Real Estate Analysis and Commentary in Victorville

I have now completed several appraisals using the new UAD 3.6 format mandated by FNMA| and Freddie Mac. The following summarizes how I will approach this new form, and my personal view of this approach to valuation reporting. 

1. The form appears to meet the GSE need for standardized data. 
2. The form does not enhance the reporting of valuations; in fact, the net impact is a reduction in the reporting of valuation issues due to stringent requirements of reporting of data. 
3. Property inspection time has increased due to issues of having to measure and report details on personal property sheds, above ground pools, etc. These items have historically reported as being present but not included in the analysis. 
4. The new form now allows for reporting of varying quality and condition in terms of construction and finishes; this will allow for adjustments that reflect these items. 
5. At current time there really is no software available to an appraiser that does more than a typewriter requiring manual input and analysis, which adds time to report preparation.

• My perceptions:
   Fees charged by appraisers must increase to reflect the time element and the cost of training and investment to meet these requirements. I have changed my fee structure from a single bid to more of a smorgasbord approach. I charge a base fee for a simple Sales Comparison Approach with a sketch and only the photos required by FNMA or Freddie Mac. Add-ons include cost approach, income approach, additional photos and "live photos" of the comparable sales

• The change in the certifications regarding client and intended users is troubling and may open appraisers to litigation if a non-intended user is allowed to rely upon the analysis for a purpose other than intended. 

• Time between inspection of a property and the report delivery has and will increase due to the manual imputing of required data.

• I fear that this method of report preparation will reduce many residential appraisers to a "form filler" moving them away from a professional level to one of a clerical role. 

A professional appraiser gives a legally defensible, onsite valuation tailored to a specific property and transaction needs. Zillow and other Automated Valuation Models (AVM) is a fast algorithmic estimation that is useful for a ballpark check but often misses local nuances, upgrades, and property specific characteristics. This type of valuation may be used only for quick market signals. The accuracy is variable with average error rates that can be significant in some markets. This type of estimate is not accepted as a formal appraisal by the courts or IRS.

 

Appraisers account for local market quirks (micro neighborhoods, lot orientation, view, etc.). Zillow relies on available statistical data and may lag on recent sales, economic conditions, or permit updates.

 

Choose a professional appraiser when you need a valuation for a mortgage, refinance, estate, divorce or tax appeal when accuracy matters.

 

Risks associated with the two models:

 

• Relying solely on Zillow or AVMs can misprice a home or property by thousands of dollars.
• The quality of an appraisal varies by the appraiser’s experience. Use of a property data collector currently being used by FNMA or Freddie Mac introduces an element of risk. While FNMA emphasizes that they are trained; they are not professional appraisals, and their inspection does not include the experience of a professional appraiser who is looking for more than the size and amenities of the home. Views, orientation, conformity to the market and other items that are sometimes difficult to quantify will be considered by an experienced professional appraiser.