and then produce a report at a cut fee. Where’s the profit? It was difficult enough to keep trainees when they were being paid 50% of the full appraisal fee. Now we expect them to get into the business to get paid less and, when they get their license, can go on to do bifricated appraisals at a cut fee? There is not future for that appraiser. This purpose of this, in spite of all that Mr. Verrette states with his corporate buzz words, is to eventually end up with AVM’s as the principap appraisal product which means more profit for lenders and AMC’s.-
K Bush, you know this business very well. If they want better speed pay us more money on the fees. Make it worthwhile to the field appraiser and he will increase the speed. The advent of the AMC via the Frank Dodd bill has been the largest detriment to the residential appraisal business. Prior to all this legislation we were preparing a twelve page report now reports are twenty five plus pages. There are still items the technology can not help when talking about speed. The field inspection endless photos required for the subject property time spent driving sales and listings for original photos takes real time. As you state there is no real future in this business. I have 34 years invested and wish had got out ten years ago and went into selling of RE or into the mortgage industry. We will never make what we did prior to 2008.-
Their is no way this will improve or help anything. As a matter of fact, it will take longer, probably cost more and produce a product that is not worth the paper it is written on. I have looked at numerous house that look fine from the outside and are falling apart inside. A trained professional, with boots on the ground is the only correct way to determine value of Real Estate. I am sick and tired of the lending industry trying to cut the appraiser out of the process with low fees and ridiculous demands. Looks like too many did not learn anything from the lessons we were taught a few years ago. For Pete’s sake it has not been that many years ago this country faced financial ruin by all the greed, fraud and deception perpetrated by the same people that want to do it again. But wait, they all got bailed out by the tax payers. If Appraisers are allowed to do our job without pressure, ample time, and we can earn a decent living we will protect the economy from crashing again. We do serve a purpose.-
Someone else does all your research, you produce the report. You’re going to be held “legally” accountable for the information YOU put in this “report”. Complete this product at your own risk. I’ll pass.-
by JULIE HOWE
This process is a JOKE! Recently reviewed a bifurcacated product; subject was a village of Elk Rapids, MI, Antrim county. “inspector” was non licensed from Cadillac, MI Wexford County, appraiser was from Detroit, MI Wayne county, whom listed his address as the AMC address from Tonawanda, NY (wonder why). The sales he used were ALL located on Waterfrontage Elk Lake, with OMITTED water locations, NO views adjustments, NO water adjustments, and this was passed by underwriting with flying colors…. clearly a JOKE!-
by Dave Hay
Suggest everyone read all of the above comments-
by Wayne Stocker
In the end there will emerge another layer with larger Appraisal Companies getting all the orders from AMC’s and farming out the work using the bifurcated process to low paid stooges. Just another system to skim money off the fees paid by the Appraisers who do all the work and support the top heavy system. Then they wonder why no one wants to be an Appraiser anymore. Glad I retire soon. Good Luck-
by Ronald Medlin
If any licensed appraiser is considering these things, I recommend that they take a CE class about Bifurcated Appraisals… and then attend a USPAP class. That should clear their thoughts and help them see that these things are bad for the appraisal business and any appraiser signing off on them. in what world would an Appraiser put a license they worked so hard to attain at-risk for such a low fee and only to be the ‘insurance’ for a deal where you will be thrown under the bus! Senseless!-
by Michael Watson
And for those that post… It don’t mean jack if you are anonymous, this ain’t Facebook.-
by Michael Watson
A large AMC approached me to do the BiF’d as I like to refer to them. The deal is a licensed appraiser inspects and another licensed appraiser write the report. Both are paid $175 for their part. So this not a fee saving report for the AMC, lender or borrower. They swore that the inspection would be done by an appraiser. I have done enough review work to know that most licensed appraisers could not measure a box and get the correct square footage. I sure as hell am not placing my good name on a report that I do not have control over form start to finish. I am willing to bet my E & O insurance provider would like it that way to. Most E and O start with a faulty inspect of the subject and then the neighborhood. Most times fraud (the other “F” word) comes into play with the selection and use of inappropriate comparables. So then, if you only do inspections don’t think that Joe Blow Appraiser is going to use the correct