Posted on by wfincham

The Six Elements of Green Part 2 The First Two Elements

Now that we have talked about how important communication is between agents and the consumers and the agents and the appraisers, let’s get into the meat and potatoes, as they say. As an appraiser, one must be able to understand and identify high performance home (HPH) features.  As I eluded to in the first part of this series, green washing can be a real a problem in this space.  It is easy to add a few “green” features and have an agent advertise a home as being an HPH.

HPH or “green” homes are not just about saving energy.  To accomplish a truly HPH one must look at the “building as a whole” entity and not just the systems.  Another way to look at it is a “cradle-to the grave” approach, or from design phase of the home through the razing of it and returning to a site. What many appraisers and consumers don’t see immediately with HPH is how much more comfortable they are to live in.

The US Environmental Protection Agency describes green building below:

green building. The practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s life-cycle from siting to design, construction, operation, maintenance, renovation, and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort. Green building is also known as sustainable or high-performance building.

So, what goes into looking at an HPH? I am glad that you asked.  Well, there are six elements[i]

  1. Site
  2. Water efficiency
  3. Energy efficiency
  4. Indoor air quality
  5. Materials
  6. Operations and maintenance

We are going to dig into the first two elements in this article.

 

site pic

Site

When I am contacted by builders or borrowers that want to maximize their values from creating an HPH, I spend some time discussing site orientation.  It is important.  Obviously the homesite will have a huge influence on the home.  The site will dictate what can be built. Location of the site within a market is a big deal.  Every site has pluses and minuses and from the concept of location, it can mean a long commute to the store or a short walk.

One of the tools that I use on my appraisals, and one that is available in many multiple listing systems (MLS) is walkscore.com. This metric will give you an idea of how “walkable” a location.  It takes into consideration distance to important market locations such as the downtown area of an MSA or shopping and retail areas.  The more “walkable” the property and the surrounding neighborhood are, the higher the score.

Site is not just about market area location, it is also about several other factors.  An important one is site orientation.  How a site is orientated, meaning how does it lie when considering north, south, east and west orientation can impact the building in significant ways.  Considering where the southern exposure of a home lies will affect the way solar energy interacts with the property.

Orientation, done correctly, can take advantage of passive solar technology. It can also minimize the amount of light that impacts the home through windows.  Solar radiation really does affect the indoor temperature, which mean sit can require more heating or cooling to accommodate too much or too little solar radiation. Orientation can also impact the availability of optimal solar PV system placement.  If done right, the site will allow better incorporation to the southern exposure for solar panels.

Drainage of the site is also an important consideration.  In areas that allow for cistern storage of rainwater this can help reduce the amount of water needed to water the lawn or other vegetation on the site.  Having less impervious surfaces that allow natural absorption and usage of water can enhance the “greenness” of the site.

Normally, educated builders and consumers will recognize the importance of site orientation and location right away.  It is important for appraisers to recognize it as well. Sometimes homeowners insist on placing the home in an odd orientation to maximize views.  Depending on what market you are in a mountain view or bay-view premium may trump a truly beneficial southern exposure vantage.  When both performance and view combat one another in a consumer’s mind, the appraiser must be aware and able to measure impact of the issue to the overall value of the home. With proper planning, there are usually acceptable compromises that can be incorporate din the design phase of the home.

water image

Water Efficiency

This element directly impacts the consumer’s monthly budget and because of that, it can be measured directly.  This element is more than low-volume toilets and installing low-flow faucet aerators.  It, like all things, require careful planning.  It also includes lessening the amount of water needed to water plants.  This can include rain barrels, cisterns, and the like.  There is also advantages to utilizing gray water; this is the waste water from the kitchen, tubs, washers, etc.  Everything except water that has been exposed to sewage.  As mentioned in the site planning portion, some local governments prohibit the use of rainwater. So as part of site planning, it may be necessary to choose to live someplace other than a rainwater restrictive location.

Some of the things that homeowners can do include the flowing items.  With retrofitting, one of the big water savers is finding and fixing any leaks.  Upgrading appliances to more efficient models.  This includes dishwashers and clothes washers.  Installing low flow faucets and toilets are another big water saver.  Utilizing the correct plants for your locality is a game changer as well.  The correct plants include using native species and other species that grow and live best in the climate where you are located.  This prevents the need to do extra watering.

Valuation Thoughts

The recognition of site attributes is not overly difficult but can be troubling for appraisers that have never seen or know about some of things that we have discussed thus far. Water efficiency technology may be easier to see if components are properly labeled. When you are not sure, ask questions.  The homeowners may be familiar with these types of improvements, as well as the agent or builder.  The best that an appraiser can hope for is that the homeowner and/or agent are up to speed as to what is present in the site and home.  Homeowners that built the home will most likely be pretty I enthusiastic to share, where as a homeowner that is the second, third or more homeowner after the build or retrofit may not be as aware of the features present.

What are some proactive ways to get more competent?  Take some classes. The Appraisal Institute offers three classes in sustainable residential properties. The AI also offers a list of appraisers that completed the program at Appraisal Institute’s Residential Registry for Sustainable Buildings.  Earth Advantage  also offers a three-day class on sustainable homes.  They also maintain a designation called the Accredited Green Appraiser (AGA). You can also affiliate with an appraiser that has experience in these types of homes.

We will get into some valuation methods in a later part of this series.  There are several tools in the tool box for appraisers that will prove familiar to most of us.  We will also discuss the very important Appraisal Institute Residential Green and Energy Efficient Addendum Form.  Another important topic we will discuss are the various home certifications out there in the markets.  Knowing what these are is extremely helpful.

[i] Residential Green Valuation Tools by Sandra Adomatis, SRA LEED GA

 

Posted on by wfincham

The Six Elements of Green Part 1 Speaking the Language

The purpose of this series of articles is help appraisers and agents see why communication is so important.  For agents it can be important for ethical market and for appraises it can be a major property productivity analysis item.

*****

As residential real estate professionals we keep getting smacked over the head with the term “green” homes.  What does green really mean? It certainly is not the color of the home or the carpet.  Most of the time, agents or consumers use the word green to describe some features within a home that show some form of energy efficiency.  This can range from having one single energy star branded appliance to a home that produces all the energy it will need without using power company generated energy that is purchased. The difference between these two examples can be stark, and as a result the market will perceive each home differently.  Meaning they’ll both have different marketability.  Right out of the gate I want to do away with a term that all of us should lose: green.  I prefer the use of the term: high-performance home (HPH).

The word green is a misused word when dealing with HPHs.  There is a term used often among real estate professionals, “green washing” which means that a home may have a few “green” features and is then marketed as a “green home”.  Sellers and agents, not realizing what they are doing, may try to communicate that a home is very green when in fact it may only have a few features to merit such description.  That is why concise and meaningful language is needed for this type of, and all, real estate valuation.

