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Roadmap for Survival
by Jim Baumberger
Whether we appraisers like or dislike the introduction of bifurcated Desktop valuations, based on third-party property data collections, we cannot stop, nor ignore, this significant change in our industry. Advanced technology, big data, computer analytics, and the GSE’s data-mining of millions of appraisals have combined to forever change appraisers’ traditional scope of work and the appraisal workflow itself. In addition, the market demands a wider suite of valuation services than many of us are currently comfortable to provide.
A wise appraiser told me recently that, “It is time for appraisers to become comfortable with being uncomfortable.” Rather than being insensitive, or ignorant, he was cognizant that we are called in this moment to be flexible and adaptive during a transitional period of major industry change. Naturally, change provokes some discomfort in us. I am also discomforted by the enormous changes in the last few years to the federal regulations that now render 90-91% of all mortgages in America exempt from the appraisal requirements of FIRREA. We no longer live and work in an America where lending clients must use our services.
In a world where clients must want to hire appraisers, there is still good news to share. Most lenders, regulators and the GSE’s, continue to publicly recognize the value that credible appraisals and independent appraisers add to inform decision-making for real estate financing transactions. No other group of professionals is as prepared, by education, experience and ethical standards of practice, to protect the public trust, serve the credit-financial system of America and safeguard the real estate wealth of Americans, as are today’s highly competent professional appraisers. The most important things appraisers contribute that cannot be replaced are judgement and integrity. As long as we apply both these traits enthusiastically, and realize we are in a customer service business, the future for appraisers will be rewarding.
If appraisers evolve into providers of valuation services, master advanced technology and improve our customer service skills, appraisers will remain the preferred solution for all institutions that use valuation services. Tomorrow’s valuation services provider will perform a wide array of professional services ranging from inspections and property data collections on to evaluations, bifurcated Desktops and all the way to traditional appraisals, using technological tools we cannot imagine today. The best solutions, in my opinion, will be the potent combination of advanced technology, big data and computer analytics with the knowledge, expertise and objectivity of professional appraisers, who reliably reconcile the final results. I believe the future can be as bright for appraisers as we have the will to create for ourselves!
About the Author
James A. Baumberger is Chief Executive Officer and minority owner of First Choice Appraisal Management (FCAM). He graduated Magna Cum Laude from Concordia University in Portland with a degree in Business Management and Communications. As a certified residential appraiser, Jim’s 28 years of professional appraisal practice includes valuation services for eminent domain, lending, litigation, marketing, and relocation purposes.
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by Michael Ford, American Guild of Appraisers
Mr. Baumberger’s perspective may be colored by the fact that he is the owner of an AMC. Clever euphemisms and folksy homilies don’t change the fact that the Mortgage Information Standards Maintenance Organization (MISMO) has already called for (1) The elimination of all residential appraisers; all commercial appraisers, elimination of hybrids (yes, even before they become commonplace), in favor of FULL automation in mortgage processing. Think AVMs rather than hybrids.
MISMO has also called for finding ways to ‘scrape’ commercial appraisal reports PDF copies to ‘collect’ the data there…as if that data belongs to them in the first place.
Hybrids are nothing more than a lower-cost method of facilitating loan fraud and deceiving investors into thinking they have adequate security for their investments.
Do not participate in this specific scam that is also designed to end our profession.
-by John M Pratt
I agree with your comments that change is coming (it is already here in some ways) and that appraisers must embrace the changes. The real problem is that those who engage the appraisers want to reduce the fees paid to appraisers for their services. There is not enough appraisal work out there for 75,000 – 80,000 appraisers to make a livable income with the fees that are being offered for these new evaluation. With the fees being offered I would estimate that over 50% of all appraisers will have to find a new source of income and those few that do survive will have work many more hours just to keep their head above water. The appraisal industry already has a problem getting new people to enter this field and low fees to the appraiser will only make it worse.
-by Candy
Short term memory of Housing Crisis of 2009. Bi-furcated appraisals are just an attempt
-to beat down fees. How can the AMCs claim appraisers are protected? USPAP doesn’t even protect us. They say your liability is limited by the outside inspector’s inspection. Baloney. You’re still liable for a credible and accurate value conclusion. What protect us is your State’s Attorney General’s Office. Believe me , bypass everyone, go to your state attorney general.
by Michael Ford, American Guild of Appraisers
Concur 100%
-by Brad Bassi
Why is it that everytime I read a article about change and how I need to embrace it, the author is from an AMC. I got an idea, how about we have the AMC go away and we get back to selling our services and expertise directly to the client and get rid of the blast email trying to find the cheapest and fastest. Just a thought, maybe the AMC should brace for being uncomfortable.
-by Mike
exactly, end us and it’s the end for you too, stupid amc’s and their false PR bologna. You wipe out an industry you wipe out all the bottom feeders too. No need for amc’s, no need for special insurance, no more fees to government regulators for appraisal renewal, no more software companies, no more tax money from all appraisers and associates in related bottom feeder areas… etc. etc. So yeah use a weirdo report style relying on inferior non-first hand information and let’s see where that goes.
Here’s a great book title, anyone can take it, “When Bright Ideas Aren’t So Bright”
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