That’s the million dollar question. Big banking is counting on the majority of appraisers to fall in line with whatever hybrid product they decide is best. It makes for an interesting road ahead because appraisers actually have the power to make these products a success or a failure. A hybrid appraisal is still an appraisal and must have a signature from a licensed appraiser.
If banks can keep whittling away at the appraiser’s scope and can get the total appraisal fee low enough, they will achieve their goal and increase their declining profits (if you really believe they are declining or if they just want more). And, why not? Appraisers have been forced to go along with every other change thrown at them in the last ten years, so why not this one? Or, will appraisers say, “you know I really like to see the house in person and measure it, and make my own judgments about condition and quality. My fee is the same whether I inspect it or you get someone else. My fee is based on what I know, just like every other professional. It’s not tics of the clock, but tics of the brain.”
Let’s talk about who’s going to do these hybrid inspections. If I’m a successful real estate agent, do you really think I’m going to spend my time doing appraisal inspections for peanuts? Who will get the jobs? The newest of the agents who could use a little gas money. It’ll be just a part time gig until they start making some real money selling real estate. It will actually be very good on the job training for the agents, but for home-owners and consumer protection, on the job training may not be the best way to handle something this important. People who have the least education and experience of anyone in the industry, who know little about the real estate business and even less about measuring square footage will be the people appraisers are supposed to rely on to provide them with accurate information. If I’m buying a house, do I really want the lowest person on the totem pole providing the foundation for my value? Not likely…
And remember, these are the same bankers that don’t like appraisal Trainees. They don’t trust the people appraisers have personally trained and know. So they say, let’s get someone we don’t know or trust at all and let them get this important info for us. And make no mistake, this information is extremely important to the valuation process. An outsider looking in on this would say it’s an insane scenario. We won’t take appraiser trainees, but we’ll take real estate trainees who have about 30% of the education of appraisal trainees, who are not good enough for the job evidently.
Consider what might happen if appraisers simply refused to sign these reports. You can write whatever you want in the report, but if there’s a problem in the future, guess who they’re coming after. Look at a little history and you can see who lenders will come after if there is any trouble, and it may be six or seven years after the fact – the lowly appraiser. Do you really want to sign a report (with all it takes to earn and keep an appraisal license) for a few hundred dollars? Is that an appraiser’s worth to the mortgage industry? Have you ever seen GSE’s and banks asking for public comments on this topic? It’s only important to those looking to make huge profits from the new products. The Golden Rule is in full swing.
If there was ever a time for appraisers to just say no, this is it.
Of course, this is a business decision for every appraisal business across the country. However, if the number of appraisers willing to sign off on these hybrid reports is low enough, just maybe, they will figure out we’ve gone as low as we’re going and we’re starting to push back. Just maybe it’s time to leave the appraisal industry alone for a while and focus on the real estate industry and appraiser’s “Source” of information. No one ever clamoured for lower appraisal fees, except for lenders, and they only want a cut of the appraisal profits. It’s still all about control and money. But this time, appraisers can actually influence their own futures. So, are you going to be a hybrid appraiser? Get ready, the requests are coming soon…
