What does it mean “appraisal modernization?” [This is Part I of a series which continues for the next two years, on a monthly basis. We will consider not only the ideal future, but the path to get there – for both users and providers]. This is silly. We just make appraisal more modern! Hmmm. So, […]
Can We Avoid Past Mistakes? Avoiding past mistakes might be important to appraisal modernization. [Part 2 of a multi-part series on Appraisal Modernization.] As we suggested in other publications (The Asset Analyst Report) there is a process to deal with change. The first step is to identify the problem, (or failed solution, such as the […]
[This is Part 3 of a series on Appraisal Modernization] “Appraisal modernization” is a crisp way to describe needed change. But what is really needed? To consider this question, in part 3, we must look at underlying motive. If we only look at the surface solution stuff, like “hybrid appraisals” we may be distracted from […]
In Part IV, we continue our quest for modernization of appraisal. In Part I, we clarified that an appraisal is an opinion. We figured out that opinions don’t modernize well! We also saw that market price may or may not be true value. And that clients of all types need more than a historic point […]
What is “Appraisal modernization”? (This is part 5 in an ongoing series on Appraisal Modernization. Part 1 starts here.) The Federal Housing Finance Agency (FHFA) is seeking input to “create a more streamlined and accurate collateral valuation process.” It also wisely recognizes that new regulations “could have negative unintended consequences.” Said director Mark Calabria. While […]
Opinion is the required end product of appraisal, mandated by the quasi-governmental regulations. By “appraisal waiver” exception, analytic results may be allowed. (No opinion is necessary.) modernized Editor’s Note: This post is an intersection of Appraisal Modernization, Part 6 and Bias Part 5 The FHFA (Federal Housing Finance Agency) wants input on: Appraisal modernization; Data […]
For some people, Evidence Based Valuation (EBV)© feels like a threat to “proven” appraisal practices. Others may believe it is a pressing, needed radical change. It is neither. Modernized appraisal unifies the best of established theory and modern methods. It is that simple. Traditional appraisal practice was built on sound fundamentals of economic theory. These […]
The FHFA (Federal Housing Finance Agency) wants input on modernization in the world of housing finance. A big change. Human response to change is – resistance. A natural human first reaction is anger. Change is first seen as a threat. “Who are they to disturb my nice comfy world?” That threat of loss triggers us. […]
For modernization, we must note how coarse are the choices available to the loan originator: AVM, appraisal, hybrid, waiver, evaluation. Each choice involves different, but pre-set steps. There is little flexibility. It is not a continuum of analytical depth. To compare valuation systems to each other, we must look at the parts of the analysis, […]
Is it possible discussions about bias are biased? Oh no! Surely personal motive cannot affect my position on bias. Can it? Editor’s Note: This is another intersection of Modernization (Part IX) and Bias (Part 6). It is difficult being a word nerd right now. Particularly writing about bias. This is a topic which is much […]
How about “loan conditions”? Clients only need a value in order to quantify risk. Is this scary? Editor’s Note: This post is an intersection of Modernization and Risk. There are only three uses for knowing value: 1) collateral loss, 2) investment gain, 3) equitability. Historical value may only be relevant to #3. Loss or gain […]
Appraisers have adjustments for “market conditions” and “sale conditions.” Why not “loan conditions?” There are similarities and differences. This is Part II in this series. Read Part I here Loan Conditions. Market conditions, for any particular market, price levels – trend together. So, appraisers apply ‘time’ adjustments to compensate for this change in ‘market conditions.’ […]
Postpone appraisal modernization. We can do that later. Why? Change and improvement should, normally, come from a profession. When a profession fails to bring improvement, eventually consumers/clients press for change. That’s what seems to have happened. The two largest consumers of appraisals now have pressed for change. Fannie Mae and Freddie Mac have realized the […]
We have heard a lot about “modernizing” the appraisal process, particularly from the GSE’s (Fannie Mae and Freddie Mac). What is clear, is that the path is not clear. The GSEs, pressing for an improved valuation product, are in a difficult situation. On one hand, they are supposed to cooperate. On the other hand, they […]
Are valuation procedures a set up for bias failure? Let’s look to see what systemic issues there may be regarding bias in valuation. This is an enigma of multiple overlapping issues. Let’s connect the “established” appraisal practice of USPAP (Uniform Standards of Professional Appraisal Practice), the established body of knowledge (EBOK), and human behavior reality. […]