Appraisal Scoop

Press Release: Drive for Appraiser Accountability Spurs Marshall & Swift’s Certification Program

Marshall & Swift (M&S), a MacDonald, Dettwiler and Associates, Ltd. (MDA) business, and the leading worldwide provider of residential and commercial building cost data to the real estate appraisal market, announces new support for the appraisal process through its appraiser certification program.

As the appraisal industry experiences increased regulatory oversight and a demand for evidence that appraisers use best practices, M&S, (a co-founder of one of the professional appraisal organizations that in 1987 helped to establish the Appraisal Foundation) has joined the fight to demonstrate the quality of valuations performed by appraisers. M&S demonstrates this by giving appraisers proof of licensed access to its industry-standard replacement cost data for their property valuations.

The new M&S Licensed User Certificate is available to M&S licensed customers at https://certification.marshallswift.com, and is for attachment to any appraisal report. The certificate is written confirmation that the appraiser maintains current building cost information in accordance with appraisal best practices, and supports the residential appraisal form requirement that the appraiser list a source of current data when calculating a cost approach valuation. Marshall & Swift also provides an online registry of certificate holders should lenders wish to confirm appraisers’ access to current building cost information as part of their underwriting process.

M&S President Peter M. Wells notes, “Marshall & Swift cost data remains one of the most important and defendable sources of property valuations in the lending process required by the mortgage and appraisal industries today.” Wells states that he believes there will be a resurgence in the use of the cost approach in the lending process because the current debacle in the mortgage industry was fueled by uncertainty in valuations and the market approach alone was unable to find the low point for valuations.

“Restoring the cost approach to the underwriting process is inevitable,” says Wells, “since it is a measurable component to valuation that is not at the whim of emotion.”

Overlooked since 1996, the cost approach has always helped define objectively the total amount of money that can justifiably be lent against a property. It also serves as a baseline to compare market trends with the cost trends of real property.

Virginia REAB Holds "Special Meeting" on Appraisal Delivery Web Portals: Part 3 of 3 - FNC's Chief Legal Officer Responds

Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.

Click here for Part 1 and for Part 2.

July 23, 2008 - Richmond, Virginia

Mr. Olson, Chief Legal Officer for FNC, did in fact take several minutes to discuss some points, many of which are similar to the comments he had made at previous meetings.  Download Neil_Olson_FNC_Response.pdf   He did not prepare or use a power point presentation this time. He chose to sit at the Board’s table and comment and answer questions as they were asked.

Much of what was said can be summed up in a few sentences.

“The ENV file that is submitted is the true copy. Many recent improvements to the AI Ready format were made that allow for inclusion of more images. The limitations of the presentation and formatting of the reports in the ENV are done so because that is the clients’ wish for the reports to be presented in such a way. He did also say that the security given by the system is the biggest advantage of Appraisal Port.”

Personally, I must say that I respect Neil Olson, any one that is willing to travel this many times and essentially defend his company the way he has done, gets a pat on the back. The lack of interest, or perhaps the lack of presence by the other companies that convert reports, and the lenders that are allowing or requesting it, leaves Mr. Olson there to defend the concept all by himself.

The point he made regarding the lender/client’s wish to have the reports in such a format, I do think this needs to be examined closer. I think a more accurate statement would be that this is the system that Appraisal Port sells to lenders on the merits of rule set reviewing and quality control. The system essentially reads the file and if any of the data in the fields is outside of an established tolerance (example: greater than 10% line adjustment) it is flagged. What I assume happens from there is that a reviewer or otherwise trained person looks over the report and decides if further appraisal review is needed, or if the report properly explains the variance.

One can surmise from the absence of the lender/clients and the fact that the programs are so limited to exclude the appraiser’s intended forms and presentation; it may not really be the lender/client that wants the reports in such a manner.

It is likely that the lender/client was solicited on the benefits of the rule sets and review features. They are not here defending the right to do so, they are leaving that to FNC. I believe this is a reasonable assumption to make regarding Lighthouse and AI Ready. This means that it is likely that the lenders using these types of services may not realize that the reports they are receiving are in many cases, limited in what they can contain. If the lender/client is aware it can be assumed that no consideration is given to the appraisal process when a business decision like this is made.

This may also explain why there has been resistance from Mr. Olson when asked about allowing the lender to receive a PDF, then converting the PDF into an ENV. This would certainly prompt a lender to ask, “Why do WE need to do this?”, and I am sure the credibility of the converted report would then be at question.

