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Bad Actors: AMC Appraisal Perspective Through Rhetorical Misdirection

October 20, 2014 | 4:45 pm | Public |

I was invited to speak at the Great Lakes Chapter of the Appraisal Institute last week and met a lot of great appraisers who cover the state of Michigan.

Summit2014Brochure

I spoke about the housing market and the misinterpretation of residential housing metrics, inspired by this article and the following infographic from the Detroit Free Press.

Inkster +106.4% !!!!! a largely distressed market with what I was told only has a handful of rock bottom sales ie $10K in 2009 becomes to $30k in 2014 – a perfect example. Hot? Hardly.

dfp-real-estate-hot-spots-2014-MAP

As much as I think I held their attention for the entire hour allotted, my presentation fell short of getting audience adrenaline pumping like the Jordan Petkovsky, the Chief Appraiser of a TSI Appraisal, a large national AMC and affiliated with Quicken Loans. I still wonder how beneficial this public relations could be by talking to the industry like a politician – as if residential appraisers were clueless to the “incredible benefit” that AMCs provide our industry.

Here are a few of the questions (paraphrased) posed to an audience comprised of heavily experienced residential and commercial appraisers:

Q: “I realize there is friction between AMCs and appraisers. What has to happen to solve this problem?”
A: Someone in audience: “Someone has to die” followed by a burst of laughter from the entire room.

Q: “We spend millions on powerful analytics. Wouldn’t it be great for appraisers to get their hands on this technology?” (repeated 2 more times slowly for effect).”
A: Someone answered: “You have to spend millions on technology because the appraisal quality is so poor you need to analyze the markets yourself.”

Q: “How do we attract new appraisers into the business?”
A: My answer “Until appraisers are fairly compensated when banks are made to be financially incentivized to require credible reports, nothing will change.”

Q: “How do you think banks feel about the reliability of appraisals today? They don’t feel the values are reliable.”
A: My answer “Because AMCs pay ±half the market rate, they can only mostly attract form-fillers (aka “corner-cutters”). They don’t represent the good appraisers in the appraisal industry.”

Q: “We focus a tremendous amount of effort on regulatory compliance on behalf of banks and boy are they demanding! We even have a full time position that handles the compliance issues.”
A: My comment – that’s a recurring mantra from the AMC industry as a scare tactic to keep banks from returning to in-house appraisal departments. Prior to 2006 boom and bust cycle and the explosion of mortgage brokers with an inherent conflict of interest as orderers of appraisals, the profession was pretty good at providing reliable value estimates. The unusually large demands by regulators (if this is really true and I have serious doubts) is because the AMC appraisal quality is generally poor. If bank appraisal quality was excellent, I don’t believe there would be a lot of regulatory inquiries besides periodic audits.

What I found troubling with his presentation – and I have to give him credit for walking into the lion’s den – is how the conversation was framed in such an AMC-centric, self-absorbed way. I keep hearing this story pushed by the AMC industry: The destruction of the modern appraisal industry was the fault of a few “bad actors” during the boom that used appraisal trainees to crank out their reports. That’s incredibly out of context and a few “bad actors” isn’t the only reason HVCC was created – which was clearly inferred.

Back during the boom, banks closed their in-house appraisal centers because they came to view them as “cost centers” since risk was eliminated through financial engineering – plus mortgage brokers accounted for 2/3 of the mortgage volume. Mortgage brokers only got paid when the loan closed, so guess what kind of appraisers were selected? Those who were more likely to hit the number – they were usually not selected on the basis of quality unless the bank mandated their use. Banks were forced to expand their reliance on AMCs after the financial crisis because the majority of their relationships with appraisers had been removed during the bubble – the mortgage brokerage industry imploded and banks weren’t interested in re-opening appraisal departments because they don’t generate short term revenue.

The speaker spent a lot of time talking like a politician – “we all have to work together to solve this problem” “appraisers have to invest in technology.” When asked whether his firm had an “AVM”, he responded almost too quickly with “No” and then added “but you should see our analytics!”

