So where do these requests come from and who is requesting them?  At AppraiserLoft, most QC requests are the result of an automated review combined with a manual audit. Through these processes, every report is examined to ensure it is correct, complete and meets our clients’ specific requests.

The initial programmed review checks every required field of the report to verify all assignments are 100% complete.  Then, every report is subject to over 900 automated rules and the eyes of a highly qualified and seasoned QC auditor to confirm they meet or address all expected industry standards.  Finally, when our clients have specific requests that are USPAP compliant, our QC team with backgrounds in appraisal, underwriting and even loan origination will check the report to make sure the appraiser answers all client questions and concerns.

So what can you do, as the appraiser, to limit these requests?  First, make sure you read the order.  I understand that some orders can be lengthy and even repetitive at times, however, it is critical that you pay particular attention to the client specific requirements.  These requirements are the ones most often missed by our panel because they can sometimes be a little out of the ordinary, but the client is still king, even in the appraisal business.  As long as the requests are compliant with USPAP, you should be addressing these concerns regardless of how trivial they may seem.

Next, if your appraisal form software has an automated rules engine to check your report for completeness and compliance, use it!  Honestly, it probably isn't much different than the system we or any other QC department uses.  These systems will let you know if a field is blank or more explanation is needed in a report before submission.  It amazes me how many appraisers have these tools available and don't use them or don't even know that they have them.

Finally, we understand that every industry standard and client specific request can't always be accommodated, particularly in troubled and rural markets.  In some areas, sales can be old, distant and less than ideal.  In these cases, there are three things you can do: comment, comment and comment.  However, lengthy, vague or canned comments buried in pages of text are hard to find, hard to understand and often don't answer the client's concerns.  The best comments are prominently displayed, brief, to the point and clearly address the users concerns.

Hopefully this peek under the hood of QC has been helpful.  So, if the dog cowers and quickly leaves the room every time your email alert chimes, take a deep breath and relax.  Please understand, no one is singling you out or actively trying to make your life difficult.  It's just another report that needs a little refinement and/or comment for understanding.



As we all know, the purpose of HVCC was designed to prevent undue pressure from being placed on appraisers to inflate home valuations.  In short, a full communication firewall was put in place between loan production staff, who only gets paid if a loan closes, and the appraiser, who is charged with rendering a third independent and unbiased opinion of value.  It's difficult to argue that this isn't a good thing.  Keeping the person who is paid when a loan closes from being in charge of ordering the appraisal needed for loan approval seems to make sense.  However, this is the way the ordering process was accomplished for years. 



When HVCC was put into place, it rocked the world for a lot people.  Overnight, relationships that took years to form between lenders and appraisers were gone.  These relationships that were built on quality, trust and understanding unfortunately ended; it was a hard pill to swallow for those playing by the rules.  It seemed as though everyone was being punished for the actions of a few.  



In a weird sort of way, I think communicating with the loan production staff of my clients made me a better appraiser.  To stand the scrutiny of a loan officer (LO), a report had better be well written, well documented and well supported.  If the report wasn't rock solid, you were certainly going to hear about it.  If I had to defend my report from long time LO clients like Jim and Bill, I better have a solid case. 



When a value was "short" I knew I could expect a phone call.  In fact, I was always surprised when, on occasion, those calls didn't come.  It's like bracing for a strong push that never materialized.  However, at the end of the day, after long discussion and argument, we typically agreed to disagree and move on.  Guess what! Despite our differences, they still sent more assignments to me because we had a relationship built on quality, trust and understanding.  To be completely honest, sometimes they made a good point and sometimes—please don't tell anyone—they were right.



Soon, Finreg (aka H.R. 4173, aka The Financial Reform Bill, aka The Dodd-Frank Wall Street Reform And Consumer Protection Act) is expected to be finalized and sunset the HVCC.  Although HVCC was only with us for a short 18.5 months, its fingerprints on the appraisal ordering process will be apparent for years to come. 



