Appraiser Talkback Blog

By Bill Cobb

With the many challenges before the residential appraiser these days, it’s important to remain on the FHA Roster- the ticket that can provide 40 to 50 percent of your income going forward. Here’s one way to help improve the quality of your FHA work.

It’s no secret that 2010 could be a very challenging year for home appraisers due to less demand for appraisal orders. However, where certain sectors are diminishing under the current mortgage market conditions, FHA and USDA Rural Development (RD) appraisal orders are booming. RD appraisal assignments require FHA standards and inclusion on the FHA Roster. FHA work is expected to remain a large portion of mortgage lending into 2010.

A Coester AppraisalNewscast in late December last year stated that as much as 60 percent of home loans made in 2009 were FHA. A recent 2010 HousingWire Update email stated that four out of 10 home loans are FHA. Whether FHA lending makes up 40 or 60 percent of mortgage lending in 2010, it seems certain that it is a necessity for appraisers to remain on the FHA Roster.

FHA Cracking Down
Why is it important to “up your game” when it comes to FHA appraisals? It was reported in 2009 that, due to FHA loans defaults, FHA reserves dwindled below one percent, causing the Wall Street Journal and others to question FHA’s survivability. It’s my understanding that FHA is increasing scrutiny of appraisals in an effort to remain solvent. Recently, Bloomberg reported that: “U.S. Subpoenas 15 FHA Lenders with High Mortgage Defaults” (January 12, 2010). And, you can bet that FHA will look at who the appraisers are that possibly helped those 15 lenders earn their high default status.

FHA Appraiser Inspection Course, Checklist and eManual!
On Real Estate Appraiser Tips (my blog filled with tips for working harder on your business, rather than in your business), we try not to get bogged down in the news of the day but offer tips and solutions to get us beyond our challenges. After reading through the FHA Inspection Course, eManual and using the Checklist in the field, I’m convinced that the use of the Checklist will certainly aid in reminding us not to forget any inspection items while onsite and consequently, remaining on the FHA roster by not committing careless errors.

For instance, one item I repeatedly forget to take note of is how far the private sewer or water well is located from the home and to properly annotate the locations of such on the sketch. The Checklist reminds me to do this. Another reminder is to include photos of the crawl space, which is something I often forget to do. With the elimination of the old “VC Sheet” in 2005, FHA inspections may not be as thorough as needed simply because of a lack of a checklist to follow during inspections. This product solves that problem for appraisers.

A helpful feature of the eManual is the real life photo examples of possible FHA deficiencies with questions and discussion as to which answers are correct and why. FHA lessened some standards in 2005 after it lost so much mortgage market share but this resource answers the extent of “current” FHA standards concisely.

“This new FHA Appraiser Inspection Course, Checklist and eManual is designed to get you up to speed on FHA appraising,” said appraiser-author Lore DeAstra. “The course explains how to complete the two-page checklist line by line. The Checklist serves as a field guide for completing your reports. The eManual saves you time and money by summarizing and organizing the material you need to know. We reviewed more than 450 pages of HUD materials and spoke with several HUD officials to compile the FHA Appraiser Inspection Form, course materials, and eManual. It will save you time and money.” (No continuing education credit is available at this time).

If you have questions for Lore DeAstra regarding FHA appraising that you would like answered, please email them to subscription@workingre.com.

Testimonials from other Users
“The eManual is written for the appraiser needing to know the latest FHA requirements. It is concise, yet contains all the newest appraisal requirements that are scattered throughout the volumes of FHA manuals, letters, etc. The included FHA Appraiser Inspection Checklist is a short two pages and still a reminder of those unusual situations not usually encountered. This will keep the appraiser from omitting required items and having to return to the subject property.” - C. Pierce. MAI, Appraiser +30 Yrs - Detroit, Michigan

“This material is for anyone learning the new FHA regulations and guidelines, even if they have been appraising for years. Utilizing the FHA Inspection Checklist and eManual are highly beneficial during the inspection and appraisal process. Very Well Done!” C. Fox, MSA, Real Estate Appraiser for +30 Years, Houston, Texas

Sidebar
Win a Free Custom Built Appraiser Blog
Author and appraiser Bill Cobb, a wizard at using blogging, social media and other “new stuff” to increase business, is offering to build a blog free for one lucky appraiser and provide training and tips on how to maintain it. You can view a sample of Bill’s appraisers’ blogs at Appraisersblogsample.info. (To learn more about why blogs can help you with your appraisal business, please read Using Blogs to Grow your Business.)

Everyone who purchases the FHA material reviewed by Bill above within the next two weeks will automatically be entered to win the free custom-built appraiser’s blog (regularly $150).

To Order: The price for the Inspection Course, Checklist and eManual is only $49 ($40 for OREP members). To purchase, please visit www.workingre.com/workingre/fha-course-checklist-emanual.html.

Contest Requirements
* Only individual appraisers are qualified to win. (Appraisal industry vendors and their employees are not eligible.)
* You will need to provide your own hosting and domain name.
* The deadline to purchase/enter is February 12th, 2010.

If you’ve already purchased the FHA material and would like to be entered to win, please email us at subscription@workingre.com.

by David Brauner, Editor

Given the fierce efforts to keep HVCC alive, it makes you wonder if AMC interests know something the rest of us don’t.

As federal legislation that would end the Home Valuation Code of Conduct (HVCC) moves closer to reality, appraisal management company (AMC) interests are blitzing the media with their message that overturning HVCC means a return to lender pressure/appraiser compliance and an environment that allowed the current real estate collapse.

Industry thought leaders have been saying for months that, no matter the fate of HVCC, the shotgun marriage between appraisers and AMCs is sealed: if appraisers want to do business, they will have to do business with AMCs on the terms dictated by these middle men or so goes the conventional wisdom.

