Sounding Bored is my semi-regular column on the state of the appraisal profession. This week, I touch on the FNC federal class-action lawsuit and the right of appraisers to their intellectual property.
In Kenneth R. Harney’s article in the Washington Post this weekend Reprisals on Appraisals he discusses the issue of reliability of appraisers and their digital alternative.
FNC is the subject of a federal class-action suit over the idea that the data collected by the appraiser can be leveraged for further use.
I do not take the view that all data in an appraisal is simply raw objective information that can be regurgitated for other purposes. As an appraiser, I have enhanced that data in my reports through my work and expertise. I made that effort for the preparation of the report. Of course some of the information is simply transposed from another source, but much of it is my intellectual property.
I have no problem with my data being used is if I am asked and decide not to opt out. However, I was never asked in advance to allow my data to be farmed for additional funds.
An appraiser’s expertise should be compensated if their work is used for an additional purpose not disclosed in the original appraisal request. That additional use would have been built into my fee from the outset.
Based on my experience and industry feedback with people who use them, the automated valuation models (AVM’s) are pretty much worthless as a reliable indicator of market value but they do appease the regulators as a document in the file and have potential in the distant future as a credible tool.
I am struck by the irony that the appraisers, who are supposedly a weak link in the mortgage chain, stimulating the need for AVM’s, are needed to provide reliable content to the very AVM’s that were built to replace them.