It was pointed out to me after part 1, that a hybrid like a mule, is sterile and the end of the biological line. Is this true about the hybrid appraisal?
A hybrid appraisal, as applied today, means that someone other than the signing appraiser, usually an agent, goes out and does the property inspection. No viewing of the comparables appears to be necessary.
In part 1, we pointed out some of the issues involved. In particular, it seems that the signing appraiser is both, “responsible for the decision to rely on their work” and, is “required to have a reasonable basis for believing that those individuals performing the work are competent.”
In my years as a residential appraiser, I had the opportunity to train many appraisers. I always lamented that I could not make competency decisions for my staff based on their level of training, and the complexity of the property/market in question. I had to inspect every property. And even then, when they came to sign their own appraisals, I still often drove the subject and comparables. This kept me feeling safe and gave me further insight of the competency of my newer appraisers.
It was the lenders, citing FannieMae who said I had to go out and understand the neighborhood, inspect the subject, and view and photograph the comps. Today, the pressure seems to be that the lender stays in charge of the inspectors. What could possibly go wrong?!
Well, if something does go wrong, and it will, something will have to be done about it. We will need rules and qualifications and licenses for the inspectors. And we will need regulators to make sure they do it right. (50 states plus two territories.) And they will need training. And we may need different levels of inspection. And we may need the comparables viewed. Surely a non-Realtor® agent can do this. We will have the best and brightest agents doing this for $40. Sure. Oh well.
Having said all that. This idea could evolve into something useful. Sometimes a client just simply does not need a highly reliable result. A “ball-park” appraisal can be enough in some situations.
One of the potentials of EBV© performed by real valuers competent in reproducible work is that the work product can be scored for reliability. This alone is a tremendous unfulfilled service which can be provided by appraisers cum asset analysts. Given this, we would be able to explicitly account for the risk and reliability needed for any particular collateral or investment level.
Clients then are able to order valuations based on the risk/reliability desired. A part of this equation is the level of market/subject/comparable data gathering needed. The most competent person to match the reliability score needed is the person who now fulfills the role of “appraiser.”
So, what do appraisers need to learn to become asset analysts? Three things are required: 1) competence in complete-data analytics; 2) the use of (data science) computation and brain-machine interface; and, 3) subject-matter expertise — like real property competence in markets analysis.
This can happen – with some effort by one or more of our professional organizations, or the Appraisal Foundation, or simply individual appraisers forming a culture of open-source community. I am convinced it will. I am committed to helping make it possible.
Photo credit: Jackalope. Photo by Mark Freeman, Flickr Creative Commons
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