Representatives from the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac and others, tell appraisers that there will be no going back to business as it was prior to HVCC, no matter if the Code is allowed to sunset in November of this year or terminated before then (FHA, Fannie/Freddie Tell it Like it Is, WorkingRE.com, Current Edition). If this is the case, what is the AMC trade group TAVMA (Title/Appraisal Vendor Management Association) so worried about?

In recent weeks, TAVMA has published stories in the appraisal press and in other online real estate-related publications strongly defending HVCC’s role as a “firewall” protecting appraisal independence. TAVMA also recently published a widely circulated “AMC Standards of Good Practice in Appraisal Management,” in an apparent effort to head off the growing trend of AMC regulation by states (see WorkingRE.com, Sidebar for the AMC Standards of Good Practice in Appraisal Management). Such regulation, they argue, would create a confusing and expensive tangle of legislation that would drive smaller AMCs out of business and raise costs for consumers.

Safe Act
What may have rattled AMC cages is passage by the House late last year of the Financial and Mortgage Industry Reform Bill (find the Bill at WorkingRE.com, Sidbar: HR 4173). If signed into law, the Bill would establish a Consumer Financial Protection Agency and require lenders to compensate appraisers their full fees, rather than splitting them with management companies. There are also rules to assure appraisal independence. The bill gives the director of the new agency 60 days from the date of enactment of this legislation to establish such appraisal rules and calls for the HVCC to sunset at the time the new rules go into effect. The bill was referred to the Senate Committee on Banking, Housing and Urban Affairs earlier this week.

The bill includes the following:
(1) shall not prohibit lenders, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation from accepting any appraisal report completed by an appraiser selected, retained, or compensated in any manner by a mortgage loan originator—(A) licensed or registered in accordance with section 1501 et seq. of the SAFE Mortgage Licensing Act of 2008; and
(B) subject to State or Federal laws that make it unlawful for a mortgage loan originator to make any payment, threat, or promise, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property, except that nothing in this section shall prohibit a person with an interest in a real estate transaction from asking an appraiser to—
(i) consider additional, appropriate property information;
(ii) provide further detail, substantiation, or explanation for the appraiser’s value conclusion; or
(iii) correct errors in the appraisal report; and
(2) shall include a requirement that lenders and their agents compensate appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
(c) SUNSET.—Effective on the date the appraisal independence requirements are promulgated pursuant to subsection (a), the Home Valuation Code of Conduct announced by the Federal Housing Finance Agency on December 23, 2008, shall have no force or effect.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), requires state licensing of mortgage brokers, including coursework, testing and fingerprinting.

These developments and a flurry of state laws to regulate AMCs may be what has TAVMA fighting back. Quoted in HousingWire.com, TAVMA executive director Jeff Schurman said, “Turning back-the-clock, and letting parties who are compensated based on closed deals order and interact with appraisers will inevitably lead to pressure and inflated appraisals.” (Find the story at WorkingRE.com, Sidebar: TAVMA Opposes New Consumer Protection Bill.)

Reason to Believe- Speaking Up
Some appraisers have given up believing that their autonomy as businesspeople will ever be restored, since HVCC has cut them off from their mortgage broker clients. Indeed many have called it quits in recent months reporting that they can not earn adequate fees working with AMCs or generate sufficient orders to stay in business.

Passage of this Bill may be the light at the end of the tunnel. TAVMA and others are pushing hard to see that that light is turned off and that HVCC remains in place. If you are opposed to HVCC, this may be a good time to make your voice heard with your Senators.

Pressure Tested
According to the Working RE/OREP HVCC Appraiser Talkback Survey, with over 4,500 appraisers responding as of this writing, 92 percent of appraisers are not in favor of HVCC as written and 82 percent do not consider AMCs to be a legitimate business model. Fifty-three percent (53%) report that they experience pressure for value with the AMCs they work with at least some of the time (47 percent say they “never” experience this pressure). Over 55 percent say that, with the AMCs they work with, they are asked to re-examine reports with the intention of trying to “make the deal work” at least some of the time (44 percent say they are “never” asked). So despite TAVMA’s PR to the contrary, appraisers say pressure still exists.

Quality Not Job One
Survey and Blog results also support anecdotal evidence from appraisers that appraisal quality has diminished since HVCC, not improved. The reason, they say, is that many AMCs look primarily for the lowest bidder when selecting appraisers, not the most qualified professional. According to the survey, 98 percent say that, in their experience working with AMCs, appraiser selection is based solely on obtaining the lowest fee at least some of the time (less than two percent answer that appraiser selection is “never” based solely on obtaining the lowest fee).

Survey results clearly indicate that pressure for low fees and quick turn around also is hurting quality. To the question: “Do ‘low fee’ appraisals result in a product that is less reliable for the end user compared to a report where adequate fees have been paid, 45 percent answer that this is “never” the case (55 percent say it happens at least some of the time). To the question: “Does the time pressure (from AMCs) result in a product that is less reliable for the end user, compared to a report where adequate time has been allowed, 31 percent say this never happens (69 percent say it happens at least some of the time).

Freddie Mac, on the other hand, reports that an internal review indicates that appraisal quality has improved since HVCC and that complaints are down. (See FHA, Fannie/Freddie Tell it Like it Is, WorkingRE.com, Current Edition.)

