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>>>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

More Comments of all Stripes
> 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 Florida ) for her to sign the appraisal, and I welcome it. So much of the business can be learned from conversation while at a property or on the way to or back. – Bob Morris

> I enjoyed the comments from both mentors and trainees. In New York State , the mentor only has to accompany the trainee until they feel the trainee is proficient enough to go out on their own.  Unfortunately that leaves quite a bit of leeway for people to send out unqualified trainees to do work.  It is because of the time and expense involved in training that no one wants to train.  Many people who try to train get burned by the employee (the mentor put in time and effort and the trainee wasn’t up to the job or they left for another firm the minute they actually started to make you some money).  I teach at in Flushing , New York .  My students always offer to pay me to take them out on assignments. They beg for us to offer practical training courses. I would love to take these enthusiastic bright individuals out into the real world to teach them appraising. I agree that many times “bad mentors” are just a way into the business.  That’s where the proper education helps the trainee “train” themselves and they can recognize that their employer isn’t giving them the support they should.  I think it takes two months of good mentoring before a trainee is ready to start doing appraisals on their own.

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

> After reading the responses on the trainee article, I felt that I had to put in my 2 cents. I started off working for a bank as an appraiser trainee. My training lasted for about a year until I was given the title of staff appraiser. After a few years I went to work for an appraisal company. Then after a few years I started my appraisal business with a partner. It took me five years before I had my own business. This is the way most professions work. Why is it that trainees expect to start working right off the bat in a full responsibility position? It is as if the 2,000 hour requirement is a finish line to training. Trainees should start off at banks, perfect their skills and be promoted when their supervisors feel they are qualified. Guidelines can be taught from a book but learning the process to identify market driven comparable adjustments for the sales analysis takes time and practice. The industry does not need a lot new appraisers, so the bank entry-level positions should suffice appraiser needs. – Shelley St. Amand

> 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. At that time, we did not verify anything; just ran through the house, grabbed three sales from a comp book, made bench-mark adjustments and went on to the next house. Today, 30-years later, I cannot do one report in an eight-hour day if I do the due diligence that certification to USPAP and good appraisal procedures require. So, to read about trainees doing 5/day is shocking. No wonder they are busy, they are creating fake appraisals to suit the needs of loan production clients. Take a look at the non-lending format the Appraisal Institute has come up with for homes. It forces the appraiser to address issues, and all three approaches to value. We actually have used a format like this since 1980 to train appraisers. Think about how much time it would take to address the issues the form raises when filling out a URAR. There is an army out there who does not know that what they do is substandard, below the level of research or analysis they are certifying to. This class of appraiser is what I call Functionally Illiterate. Most have never taken a meaningful appraisal course. Many got their training online or through a shake-n-bake schools. What they also do not know is that when they are sued, civil or criminal, the standards are what are used against them. The only reason for USPAP is to have a standard for appraisers to use. It helps judges and juries make decisions. – Steve Smith

> One solution would be for trainees to pay their mentor. 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 working 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. It was my fault that I kept him as long as I did but it was not my fault that he could not learn. 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 to a mentor would help ease the mentor’s mind when it comes to resources that can’t cover a trainee who isn’t producing. It would at least pay for gas money, insurance, or some other light overhead expenses. – Greg Hartley

> I am a certified residential appraiser with a company in Berks County , PA. 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 of many “supervisory appraisers” who let the trainees go on assignments themselves and just sign off on their work. We also know of several fathers and mothers that are certified appraisers who sign the appraisals for their daughters and sons who never even viewed the property and completed the assignment; thus making them certified appraisers who are not qualified. A big problem is that the current certified appraisers are afraid of training their future competition. Out of four trainees in our office, only one ventured out on her own after getting certified. The rest of us feel more 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 I owe some loyalty and I think the majority of trainees would feel some kind of loyalty to the person who mentored them until they got certified, but of course not all.

>>> 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 California . I am not familiar with the Tucson  market. The borrower tells me the house is worth $500,000 but the AVM doesn’t show any comps near that. Can you pull some comps for that value?”

Faxes titled “Comp Check/Appraisal Order” usually instruct me to verify value before proceeding with the assignment. Discussions with other appraisers in Tucson show that many of the faxed comp checks are broadcast to as many appraisers as possible. – Ricardo Small

> 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: “Well (Jim, Jane, whomever) as I’m sure you’ve heard by now, we can no longer to do “Comp Checks” as we knew them in the past (and of course neither one of us wants to do anything that puts our license in jeopardy, do we?).

