Cutting Edge Solutions for the Appraisal Industry?

Think about it, how would you go about changing the current state of the appraisal business to make it better?  Streamline reports?  That is code for shortening the form, or shortening narratives to the “10-page report” format and it’s just another way to say that data we now believe to be necessary will no longer be included. 

Do users of appraisal reports really want less information reported?  It sounds like a giant step backward toward the 1-page report.  It’s my opinion that consumers don’t really care about the appraisal process, they just want a market value opinion and oh yes I have to be able to defend it in court or in front of the regulatory board if the opinion is challenged. 

Attorneys tell me they are using Zillow.com and trulia.com for probates and bankruptcy filings all of the time, so is anyone all that concerned with accuracy?

I am so looking forward to seeing how the “leaders” of the appraisal industry are going to change appraisal reporting.  If the motivation behind changing it is to make it easier for agents to make sales and easier for lenders to make their loans then I think appraisers and the appraisal industry are all in for a rough ride.

Report Quality

The whole point to the “summary” report was that an appraiser could do the same analytic work for it that they did for a “self-contained” report but then decide how much of the data collected and the analyses performed was necessary to be in the written report for a specific assignment. 

If you have seen recent reports being delivered to clients right now you know that the quality of appraisal reports is deteriorating.  Is there really going to be a move by industry leaders toward compromised reporting in an effort to placate builders, lenders and the public?  If there are fewer appraisers is that going to be the excuse used for lowering appraisal standards, or is it just that the primary user of appraisals (being the banks) and done with having appraisers in their way?

Computer Modeling

Why not just adopt computer modeling?  That would definitely shorten the time spent doing appraisals.  Yes, we need to move toward the Zillow.com type of analysis that is admittedly already often off by 35% or more from the actual market values, but using that appraisal method would be cutting edge wouldn’t it?  How many appraisal customers will be happy with an error of that magnitude?  How many would accept that the new, updated model-based appraisal process may opine that their $ 300,000 home is worth $ 200,000?  Sounds like a nightmare to me.

Cost Approach Problems

It appears to me that the cost approach analysis is going the same direction as the Condor, it’s becoming extinct.  While it has not often been used in residential reports it is even now disappearing from commercial reports.  Even when use of the cost approach is required by lenders because improvements are nearly new the approach provides value indications that do not conform to the values developed using the sales approach and the income approach.

Either the source information on costs has to be updated or appraisers must develop their own.  Otherwise the cost approach will continue to be excluded.

While appraisers discuss that they have considered the cost approach it is being used less often than it used to be and this may be an area that is looked if reporting is to be changed.

What the appraisal business will look like in the next several years is beyond the control of any one or any small group of appraisers, but it’s my opinion that appraisers if given an opportunity should respond to proposed changes.  It’s important that we at least attempt to preserve reasonable methods and reporting.

If the whole real estate appraisal industry is hijacked by biased outsiders then it will just be a matter of time for the pendulum to swing back after the next real estate fiasco plays itself out.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (http://www.appraiserlasvegas.com), or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at http://www.linkedin.com/pub/glenn-rigdon-ma-mrics-asa/1a/30b/879/

Article source: http://www.appraisalarticles.com/General-Appraisal-Articles/Appraisal-Industry/4620-Cutting-Edge-Solutions-for-the-Appraisal-Industry.html