FHA Fees- Customary and Reasonable?
An appraiser poll hosted by AppraiserSupport.com finds that today the majority of fees for FHA appraisals are under $250 nationwide. At issue is FHA’s new policy, which takes effect this week and mandates that appraiser fees be customary and reasonable. According to AppraiserSupport.com, “In 1986, FHA mandated the appraisal fee of $225 be paid to all FHA appraisers. FHA realized that a fair wage was required to produce quality appraisal reports. If you adjust the 1986 mandatory appraisal fee for inflation, a current appraisal fee would be $436, which was approximately the amount appraisers were charging prior to the HVCC. HUD has addressed the issue of ‘reasonable and customary’ appraisals fees. Their definition is that ‘customary and reasonable’ are reflective of those fees established and negotiated by an FHA-approved, self employed independent fee appraiser.’ However, we have evidence that, on average, AMCs are only paying 60 percent of the reasonable and customary appraisal fee.”

New FHA changes also stipulate that the fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal. (See Appraisers Talk, FHA Listens at WorkingRE.com, Current Edition.)

Side Notes: The Good, the Bad and Shangri-La (Montana)
Reaction to coverage of HVCC and AMCs in the current issue of Working RE magazine has been mixed, to say the least. Comments range from gushing praise to tirades that would make Senator John McCain blush. Here are two of many.

“I just read your latest article, it was very enlightening. I have been in the business for 23 years and sound very much like the appraiser at the end of your article. I worked very hard to build a reputation and good list of clients, just to have it all taken from me. I have to start all over again but this time it is not about my education or my designations. The only thing 95 percent of the AMCs ask for if my license, that in itself should indicate they are not interested in quality or education of any kind. The only requirement they have is the bare minimum and the lowest fee they can get. I have one exception, and that has been Landsafe. Landsafe is the only reason I am in business today, they have a staff that is knowledgeable and they actually look for quality work,” said Kevin Talbott, SRA.

And this from another appraiser: “So how much are AMCs paying you to help them? Give me an article that defends appraisers and criticizes our enemies.” (Name withheld.)

Also, several appraisers wrote us puzzled about what the acronym “HVCC” stands for- they had never heard of it! One of these appraisers, who lives in rural Montana, told us he has not been effected one way or the other by the Code.

Getting Out: Why I’m Leaving Residential Appraisal
A sometime contributor to WRE, appraiser Mike Read, sends us this letter:

I used to love appraising. Long before there was any appraiser regulation my clients came to me for valuation opinions because of my years of experience in real estate and their recognition of my accurate and reliable reports. Then came HVCC. Now my clients of 24 years are not allowed to contact me. They have to order appraisals through a third party appraisal management company (AMC) which takes up to 60 percent of my fee for their trouble.

I have signed up with about a half dozen AMCs. One went out of business owing me over $7,000. Three asked for all my exhibits and I’ve never heard from them again. One expected me to complete a URAR for $90. My most recent AMC has not sent me an assignment in months due to their lack of volume.

I recently testified before my state legislature in support of a bill to regulate AMCs. My first suggestion was to support the repeal HVCC at the federal level. Secondly to ensure that a certified appraiser is on staff at the AMC to do review work and third to require the AMC to have a surety bond of $500,000 to $1 million so payment to appraisers is assured if the AMC defaults. Others recommended that AMCs become regulated by the State Appraiser Licensing Board.

I have 24 years of appraising experience, am licensed in two states as a General Certified Real Estate Appraiser, have been HUD approved for the whole 24 years without any complaints and have completed hundreds of hours of special education. What good has that done for me?

What is driving this patchwork quilt of ineffective appraiser regulation? Have you heard of “The Golden Rule?” He who has the gold makes the rules! The greed of lenders is the source of the problem and always has been. They are the ones with the money to lend. They are the ones that establish the lending guidelines that have to be followed by everyone else in the lending chain. They are the ones with the “pipeline” to keep full and flowing. When they run out of borrowers with 20 percent down they reduce the requirements to encourage borrowers with 10 percent down. Keep that pipeline full. When they run out of borrowers with 10 percent down they reduce the requirements again to encourage borrowers with five percent down, then zero down, then “no doc loans.” Keep that pipeline full.
What about the increased risk? Well, they just pack the loans up and sell them off to someone else in a mortgage backed security that is so far removed from the valuation process no one can figure out the value any more…not even the sophisticated investors. (Nobody thought to ask the appraisers!)

Now it’s time for me to say goodbye to my clients and friends in the residential real estate and financial service fields. You’ve heard of the theory of “trickle down” economics? Well here is how my exit from the business will trickle down to you all.

Dear MLS provider, I will be canceling my subscription for data services at the end of my current period ($105/Q).

Dear title company, I will be canceling my subscription for data services at the end of my current period ($85/mo).

Dear software company, I will not be renewing my annual software maintenance agreement at the end of my current period ($399/yr).

Dear Board of Realtors, I will not be renewing my annual dues this year ($375/yr).

Dear Appraisal Institute, I will not be renewing my annual dues this year ($330/yr).

Dear E&O insurance company, I will not be renewing my policy at the renewal ($500/yr).

Dear state of Washington, I will not be renewing my appraiser license at the end of the biennium ($500).

Dear state of Oregon, I will not be renewing my appraiser license at the end of the biennium ($500).

Dear education provider, I will not be needing any more CE credits so will not need any more expensive classes ($500/yr).

Dear AMCs, goodbye.

Dear Consumer, you are the only one I feel sorry for. I will no longer be in a position to provide you with an independent valuation for your largest lifetime investment. Your lender does not want you to know who I am, how to contact me, how much I charge, what value opinion I reach, they just want you to pay for some conforming paperwork. If they receive any bad news they just shoot the messenger.

For more from Mike Read, including his entire farewell letter: http://appraisals4realestate.wordpress.com/.

Editor’s Note: Bill Cobb is a wizard at using blogging, social media and other “new stuff” to increase business. Here, he generously shares his expertise.