The residential appraisers in the audience were largely seething after the presentation based on the conversations I heard or joined with afterwords.

It’s really sad that appraisers don’t have a real voice in our future. We’ve never had the money to sway policy creation and we can’t prevent the re-write of history.

But we’re clearly not the “bad actor.”

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[AppWatch] RoomScan – An Easy Way to Create A Floorplan

March 23, 2014 | 11:38 am |


roomscan I stumbled on to this iPhone app from the Locometric called RoomScan – to measure rooms, create floor plans , calculate square footage on the fly. I was really impressed with the free version and quickly upgraded to the $4.99 pro version to be able to create doorways and connecting rooms. This may soon replace the $500 laser measuring device I’ve hauled around for years.

roomscandrawroomscanfinal

An ah-hah moment indeed.

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Reverse Polish Notation Refresher: HP12C Video For Real Estate

January 9, 2013 | 10:14 am |

Bruce Kirsch over at REFM Blog posts a view worthy class on the stalwart of real estate calculators, the HP 12C.

Here’s my sentimental look at retiring my old HP12C.

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[a la mode] Here’s My Testimonial For Their Appraisal Software

September 3, 2012 | 8:53 pm |

Earlier this summer I found myself on the home page of a la mode software, the largest appraisal software company out there with over 100k users. Our firm Miller Samuel uses their software and well, here’s my testimonial on the a la mode web site and a version that was recently sent out to about 80,000 appraiser subscribers of Working RE, an essential publication for real estate appraisers.

Hey this is better than being on the cover of Time.

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[New Yorker] Social-Networking My _ _ _ Off

August 9, 2012 | 11:13 am |

I’m just back from vacation and had taken a break from social media. Now that I’m back, this New Yorker cartoon struck a chord.


Source: New Yorker

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[a la mode] I Find Myself in an Ad for Appraisal Software

July 9, 2012 | 11:45 am |

A few months ago one of the largest appraisal software vendors out there, a la mode, reached out to me to appear in their advertisements as a neutral real-world user. a la mode claims that half the appraisers in the United States use their products. The ad is currently placed as the starting image on their home page. This is the first iteration with more to come in print and on the web.

Celebrating 26 years as a technology leader, a la mode develops desktop, mobile, and Web tools for the real estate and mortgage industries. a la mode’s mission-critical products are used by hundreds of thousands of appraisers, agents, inspectors, and lending professionals to complete the nation’s real estate transactions. a la mode’s state-of-the-art offices are located in Salt Lake City, Oklahoma City, and Washington, DC.

My firm has been using alamode software since 2007 when we stopped developing our own (after 20 years of doing so) and their solution works very well for us.

Over the past decade the appraisal industry has changed rapidly and it got to the point where there were too many form changes, technology requirements and time spent working on it to justify developing our own software anymore.

After all, as my sister (who is also one of my partners) pointed out to me, Miller Samuel is an appraisal firm, not a software company.

So noted.



a la mode home page [a la mode]

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A Twitter Shout-out from Valuation Review on their 10th Anniversary

May 21, 2012 | 3:30 pm | Public |

Here’s the Editor’s page in a recent copy of Valuation Review, an essential publication for real estate appraisers by October Research. I’ve been subscribing since nearly the beginning when it was called something else. Always relevant good reading for an industry besieged by bad information.

And more importantly, take notice of my twitter shout-out . Fun!


[click to expand]

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[Interview] Doug Heddings, Founder/Broker, Heddings Property Group LLC, True Gotham Blog

October 3, 2010 | 12:19 pm | Podcasts |

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[Interview] Ilyce Glink, Author, Blogger, Columnist, TV Reporter, Talk Radio Host, Think Glink Publishing LLC

August 20, 2010 | 11:26 am | inmanlogo | Podcasts |

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[Interview] Ian Huckabee, Founder, Weejee Media, Web Marketing Strategist/Technologist, Home Builder

August 12, 2010 | 1:24 pm | Podcasts |

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