HPHs are becoming a normal thing in my market area and many other markets as well.  Technology and building science continue to evolve and the costs to implement the technology is coming down.  I want to create some introductory and easy to grab onto suggestions for real estate professionals to understand that this is a language that we all need to understand and use effectively. The most pragmatic reason from a business perspective is that clear communication can reduce professional liability. And remember, communication is a two-way street.  We must clearly convey ideas and information, so the receiver can clearly receive the ideas and information.

For appraisers it can be a difficult job sorting through the data out there about what is and is not valuable.  One of the biggest issues that appraisers have is with the basic researchers’ tool when it comes to HPHs: the multiple listing services (MLS).  Most MLS systems are not set up in an appraiser friendly manner. Take my own MLS for an example.  The first image shows the searchable fields for inputs that agents can use when creating a listing. The second is just one of those fields expanded to show the options, in this case heat is used.  Most fields have a similar number of options.

carr 1

CAAR MMLS

caar 2

CAAR MMLS

 

So that gives us 13 fields with somewhere around 10-15 options for each field.  Let’s say there are 10 options for each field, that is a total of 130 possible indications of HPH property characteristics. Seems impressive right? Guess how many of these features show up on a standard full list sheet report?

 

None.

 

If the MLS user does not create customized fields on the output report and unless the listing agent puts HPH related details in the comments section, then these features are lost to a researcher.

 

Communication is a key element in any type of valuation assignment.  Per normal, it falls on the appraiser to ask the questions and understand what we really need to look for in order to do our jobs properly. It falls on the agent to ask the correct questions of the sellers to make sure the features of the home are accurately conveyed to consumers and appraisers. The biggest take away that I can give agent sis to reference a study that I helped prepare in 2017 for a HPH certification.  It was obvious after we compiled our research that even the “greenest” home we looked at would not sell at a premium if it were not marketed as an HPH.  Agents that spent time highlighting the comfort and efficiency of the home saw a better return when the home was purchased.

 

One of the common things that I hear around the country when I talk to other appraisers is that the market doesn’t recognize “green” yet.  Maybe it does, and appraisers miss it because they do not realize that the MLS is a flawed data set that requires the researcher to take additional steps to complete the proper due diligence.  It would be great if all MLS systems would be open to adopting a uniform way to report such things, until that happens agents must be thoughtful in how the homes are listed and appraisers must spend time learning how to research these homes.

I appraise homes regularly that are not marketed on the MLS in a way that a quick read of a listing sheet will allow one to get any insight as to whether a home has HPH features or not.  It isn’t until I am on site and I see things that prompt me to ask questions.  Or I see a feature sheet on a counter that delves into the HPH features.  I have seen this on net-zero homes, LEED certified homes, Pearl Certified homes, and homes with HERS scores.  Many appraisers will blame the agents for not communicating effectively and while there is truth to this, in the end, it falls squarely on our shoulders to do an effective property productivity analysis. Appraisers must ask the right questions.

One resource that is of note, concerning HERS rated homes, is the Appraisal Institute member accessible  database.  HERS rated homes are a common home certification that is seen on a national level.  This is a searchable database that allows one to look for homes that have HERS scores. This offers the appraiser quantifiable information that can be used to help develop adjustments and gain insight to sales premiums.   Below is an example of the information that can be found for a HERS rated home in that database.

 

 

hers

RESNET

In conclusion, the real meat of this article is to remind agents and appraisers the importance of clear communication. Appraisers cannot value properly if they are not aware of all the features a property may have.  It is paramount that an effort is made from both the agent’s perspective and from the appraiser’s perspective.  Agents should always communicate all features they think are important; a feature sheet is always a good idea.  Appraisers should trust their instincts and ask the right questions.  If something seems unclear, ask about it.

Posted on by wfincham

Experienced and New: A Review of Appraiserfest 2018

Originally posted at :

http://appraisersblogs.com/experienced-n-new-appraiserfest-review

Experienced and New: A Review of Appraiserfest 2018
By Tom Horn, SRA and Woody Fincham, SRA, AI-RRS, RAA Member of RAC

A Newbie Conference Attendee’s Take on Appraiserfest 2018
Tom Horn, SRA

I just got back from the first ever Appraiserfest conference, held in San Antonio, Texas, and while it is fresh on my mind I thought I would share my thoughts. This is my first national appraisal conference to attend and I have to say it did not disappoint.

I have been an appraiser for quite a while but have never been interested in spending my money or time to attend a conference that was not close by where I live. This may be the same way other appraisers think also but I hope this article gives you some insight into what happens at one of these conferences and what you can get out of it.

One analogy that I have heard about appraisers, and one that was mentioned at the conference, is that we are very similar to lone wolves. Many of us work by ourselves and we do not get a chance to talk with other appraisers whenever we need another professional’s opinion.

Ithink one of the messages that the conference wanted to get across is that appraisers must try and shake off this mentality. We must try and go from lone wolves to a pack of wolves. It is only through this transition that we will be able to affect change at the national level because there is strength in numbers.

This change can start at the most basic level, like that offered by social media groups. One of these groups that comes to mind is the 100% Appraiser Group, started and ran by appraiser Mark Skapinetz. I truly believe that this conference would not have been as strong as it was without the camaraderie that this group has built, or at least the friendships that appraisers have developed online.

The natural progression of these online friendships is to move them offline and in person. Taking this a step further these relationships also develop into state appraisal coalitions that have been so effective over the past several years. Again, when appraisers work together like this it becomes a more effective method for communicating with government officials to get things changed in a positive way for the appraisal industry.

The underlying themes for Appraiserfest 2018 included:

  1. Finding alternative forms of appraisal work that do not involve lenders
  2. Making yourself the local expert by analyzing the market and reporting your findings to other local real estate professionals
  3. Being aware of antitrust laws so that you stay out of trouble
  4. Learning as much as you can about your state appraisal laws in order to avoid mortgage fraud
  5. Educating ourselves on the new technologies such as blockchain so that we can position ourselves as valuation experts
  6. Staying on top of the main economic indicators so that we can plan for market changes in our businesses
  7. Learning how to use social media to our advantage in order to grow our non lender business and finally
  8. Thinking differently about the current real estate appraisal model by providing value to consumers by helping them manage the equity of their largest asset, their home.

In addition to getting value from the above noted curriculum the ‘fest also provided great value in other ways also. The friendships that were built online were taken offline and strengthened even more. While I don’t have any other national appraisal conference to compare it to I have attended regional or local get togethers and this was much different.

This gathering had a special vibe to it because everyone seemed to already have a bond with each other because of their online communications. It was this aspect of the ‘fest that I believe sets it apart from all others.

A very special part of the weekend involved a ceremony that honored all of the appraisers that had served in the military. Each of their names were displayed on the big screen and they were all given medals. This was an emotional time for everyone attending.

Everyone in the group has a genuine love for appraising and the desire to continue providing value and help to consumers, because without an unbiased third party involved in the mortgage transaction this could negatively affect the national economy.