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

>>> Five Suggestions for Honest Appraisals (Part II – fraud and more) –  read story

> 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

> While I heartily agree with most of Doug Quezner’s points (Five Suggestions for Honest Appraisals, May 2005), his stated reluctance to report fraudulent or misleading appraisals to regulatory authorities is misguided. In fairness, I, too, used to be hesitant to report obviously fraudulent or misleading appraisals that I had reviewed until my State regulatory office readily assured me that I would not be violating the confidentiality rule by doing so. In my opinion, blowing the whistle on appraisers who turn in outrageously inflated values should be considered a duty and a responsibility, and honest appraisers and reviewers should never fear accusations of attempting “to eliminate the competition” by advising State authorities in cases of obvious fraud. I don’t consider dishonest appraisers to be my “competitors”, and neither should Mr. Brauner or any other appraiser who adheres to the standards and rules of the field.  Ultimately, our tolerance of such abuse is at the cost of our own, collective professional credibility.  – Don Fiore

> We always talk about unscrupulous or incompetent appraisers and that certainly is a major problem. Very rarely, however, does anyone talk about the underlying and very much contributing factor: the client!  For years we have been pressured to do reports at an ever-increasing rate at an ever decreasing fee.  For example, we work with a mix of AMCs, banks and credit unions.  We choose not to actively pursue mortgage brokers in my areas of coverage for various reasons (which is another article). Just over a week ago we received an order from one of our AMCs. They have a pricing schedule that is lower than many of the other clients we work for. We made this schedule for them, at their request, because they also service another client that we are targeting as well.  So, they recently connected with another member of our client base.  An order came from the AMC through this client.  We would have gotten the order directly from the client in the normal course of business and at a higher fee. However, since it came from the AMC, it was at a lower fee.

The AMC is selling the client convenience but they are not asking the client to pay for the convenience, as most of us do in the normal world. Instead, they are going to the service provider and asking them to pay the AMC by working for a lower fee. The last time I checked, I was in business to make a profit. So, if the fee keeps decreasing, appraisers are forced to cut corners in order to make any profit. I know for a fact that many appraisers in my area do not take the time to drive and look at the comparables. They copy and paste photos from the MLS and rely solely on what the MLS listing sheets say.

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

> I am writing this letter probably as one of my last efforts in the real estate appraisal business. I have been involved in real estate for over thirty years now, the last 20+ years in the capacity of an appraiser. Health is the culprit in my case. I’ve read several articles over the years concerning problems in the appraisal industry, and believe it or not, other professions experience some of the same problems. The difference with appraisers is that they are voicing their grievances in a manor that is casting a huge shadow over the entire industry. Articles in you magazine, such as “Five Suggestions” and “Five Step Program for Honest Appraisers,” and in other publications, suggest that this profession is imploding. While I’ll admit that there are problems in this profession, do we really need to air our dirty laundry in the public’s eye? I wonder what an attorney would do with some of these articles if he had an appraiser in an adversary position in court on the stand?

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 Manhattan Bank or Chase Home Finance; not Mr. Loan Officer.

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 read Phil’s article in Working RE Online and think it carries a valuable message that should be heard by all of Oregon ’s licensed and/or certified appraisers. As such, I am requesting permission to reprint the article in the newsletter our agency publishes twice a year. I would be happy to give proper acknowledgement to Phil and Working RE magazine. – Bob Keith, Administrator Oregon Appraiser Certification & Licensure Board

> I am an independent fee appraiser working four large, sparsely populated counties in Eastern Oregon . There aren’t many appraisers out here. And as the refi market fades so do prospects for work. Rather than take the ‘all bets are off’ approach to work, I chose a different path. I upgraded my software package figuring that will cost me the profit on two appraisals a month and am e-mailing clients to stress continued integrity and more services. If someone wants a ‘meet value’ appraisal, I will happily give them the names of all four other appraisers in the area.