Using Blogs to Grow Your Business
By Bill Cobb

This may seem shocking to you but I don’t own an appraiser “website.” I don’t need one.

I am not an expert in SEO (search engine optimization). My sites are not “PR5”s to “PR8”s (Google page rank) but I have figured out how to grab the attention of Google for those searching for local appraisers. You may ask, “Why appraiser blogging?” and, “Is it worth my time?” These are excellent questions- the same ones I asked. Here are the answers.

In early 2006, my experience with appraiser blogging began out of major frustration. I was spending almost $1,000 a year for a fancy website with all the bells and whistles and around $1,500 a year for online appraiser directories that weren’t producing many appraisal orders.

About that same time, my friend, Wayne Pugh, MAI, owner of SFREP appraiser software, taught me how to set alerts for Google content. So on the particular website with which I was working, I spent time adding content and updating it. Still, not many additional orders were produced nor was there an increase in Google attention. Then, when a blogging feature was added to that website, I began adding my local content but still, no attention from Google.

Fortunately, a relative sent us a link to his new Blogger Blog (Blogger.com), a free blog from Google, with photos from his missionary trip to Russia. So I started my own free appraiser blog that weekend. I took content from my website blog and posted it to my Blogger Blog and within one week I began receiving alerts of my published content called “posts.” Shortly afterward, I began receiving calls from national lenders needing appraisals. When I asked them how they found me, they said they Googled my area and I appeared at the top of the list. Cha-ching! So, I setup a free Wordpress Blog as well as blogging on two other free blogs.

Unfortunately, within two months, both blogs were shutdown because they were about the self-promotion of my business- a violation of their Terms of Service (TOS). All of those hours invested into my blog posts just evaporated instantly. Gone.

I learned two lessons early on: Blogs built into websites do not generally index well and free blogs generally do not allow appraisers to promote their services due to violations of TOS.

High Returns
By mid 2006, I learned how to self-host Wordpress blogs for my appraisal business ($8/month) while using free Wordpress themes. I adopted my own TOS and self-promoted my appraisal business 24/7. Then I learned that Wordpress was evolving from just a blog to a very easy-to-use CMS (Content Management System). Today, many are choosing Wordpress verses traditional websites because a blog has a built in pinging feature which indexes in Google within minutes or hours of clicking the submit button. Traditional websites don’t have this feature and Google gets around to them only every so often. Everything I do online is built in Wordpress- i.e. the appraiser blog setups that I build nationally with online appraisal ordering, online video business cards, video landing pages. No websites!

Why do Properly Setup “Appraiser Blogs” Trump Traditional Websites?
When I take the market data from a recently completed appraisal report and publish it as a blog post, a chain of events takes place. Note that I set these features up in advance. First, the pinging feature alerts 25+ top directories, including Google and Yahoo, which indexes my content. Second, my blog post is automatically sent out as a tweet on Twitter which is a very powerful Google indexing free service. Third, my post becomes an online podcast into iTunes, which is indexed by Google. Fourth, with a few clicks, my post is bookmarked onto my Facebook plus 20 other social media pages, all indexed by Google. Fifth, my post automatically get posted to “My Page” on Appraiser’s Water Cooler (Appraiserswatercooler.com) and any other directory I feed the content to. Doing all of this might take five to 10 minutes after the proper setup.

Because my posts are syndicated as podcasts, the reader can listen to the post or article being read to them with a click of a button.

Becoming a Trust Agent
Another appraiser experiencing success with Wordpress is Ryan Lundquist in Sacramento, California (Lundquist Appraisal Blog and Twitter@SacAppraiser). Ryan has come a long way in a short period of time generating 8,391 visitors in 2009 based on his “hit counter.” His is a testimony to how easy Wordpress is to use. Ryan has incorporated both local photos and short videos to make his posts very interesting. The philosophy that Ryan and I share is that our sites are where locals find out what’s really taking place in their uncertain housing market. Where else are locals going to get trustworthy news about their housing market? This is an appraiser’s opportunity to shine and become a “trust agent” within their local community. Has this effort paid off for Ryan? Yes, in the form of multiple tax appeal appraisal assignments (non-HVCC compliant appraising).

What is Appraiser Blogging?
Appraiser blogging is simply taking information or 1004MC research data from your local market and quickly publishing it to your blog and adding a photo, aerial image or charting to make it appealing to your local and national readers. An appraiser can also take a published article from his local news or business report, tell his public about this news article and offer his expert commentary on what’s been reported. An appraiser can also engage his readers with polls about their market. Appraiser Blogging has replaced my traditional appraiser websites.

Why do Appraiser Blogs get Google’s Attention for Online Searches?
Google loves to index blogs with fresh content, images and video. Wordpress Blogs have superior built-in pinging features that automatically syndicate your post to the search engines. In other words, when an appraiser in Birmingham, Alabama adds a blog post with the title, “Birmingham Alabama Real Estate Appraisers Offer Pre-Listing Appraisals,” that appraiser will be indexed in Google for national online search for those keywords. When a local homeowner wants to sell a For Sale by Owner (FSBO) and needs an appraiser to price their home, they Google similar keywords and that appraiser is found and gets the assignment. This works similarly for FHA work. Properly tagged images also help you get found– just do a Google image search for “Baton Rouge Real Estate Appraisers” and see what I’m talking about. Adding your own YouTube appraiser channel helps one dominate their markets for local real estate video search. Then, adding video content to your blogs further engages your visitors. Offering an email update allows your readers to receive emails when you post updates to your blog.

Measuring Time and Effort
I take my 1004MC research data, a photo of the subdivision entrance sign and a trends graph and report that information on my blog. Since I’m already doing the work for my appraisal research, I’m not adding much time. Using free software, it might take me five extra minutes to format the post and click submit. At a minimum, two blog post per week are optimal, which adds about 10 minutes a week. And, when one begins to see how effective this is for Google Searches, it won’t take long to realize the reward for your time.