So, my final thought about Appraiserfest 2018 is that I would definitely attend another one because the value received was so much more than the cost and time involved and the 14 hours of continuing education doesn’t hurt either. If I can answer any questions about attending the ‘fest feel free to contact me.

An Experienced Conference Attendee’s Perspective
Woody Fincham. SRA, AI-RRS, RAA Member of RAC

Appraiserfest 2018 has ended. I admit it, I was a skeptic that it would ever happen. Not only did it happen but is was an astonishing success.

Wow, what an experience. I think all of us that attended had a bit of withdrawal when we got home. This is one of many valuation conferences that I have attended in my career. It was certainly different than most. This was my sixth and final one this year. Appraiserfest is a different beast than what most appraisers would be familiar with. It is not just one stuffy panel after another. Pretentiousness was checked at the door and we were all simply appraisers working towards a single goal. That goal being successful valuation practice.

Starting out, the energy was vibrant.  Everyone that attended expressed how much positive energy they felt there. In a time where residential appraisers feel isolated and preyed upon by lenders, AMCs and GSEs, this conference helped turn some frowns upside down. The networking was excellent. I was able to meet many appraisers that I have emailed with or spoken to on the phone or exchanged correspondence with over social media. It was great to shake hands and get hugs from folks I have befriended over the last few years.

The introductions that were done included music, video and lots of pumping up the crowd. The leadership that put together the fest did it right. Phil Crawford has a great ability to interact with the crowd, very personable. Mark Skapinetz “Skap” is well…Mark, it is hard not to love the guy. They keep saying this is a “Happening”, it was more like a “Skapening”. He is certainly a genuine person who wants to see good things happen for all of us as professionals. Lori Noble, as we say in the south, was certainly the belle of the ball. Everyone, Phil and Mark included, had such wonderful things to say about her and it seems she was the glue holding much of it together. These three deserve all the accolades for getting this thing to work.

A personal highlight for me was being able to sit on a leadership panel with Mike Ford, Maureen Sweeney, George Dell, John Russell, Jonathan Miller and Jim Park. It was neat to see the crowd from the stage. It was a perspective only a few of us got. The biggest take away for me sitting up there: Appraiserfest is a diverse group. The number of women appraisers that attended seems much higher in comparison to other conferences that I have attended. That is great!

Over the next couple of days there were a slew of great presenters and lots of networking. I walked away with dozens of business cards. That is always a great thing about attending conferences and classes in person.  You can meet folks and not feel like you are an island unto yourself. Many of us are single appraiser entities and we forget that there is strength in fellowship and unity. I mean the Fest even brought David Samnick back to the 100% Appraiser Facebook page. Many missed his “As the Liver Turns” posts, I am glad to see that he is back as well.

I will certainly be attending the next one, and I hope to be a part of the leadership and presenters again. I do hope to see a larger cross section of the profession at the next one. I was surprised at the absence of the Appraisal Institute. This was a large gathering of residential appraisers and this would have been a great platform for the AI to reach out and talk with the boots on the ground appraisers out there. Maybe next year.

So now you have a new conference attendee’s perspective from my friend, Tom Horn. (By the way, I had never met Tom in person, it was great to finally do so.) He liked what he saw at the Fest. You have my perspective from a veteran conference attendee, and I have no issue saying it is unlike anything else out there. It is worthy of your time and resources to attend next year.

Posted on by wfincham · 2 Comments

Appraiser Fest

Folks, we are just a couple of weeks from AppraiserFest. If you serve the housing and financial services sector, The Henry B. Gonzalez Convention Center in San Antonio, TX is the place to be this November 1-2-3. The Appraisers Economic Forum (AppraiserFest) is a unique conference offering to the valuation profession that I am very interested to see.  This is the inaugural event and it is bringing together diverse mix of professionals. It is truly rare that a conference founded by appraisers, for appraisers and run by appraisers even exists.

I have attended just about every notable valuation conference there is and mostly they are events set up by specific organizations that require or solicit membership.  The Appraisers Economic Forum however brings folks from all over the valuation sphere.  To the benefit of appraisers, AppraiserFest brings a lot of folks together that have had to pass on other education offerings because they may not be members to certain organizations and even other conferences that are focused on certain specialties.  Just looking at the conference agenda it is apparent that there is a little something here for everyone.

Lori Noble, SRA and member of RAC, is one of the coordinators of the conference.  She shared some of her personal insight about AppraiserFest:

“One of the great things about AppraiserFest is that it’s bringing so many of us together for the first time which is something appraiser have said they wanted. The venue is spectacular, and I am confident it will be a memorable presentation for everyone because we’ve cut no corners to make it exceptional. There is expected to be a lot of fun and laughter; Mark (Skapinetz) and Phil (Crawford) will make certain of that. I’m also excited about the takeaway of knowledge we can all use in our businesses from the speaker series. Real estate markets are a central role in the welfare of local and global economies and AppraiserFest brings some of the best speakers on appraiser economics to the forefront.”

Lori has done a phenomenal job putting together an excellent 14-hours of continuing education that is approved in most states with more coming on board each week.  It certainly makes it a worthwhile way to write off a quality education conference.  Yes, it can seem expensive, but the investment in ourselves is an intangible value that comes out of a quality education conference where relationships are built through the networking and the personal connections that we make in person. The value of bringing together folks from all over the valuation space means a lot.  We will have members from the ASA there, the AI, the AGA, RAC, TAF, the ASC and more.

This business, unfortunately, creates small clicks of folks that tend to see their group as the best option for everyone.  Valuation, because of how small it is, needs to remain agnostic when it comes to organizations.  There are lots of good ones out there and what is important is most important is that we come together as a whole.

AppraiserFest offers that opportunity and I hope the momentum continues.  Many that know me know that I spend lots of my time working with the AI.  That is my personal preference.  But I welcome the opportunity to work with members form the AGA, the ASA and the other organizations that are out there.  All of them bring something worthwhile to the table and a space like AppraiserFest allows a neutral ground for folks to check their “colors” at the door and see what common ground there is to work as a community.   I hope this is a theme that continues to grow and that we see more direct participation from the various groups out there in future conferences.

I look forward to seeing many of you there.  Make sure you say hello as I will be there enjoying the event with everyone.

Posted on by wfincham

Going Concern Valuer in Virginia

placer
Courtesy H.Placer

Heather M. Placer, MAI, SRA, CCIM, IFAS, ASA is an appraiser located in Midlothian, Virginia. Heather is a career long appraiser that got started at an early age.  She volunteers her time to the Appraisal Institute (AI) and is currently the president of the Virginia Commonwealth Chapter of the Appraisal institute.  It would require too much space to list everything that she does and is a part of with the AI.  Heather is also the lead non-residential appraiser on our Virginia team for our company, Valucentric.  As well as Vice-President of the company. She is also an active commercial real estate agent.

 

VN:  How long have you been in the profession?

HP: 25 years (started in 1993 as an assistant to an appraiser)

 

VN: What is your favorite thing about the profession?

