Portland Area Real Estate Appraisal Discussion

If you are shopping for an appraisal based only on fee, be careful. Perhaps you should also ask the appraiser how many appraisals they do per day. As real estate appraisers who do all of the work necessary to produce credible results, it is frustrating when we hear about others who brag that they can do typical Uniform Residential Appraisal Reports (URAR) in two hours, or many appraisals in one day. Do not misunderstand. We at A Quality Appraisal are innovators who embrace any technology that will increase our productivity. Just take a look at the seminar I taught on Three Steps to Mobile Appraiser. However, we are nowhere close being able to complete a URAR in under two hours.

Today I received an email from an appraisal software company listing one appraiser’s claims as to the time it takes him to complete an appraisal and asking me to guess his software. His appraisal timeline follows the video:

 

I have the following problems with the above 1:14 timeline:

1. “Running the MLS.” This appraiser says it only takes 15 minutes to pull the comparable data and the market data. It takes our office up to one hour to pull the best comparable sales and the best market data, and sometimes longer for a complex property. Yes, we could run one quick search for comparables and export the same data for our market analysis in under 15 minutes. However, we have a systematic approach to comparable searches that ensures accountability of each search, why we did or did not select comparable sales, and ensures that strong comparables are not missed. Our market conditions data is also carefully controlled to assure that we are capturing the most accurate picture of the micro market that the subject property would compete in. Often, market analysis takes looking at our results, identifying outliers that are skewing the data, and changing the search parameters for a more accurate representation of the market.

 

2. “For the inspection.” This appraiser says the inspection only takes 22 minutes at the property. I too use a tablet computer in the field and I am very quick. I could, if I rushed, take only 22 minutes at a 3,737 sf home. However, if I did this, my head would be directed at my tablet the entire time, rapidly entering data and most focused on measuring. I would not have much time to ask the owner lots of questions and absorb all of the things that make every property unique. I have been called out countless times as a second opinion on an appraisal and the person showing me the property says something like, “The other appraiser was only here for about fifteen minutes.” My typical inspection takes about 45 minutes and I too am done with page one of the URAR in the field. Since I use a “desktop replacement tablet”, I don’t have the lost time that this appraiser has of transferring to the cloud and moving from one device to the other.

 

3. “Completing….” This appraiser says it only takes 24 minutes to import three sales and two listings, and then do a final read thru. From what I can see, this is an appraiser who is only focused on form filling. Granted, this is an advertisement for an appraisal form filling software. However, FORM FILLING IS NOT APPRAISING! A completed form does not mean a competed appraisal. In this timeline, there appears to be no time spent on other approaches to value, supporting adjustments (hopefully this software has some automated regression tools), analyzing and explaining data, or reconciling. My staff and I typically spend hours doing this. There also appears to be no time spent communicating with parties to the transaction to verify data and find out the details behind the scenes. Data confirmation can easily take an hour or more, but it is important in a well-researched value conclusion.

Appraisers should be outraged when they hear stories like this of typical appraisals being done in less than two hours. With the current state of poor quality real estate data and the technology available to appraisers today, timelines like the one above are only possible when the appraiser uses the same boiler plated garbage that is said on every appraisal assignment. Advertisement for software or not, appraisers who make statements like this undermine the ability for other appraisers who are doing quality work to obtain a reasonable fee for their time and careful analysis.

If there are ways to complete a credible URAR in less than two hours, I am in. Statistically driven automated tools are the future of appraisal. Unfortunately, “professionals” who produce a report this quickly today do more than just cut corners; they overstep entire components, which affect the credibility of the conclusion. If you think you have received a low quality appraisal, check out my blog post on how to spot and dispute a bad appraisal.

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Thanks for reading,

Gary

 

 

 

If this comment shows, then my Portland Appraisal Blog comments are once again working.

I totally agree Gary. While the process can be streamlined (something you do very well) I think they are minimizing the value of the appraiser and making it appear like anyone could do the job. There is a lot more skill involved than just filling in the form.

Thank you Tom for joining the conversation. I could not agree more.

I watched this video today and looked around to see if there was any discussion of it... The main issue is that the time described is the AMC paradigm of the new "normal" that is so pervasive now. On the one hand the industry has raised educational requirements, and through licensing assures the public that college educated appraisers are receiving continuing education to practice the craft at a high standard. On the other, AMC's and guys like this promote the idea that appraisals do not and should not take, much time at all, and any appraiser ought to be able to do 4-6 appraisals/day. And since the AMC "frees up" so much time for the appraiser (yeah right), allowing him to be more productive, they are of course entitled to take a huge cut of the total appraisal fee. The approach described by this advertisement feeds right into that scenario - the appraisal is just a form to be filled. The underlying issue is - if this all that needs to be done for a valuation - cobble together some canned statements, no to little analysis, put in some photos - then why bother doing an appraisal? A computer generated AVM is just as informative as that. At our office, we use a lot of computer generated input - the subject property info, loading comparables, and generating the Market Conditions Summary, but it all has to be analyzed and considered. The methods being described in this video have no room for any kind of analysis, and the time estimates are simply ridiculous. I think this video does a great dis-service to good appraisal practice, by helping promote the myth that 1-2 hour turnaround appraisals are the way to go - a view that is way too prevalent in the Appraisal Management Company mindset.

Fred, thank you very much for such a detailed and well thought out comment. I agree. Form filling can be done in under two hours. Real analysis that is specific to the subject property and the competitive market for the subject takes much longer than a what this guy suggests.