There is a loop hole here that is being used to force appraisers to convert formats and then the appraiser be held accountable for what is essentially two different versions of a report. Most appraisers do not understand that the reports are limited, and from many I have spoken to, they do not read the converted report and compare it to the report in their forms package.

Is This What the Lenders Really Want?  Click here to continue reading . . .

Virginia REAB Holds "Special Meeting" on Appraisal Delivery Webportals: Part 2 of 3 - MISMO Standards

To Convert or Not to Convert? Is the New Standard the Same as the Old Standard?

Appraisal Scoop reported previously (click here) on the May 22, 2008 Virginia State Board for Real Estate Appraiser's (VREAB) meeting to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse. Click here for Part 1.

Virginia Real Estate Appraisers Board July 23 2008 Special Meeting Regarding Web Portals

Moving on into this second part of three, we are going to look at Rob Fraiser’s presentation on MISMO. First, I am sure many of you have no idea what MISMO is. The Mortgage Industry Standards Maintenance Organization (MISMO), a not-for-profit subsidiary of the Mortgage Bankers Association (MBA).

Their mission statement is as follows:

Mission Statement - MISMO was created to promote and support the common business interests of the Commercial and Residential Mortgage Markets. Its mission is to benefit industry participants and consumers of mortgage and investment products and services by:

• Fostering an open process to develop, promote, and maintain voluntary electronic commerce procedures and standards for the mortgage industry, and
• Enabling mortgage lenders, investors, servicers, vendors, borrowers, and other parties to exchange real estate finance-related information and eMortgages more securely, efficiently and economically.

So what does all that have to do with appraising you may be wondering? Quite simply, it is an endeavor amongst software companies, and the mortgage industry to develop a standardized format that will include appraisal delivery. The real reason that file versions such as PDF, ENV, DOC, ETC are all an issue has led to the development of MISMO.

You see when an appraiser reports a file in PDF to a client; the client must access the file the old fashioned way, by having a human being read it. The mortgage industry has in mind that using a format that allows the information in the report, the data, to be placed within automated processing to expedite the loan process. They are able to run this data through established rule sets and various quality control processes. PDF versions, while capable of being converted, are not the friendliest of formats for them to work with.

Rob Fraiser, SRA is the chair for the Property and Valuation Services Workgroup. The workgroup’s mission statement is:

Mission The mission of the MISMO Property and Valuation Services Workgroup is to ensure that data elements related to property identification and valuation services are identified and logically arranged within the Schema. P&VS workgroup is building the communication bridge between valuation professionals and the end users of their services.

Now we have an idea of what they are doing, let’s take a look at Mr. Fraiser’s presentation. Within it he showed us several slides from a MBA technology conference in March of this year. Mr. Fraiser did provide me a copy of the total power point that was used at that conference, which is much more detailed than the one he showed us, due to time constraints. This is publicly available from their website, but I have supplied a copy Appraisal Scoop to allow you to read through if you like.  Download MBA_TechConf_03_2008_Public.ppt

Click here to continue reading . . . .

Webcast appraiser interview of a la mode, inc Chairman, Dave Biggers - Download Here

I met Florida appraiser Marco Ruiz in Chicago back in June at an a la mode regional conference.  This morning Marco dropped me a note to let me know that he'll be on a radio interview/talk show with Dave Biggers, a la mode, in Chairman, Thursday 7/31/2008 at 4:00pm at My Technology Lawyer.com (http://www.mytechnologylawyer.com/radio)

Download Dave_Biggers_Interview.mp3 (27528.9K)

"We are going to be talking about the appraisal business, changes in the industry, etc.  I set this thing up originally to talk about the HVCC.  I’m sure it will be a lively and interesting discussion. I’m confident you’ll want to hear what Mr. Biggers has to say.

Please try to tune in and listen to it live if you can.  That way you can participate by email or phone."

Marco A. Ruiz - www.ruizappraising.com

Appraisal Institute - Their Residential Database and FNC's Impact on the Appraisal Profession. What's Your Opinion?

The most recent newsletter by Appraisal President, R. Wayne Pugh, MAI, addresses technology and other forces impacting the residential appraisal field, including property databases, AI Ready, FNC, automated valuation models ("AVM"), Appraisal Institute residential report forms ("AI Reports"), the Home Valuation Code of Conduct ("HVCC"), the Cuomo/Fannie Mae/ Freddie Mac Agreement, and Appraisal Management Companies(AMCs).  Download AI_061208_Newsletter.pdf

Read the lead segment below . . .