Michael Gerber, in his now famous “E-Myth” philosophy, spoke of working harder on your business rather than in your business. Gerber reminded us that “technicians,” like appraisers, especially have this challenge because we are so busy “doing it, doing it, doing it” or getting out appraisals. Consequently, we often fail to work on our businesses. For me, appraiser blogging has been my opportunity to work on my business and reap the rewards of being found online.

Giving Credit Where Credit is Due
I didn’t start this appraiser blogging trend and I acknowledge that appraiser Brian Davis, with Appraisal Scoop, was very inspirational and helpful in my start. Brian was the first to publish my “Appraiser Liability – Dodging The Bullet!” content nationally and took the time to professionally format the article in Typepad. Other inspirational appraiser bloggers are: OREP/Working RE Magazine’s Appraiser Talkback Blog, Jonathan Miller’s Matrix Blog and Frank Gregoire’s Appraiser Active Blog. And, to Danny Wiley in Tennesse, for introducing me to “Snagit” screen capture, which has changed the professional side of my life.

It’s 2010. Blogs, video, and the “Big 3” in social media (Facebook , YouTube and Twitter) are making it very easy to be indexed by Google. With 76% of real estate agents on Facebook, as per the National Association of Realtors, it’s time for appraisers to catch up! Appraisers who are taking control of their online marketing are seeing the fruits of their marketing labor and are saving time and money by spending more effort on their businesses instead of in them.

About the Author
Bill Cobb is a full-time residential appraiser in Baton Rouge. You can find him on Twitter@appraiservideos. Bill builds “appraiser video blogs” with online ordering capability, teaches appraisers how to “blog to be found” on local online searches, how to use the new social media and video marketing to increase business. Visit: Appraisersblogsample.info. Bill also teaches “Appraiser Video Marketing” at AppraiserVideoMarketing.com.

Editor’s Note: Happy New Year! The Winter 2010 edition of Working RE is in the mail to 80,000 of you right now. You can also read it digitally by clicking the cover image (at left). There, you will have the opportunity to opt out of print for future editions, joining thousands of others in choosing to save the resources required to manufacture and mail their copies of WRE. If you decide to opt out of print, we’ll let you know via email when each new issue is posted online.

Below you’ll find this issue’s cover story summarizing the effects of HVCC, according to the Working RE/OREP HVCC Talkback Survey. So far, over 4,300 appraisers have responded, making it the most comprehensive appraiser survey of its kind, including being quoted in an influential New York Times story, published last summer, which reported that over half of you still feel pressure from AMCs to make a deal work at least some of the time. (Find the NY Times story at WorkingRE.com, Sidebar: In Appraisal Shift, Lenders Gain Power and Critics.) The percentage reporting pressure has stayed steady in the months since, as you will read. If you haven’t participated yet, you can find the questions below and a link to the survey. The good news is that grassroots and feedback from the appraisal organizations and other interested parties are making a difference! We have no doubt that most appraisers will find their way in this new environment.

Looking Ahead/Looking Around
For eight years the mission of WRE has been to help readers grow as professionals and business people. True to our mission, you’ll find valuable stories in the new issue on how to find more work and how to be better appraisers. But we will not ignore what you are telling us, via the survey, about the effects of HVCC: the Code has turned the profession upside down while not solving the problems it was intended to fix- pressure on appraisers remains and, according to many, the quality of work is diminishing not improving. The most seasoned appraisers say they will not work under the present conditions and are leaving for greener pastures. This hurts everyone, including consumers and taxpayers.

Thousands of others say they want to continue appraising but may not be able to make a living on the new cut-rate fees or are unable to secure enough work from AMCs to stay afloat, now that they do not have access to their regular clients. The sad irony is that most of the protections in HVCC– which by all accounts are easing pressure and reducing complaints to some extent- existed before the Code was even a gleam in the eye of the New York State Attorney General.

Real Life
Just before Christmas, an OREP member shared that he is leaving the profession after over 20 years. His story is more representative than it is unique. He said he has had a great career, built a (once) successful business, mentored many quality appraisers along the way- never giving in to pressure, producing first-class work. He still loves appraising but after two decades of honing his skills, acquiring expertise, earning designations and certifications and building a strong reputation and loyal clients based on quality work, he said that appraising for half fees in half the time for people who mostly don’t know much about the practice, just doesn’t make him eager to jump out of bed in the morning to go to work. He said he has other options. He did everything right and has been run out of business by HVCC.

And there is this comment posted to the HVCC Talkback Blog in December. “I just got off the phone with a major AMC. I called them to complain that it doesn’t matter how fast I text them back for an assignment, it has already been accepted by another appraiser. I got five text messages in the last two days and didn’t get one assignment. I complained that every time they text message me it costs 15 cents and that I wouldn’t mind paying the money if I got an occasional appraisal. The woman said that the way they assign appraisals is that when an appraisal comes in they put the address in their computer and all the appraisers within a certain radius get a text message. First one to text back gets the assignment. I told the woman on the phone that I didn’t think it could be any worse than that. I was told that what I should do is get a P.O. box in a busy area and they could feed me work that way. They are already doing that with a few appraisers. She told me that she thinks that I am nasty and that is why I am not getting any work. She said they want to have a mutually friendly working situation and that being nasty was making it hard for them to assign me work. I said you want to talk about nasty, I did two appraisals for your company and I am waiting over 60 days to get paid a lousy $210 an appraisal. She hung up on me. Anyone who thinks that this AMC is a good thing is out of their minds. After 25 years in the business I think it’s time for me to find a new profession.”

