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.”

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.