As for Finreg, it appears that the firewall in the ordering process between the lender and appraiser will stand.  However, it does have a provision that specifically states it does not prohibit anyone with an interest in a real estate transaction from asking an appraiser to consider additional information, to provide further support, or to correct errors found in the report.  Those with an interest in a real estate transaction include the mortgage banker and broker.  Under these new rules, loan production staff will still be barred from ordering appraisals, but at least they will be able to communicate with the appraiser about the report.



The jury is still out, but on the surface it appears this new process might be the best of both worlds.  I think most would agree that keeping a firewall in the ordering process is a good thing, but to completely exclude those in the loan production world isn't the answer.  As with anything new, only time will tell how things will pan out.

Well if you haven't already heard, it seems as if a game changer is on the horizon.  The "Dodd-Frank Wall Street Reform and Consumer Protection Act", aka HR 4173, is very close to becoming a done deal.  This 2,000+ page document addresses numerous financial provisions, from credit rating agency requirements, to creating a 5% "skin in the game" stipulation for lenders who make loans that don't meet standards of reduced riskiness.  Although the complete document is a thrilling read, for the sake of brevity, most appraisers will only be interested in 40 pages.  

These pages, beginning on page 1914, address the following concerns:

Appraiser Independence

• Reiterates the importance of eliminating pressure on appraisers.
• However, a provision does allow any person with an interest in a real estate transaction, including mortgage brokers and loan production staff, to ask the appraiser to consider additional information to provide further detail or correct known errors in a completed report.

Mandatory Reporting

• Anyone involved in the loan process, from a Real Estate Broker to an employee of an Appraisal Management Company, who has a reasonable basis to believe an appraiser has failed to comply with USPAP, is required to refer the matter to the applicable State appraiser regulating agency.

Appraisal Report Portability

• New regulations will be considered to address the issue of appraisal report portability, including regulations that ensure the portability of 1-4 family appraisal reports between lenders.

Customary and Reasonable Fees

• Studies will be completed to establish what is considered a customary and reasonable fee by areas. These studies will exclude assignments ordered through appraisal management companies and will provide a guide for appropriate compensation of fee appraisers.

Sunset of the Home Valuation Code of Conduct (HVCC)

• Passage of HR 4173 will sunset the HVCC.
• However, many of its provisions have been adopted by HUD and written into the selling guides of Fannie Mae and Freddie Mac.  As such, its effects are expected to last for years to come.

Establish and Maintain a National Registry of Appraisal Management Companies (AMC)

• Just like appraisers, AMCs will now be required to register and be under the supervision of a State appraiser certifying and licensing agency.
• AMCs that are subsidiary owned and controlled by a federally regulated financial institution will not be required to register with a State.

Definition of an AMC

• Any authorized third party that oversees a network or panel of more than 15 certified or licensed appraisers in a State, or 25 or more nationally within a given year.

AMC State Regulatory Agency Fee

• With consideration to how long an AMC has been in business, the fee paid to the State is anywhere from $25 to $50 per appraiser on the panel.

Reciprocity

• State certifying or licensing agencies will be required to have a reciprocal policy for individuals from other States when the other State is in compliance and the appraiser holds a valid certification.

Approved Education

• The States will be encouraged to accept courses that are approved by the Appraiser Qualification Board's Course Approval Program.

Appraisal Complaint National Hotline

• A national hotline will be established to receive complaints of non-compliance with appraiser independence and USPAP.

This is only a thumbnail sketch of all the changes expected to take place.  Of course, only time will tell how it will all pan out.  No matter how it goes and "For What It's Worth," rest assured I will be knocking on your in-box with my interpretation.

However, having the proper tools and knowing how to use them is only part of the communication process.  Before these tools become useful, one must also be able to effectively convey one's thoughts.  In a nutshell, appraisers investigate, analyze, conclude and report.  A good appraiser can do all four but a great appraiser excels in the reporting category.  