and appropriate comparables. And will not rush through and use inappropriate comps to go with your accurate inspection. Either way, you could end up in court having to explain to a jury of numb numb housewives and retirees it wasn’t your fault you just did the inspection. This entire thing is a recipe for disaster. The irony is, currently an appraisal MUST contain photos of the comparables taken by the appraiser, MLS photos are prohibited. Really? One more of the FNMA rules that will need to be sidestepped. Oh and what about the perfect comparable, well maybe you don’t really know because the real estate agent was a fool and did not care to take a photo. Or better yet and I see this almost daily, the photos in the current listing are from 5-10 years ago right after the home was remodeled. Why not just bring back the old 704 driveby report if they want quick and dirty? Sorry to the kids under 35 you most likely never saw that 704 little jewel. Pull it up and you will see what I am referring to. If most of the data in the 1004UAD is going to be half-assed at best, then let us just use the most half-assed report ever made, the 704. No, really I am serious, because from where I stand FNMA has always looked at appraisers as a problem that must be dealt with. They are willing to throw out the baby with the bathwater in the name of fast turn times. So lets given what they want, form 704! …. oh, wait I am sorry. They want it both ways, more data with more comparables and less turn time, how stupid of me. At least that is where FHA and FNMA have driven the bus. Add to this the fact that over the past 30 years government entities that rule over all of us have made it almost impossible to become an appraiser. Who in their right mind would hire a trainee? Just to have them stay with you just long enough to learn just the minimum and be dangerous to themselves, then go out and become your competition. Now California has almost half as many appraisers as is did 12 years ago. Didn’t see that coming, yea right.-
We need to question the motives of anyone who sees bifurcated appraisals as efficient or credible. Given the corrupt history of FNMA, just the notion of this absurd valuation process should keep it in conservatorship. This is yet another attempt to control the valuation process. The consumer won’t stand a chance!-
by Thomas P Hubschman
I hope this latest appraisal incarnation goes the way of the dodo. The perpetrators of this nonsense have outdone themselves once again. I already have 3 well qualified staff members whom I implicitly trust to inspect any property and comps. The lenders’ fees for this are ridiculous and we will have no part with this newfangled crap. What a joke?-
by Bob Hullet
Until the kinks get worked out, I wonder if it won’t take longer to deliver a credible report. AMC’s shouldn’t get any of the appraisers fees.-
by Alan schorr
If we could start off the discussion Off honestly for once… There’s only one reason for this crap faster and cheaper.-
When will the survey close and the results of this survey be released and published?-
by Scot Berke
Great article, bravo. I will go into a different business rather than do bifurcated work!-
by Andrew Picarsic
If lenders want to waive Appraisals, do away with Inspections by the appraiser or a Trainee…then let them do it, but without the Federal Money(aka Public) backing the loan! Watch how fast this Burb It Up Report disappears literally over-night. If I as the Appraiser is the one causing the delay in loan closings?…then tell me why does the typical loan close so many days(4-10 or longer) after i have delivered the report? If Appraisers are slowing up the process so much, Why do AMC’s spend a week or more searching for the Cheapest Appraiser out there…Why..Hmmm Inquiring minds want to know.-
by Howard J McDermott
Very good and truthful article. You hit the nail on the head here. We must keep appraisers viable.-
My 2 cents (and then some)
NO, it is NOT a done deal and as a provider of E&O to appraisers, I am offended that you would publish an article saying that it is. Appraisers need to understand completely their requirements when performing these things….and many DON’T.
1. The professional Appraiser is the only party to a mortgage transaction that is unbiased and advocates for no one except the public.
2. The Appraiser’s primary function is one of protecting the public trust. Remove them from the lending equation, and you are putting the fox in charge of the hen house.
3. The issue with fees and turn times for appraisals is NOT about an “appraiser shortage”…it’s being caused by AMCs. They spend days, sometimes weeks shopping around for the cheapest appraiser, thereby causing delays in turn times.
4. AMCs engage the Appraiser for $200-$300 while charging $600-$700 to their client which is passed on to the borrower.
5. When TILA-RESPA was in the process and open for public comments, Appraisers tried to make everyone involved aware of the urgent need to separate and identify the actual Appraiser’s Fee from the AMC’s fees on the new closing documents, with NO LUCK. AMCs fought it tooth and nail. So the borrowing public remains CLUELESS.