HP: I love the flexibility of my hours and the challenges of the assignments.  I also like visiting different businesses and learning about how they are successful.  One of the most interesting things is talking to small business owners and seeing what makes them successful.

 

VN: Who are your mentors and idols within the profession?

HP: Any of our leaders at the Appraisal Institute have been exceptional.  Scott Robinson, MAI, SRA, AI-RRS, AI-GRS our most recent past president, did a great job at trying to get younger people into the profession.  We have a number of professionals coming up that exemplify the passion we need to continue moving the industry forward.

 

VN: What are some of your passions inside the profession?

HP:  I am really interested in going concerns-anything that seems strange or odd in the commercial world fascinates me.

 

VN: What are some passions of yours outside of the profession?

HP: I am also a commercial sales agent.  I recently earned my CCIM.  That has been a different experience.  I also enjoy teaching.  In my downtime I have a passion for anything with water and my next goal is to buy a lake house.

 

VN: Where do you see the profession in 3 years?  5 years?  10 years?

HP: As technology continues to impact the profession I think that in 3/5/10 years the most successful appraisers will be those that can specialize in one area and those that have earned their designations.

 

VN: What is one thing about your personal business that you are most proud?

HP: I have spent a considerable amount of time studying vineyards.  I am really enjoying branching out into assignment types that many appraisers do not like.

 

VN: If you could change one thing about your business model what would it be?

HP: I would try to get away from the standard “cookie cutter” bank work

 

VN:  What are some present goals for you and what you do are doing in the valuation space?

HP: I am working on really trying to learn more about the going concern models.  I want to continue to build a database to get a good foundation of multipliers and other ratios to contribute to the study of separating intangible components.

 

VN:   If you could change one thing in valuation, what would it be?

HP: Doing away with AVM’s and banks that think they can apply a standardized model to our profession.  This is not an industry that can be automated.

 

VN:  What advice would you give someone just getting in the profession?

HP: You may have to make less the first two years while you are training but it will be worth it

 

VN: This last one is for you to discuss or talk about whatever you would like.

HP: I cannot stress enough the importance of continuing to take education, whether you are new in the business or a seasoned veteran.   This industry changes continuously; the best appraisers are the ones that continue to keep up with these changes.

 

 

*****

There you have it folks.  Heather is a testament to what education and hard work can get you.  She has vigorously chased and earned several designations.  I have personally done several assignments with her and she knows value.

 

 

Posted on by wfincham

Valuation Cowboy

andy
Courtesy of A. Arledge

I have known Andy Arledge for 4 or 5 years now.  He is the creative force behind Appraiser Genie.  The genie is a tool that he sells to a appraisers that assists with data importation, analysis and report writing.  I have spent enough time with Andy to know that he is a man of integrity and one that loves the valuation profession.  He lives in Abilene, TX.  I hope that you enjoy getting to know Andy Arledge.

VN:  How long have you been in the profession?

AA: I started out in 1981 when I got my real estate salesman license, was a broker for 10 years and now an appraiser for 14 years. I’ve owned a brokerage firm, the largest property management company within 150 miles, developed real estate, built new construction and owned many rentals. I have a wide range of real estate experience.

VN: What is your favorite thing about the profession?

AA: I enjoy meeting people, solving the problem of the appraisal. Complex assignments intrigue me.

 

VN: Who are your mentors and idols within the profession?

AA: That’s hard to say, there are a lot of good appraisers that have joined the ranks of AMC’s. I enjoy listening to the boots on the ground appraiser who’s still in the field tackling the actual problems of the industry. I respect Mark Skapinetz for leading the charge of trying to get appraisers to come together as one voice.

 

VN: What are some of your passions inside the profession?

AA: My current passion is writing software that perform analytics on large datasets from MLS exports. I like helping the boots on the ground appraiser perform a more analytical approach to appraising by using tools that greatly increase their productivity, rather than just being a form filler guessing at adjustments or just pulling them out of thin air. The appraiser of the future must have support for their adjustments/analysis.

 

VN: What are some passions of yours outside of the profession?

AA: I love flying small planes and getting back to nature in the mountains, hunting and fishing.

 

VN: Where do you see the profession in

AA: 3 years?

Having now lived through 2 real estate downturns, I see the current market as overheated and I expect another real estate correction in the next 2 years. If the correction is large enough, the profession might gain credibility again if the appraiser’s stick together and become a cohesive voice. Our industry is so fragmented, we don’t have a good voice to get Congress’ ear when new laws are implemented. The big banks could care less what we think, so it’s our job to band together and get the lawmakers to listen to the appraiser’s experience. I believe the desktop push that is currently being pursued by the GSE’s will run it’s course and prove to not be reliable enough to be a good lending tool.

5 years?

I see more and more automation in the appraisal process due to technology advancements. By automation I mean the more mundane clerical processes will be automated to allow the appraiser more time to do the actual research and analyzing their professional expertise requires to build a credible report. The appraiser that engages technology into his business should prosper.

10 years?

Artificial intelligence is advancing so rapidly, it’s difficult to project this far in the future. What we know as advanced technology today will be antiquated within 10 years. 10 years ago, cell phones weren’t taking photos and didn’t have the power to load mobile inspection apps. I still see the appraiser as an integral part of the loan making process, since the appraiser is the only one bringing common sense to the loan process, provided the appraisers become a unified voice with representation in Congress with the decision makers.

 

VN: What is one thing about your personal business that you are most proud?

AA: Taking a private appraisal practice and using that experience that experience to develop Appraiser Genie from an idea into a national presence is what I am most proud of. It’s been 4 years of hard work, but with our new version coming out very soon, Genie will be the most advanced software supporting the appraiser in today’s market.

 

VN: If you could change one thing about your business model what would it be?

AA: I would’ve developed more private work earlier, where I didn’t do as much AMC work.

 

VN:  What are some present goals for you and what you do are doing in the valuation space?

AA: I’m planning on continuing development of Appraiser Genie where it becomes more the norm for appraisers.

 

VN:   If you could change one thing in valuation, what would it be?

AA: I’d say it was time to move back to a more lender/appraiser relationship, recent studies have shown this to be more effective and less costly than the current model.

 

VN:  What advice would you give someone just getting in the profession?

AA: For the past 10 years, I’ve advise anyone who called me NOT to get into this profession. With the recent rise in fees and the advancement in technology, I would advise a trainee to gain as much technology experience as possible. Technology will drive the future of the industry.

 

VN: This last one is for you to discuss or talk about whatever you would like.

AA: I would strongly encourage every appraiser to join their state coalition or a national association. Appraisers are so independent, it’s like herding cats, none of them will go in the same direction at once. It’s no wonder we are the whipping boys of the industry. Until we band together as one voice, the appraiser profession will continue to be at the bottom of the food chain. With one voice we will be heard, and our profession will continue long into the future.

 

****

There you have it folks.  A little insight into another professional in our field.  I have to echo Andy’s sentiment on the profession.  Get involved.