Approximately 10 years ago, the Appraisal Institute Board of Directors foresaw the advance of technology in the appraisal field, the oncoming standardization of data formats, and the potential development of databases relating to real estate.  Given the strategic opportunity of these developments, the Board decided that it would be best to have an appraisers' database rather than databases developed by others. 

The thinking was that appraisers would "control" the data they contributed to the databases and would profit from their choice to sell that data.  The Board also decided that it would be most beneficial for the Appraisal Institute to be the leader in establishing appraisal data standards rather than have others impose their own standards on appraisers.  In other words, the Board wanted the Appraisal Institute to be the leader among inevitable forc es tha t would bring benefit to appraisers and the public, instead of ceding leadership to others who might not have the appraisers' and public's best interests in mind.

The result was the creation of the Appraisal Institute Residential Database (AIRD) and the AI Ready residential appraisal data standard.  AIRD was established through a joint venture agreement between the Appraisal Institute and FNC.  The Appraisal Institute made a minority interest capital investment in the joint venture and licensed some of its trademarks, including AI Ready, to AIRD for use in connection with the residential database. 

In 2002, FNC expressed an interest in purchasing the Appraisal Institute's minority interest in AIRD.  As part of this sale, the Appraisal Institute received an option to purchase shares in FNC should FNC go public, be sold or be merged into another entity.  The Appraisal Institute also received royalty payments from FNC for the use of the licensed trademarks in an amount that allowed the Appraisal Institute to recover its original capital investment.

The Appraisal Institute currently has no ownership interest in FNC and receives no royalties or profits from FNC.  The Appraisal Institute simply owns stock options that could be converted into cash if and when FNC goes public, is sold or merged into another entity.  The aforementioned license agreement runs through 2012. 

While the AI Residential Database no longer exists, the AI Ready Standard continues to this day.  This appraisal data standard, developed largely by Appraisal Institute residential members for the benefit of appraisers, is fast becoming the pre-eminent appraisal data standard in the field, helping to ensure a consistent, high quality standard for appraisers to use and bringing brand recognition to the Appraisal Institute and its members.  A multitude of residential software vendors whose software is compliant with the AI Ready Standard use the licensed AI Ready logo.

Unfortunately, the market recently has been flooded with misinformation about AI Ready, with some coming from parties who have financial interests in raising concerns about AI Ready. 

For a detailed explanation about AI Ready that addresses much of this misinformation, please see the Q&A : Click Here.

To read the entire newsletter click here: Download AI_061208_Newsletter.pdf

Virginia REAB Hears Petition To Prohibit Use of Appraisal Delivery Webportals That Transmit Altered Appraisal Reports

Author: Woody Fincham:

This article is a first hand account of the 5/22/2008 Virginia Real Estate Appraiser’s Board meeting.  These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.

May 22, 2008 - Real Estate Appraiser’s Board, Richmond, VA: Today the Virginia State Board for Real Estate Appraisers met to discuss among other things, a petition submitted by George Dodd, SRA.  Click Here to: Download Virginia_Appraisal_Board_Petition_052208.pdf

The petition was written to prevent online sites, or web-portals from changing or otherwise altering reports that appraisers prepare.  Web-portals would include such companies as: AppraisalPort, RELS, and other AI ready required companies. It also seeks to limit the illegal PDF stripping down, and programs that erroneously copy information from reports such as Lighthouse.

The fight to protect appraisal data was front and center in Richmond.  There were several people there to watch and learn, including Chief Legal Officer for FNC, Neil Olson and Mark Chapin, Vice President, Zone Sales and Business Development for ZAIO. Within the galley were several appraisers from across the Commonwealth of Virginia. From one-man shops to multi-appraiser/multi-area shops, everyone wanted to watch as Virginia bravely looked to change the playing field for the industry.

