The Appraisal Blog

25 years ago I charged $285 for my first full appraisal.  Last week I did one for $300.  Now, we are currently in a downturn in the real estate market in terms of volume, so there are some other market pressures, however, the AMC model has had a major impact on appraiser fees.  For those of you who don't know, after the 2008 crash, Congress signed Dodd-Frank into law which created the AMC model currently in place.  Essentially, an AMC is a middle man between the appraiser and the lender.  And for doing their service they charge anywhere between 50-100% of the appraisal fee.  That fee isn't charged to the lender/consumer... it is taken from the appraiser.



https://www.housingwire.com/articles/appraisers-raise-alarm-on-amc-revenue-sharing-models/

It has been my experience that there is a general misunderstanding of what an appraiser does, what their opinion of value is used for and how much power an appraiser has.  I've had discussion very recently, even among real estate agents, who think that appraisers create value in markets.  This could not be farther from the true.  We report value based on what we see in the market.  Furthermore, our opinions are private.  They are not available to ANY party outside of the transaction and therefore could NOT be used by 3rd party as a basis for a different party.

Take a look at this article for a more detailed breakdown.  Let me know if you have any comments or feedback!



https://www.nar.realtor/magazine/real-estate-news/sales-marketing/how-much-power-do-appraisers-have-over-home-value

Interstate 15 used to dead end in the San Diego City Heights neighborhood.  Nine blocks of houses and business had to be acquired by CALTRANS to connect the freeway.  What an eminent domain disaster?  But I am glad they got it done.  Check out the before and afters and listen to the podcast for some interesting information on freeway's in San Diego.




https://www.kpbs.org/news/local/2023/05/23/watch-as-9-blocks-of-housing-in-san-diego-become-a-freeway

Two policy issues are in direct opposition to each other.  Historical designations preserve architectural unique properties.  Changes to zoning increase density to increase the number of housing units in a community.  Who determines a "Streamline Moderne" style structure is historically significant?  Do we want another "Up" house surrounded by 20 story buildings?

These are unanswered questions.  What do you think?



https://voiceofsandiego.org/2023/05/22/historic-properties-are-again-a-battleground-for-housing/

My previous post was regarding an article in Working RE Magazine titled Appraiser Countersues Black Plaintiffs Who Alleged Discrimination.  And, as I have mentioned before, this topic strikes a chord with me.  So I wrote a response ... and they published it in their most recent Issue 62.

I promise to discuss the details in a future post ... but read the reader response for a preview.



https://issuu.com/workingre/docs/issue_62_workingre_final

This one is a no brainer.  The facts of the case will completely exonerate the appraisers and hopefully he will win his countersuite argument.

Basic Facts:
- Subject was appraised for $472,000 in June of 2021
- 7 months later it was appraised for $750,000 after "white washing"
 Subject is situated on a major roadway, Northern Parkway and suffers from negative external obsolesce.
- Property NEXT door to subject sold for $465,000 August of 2021 (2 months AFTER 1st appraisal) with superior kitchen improvements and a sunroom.
- Listing of property situated on same busy street, Northern Parkway, for $605,000.  It was on the market for 3 months, reduced to $550,000, and then to $510,000 before it went under contract.  The only reason seller's reduce their asking price is because the original asking price was TOO high!

The second appraisal at $750,000 was never provided to the attorneys... I wonder why?  But it does not appear to be in line with other sales with similar negative influence including the dwelling next door to the subject.



https://www.workingre.com/appraiser-counter-sues-black-plaintiffs-who-alleged-discrimination/

As the article states, AI (Artificial Intelligence) is all the buzz.  From creating writing reports to passing the bar exam, from realistic photos and deepfake videos.  It can write music and solve math problems ... is there anything it can't do?

I recently gave ChatGPT a shot. 

Will AI take the place of appraisers?  Probably not.  They may help with certain tasks in some areas ... but the existing AVM (Automated Valuation Models) probably aren't going to get significanlty better.

Here is one person take on what it can assist with.  I'll give a real world test run in my next post ...



https://appraisalbuzz.com/the-next-generation-of-appraisals/

I just received a list of words from an AMC that I am not allowed to use in my reports anymore.  Truth be told I see only one or two words in this list that I occasionally use in my reports.  Desirable  ... in reference to the climate in San Diego, and Gentrification ... in reference to communities in which there is a trend towards remodeling and enlarging the homes in the community.  Oh ... and Indian ... as in the city of Indian Wells.

But the notion that we have become so sensitive to be offended by some of these words is disturbing.  

The Appraiser Qualifications Board (AQB), which is one of the subcommittees of the Appraisal Foundation, and is responsible for establishing the minimum qualifications for real estate appraisers has approved the Practical Applications of Real Estate Appraisers (PAREA) program.  The program will be a departure from the standard Supervisor-Trainee model that has existed for decades and will allow another pathway for individuals to enter the profession.  The Appraisal Institute appears to be the first organization with an approved PAREA program.

I am all for modernization of the appraisal process and training, but think that this might not be necessary if the AMC model was retired.  I have trained many individuals to licensure over my career... but don't do so anymore.  The AMC's require the supervisor appraiser to inspect every property with their trainee and makes no financial sense.  It didn't used to be that way!

So we will see how this pans out ... 



https://www.appraisalinstitute.org/aiparea/