 

Posted on by wfincham · 1 Comment

Moving to a New Market

 

moving-truck

I have seen several folks on social media asking what it takes to pick up stakes and move to a new market.  I am surprised at the advice and lack of GSE and FHA/USDA understanding out there regarding such a thing.  While Fannie Mae, Freddie MAC, FHA and USDA do not prohibit an appraiser from moving to a new market, they do prohibit one form doing any work in the new market until the appraiser becomes competent.  Each entity requires that competency already be established when talking on a new assignment.  In this blog, we are discussing a specialized competency: geographic competency.

Over my career, I have moved four times where I required to become market competent.  I was careful in each case to do so by working with offices that could help me become competent. It was not an easy task, but one that I knew was required.  Yes, it meant taking less fee for a bit, but I wanted to be bullet proof from a possible complaint. I will add that each experience served as rewarding one.  If you move you must retool your processes for each market.

When I moved to Charlottesville (Blue ridge Mountains), I came from a coastal plains area (Hampton Roads).  When I lived in Hampton Roads there was almost no such thing as a basement except in rare cases.  I had no choice but to learn about this and many other things that were common to a Piedmont location.  That meant doing case studies to prove contributory values, etc.  Thank goodness I had experience with Excel and other tools like Regression+ to help me do my job well enough.

GSEs and Agencies

Many would argue that USPAP allows one to become competent, which it does.  But the issue with the GSEs and agencies is that they require demonstrated competency. So, there is an assignment condition which makes that flexibility found in USPAP not applicable to the assignment. This what they say about it:

Fannie Mae Selling Guide B4-1.1-03

Knowledge and Experience

Lenders must use appraisers that

  • have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and
  • have the requisite knowledge about, and access to, the necessary and appropriate data sources for the area in which the appraisal assignment is located.

Appraisers that are not familiar with specific real estate markets may not have adequate information available to perform a reliable appraisal. Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility. (emphasis added)

 

FHA 4000.1 I-B-1-b

(B) Competency Requirement

The Appraiser must be knowledgeable of the Uniform Standards of Professional Appraisal Practice (USPAP) and FHA appraisal requirements. The Appraiser must meet the competency requirements defined in the USPAP prior to accepting an assignment. The Appraiser must be knowledgeable in the market where the assignment is located. (Emphasis added) (this applies to USDA as well since USDA requires adherence to FHA protocol)

FHA 4000.1 I-B-1-d-ii

The Appraiser assigned to provide the appraisal must be able to complete an assignment for the property type, assignment type, and geographic location of the subject Property.

The Appraiser must comply with the USPAP, including the Competency Rule, when conducting appraisals of Properties intended as security for FHA-insured financing.

What do the Experts Say?

I even took the time to interview a USPAP instructor, Maureen Sweeney, SRA, AI-RRS, IFA, CDEI on the topic and she wrote me up this ditty (I use the word ditty on purpose, as anyone that knows Maureen knows that she likes to sing):

“Competency is competency, and it is not to be sliced up like a pie of different categories. You either have it, or you don’t, and it is not sliced into demonstrated or normal or abnormal; it just is. Credible assignment results are based on the appraiser’s total ethics and total competency. The assignment results either has it, or it doesn’t. USPAP is very specific in what Competency requires, how it is acquired, and what to do if you lack it.  USPAP required the appraiser to be competent when they sign the report.  Fannie Mae goes one step further.  They want you to be competent when you accept the appraisal assignment.  Per the Fannie Mae Selling Guide, dated June 24, 2014, page 549 under “Knowledge and Experience”: “Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser that does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment, Fannie Mae does not allow the USPAP flexibility.”  Fannie Mae wants their appraisers competent when they accept the assignment.  The Selling Guide states, “Lenders must use appraisers that 1) have the requisite knowledge required to perform a professional quality appraisal for the specific geographic location and particular property type; and 2) have the requisite knowledge about, and access to, the necessary and appropriate date sources for the area in which the appraisal assignment is located.” https://www.fanniemae.com/content/guide/sel062414.pdf  For those who think FHA is going to give them a pass, too bad.  Per SF Handbook, I.B.1.b.i.(B) Competency requirement, “The appraiser must be knowledgeable of the Uniform Standards of Professional Appraisal Practice (USPAP) and FHA appraisal requirements.  The appraiser must meet the competency requirements defined in the USPAP prior to accepting an assignment.  The appraiser must be knowledgeable in the market where the assignment is located. Fannie Mae and FHA are making suggestions that appraisers should maybe be competent.  The say we MUST be competent PRIOR to accepting the assignment.”  https://www.hud.gov/sites/documents/APPR_ESSENTIAL_09-14-16.PDF There is no wiggle room around this requirement. If an appraiser doing work for Fannie Mae and Freddie Mac is not competent at the accepting of the appraisal assignment, and they hope to gain competency prior to signing the report, and this is your current practice, please stop.”

I also interviewed another USPAP instructor, Jim Atwood, SRA.  He takes it even a bit further, and states that if the FNMA 1004 is used at all, then because of certification-11, the appraiser must have demonstrated competency.  I agree with his summation.

cert 11 1004

“Certification -11, pre-printed into the Fannie Mae 1004 appraisal form, states: “I have knowledge and experience in appraising this type of property in this market area.”  When using this form for Fannie Mae, Freddie Mac, VA, or FHA purposes, the appraiser is indicating, by signing the certification, his or her pre-existing knowledge and experience (competency) regarding a particular property type or geographical area.  Although USPAP, assuming the client’s agreement, allows an appraiser, who is unfamiliar with a certain property type or geographical area, to perform the appraisal as long as he/she becomes competent prior to completing the assignment, this certification implies that the appraiser is to have sufficient prior knowledge and experience so as to perform the appraisal competently.   Certification #11 seems then to preclude accepting assignments for which the appraiser is not already competent.”

In Conclusion

I hope this was a meaningful post.  I am not writing this to sound pious, but to help my colleagues make pragmatic decisions.  This is an easy enough thing to overlook and I have seen several appraisers do it.  As the sergeant used to say on Hill Street Blues:

 

 

hill street blues
“Let’s be safe out there.”
Posted on by wfincham · 2 Comments

The Queen of Green

July 6, 2018

 

sandy picture
Courtesy of Sandra Adomatis

Sandra K. Adomatis, SRA, LEED Green Associate, NAR GREEN Designee has been a meaningful member of the valuation profession for many years.  I first met Sandy when I was taking the last class and demonstration alternative for my SRA designation.  Sandy was the facilitator for that week.  I was immediately impressed with her knowledge, astuteness and love for valuation.  There was no doubt that she loves the profession and believes in doing it the right way.  She is a great instructor, one of the best there is in my opinion.

Sandy has been a thought leader in the profession, most notable in sustainable residential technology.  She is the foremost authority in valuing residential solar PV systems and has been crucial in assisting the Appraisal Institute in developing the Residential Green and Energy Efficient Addendum.  She has also authored a book, Residential Green Valuation Tools, which is a must have for any valuer’s library. She is also a developer and course writer for several classes including the green series.  I have had the pleasure to work with her on a team that she led that focused on extracting a premium for PEARL home certifications which was published in a report here.