There are still lenders who want to know what the value of a property is and they are who I want to work with. Those “meet value” appraisals are the ones who will come back to bite you. Meeting value usually means the client is in money trouble. Quite often these properties soon go on the market with the inflated appraisal value as the asking price. You don’t need me to tell you what happens next. Thanks. Keep up the good work.  – Dave Mead

> 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. – Lawrence G. LaCroix, SRA

> 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 Florida statues. At no point did I leave a message asking to talk about the particulars in the case. All I wanted to know was what I do in the event that one of these files comes back to me with an attorney letter telling me I’m being sued since now the state sees no merit and has dismissed the case. What we need to do is unite as a group and voice our concerns. It’s difficult (not impossible) for one person to make changes in the system, but as a group standing together we can definitely be heard and we will definitely be listened to and changes at the end will be made. If we allow for these instances to go on we the victims will not only allow our reputations to be damaged but our livelihoods as well. – Alex in Fla.

> Only one thing to do: hire an attorney and press civil charges. In New York , in order to get an action started, the party pressing charges is held liable for ANY wrong-doing if the defending party (alleged wrong-doer) is found innocent. The other thing is to NOT hire trainees. I am now a one person shop after having 15 appraisers. There was too much responsibility for too little economic gain.  – Marc Dattoma, IFA

> Your article on trainee fraud only touches the tip of the iceberg.  Increasingly, the producer’s of high quality appraisals are being assaulted by hacks who will work for peanuts and produce “appraisals” that do nothing but further damage the credibility of our profession.  As noted in your article, most appear to be new to the profession and seem to be in it only for a quick buck. We have seen all manner of incompetence or fraud ranging from no adjustments, fake or irrelevant comps, across the board, six-figure, unsupported adjustments with final values that are hundreds of thousands of dollars above the highest sale, 3,000 square foot comps compared to a 1,500 square foot subject, etc. We pay handsome fees to an OREA who won’t consider complaints or even take e-mails but appears only interested in collecting more fees from anyone able to sign a check.  Finally, we are forced to work for mortgage brokers, borrowers and banks whose attitude ever increasingly seems to be: hit the number, fast and cheap or go away. There appears to be little that can be done. Hopefully, lenders will get a clue as values stabilize or decline, but I’m not holding my breath.  – John Streb

> 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. When appraisal licensing was first adopted, there was considerable debate about the federal government being too over-reaching and thus the federal appraisal licensing standards that were established were designed to be MINIMUM standards and the individual states had the authority to establish additional standards and regulations. One of the key gaps in our existing appraisal licensing laws is that there is no “trainee” licensing category.  In Arizona , when appraisal licensing was first proposed, I spoke at the public hearing and recommended that our state add a “trainee” category.  My logic was that if there was no “trainee” category, then the state appraisal board would be powerless to take any action against a trainee who violated appraisal laws.  Our state and many other states decided not to have a trainee category, and now I suspect they regret that decision.

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;
2. Addressing penalties for individuals who forge a signature or who inappropriately modify an appraisal without the express written consent of the original licensed appraiser;
3. Addressing penalties for mortgage loan officers who attempt to improperly influence the independence of an appraiser or to improperly influence the outcome of the value estimate, including the threat of withholding payment until a desired value is achieved.

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. It would be helpful if these issues could be addressed at the federal level in Congress. However, I suspect that might not happen and thus each state should be working to establish their own laws to address this problem.

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

> Early this year, the appraisal section of the Office of Banks and Real Estate (BORE) of Illinois sent all licensed appraisers an e-mail on this issue. The office also initiated a policy of not publishing the license numbers of certified appraisers on its web site. That is one policy that all certifying/licensing boards of each state should take to eliminate one potential source of illegal appraisal activity.  – Paul M. Bauer

> 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. – Bob Lawrence, SRA, SRPA, CGA

> 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 at the local college I am told of practices such as signing reports while not having seen the house; signing as Supervisory Appraiser, marking DID inspect when they didn’t inspect also is common. Failing to indicate professional assistance in the report, finding comparables to support the needed value when market data more similar to subject is overlooked. Not indicating accurate description of the condition of a property wherein characteristics reflect deferred maintenance conditions. Overlooking off site negatives such as a power station next to property which negatively impacts appeal and many more!

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. Unfortunately many experienced appraisers and newer appraisers learning how to do an appraisal, indicate wanting the economic rewards of being an appraiser but fail to adhere to the professional responsibilities of the appraisal profession. Being an appraiser and working in the business of appraising requires ethical conduct. Competency can be taught but ethical conduct cannot be. It comes from within the individual to understand what should and should not be, done.