In short, the best appraisers are those who can pass on their thoughts and conclusions in a clear and concise manner.  Everyone knows that a client doesn't always agree with an appraisers opinion.  However, if presented properly, the "how and why" of an appraiser's conclusions should be clearly understood.  In other words, they may not agree with the end result but at least they understand the reasoning behind the conclusions.

As such, it is imperative that appraisers develop a fluent writing style that is logical and effectively communicates the analysis and conclusions to the client.  Writing a report that is interesting and easy to read is an essential part of an appraisal assignment.  The best data and analysis is useless to a client if the results can't be effectively communicated.  

For many, it's probably been years since your last writing course.  As strange as this may sound, it might not be a bad idea to brush up on some of those writing skills.  I recently took a writing course for appraisers through the Appraisal Institute.  At first I was skeptical about taking a writing course for appraisers.  I mean, lets get serious; I'm an appraiser, not an author.  However, I really learned a lot and it definitely changed the way I wrote my appraisals and made them better.

If your looking for continuing education, give an appraisal writing course some consideration.  With lenders asking for more and more comments these days, being a better communicator can't hurt. 

In the appraisal business, communication has always been an important element in the client / appraiser relationship.  Even in the days of snail mail, I can remember giving the client a call and letting them know that the postman delivered their order.  With today's technology, there isn't any excuse for a serious professional to fail when it comes to keeping the client informed. If you show up at an inspection and no one is there to let you in, get on the phone.  If you show up to inspect a single family home and you find a duplex, shoot off an email from your smart phone after finishing the inspection.  I've even snapped photos from my Blackberry during an inspection and sent them off to the client for their review.  Keeping everyone informed and up to date as quickly as possible yields a smoother process and happier clients.



My grandfather taught me at an early age that having the right tool for the job makes all the difference.  However, just having the right tool is only half the battle.  Before it becomes effective, you need to get it out of the tool box, and more importantly, you need to know how to use it.  Voice communication is only a fraction of what most smart phones do today.  Believe me when I say, "this isn't your fathers cell phone."  Technology isn't going away any time soon and those who embrace and master its capabilities will certainly reap its advantages.

All kidding aside, the virtual classroom has become a feasible alternative for Real Estate Appraisers trying to satisfy their continuing education (CE) requirements.  Those getting into the business are also utilizing online instruction to fulfill their education needs.  Practically all of the qualifying appraisal education needed to become an appraiser is now available online.  Without a doubt, distance education has become a substantial part of the appraisal industry.



I must admit, when online education first started, I wasn't a big fan.  There's something about sitting in a classroom with other appraisers, hammering out appraisal problems and sharing war stories that's hard to duplicate anywhere else.  It gave you an opportunity to network with other appraisers and share ideas.  Appraisers typically don't make it a point to "hang out" with one-another, so the traditional classroom became a great place to meet others in the business.



However, from a practical standpoint, continuing education online really makes sense.  Because it is online, you are able to go to class anywhere there's internet connectivity and because it is self-paced, it's easy to fit into your schedule.  How many times did you find a course you wanted to take but didn't because it was too far away, and how often did you find a course that peaked your interest, but didn't take it because it didn't fit your schedule?  With online education, the course comes to you and it comes when you want to take it.  I've personally worked on my own education while flying on airlines that offer wi-fi connectivity above 10,000 feet.



Online education is very good; especially when it comes to continuing education.  Because CE doesn't require taking an exam, it's really easy to physically sign in to the traditional classroom but mentally check out.  I've literally witnessed students sleeping during instruction while others used the time to read the sports page.  One would think that it would be easier than ever to do the same, if not worse, in the virtual classroom.  However, most online education courses require the participant to understand each section of the material before they move on.  This is done by having the student take and pass a quiz before they can begin the next section.  If you don't pay attention to the material, the quizzes can become quite challenging.



At the end of the day, I would have to give the online educators kudos for providing appraisers with a very viable alternative to the traditional classroom.  They've done a very good job at providing a quality product that is meaningful, flexible and affordable.  If you haven't tried an online course, I suggest you give it a shot.  Just check with your state before signing up to make sure it qualifies and fulfills your CE requirement.