On a personal note, there are few valuation professionals that I hold in a higher esteem.  I am thankful to her for being a mentor to me, and for helping me along in my career.  Just to share one quick story about what a good person that she is:

My wife and I have a son that has some special needs.  Sandy met my two youngest children (twins, a boy and a girl) and my wife when she came to Charlottesville to teach the green classes a few years ago.  My twins have since nicknamed her “Sandy Starfish”. Our son has been in a facility moist of this year to help with some of his issues and when Sandy found out she started sending him correspondence by mail.  That meant the world to him, and to my wife and me.

So that is the setup for a Valuer’s Dozen that I am most proud to publish.  Ladies and gentlemen, the Queen of Green, Sand Adomatis:

 

VN:  How long have you been in the profession?

SA: I started appraising in 1981 after two years working for a builder, 1 year for a retrofit contractor, and 1 year managing an appraisal business.

 

VN: What is your favorite thing about the profession?

SA: Appraising is a puzzle that offers a new picture and challenge with each assignment.  As a certified general appraiser working many years with my MAI husband, I had the privilege of inspecting a wide variety of properties from nudist camp, farms, adult toy store, railroad right-of-way, 16,000 sq ft houses on the Gulf to 800 square foot cookie cutters.  How many people can say their job is that diverse?  Not only have I learned much about appraising methodology but have also met many interesting people and learned lots about businesses.

 

VN: Who are your mentors and idols within the profession?

SA: My biggest mentor is my husband, Richard Adomatis, MAI.  He has been retired for more than 25 years but has a great mind and has not forgotten the business.  I can still discuss an appraisal problem today and get direction or suggestions that lead me in the right direction.

I don’t have any idols in the profession, but I have several people I truly respect and admire.  They are all Appraisal Institute members and to name a few – Maggie Hambleton, SRA; Tim Runde, MAI; Kathy Coon, SRA; Scott Robinson, MAI, SRA; Donald Boucher, SRA; and even you Woody.

 

 

VN: What are some of your passions inside the profession?

SA:My passion for the profession is to see more young people come into the profession with a desire to be the best they can be.  That means learning as much as you can and looking to be more than a mortgage lending appraiser.  There is so much work out there that pays well outside the mortgage lending world.

Appraisers that specialize in mortgage lending work have a challenge going forward with low fees, increasing regulations and guidelines, and automated valuation models that will take away the easy assignments.

My passion is to see more appraisers learn about the green features that are beginning to become code in many markets on the residential and commercial side.  I’ve been on this track of learning all I can about the buildings science and dedicating much of my time in sharing what I’ve learned.  Our professional is so slow to move in a direction that is not the norm and sometimes don’t see the train until it is upon them.  I’ve recently been engaged in working with appraisers in three states that are very green and learned that we still have lots of education needs to bring our profession up to speed.

 

VN: What are some passions of yours outside of the profession?

SA: My passion outside of the industry include photography and spending time with family.  Photography is a hobby and I enjoy doing photo shoots for high school graduates that do not have the funds to buy the expensive photographs from the school.   I’ve done prom pictures for some of these students as well.  Little kids are really a pleasure to photograph.  My children and grandchildren are getting older now, but they gave me lots of joy in photographing them as they played.  I did the formal event photographs for the Charlotte Harbor Yacht Club for about 10 years.  (My photography is all volunteer because I love it.)

 

VN: Where do you see the profession in 3 years?  5 years?  10 years?

SA: In 3 years I do not expect major changes in the profession.  In 5 year, we will begin to see more AVMs taking the simple assignments for the mortgage lending work.   We’ll begin to see more appraisers leaving the business due to age and loss of mortgage work if they have not prepared for other client types.

In 10 years, the databases will be incredibly different, larger, and yet still lacking important data needed to truly understand the more complicated property types.  This means appraisers with skills in complex assignments will always have a space in the real estate transaction.

 

VN: What is one thing about your personal business that you are most proud?

SA: My personal business has flourished over the last 25 years.  I’ve seen some appraisers in my market move to other areas or take government jobs because they could not survive during the lean years.  Fortunately, my mentor taught me to  diversify and have a variety of clients.  He also taught me to find a niche that no one else is filling and be the champion.  That is how I gained the title “Green Queen.”

 

VN: If you could change one thing about your business model what would it be?

SA: If I could change my business model it would be to have brought a couple trainees along 10 years ago.  I’ve worked with assistants that were very good and made a difference in the work I could handle.  As I move toward the winding down years of my career (last 10 years) I could see another 10 beyond that if I had a couple trained appraisers that were younger and dedicated.

 

VN:  What are some present goals for you and what you do are doing in the valuation space?

SA: I have a goal of writing another book in 2019.  I’ve got a start on it and hope to have one finished by end of next year.

My current work locally is appraising for estate, divorce, listing, or consulting clients.  I do some governmental work for right of way projects as well.  My consulting falls into the space of builders and real estate agents that need help in marketing, preparing for an appraisal or challenging an appraisal of a high performance (green) property.

Much of my time is spent writing courses, seminars, and teaching or speaking on high performance properties or features.  Some local appraisers hire me to do the solar PV valuations because they have not taken the classes and need the assistance.

 

VN:   If you could change one thing in valuation, what would it be?

SA: The image.   There are 77,000 licensed appraisers in the US and far too many do not present a professional image to the people they serve.  We are in a service business and we must take the time to do our work well and to serve the people we call our clients.  If we tell them we’ll have a report in 5 days, do it.  Why do appraisers think they only need to take the number of classes needed to get the required CE?  What does this say about our dedication to be the best we can be?

 

VN:  What advice would you give someone just getting in the profession?

SA: If you plan on making this profession a career, take quality education and work under an appraiser with a good reputation.  Take pride in your work and find a space where you can specialize and learn everything you can about it.

Network with other professionals and organizations that will add to your knowledge base, skills, and potential clients.  Attending meetings and educational offerings by right of way organizations, attorney education, and building science classes are just a few of the ways I’ve found were most helpful in gaining a presence in the space I wanted to serve.

 

VN: This last one is for you to discuss or talk about whatever you would like.

SA: I love my profession and I want to see everyone in this business love it like I do.  We need to work together to make it what we want it to be.  The low fees we accept can only be changed by appraisers.  Charge what you are worth.  I am not on sale today and I am not a .org.  Keep that in mind when the next client calls.

*****

I hope that you all enjoyed this one.  I am getting lots of great feedback on this series and I consider it a success already.  Please keep the suggestions coming.

Posted on by wfincham

Real estate Agents and Appraisers

Real Estate Agents and Appraisers

July 5, 2018

Woody Fincham, SRA, AI-RRS, Member of RAC

 

cville

I live in a wonderful community.  I love Charlottesville, VA.  We got some bad press last year because of a bunch of outsiders using our community as a match to set off a flame.  This area has a very diverse group of people from all over the world.  The University of Virginia attracts some of the best and brightest from all over, and the locals are accepting and friendly for the most part.  Because of the diversity we have some great ethnic restaurants in addition to the myriad of farm to table and haute cuisine from the region.  This diversity also offers lots of great professionals in the real estate profession.