The meeting was mostly formal business as usual, licensing sanctions and the typical stuff. Traditionally, public comment is limited to 5 minutes. A motion passed to hear Mr. Dodd's petition and up to speak first was Mr. Olson. He spoke well and politely, agreeing that the issue was indeed serious in nature, and that appraisal report delivery has changed since the days of typing a report and sticking photos in the report and dropping it off at the bank.  Download Neil_Olson_FNC_Response.pdf

• He made it very clear that the conversions were done by the appraiser. It seemed he was very determined to make it known that essentially the liability of the conversion rested with the person initiating the conversion: the appraiser.
• He also compared the PDF format and the AI format as being relatively the same. Mr. Olson discussed how the major component of the AppraisalPort site was to check for viruses.

Many of you may be wondering why that is an issue. Really, it has always been the appraiser’s responsibility to make sure that all reports are sent in secure manners. There has always been the requirement that appraisers have complete control over signing their reports. So why should we be concerned with things as they are enough to try and see that a state board requires non-licensed companies to stop their business practices?

It has to do with the requirement of many of these companies to force an appraiser into either doing these things with their reports, or be forever blacklisted from receiving work.

They are asking appraisers to send in work in a format that essentially allows them to unlock your data, use it how they see fit. The data is essentially pulled out into sections, including your signatures.

Click Here To Continue Reading . . .

Shameless Self-Promotion: Grand Opening! ScoopGear.com!

Some of you have already noticed the ScoopGear.com display ad on this blog and were curious enough to click on it.  For those of you that haven't . . .this post is for YOU!

Over the years, I've noticed that a lot of appraisers come up with some pretty neat ideas but they never seem to gain any traction because there was no place to advertise them economically or they weren't able to demonstrate or explain their value.   That's all about to change!

AppraisalScoop has been phenomenally successful thanks to all of you!  Along with that success comes an opportunity to create a sister-site, that's geared towards marketing a variety of niche-market appraisal tools, that would otherwise not of had exposure to a large targeted market.

ScoopGear.com has been open for a few days now but today is its official GRAND OPENING! 

One of the key features of ScoopGear.com is its blog interface.   This is NOT just another storefront site.  For the first time ever, ScoopGear.com's blog style allows merchants and appraisers to interact real-time on a variety of levels.  Sure, you can buy stuff from the individual merchants, but that's not the great part of this site. 

Each merchant essentially becomes a blog author!  Just like on AppraisalScoop.com, each author can post articles, videos, and photos about their product or service.  In turn, appraisers can comment and interact with the merchant. 

Many will recognize Anthony Young's fantastic Nuts & Bolts of Spreadsheets and Graphs DVD as one of our premier merchant offerings.  "Soup to Nuts" might be a better description for Anthony's DVD.  Beginner or seasoned Excel grapher, there's plenty in this video training DVD for everyone.

Anthony Young is already working on a series of training videos to illustrate some of the things that you'll learn with his product.  Your questions and comments to Anthony will also be featured there.

The LaserReel is also being featured on ScoopGear.com!

LaserReel is a heavy-duty retractable "Quick Draw" reel designed to replace the bulky holster that comes with laser measuring devices.  The LaserReel works with any laser measuring device, camera, or light that has a standard 1/4-20" mounting thread, up to 1 lb.

I had tried another brand and really, really liked the concept but the design was not durable enough for the way appraisers would use it.   I went looking for an alternative.  The LaserReel's superior 0.04" (O.D.) steel wire with a protective vinyl plastic outer layer has a 34" long reach which is ample for when you want to use the telescopic viewer on Disto measuring devices.

In the coming weeks I hope to finalize some talks with additional merchants and see if together we can build a community sharing tips, tricks, gadgets, and software.   I hope you'll visit and support the merchants.  Watch for upcoming videos!!!

Press Release: ACI Strengthens Offering to Appraisers with ACI Sketch™

May 15, 2008, Palm Coast, FL. ACI, a leading innovator in providing technology solutions for the appraisal industry announced today that it has acquired the source code of the RapidSketch™ floorplan software from Buffalo-based Utilant, LLC. RapidSketch is one of the most popular software applications for creating accurate floorplan layouts and is used by tens of thousands of appraisal and insurance professionals throughout North America.