Abuses by trainees are the reason why many lenders are no longer accepting reports signed by trainees. I consider a lot of the problems the fault of Supervisory Appraisers who fail to execute responsible oversight of the trainee working for them. Additionally, I find that loan officers do not care as they too want to reap the economic benefits of the loan. Many loan officers press for value and ask appraisers not to include negative property conditions. I have personally been involved with loan officers when they are notified that an appraisal is signed by an appraiser who never saw the house and they don’t care about this. They just want to close the loan.

Problems created by the appraiser and lenders become known only after the fact. Lenders have loaned the money, borrowers have what they want, loan officers have been paid and then the problem is discovered. Years may have passed when the loan is found to be faulty. In many cases the loan then becomes a liability on the lender who holds it (most often not the originating lender). On investigation the poor practices are discovered. The originating lender and loan officer got paid. Maybe by the time the problem is discovered the loan officer is no longer in the business or at least not with the originating lender. The appraiser needs to be a professional! Ethics and competency must be recognized for their importance and ethical practices must be maintained! How can appraising be recognized as a profession when there are so many individuals doing what they are doing?  We need stronger and more timely investigations by licensing agencies about complaints by users of our services.  We need to police ourselves by reporting to the appropriate governmental agencies the practices we learn about or see. Only through diligence and responsible and ethical conduct can the “profession” of appraising be maintained. We must look to ourselves to lead the way. Each appraiser must accept the responsibility to do the job in a manner which is correct. Apply the skills; exhibit ethical conduct. Do not allow clients to have you do things which violate the requirements and spirit of the law. – Barry Cleverdon

> Here in Illinois mortgage fraud is running rampant as well. About 20% of the cases that are now coming to our board are fraudulent appraisals – actually forgeries. What is actually happening is that individuals (crooks) are going to the ASC lists and taking the names and license numbers of practicing appraisers and then going out and writing appraisals in their names.  Our department has actually (we think) identified the perpetrators of these forgeries but there isn’t anything we can do about them. The department only has power over appraisers – not forgers. Unfortunately the AG’s office and the Feds appear to have too much “other stuff” on their plates and have not gone after these people – the world isn’t a perfect place. It’s my guess that unless the lenders (those who have been losing money) are not upset and turn in the appraisers, nothing is going to happen. – Bob Gorman

> 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

>>> Keeping Track of Work Files  read story

> 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: What’s Not to Like?  read story

> I read your excerpt of relocation appraisals and I couldn’t agree more.  I was wondering if you had some insights into getting orders once you are on the list?  – Michael J Geis JD, CREA, CRA

> 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. If the first house sold for $200,000 a year ago and the current sale is for $211,000 with the seller paying $11,000 in points, there was a zero time adjustment. However, the AVM price trend would be say 5.5%. If the first house sold for $200,000 a year ago and the current sale is

$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. I disagree with the author’s conclusion that, “The AVM valuation may be considered a ‘new’ valuation method, a separate unbiased opinion of just additional support for the appraised value.”  It is just a mathematical model that predicts a sales price with a certain degree of certainty from a large group of sales. It should not be used to value an individual property or to support a time adjustment. – Marcos (Marc) E. Campos , MAI, SRA

>>> Comp Checks: Turning Requests into Orders read story

> The requests I get have taken on a new twist. Phone calls now start with, “I ran this through an AVM and don’t like the results. Can you get $xxx,xxx?” My typical answer is, “I have no idea what it is worth until I’ve actually done the research and analysis. That is what I get paid to do. You can fax me an appraisal request but I can’t guarantee a number.”  They usually hang up.  Once in a while the calls do result in an actual appraisal request.  The “target number” is always on it despite our conversation.  I just cross it out, often with expletives (written on the order form) and note that we’ve discussed my inability to target a number and the number isn’t a factor in the appraisal despite what the bozo wrote on the appraisal request.  I make sure these are COD and the check has cleared before I discuss results with the client.   – SV

> 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. There are many aspects of our business which are worthy of comment that are of a positive nature. Find a few and report on those. So that when I’m done reading your articles I’m happy I’m an appraiser….not that I want to go hide under a rock (with the media who already live there in the dark)!
– 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

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