The spark for this blog has come from my interaction with agents and brokers here in Charlottesville.  I have worked in four distinct markets in my career.  I have found that since I have been here in Charlottesville that the agents that I work with are a bit stand-offish.  I do not mean that in a negative manner, as they are very polite and professional but pretty much steer clear of the appraiser. In every other market I have worked in the agents were very interactive with the appraiser, in some cases almost too much so; like anything there is a balance.   This is problematic in many ways and I think the reason why I say that will be evident in the following narrative.

 

Before I dig too deeply into the purpose of this blog, I want to make something clear.  I have nothing but respect for professional real estate agents and brokers.  They represent an important function in the real estate transaction.  I have tried myself to work as an agent and learned quickly that it is hard work and requires a set of skills that must be honed.

 

 

Why is the Relationship Between Agents and Appraisers Important?

 

I teach residential valuation classes for the Appraisal Institute.  This means that I facilitate and lecture education for those starting out in the profession, those that are seeking continuing education and those seeking the prestigious SRA and AI-RRS designations.  I mention this because every class that I do facilitate, I inevitably talk about the psychology of the real estate transaction. This requires discussing the importance of an open, honest and transparent communication between valuers (appraisers) and agents and (brokers).

 

Valuers analyze data and legally are required to maintain an unbiased position within the transaction.  This means that we are not able to consider emotional reasons or circumstances to influence what we do, or we can face lots of trouble. Why do I mention this?  Because, with residential real estate, there is often lots of emotions tie d up in the transaction. This, after all, will be someone’s personal residence; their castle.  This can include purchases of vanity homes, homes to raise children in, very simple homes etc.

 

Appraisers do not normally deal directly with the consumers that are buying and selling real estate directly. Often, we are dealing indirectly with consumers through the lens of the agents that were involved with the sale, both the selling agents and the listing agents. Therefore, the relationship is important.  I have a requirement to verify sales information like concessions, buyer and seller motivations, and other things that relate to confirming if the transaction was arm’s-length.

 

Because we need to understand the psychology of the transaction, we must have communication with those that were party to the transaction.  Often enough this will be the agents.  We certainly like to speak to sellers and buyers but that is often not feasible or even possible.  We email and call the agents to confirm what we can.  But this is not just limited to the comparable sales and listings that we use, it is equally important to discuss with the agents on a property that we are valuing for a pending sale.

 

Agent and Appraiser Interaction on a Mortgage Transaction

 

When I am working on a file that is a sale involving a lender, I really like to have the agent(s) available to answer questions. It is imperative that the listing agent make themselves available at least vie phone or email.  I love to have the listing agent present at the appraisal observation on site.  It allows me to discuss the listing history, price changes, and even market reaction.  Feedback from showings can be extremely important as is the motivation from the seller as to why they are selling.  This is important because the appraiser must determine if the sale is arm’s length or if it may have some form of duress that affected the price.

 

I also like to discuss how the property was priced.  I find that in the appreciating markets that we are currently under, it is useful to be able to see how the property was priced.  Of course, I do my due diligence and locate and utilize sales that I believe to be the best and most representative in comparison to the subject. But I do like to get input form the agent, as it helps me tell the story of the listing history and motivations.  If there are multiple offers, escalation clauses, etc.  These things can show pent up demand and it is important to let the appraiser know these things.

 

Some Agents Have a Negative Perspective of the Valuation Process

 

Having read several blogs lately from agents discussing the problems that they have with appraisers it seems some really dislike having to deal with appraisers.  I get it.  To many agents the appraisal is just a box to check.  In all honesty, that is a common perception for loan originators as well and they are the client of the appraiser writing the report.  But appraisals are more than that, they require a full-blown research process followed up by supportable analysis based on market reaction.

 

Many reports that I write take anywhere from 8-20 hours in total file time.  It is not a simple undertaking in many respects.  To use familiar terms to an agent, it is like taking a CMA (comparable market analysis or BPO, Broker price opinion) and adding the requirements to measure the property, take lots of pictures, address any needed problems or repairs, be familiar with lending guidelines such as Fannie Mae, Freddie Mac, VA, FHA, USDA, various investor requirements and interagency guidelines.  Not to mention the myriad of client additional requirements. There is much more to the appraisal than just what is typically seen at the property observation. In fact, on many files that I do, the data collecting that I do at the property observation is the easiest part of the assignment.

 

My point here is that appraising for lending institution is not easy.  It has lots of moving parts and requires specialized knowledge to do it.  And this is in addition to understanding how to value a home.  There are many hours of education and many pages of books devoted to this topic.  Even simple homes require lots of work to just value it.  For the agents and brokers that I work with here in Charlottesville, please ask questions.  Please attend the appraisal site visit if you can.  Please share notable information.  Your involvement and communication to the appraiser is key to our abilities to do our jobs the right way.

Some Appraisers Have a Negative Attitude Towards Agents

 

The only advice that I can give to valuation professionals on this is to stop.  Agents and brokers can and are required to advocate for their clients.  This can be frustrating to appraisers but that is their job.  I understand frustration, but I see some vitriolic comments and less than professional attitudes out there.  And while I sometimes share in the less than positive experiences, I try to live by this mantra: “I may not agree with you, but I will do everything that I can to explain to you why my opinion must be different”.  We are not in the appeasement business, we are in the appraisal business.  Sometimes we are not going to make folks happy, but it is better to respectfully disagree.

 

Thanks for Reading

 

I appreciate that you have read this blog and I hope that it serves as an informative piece.  While I want to communicate with agents and brokers how important their availability is to the appraiser, I also want to remind my valuation colleagues that we need to be talking with and engaging with agents and brokers.  In these hot markets that we all are dealing with (agents and appraisers) open and professional dialogue is needed.

 

I have also linked to this blog the National Association of Realtors:  Residential Appraisal Process – FAQs for Agents

 

Tom Horn, a colleague and fellow blogger put this out on his blog Birmingham Appraisal Blog.

Ryan Lundquist who publishes Sacramento Appraisal Blog has a great article on challenging an appraisal.

 

 

Please feel free to reach out and let me know if I can help you in any way.

 

Woody Fincham, SRA, AI-RRS, Member of RAC

wfincham@valucentric.com

 

Posted on by wfincham

Valuers Dozen, The Professor

 

I am very pleased to out this Valuers Dozen up.  The subject of this one is someone that I look up to in the profession.  Stephen Roach, MAI, SRA, AI-GRS is a thought leader in the valuation space.  His firm, Jones, Roach & Caringella, Inc is a well respected one. Stephen has served in some very important positions with the Appraisal Institute (AI) going back to 1991.  Presently he is the chair of education and member of four other committees with the AI.  He is considered by many to be one of the best instructors in the AI.  On a personal note, Stephen is someone that I know that loves to find good food.  Dear readers, I give you The Professor, Stephen Roach, MAI, SRA, AI-RRS.

roach pic

Courtesy of Stephen Roach

 

VN:             How long have you been in the profession?