And so it goes.

HVCC Survey Results: Appraisers Still Feel Pressure
By David Brauner, Editor

If you’re struggling to survive post HVCC; if you’re angry at having control of your business taken from you; if you’re having trouble getting orders from AMCs even though you’re trying; if you can’t make a living working for reduced fees; if your experience is that AMCs hire based on the lowest fee rather than quality work or if you continue to feel pressure to make deals work, then you’re not alone according to the OREP/Working RE HVCC Appraiser Talkback Survey and Blog.

With over 4,300 appraisers nationwide responding to the survey, the most significant results are that over half of the appraisers working with AMCs report that they continue to feel pressure to make deals work at least some of time.

Here are some quick stats. Find more complete results below:
* Ninety-two percent (92%) answer that they are “not in favor of HVCC as written.”
* Eighty-two percent (82%) say they “do not consider the AMC model to be a legitimate business model.”
* Fifty-one percent (51%) say appraiser selection (by AMCs) is always based on the lowest fee.
* Twenty-four percent (24%) say personnel at the AMCs they work with are never knowledgeable and competent.
* Eighty-six percent (86%) say working with AMCs is not worth the “trade offs” (for example, earning lower fees in exchange for no pressure for value, a steady flow of work, no time/resources spent on collection, etc.).
* While seventy-two percent (72%) say they are “generally satisfied with appraising,” over half (52%) say they don’t expect to be appraising full time five years from now.
* Sixty-nine percent (69%) of appraisers are not in favor of the new Fannie Mae 1004MC form but a majority (70%) are in favor of the increased licensing and education requirements imposed by the Appraiser Qualifications Board.

In the feedback we’ve received this year, perhaps the most gut wrenching are the many hundreds of emails that go something like this: “After 25 years I have gone through a lot of changes, been in and out of the professional organizations, worked for large institutions and have had three different, honorable fee shops in my journey. I somehow managed to gain approval with 45 major lenders and institutions and have never been blacklisted (that I know of), and never been sued. I have a solid reputation. I’m honest, hard working, and insist on providing my clients with only quality, comprehensive detailed reports. I don’t think I have ever completed an assignment in less than three days (after inspection); I usually take five to seven. Nor have I ever been pressured to do so. I’ve established my own fees and built a clientele of honest mortgage brokers, banks, attorneys, and accountants, and have never been without work.”

The appraiser continues, “I have never worked for an AMC and will obviously/most likely not be able to. The HVCC is costing me 60-70% of my business and it is doubtful I will be able to survive financially. The cost of maintaining my now one-person practice will be prohibitive, unless by some miracle I find a situation that will cover the cost of my E&0, health insurance, data sources, office and auto expenses, etc. Well, I guess we could move back in with my parents. (I jest, I’m 52.) The loss of so many seasoned appraisers will be devastating but was it really necessary? For now I anticipate having to start over in a new profession, wish me luck.”

HVCC Moratorium
A bill that would impose an 18-month moratorium on the HVCC (H.R. 3044) was forwarded to the U.S. House of Representatives in June by Representatives Travis Childers, D-Miss., and Gary Miller, R-Calif., in reaction to complaints from appraiser constituents. This bill is in the first step in the legislative process, according to Govtrack.us. To weigh in visit Govtrack.us/congress/findyourreps.xpd to find your state representative and how to contact him or her.

Survey Results

>> “Number of years appraising”
• Less than 5: 3%
• 5 to 10: 24%
• 10 or longer: 73%

>> “Was/is the lack of appraiser independence (lender pressure) a serious issue in your practice?”
• Yes: 38%
• No: 62%

>> “Are you in favor of having mortgage brokers removed from the process?”
• Yes: 42%
• No: 58%

Quality, Pressure, Fairness
>> “In your experience with AMCs, appraiser selection is based solely on obtaining the lowest fee?”
• Always: 51%
• Often: 37%
• Sometimes: 10%
• Never: 2%

>> “In your experience working with AMCs, service, quality and other factors play a part in appraiser selection.”
• Always: 5%
• Often: 14%
• Sometimes: 43%
• Never: 38%

>> “Are the personnel at the AMCs you work with knowledgeable and competent?”
• Always: 2%
• Often: 14%
• Sometimes: 60%
• Never: 24%

Fees
>> “Are the fees offered by the AMCs you work with unrealistic given the nature and scope of the assignment?”
• Always: 47%
• Often: 37%
• Sometimes: 14%
• Never: 2%

>> “Do you turn down AMC work because of inadequate fees?”
• Always: 22%
• Often: 45%
• Sometimes: 29%
• Never: 4%

>> “Do ‘low fees’ (from AMCs) effect the quality or completeness of the finished report compared with higher fee appraisals?”
• Always: 15%
• Often: 18%
• Sometimes: 26%
• Never: 41%

Pressure
>> “With the AMCs you work with, do you experience pressure for value?”
• Always: 3%
• Often: 11%
• Sometimes: 40%
• Never: 46%

>>“Do the AMCs you work with provide an adequate ‘firewall’ between you and the loan originator?”
• Always: 33%
• Often: 34%
• Sometimes: 26%
• Never: 7%

>> “With the AMCs you work with, are you asked to re-examine reports with the intention of trying to ‘make the deal work’?”
• Always: 3%
• Often: 12%
• Sometimes: 41%
• Never: 44%

Turn Times
>> “With the AMCs you work with, do you experience pressure for turn around times that is unrealistic given the nature and scope of the assignment?”
• Always: 35%
• Often: 42%
• Sometimes: 19%
• Never: 4%

>> “Does the time pressure (from AMCs) result in a product that is less reliable for the end user, compared to a report where adequate time had been allowed?”
• Always: 15%
• Often: 23%
• Sometimes: 32%
• Never: 30%

Dying Profession?
According to comments posted at the blog and survey, many appraisers doubt the profession can continue to attract competent professionals given the low fees, considerable expenses and licensing/training requirements. Many say they see greener pastures elsewhere.

