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Services Offered this Issue
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> Just Published: OREP/WRE’s 2017 Fee Survey Results! To view the results in your state, click here. If you have not already taken the survey, please weigh in here.
Fungible
By David Brauner, Publisher
Many of us have a “pet word” that we tend to slip into conversation because we like the way it sounds or how perfectly well it fits an idea. Mine is “demarcation,” which connotes a distinction or differentiation between two things—I guess I like to put things into distinct boxes to help me understand them better.
As someone who covers appraising, another word comes to mind that a friend of mine is smitten with: fungible. Something that is fungible can be easily replaced by another item—mutually interchangeable. I don’t think the adjective is intended as a modifier for human beings, but that’s the way my friend uses it because he feels that way sometimes. But boy does the concept ring true for appraisers today, as once again there is a rising fear level over being replaced by automated appraisals and big data (See AVMs to Finally Replace Appraisers?).
Fannie Mae and Freddie Mac aim to replace an increasing number of appraisals through the greater use of advanced automation and stores of big data, and by extension, make appraisers more fungible as well. To be fair, I wrote about this issue in 1994 and to many back then, it felt like the beginning of the end of the profession. We’ve seen a lot of water under the bridge since then.
Putting aside how little these quasi-governmental agencies have learned from their journey into “conservatorship,” following the most recent real estate collapse, the truth is, no one really knows how many appraisals they aim to replace this time given their data collection efforts over the last few years.
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I won’t predict the future. But I do know from experience that with every challenge comes an opportunity, and a well-trained, professional appraiser who is an expert in their market is not fungible and, in fact, will be in greater demand as time goes on—just like print magazines. So the experts advise the following: up your game through education and training, deploy the tools at your disposal to cut costs, and strive to produce a product that no machine can replace. Being professional doesn’t hurt either—we are all in the customer service business. And, the time may have finally arrived where most appraisers can choose whom they want to do business with, rather than the other way around: cultivate a balance of clients to include those who need an expert as well as those who just need a number.
Working RE is celebrating its fifteenth year publishing valuable news and information to real estate appraisers, and is published by OREP.org, a leading provider of appraiser E&O insurance. Thank you for reading.
> Just Published: OREP/WRE’s 2017 Fee Survey Results! To view the results in your state, click here. If you have not already taken the survey, please weigh in here.
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About the Author
David Brauner is the Publisher of Working RE magazine and Senior Insurance Broker for OREP.org, a leading provider of E&O insurance for appraisers, home inspectors, and other real estate professionals. He has been involved in providing E&O coverage for appraisers for over 20 years.
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by jd1958
The word is NOT fungible, it’s fudgable. Lenders don’t want to pay anyone for anything, but want to collect everything on all Real Estate Transactions. But in reality they “DON’T PAY FOR THE APPRAISALS ANYWAY, THE BORROWER DOES”. They don’t want appraisers? Fine. Let them use the data that they’ve been mining. How long does that information last? How many home owners “maintain or take pride in their homes”? How many do improvements? How many take out money for improvements and don’t accomplish them, but spend the money? How many lay their properties to waste? How many people still walk away from the home after taking all the money out? How many after hitting hard times; destroy or vandalize the very home they own BEFORE walking away? How many homes waiting to be sold become “squatter havens or drug labs”? Squatters who then TAKE everything that is worth anything from within the home out of the home. Without eyes on the ground the “fudge factor” becomes pretty broad. I’ve looked at “accepted” AVM’S and see their “fudge or confidence factors” ranging between 5-30% “. This may not be a major issue on a home for a $100K ($95-105K@ 5% on the low end, but 70-130 at 30% at the upper) a possible $60K gap? Any lenders here want to take this risk? Hello!! ANY? Now move that up to the $500K bracket and NO ONE will loan on that wide margin. What are the Lenders then going to do? Turn to “Trusted Realtors and Brokers” for their Opinions? After all they’re “trust worthy”, and won’t their vested interest in the properties cloud their judgment on value now would they? What happens “WHEN” the market trends downward? Will the lenders then want to do the Broker Price Opinions again? How well did that work out the last time? The time when Realtors, Brokers and Lenders who all screamed bloody murder when their deals fell apart because the APPRAISER, THE PROFESSIONAL RENDERED AN OPINION OF VALUE which was less than that of the BPO’S! Or screamed when the market now flushed with Repo’s, CRIED that it’s not right appraisers would use a Repo or bona fide arms length sale who’s price was set by a BPO? Or Mr. Smith and Mr. Jones who is all ticked off because the toxic assets are being sold slightly below market value set by the BPO to remove them from their. We all remember when appraisers weren’t blamed for “lowering the market”. Better yet; Let’s forget an appraisal altogether and grab those dice, toss them for a match on “Little Joe” and hit snake eyes or box cars first every time. What a smart business move this may become. Just saying………………….
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