SDR:    This is my 40th year appraising.  I got a job with a local MAI the day I graduated from college, and I’ve been at it even since.

 

VN:             What is your favorite thing about the profession?

SDR:    I love figuring out the question.  For the kind of work that I do, it’s not always clear what the actual question is, and sometimes the clients need help figuring it out.  I enjoy helping them do that.  And then I enjoy solving the problem that I may have helped to define.

 

VN:             Who are your mentors and idols within the profession?

SDR:    In terms of mentors, the gentleman who hired me, Andy Smith, saw something in me that I may not have seen in my 23-year-old self at the time.  I’m eternally grateful to him for that and for the opportunity and the encouragement.  My first business partner, Robert Jones, was also a great partner, friend, and mentor; he shared his experience and helped me grow as an appraiser.  My idols early in my career were the appraisers and teachers who I viewed as industry and intellectual giants – guys like Jim Mason, John O’Flaherty, Bill Kinnard, Frank Harrison, Bob Foreman, and Jim Graaskamp (truly sorry if I left anyone out!).  More recently, my idols are the people who are moving the profession forward; they’re the thought leaders of the profession, in my opinion.  I’d put folks like David Lennhoff, Richard Parli, Jeff Fisher, Jim Amorin, Leslie Sellers, Nelson Bowes (RIP, buddy), Ted Whitmer, and Jim Vernor in that list (even sorrier if I left anyone out).  I also have a huge amount of respect for the people who step up to help lead the Appraisal Institute, which I consider to be the most important organization for appraisers in the world (AI publishes more books and develops more courses than anyone else, and I view AI as the keeper of the flame of the body of knowledge).  I really look up to all of these people, and it’s a true honor to call them colleagues.

 

VN:             What are some of your passions inside the profession?

SDR:    I really enjoy teaching and testifying.  Perhaps that’s because I think those two are opposite sides of the same coin, as both require listening carefully, figuring out the question, and watching the listener to make sure that the explanation is making sense to them.  I particularly enjoy helping the next generation of appraisers get a good start and find their passions in the profession – some truly great folks did that for me, and I am happy and proud that I can help pass it on.

 

VN:             What are some passions of yours outside of the profession?

SDR:    The most important thing in the world to me is my family.  I’ve been married over 39 years, and I am so grateful for every one of those days.  I’m super proud of my children, both successful in life and their chosen fields.  I also love to ride my motorcycle (and my Vespa) – the quiet time is very relaxing, and I love to travel.

 

VN:             Where do you see the profession in 3 years?  5 years?  10 years?

SDR:    I’m not sure that I can break down the timeline like that, but my suspicion is that the profession will continue to evolve and fragment.  I see three major trends on the horizon.  First is the continued emergence of AVMs, so-called hybrid appraisals, and other alternatives to the traditional model of residential appraisals.  I don’t mean to sound alarmist, but I see this as an existential threat to a large number of appraisers in the country, and I can’t imagine that demand for these traditional appraisals won’t continue to erode in the future.  I suspect that this trend will spread to the commercial world in due course, although likely to a lesser extent due to lower homogeneity of the product.  The second trend I suspect will continue is the fragmentation of the work.  When I stated in the profession, our four-person appraisal firm did everything – loan work, counseling, litigation support, houses, commercial property – whatever came in the door.  Over the past 40 years, I have seen more specialization by property type and even by issue, and I suspect that trend will continue.  The third trend I see continuing is the change in company size and structure.  When I started in that small firm, we were able to get relationship-based work from just about every major financial institution in the area (from local and regional banks and S&Ls up to the national powerhouse banks).  My impression is that much of this work is now going to larger firms, and that the smaller independent firms are having a harder time competing, especially in the more urbanized parts of the country.  I see this trend as largely responsible for the “franchise” models (like IRR and Valbridge) and the continued growth of the appraisal offices of larger national and international brokerage firms.

 

VN:             What is one thing about your personal business that you are most proud?

SDR:    I am proud that we have found a niche that we find interesting, keeps us busy, keeps us challenged, and compensates us well.  I’m proud of our great team of appraisers who excel in solving difficult problems.  I’m proud of the fact that we see a wide variety of different problems, and that we figure out the question and then solve it.  I’m probably most proud of the fact that our clients call us back for future work, reinforcing to me that we helped them solve their problem the last time they called.

 

VN:             If you could change one thing about your business model what would it be?

SDR:    Big picture – nothing.  I very much enjoy the kinds of assignments we work on, and I love the fact that we have relatively little competition in our space.  I could certainly use a cleanup of my desk, but if that’s my biggest complaint, I suspect that life is pretty good.

 

VN:             What are some present goals for you and what you do are doing in the valuation space?

SDR:    I still enjoy what I do.  In the past few years, I have transitioned a bit into more complex litigation, and I’m doing a lot of review and methodology testimony.  I’d like to continue down that path.  It sounds funny, but my professional goal is to sign my name as few times as possible in any given year; this isn’t because I want to work less or bill less, but I’d rather work on complex assignments that take some time.

 

VN:             If you could change one thing in valuation, what would it be?

SDR:    I would make the profession more academic.  I see what we do as a true profession, but I fear that we are often not seen that way from the outside.  That’s largely our fault, in my opinion, as I see and hear a number of appraisers who really don’t seem to be interested in life-long learning and growth.  I’d like to see us all strive to educate ourselves on the body of knowledge and apply it correctly every time.  This is an honorable profession, and I fear that some treat it like a mere job.

 

VN:             What advice would you give someone just getting in the profession?

SDR:    Head to the top, not the bottom.  There’s a lot of competition, mission creep, external threats, and low competitive fees in certain parts of the profession.  That’s not true in other areas of the profession.  Also, get a professional designation.  No one will treat you like a professional if you don’t act like one.  Lastly, get involved with your profession.  Your volunteer work will pay off more than you suspect in ways that you cannot now know or even suspect.

 

VN:             This last one is for you to discuss or talk about whatever you would like.

SDR:    Life is beautiful and wonderful, but unfortunately, it’s relatively short.  So, let the small stuff go and uplift each other.  And hug your parents and tell them how much you appreciate everything they have done for you.  Trust me – I had that opportunity with only one of mine, and it will mean the world to you when they are gone.  Spend time with people and things that make you smile and be that person who makes others smile.  Finally, stop putting ice cream on pie – it ruins both.

 

There you have it folks.  Stephen is a great advocate for the profession and an example of someone that has made a career out of not staying inside the proverbial box.  There is life outside of the lending world.   Happy Fourth of July.

 

Please suggest anyone that you may feel would make a great subject for this series.  I want to see some of our colleagues get some exposure. wfincham@valucentric.com