>> As reported, 52% of survey takers say they don’t expect to be appraising fulltime five years from now but interestingly, 72% answer “yes” when asked if they are “generally satisfied with appraising.”

>> “Are you making plans to leave the appraisal profession?”
• Yes: 45%
• No: 55%

Many express doubts about whether the trainee system for bringing new appraisers into the profession is sustainable: how can you split a half fee in half again? So far, 72% of survey takers say they would not consider taking on trainees in the future.

Other Issues
>> “Is being able to be certain that your clients are receiving an unaltered version or ‘true copy’ of the appraisal reports you send them an important issue to you?”
• Yes: 92%
• No: 8%

>> “Is the data mining of your reports an important issue to you?”
• Yes: 91%
• No: 9%

>> “Is being ‘forced’ to submit your work through a third party entity and pay a fee to maintain a client relationship, an important issue to you?”
• Yes: 92%
• No: 8%

>> “Are you able to charge a higher fee for the new (1004 MC) form?”
• Yes: 34%
• No: 66%

Surviving by AMC Shopping
It seems shopping for the “good” AMCs may be a survival strategy appraisers are adopting. Seventy-two percent (72%) of survey takers report that they are satisfied working with appraiser management companies (AMCs) at least some of the time. (Twenty-eight percent (28%) respond “never” satisfied). Does this mean that those who are surviving are picking and choosing the AMCs they work with and firing the others, just like they did with mortgage brokers?

Fixing the Problem
Many appraisers say they intend to take back control of their profession and their businesses by working only with the AMCs that treat them fairly and by avoiding the ones that don’t.

So far, these are the remedies most mentioned by bloggers and survey takers: appraisers must band together, put their differences aside and speak with one voice to put their interests forward. Many appraisers suggest a short, national boycott to demonstrate their importance to the system. Some say a fixed fee structure is necessary and/or a cap on the percentage of the appraisal fee AMCs may keep. One theme expressed over and over is that no one can make anyone work for low fees. The only way to fix this problem is to just say “no.”

About the Author
David Brauner is Editor of Working RE magazine and Senior Broker at OREP, a leading provider of E&O Insurance for appraisers, inspectors and other real estate professionals in 49 states (OREP.org). He has covered the appraisal profession for over 16 years. He can be contacted at dbrauner@orep.org or (888) 347-5273. Calif. Insurance Lic. #0C89873.

Editor’s Note: Year-end advice from two appraisers show us how to make 2010 a happy and prosperous new year. E.J. Frank discusses techniques to make us better business people by being happier and less stressed. Bill Cobb argues that, from his point of view, it’s time to move on after HVCC and shows us where the best opportunities for appraisers are today. 2010 begins year nine for Working RE/OREP! Thank you for your business. The entire staff at WRE/OREP wishes you and yours the very best this holiday season and in the New Year!

Better Appraising from the Inside Out
by E.J. Frank

There is good news and I want to share it with you.

It’s not like any of us need to be reminded of the multitude of changes from HVCC to 1004MC to FHA. The influx of REOs and low interest rates are keeping some of us very busy while others are not very busy at all. Most of us have taken a hit in our bank accounts and have been thrust into a world of panic, anxiety and tension and… oh yeah and the holidays are here.

The good news is that a number of simple things can help restore us to sanity and get us through these trying times.

First, let me make it clear that you and only YOU can do this for yourself. If your boss gives you a day off and you go home to work, it’s defeating the purpose. If your family goes out to dinner and all you do is stare into your soup and think about work, you’re defeating the purpose. In my seminars and books I like to say…well, many things but one very important point is that you must take care of yourself. You can’t function and others can’t rely on you if you aren’t healthy: honor yourself as you honor others.

Uncertainty, Anxiety
We appraisers never know from week to week what our workload will look like. One week we can have two jobs, the next 20. It’s the nature of the business. This uncertainty can be frustrating and stressful. Add to that the stress of new rules, new forms and changes in policies and procedures. If you work in a larger shop, other issues may include changes in personnel, workload, expectations and so on. Add to this, issues in our personal lives- the kids’ schedules, the expectations of a spouse or significant other, their workloads. Maybe you are caring for a sick parent, trying to juggle school, work, and family…any number of scenarios can exist. Short of melting into a complete pile of goo by the end of the day, what can you do to keep it all going?

Keeping it Together
The first step is being honest with yourself. You can only do what you can do. If the choice is doing ten jobs a week well or doing twenty jobs half way, how do you want to work? Do you want to give your best or 50 percent?

Be realistic. Take an inventory of your situation. Take a few minutes to do this and keep doing it weekly or daily if need be. In this inventory, prioritize the items for the day or week from need-to-do to should-do. Your list should not contain only one category. If your list reads: item #1: work, item #2: work and so on, either you are not being honest about the other parts of your life or you need to get a life. A person’s life is commonly made up of four general parts: work, family, recreation and faith. To be balanced, everyone should have more than one part. Consider this: if we have four parts and one isn’t working, we still have three parts remaining that are. This leaves us energy to put into the part(s) that need work. However, if we put 100 percent of our life into work and something goes awry…wow, we are in a serious personal crisis.