RapidSketch, which has already been integrated with ACI’s entire product line is now enhanced and re-branded as ACI Sketch™. ACI Sketch works on the desktop, tablet, and web, and incorporates numerous productivity-enhancing features:

• Mouse and keyboard drawing with precision settings
• Extensive drag-and-drop symbols library
• Editor to create custom symbols
• Library of stock labels
• Drag center point of any line to quickly create an arc
• Copy-and-paste cloning
• Undo and Redo feature
• Rectangle tool to draw the most common floor plan shape
• Shapes tool for drawing octagonal decks, pentagonal sun-rooms, and geodesic domes
• Image or blueprint tracing with auto-scaling
• Angle, Rise & Run Display
• Standard or metric support for U.S. and Canada appraisers
• Display decimals or inches, or fractions of inches
• Online help with video tutorials

According to ACI president Dave Roberts, "The acquisition of RapidSketch as the foundation for ACI Sketch complements our strategy of providing clients with a full-range of appraisal technology. While we will continue to offer appraisers a variety of sketch options, we have developed ACI Sketch to stand head-to-head with any product in the market. By owning the technology, we can develop and support the application without relying on any third party--translating into a better product wtih tighter integration and lower cost for ACI customers."

“ACI Sketch is one of the best new efficiency products for appraisers,” said Jay Delich, President of Arizona Appraisal, LLC. “We use it in the office and on our tablet PC’s in the field, both with great success. We are particularly impressed with the free-form approach that ACI Sketch brings to creating floorplans.”

Interested parties may contact ACI Sales online at www.aciweb.com

Free Webinar Wednesday May 7th - Motion F5 Mobile Field Tool - Motion Toughens Up with Semi-Rugged Slate Tablet PC for Appraisers

Appraisal Scoop author John Hill, from Allegiance Technology, and Motion Computing are sponsoring a webinar tomorrow for people that want to learn about the Motion F5 Field Tablet PC.

The Motion F5 Mobile Field Tool is the first semi-rugged slate PC designed specifically for the mobile appraiser that combines durability, mobility and integrated functionality with the benefits and convenience of tablet input. See our Motion F5 Brochure.

The nice part is that if you are thinking about one of these tablets, there is an opportunity for webinar attendees to purchase one for $1,000 off the list price.

Sign Up HERE! - F5 Webinar hosted by Allegiance Technology

The F5 is IP54 rated to meet the demands of the job from dusty construction sites to the occasional drop from a vehicle or exposure to a rainstorm. In fact, the F5 is designed to protect from the top three causes of notebook damage, which continue to be drops, liquid spills and objects being dropped on to notebooks.

Additional F5 capabilities include:

• Thin and light with high performance capabilities (approximately 3 lbs.)
• Wi-Fi, Bluetooth®, and optional integrated mobile broadband
• Shock, drop, vibration and temperature resistance
• Vehicular docking capabilities
• Intuitive buttons and triggers
• Integrated barcode scanner (optional)
• Integrated RFID reader offering quick and simple inventory tracking and management
• 2.0 megapixel camera
• Integrated fingerprint reader to simplify password management while increasing data security
• Natural handwriting interface for convenient data capture while standing or walking
• Speak Anywhere® audio technology for convenient access to voice notes and advanced communication

Market Modeling and the Real Property Appraiser - Part III

Author: David A. Braun, MAI, SRA (President, Braun & Associates, Inc.) has been actively engaged in real estate appraisal, review, and consulting since 1976. In this period, assignments have been performed throughout East Tennessee for numerous clients

This is the final part of a three part article on "market modeling". The purpose of this series of articles is to introduce real property appraisers to the concept of market modeling in a way that helps remove the mysterious cloak surrounding it.

In Part I we discussed that market modeling covers AVMs, matched pairs, regression, artificial intelligence, and expert systems. The article pointed out that appraisers perform market modeling every time they fill out a sales grid when performing the Direct Comparison Approach. In theory, even the most complex AVM program can be duplicated by hand calculations.

The climax of Part I was that all of the methods represent one science; as their purpose and nature are all similar. In fact, appraisers know a lot more about market modeling than they think. A regression application that I programmed in Excel was provided (Excel utility) so that appraisers could get some hands on experience with automated modeling.

The video tutorial was designed to give the appraiser enough information to use the application; but was not intended to be a "how-to" for regression analysis. Based on feedback from many of you, the application that I provided was very functional and much easier to use than many other programs available to the appraiser. My goal was for appraisers to see that applying a proper regression analysis intended to extract adjustments was much more labor and time intensive than we had been told.

In Part II we focused on regression analysis and laid out some requirements and goals that would be necessary for any market modeling system to be used in everyday appraising. These were:

1. Produce a more reliable (accurate) value opinion without adding too much time.
2. Shorten the time to perform an appraisal of equal quality.

Click here to continue reading . . .