6. You think that we had issues with the housing / lending / mortgage industry back before FIREAA…and as recently as 2007-2008, just hold on. Who honestly thinks allowing untrained, unregulated people into someone’s home is a good idea?
7. Even engaging brokers as “data collectors” is crazy. Brokers are famous for inaccurate MLS data and artificially inflating square footage and features of homes.I hate to say it, and I am actually a Realtor since 1988 (as well as an Appraiser) but I seriously question the reasoning of thinking that brokers are a good data source. Some do a good job…many do not.
8. Brokers regularly hire APPRAISERS to measure their listings. Who thinks brokers want to actually even do property data collection? Fees I’ve seen offered to brokers are $20-$25 per property.(yeah…you’ll get rich that way)
9. The truth is that the data collectors AMCs will be able to hire for the fees being offered, will not produce reliable, credible data. You can try to convince everyone that these collectors will be “virtually trained” and be given a data collection sheet to “check off” to be sure they gather what is needed at the property. How does any of that protect the public? How does that result in unbiased data or analysis? It doesn’t. Bifurcated appraisals are not ABOUT accurate, reliable data. They are about putting more money in the pocket’s of AMCs. (many owned by the Lenders!)
10. How does it make any sense that for years Lender’s have refused to allow Licensed, Supervised Appraiser Trainees to perform the inspection of the subject property, but now all of a sudden, will allow unregulated, unsupervised people to do “data collection”? The truth is that everyone understands how important the information gathered while at a subject property is…it is vital. It needs to be as accurate and unbiased as possible. THATS what an Appraiser is trained to do.
11. When we start hearing of data collectors “accidentlly” leaving a rear door unlocked at properties, only to have their friends return later to clean the place out, what then? Professional Appraisers go through an extensive education, training and licensing process far above anything a standard “background check” will provide.
12. If the data collector takes 50 photos of a property and only 25 are provided to the appraiser, who is in charge of filtering out which photos are used? The AMC? The Lender?
13. When market data and analysis is provided to the Appraiser via AVMs, does anyone honestly believe it’s completely unbiased? Computer generated data is easily manipulated. Garbage in = garbage out.
14. When an Appraiser, with 17 reciprocal state appraiser licenses, sits out in Texas doing nothing but bifurcated appraisals in coastal states he’s never worked in before, how can anyone say that’s a reliable, credible appraisal? Or say that that appraiser is geographically competent?
15. The Appraisal Foundation’s public statement about bifurcated appraisals being USPAP compliant is misleading. While bifurcated appraisals are not specifically prohibited under USPAP, it’s becoming apparent that many appraisers are not understanding their USPAP requirements as it relates to these things. Get ready state appraisal boards…you’re going to be SUPER BUSY with complaints about bifurcated reports. These things can not be compared to a regular “desktop appraisal” or a “drive-by appraisal”. We all know that.
16. The purpose of pushing these “products” is nothing more that an attempt at removing the ONE PERSON that keeps everybody honest…the Professional Independent Appraiser.
17. Everything about bifurcated appraisals leaves room for abuse at every turn. The housing industry plays an important, integral role in our nations overall economy. So this isn’t just about Appraisers being afraid of “change” or afraid they’ll be put out of business. Geeezz.
18. If this becomes “the norm”, get ready folks…we’re all in for a bumpy ride indeed.-
by Rob Review
I am a review appraiser for the largest lender in the US. I have reviewed a number of bifurcated reports and most of the time I recommend a product upgrade due to poorly selected comps or poorly collected data – think partly below grade being included in GLA. Most Realtors are not versed in FNMA lending guidelines as they relate to appraisal. I’m not sure if appraiser’s are being conservative in fear of liability. More often then not, the values are low and the borrower suffers. If me and most of fellow reviewers are recommending product upgrades, where’s the time saving? They are actually taking more time with an additional cost. Why isn’t anyone talking to the end users?-
by Patricia Lucas
Nailed it! I agree with each and every point you make.-
Excellent points. I pray that the “powers that be” read and PONDER your points. Bravo Zulu.-