Stress, Tension
Does this sound familiar? We get to work on a Thursday morning and we’re emotionally and physically tired. We’ve had a rough week of being griped at by reviewers, AMCs, agents, borrowers, and even other appraisers in the office. It’s been trying but (of late), a pretty typical week. We’re preparing to go out to do two inspections. We don’t feel like working. Our bodies feel run down. We take shortcuts just to get things done. We’re snippy with our office mates. And what about road rage? Even the most mild mannered of us can become vicious monsters once we get behind the wheel, especially if we’ve been tainted by anger, stress, anxiety, or any number of similar issues. A car can become a dangerous weapon. Remember, everyone would like to return at the end of the day in the same physical condition they left home with that morning!

Fix It
Give yourself more time. This allows us to go a bit slower rather than try to beat the clock. We could allow a two car distance rather than tailgating. We might stop for that red light rather than running it. We may even back off and let that car merge in rather than run up to the car ahead. We also won’t feel as tense when we arrive because we’ve made our timeframe.

Take a different route to the inspection. We typically take the same route everywhere. It’s familiar, we can time it, we know the possible pitfalls. We also tend to zone out, think about other things we have to do and this can add to our tension. So, take a different route, one you aren’t as familiar with. This forces you to focus on the road and what’s around you and not on your thoughts. You can’t be mad and calm at the same time. You can only be one thing at any moment. Change your focus, change one thing and change your thoughts.

Listen to relaxing music- something calm, preferably with few words, low drums and at a low volume. This type of music calms the heart which calms the mind and body.

Avoid driving if you are tired. This affects everything– your ability to focus, your reaction time, your judgment, your attitude…everything. If things you are trying such as energy drinks and coffee aren’t working, your body is telling you that you need to rest. Remember, you must take care of yourself.

Coping with Change
The people who survive and thrive are those who can bend with the changes. In many cases, this includes diversifying. Learn other aspects of the job. Not a hundred aspects mind you- you don’t want to spread yourself so thin that you can’t be proficient and effective. Being more marketable is a good benefit. Also, doing something different from time to time helps keep work interesting and manageable.

Work with your partner, family members and others who are available to handle issues which may arise. Sharing responsibilities helps everyone in the household, creates a better overall internal and external environment and could save a marriage in trouble!

Don’t try to do it all. Delegate. Share. Be realistic about what you can take on in any one day. It’s better to take on less and get it done well than to take on too much and make mistakes you’ll have to correct later. If you set reasonable expectations you will be more likely to handle your workload and keep a positive self image.

Here are some very basic but important tips. Please try not to “rush through” or skim the list- most of this information is not new- we know what we should and shouldn’t be doing. The trick is to consider each from where you are today and then make a plan to correct whatever area needs help.

• Get a good night’s sleep.
• Eat well. Eat several whole meals and several small meals or snacks to keep your body energized.
• Stay hydrated. It’s amazing how much energy we lose if we aren’t.
• Exercise daily. Take a walk. Work out. It’s suggested by most professionals that we workout at least 20 minutes a day. It gets you away from the desk and gets you rejuvenated.
• Be present at whatever you’re doing. If you are with your family, be with your family. Focus on them. Appreciate the time you have with them.
• Communicate with those around you – co-workers, family members, etc. There is no substitute for communication.

One of the most powerful and simplest solutions to a tough day is to wear a smile. It’s amazing how smiling changes everything. Remember, we can’t be angry and happy at the same time. We can only be one thing. Choose to be happy. If you are with a homeowner, even if your day is going to hell in a hand basket, smile, be kind, say something nice about their house and be pleasant even if you really don’t want to. You will leave that job feeling lighter and different about your day. And that can make all the difference in the world!

About the Author
E.J. Frank is a Certified Residential appraiser in Colorado who performs conventional and FHA appraisals as well as machinery and equipment appraisals. E.J. is also an EFT (emotional freedom techniques) Advanced Practitioner. E.J.’s websites are www.EJFrankAppraiser.com and www.EFTwithEJFrank.com.

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Moving On
By Bill Cobb

Even if HVCC is repealed in 2010, industry leaders have said that most of the guidelines are in place for good and will not be altered even if the Code is repealed. In other words, most of the changes within the lending industry with respect to how appraisals are ordered are not going back to the way they were.

Fannie Mae, Freddie Mac and FHA are raising loan qualifications standards for 2010, which means that there may be fewer appraisals ordered in 2010. If your business is focused strictly on mortgage lending you could be headed for trouble.

Motivational speaker Jim Rohn, who recently passed away, emphasized this message: “You get paid for bringing value to the marketplace.” Another quote of Rohn’s is, “Don’t bring your need to the marketplace- bring your skill. If you don’t feel well, tell your doctor, not the marketplace. If you need money, go to the bank, not to the marketplace.”

Others might put it this way: We get paid based on the problems we choose to solve in life. A lawyer gets $200/hour and a store clerk gets paid $7/hour. What’s the difference in the two of them? The difference is in the perceived “value” of the problem each chooses to solve. For appraisers, it appears that the perceived value of what we bring to the marketplace is greatly diminished, at least for now and at least to the lending industry.

So, where is the perceived value of residential appraisal services regarded most highly these days? Three places:
1.) REO assignments, which do not have to be HVCC compliant.
2.) Local individuals needing pre-listing or pre-purchase appraisals.
3.) In the non-lending community of attorneys and CPAs for the settlement of estates/successions, divorce, litigation, trusts and tax appeal.

If Jim Rohn were alive today and speaking to a group of appraisers he would tell them that the past is the past and it’s time to move on to solving the valuation problems that have more of a perceived value in the marketplace.

About the Author
Bill Cobb is a full-time residential appraiser in Baton Rouge. You can find him on Twitter@billcobb. Bill builds “appraiser video blogs” with online ordering capability, teaches appraisers how to “blog to be found” on local online searches, how to use the new social media and video marketing to increase business.Visit: Appraisersblogsample.info.