The Appraisal Profession Is Clearly Regressing

Posted by Jonathan J. Miller -Tuesday, March 13, 2012, 6:30 AM
3 Comments

A commercial appraiser I know passed along this press release from Bradford Technologies. We liked and used their MacAppraiser software back in the day when they were known as Bradford & Robbins and supported Macs. No disrespect meant to them specifically – I am referring to the state of the broader mortgage lending industry and their use and interaction with appraisers.

How on earth can the mortgage industry, who has successfully pushed the professional appraiser away from valuations through the use of appraisal management companies (who are more about bulk and cheap) than about professional quality, unleash a regression tool on the appraisal masses? Yes they will take a class or two to learn it, but this is way above the average skill set. The appraisal industry is still struggling with the selection of comparable sales.

Here are a few observations on this made by others on an advanced product like this:

This is just what the by-the-book residential appraiser ordered: a statistically supported valuation! A regression analysis that inputs all those hard to define variables like driving distance to a Starbucks, or economic conditions in Uzbekistan. We commercial appraisers have been stuffing reports with this garbage for years and look how much it has done for the reasonableness of our estimates.

…you can cut your overhead and staff…and sleep well at night-no doubt this is geared to the banking industry that will repeat all the mistakes of the past once the new generation of lending mavens is ensconced and they settle into their quota of what they have to lend for their P&L bonus pool (that’s the real regression analysis)

I have likened it to giving an appraiser a loaded gun.

Ok, got it?

BRADFORD TECHNOLOGIES BRINGS REGRESSION ANALYSIS TO RESIDENTIAL APPRAISALS [Working RE]

View the original article here

[Public Speaking] Appraisal Institute Dinner Keynote 2-15-12

Posted by Jonathan J. Miller -Thursday, February 16, 2012, 8:30 AM
No Comments

I was invited to keynote the February 2012 dinner meeting for the Appraisal Institute: Long Island Chapter in Westbury, Long Island to talk about the Long Island, regional and US housing markets, the problem with housing finance, misdirection in the market etc. with an extended Q&A session. …90 minutes of valuation discussion bliss.

It was great to see friends and acquaintances, let alone be invited to speak on issues I am so passionate about. I generally rail quite a bit about our profession, but I am speaking about the 80%, largely enabled by the AMC industry. The 20% was represented by the meeting attendees who have local market knowledge and are striving to improve their craft.

It became apparent to me from attendee feedback that:

AMCs account for most residential mortgage lendingAMCs provide terrible quality valuations but bank staff are mandated to use them from aboveThe industry is aging – not much new blood is entering the profession (of course I am excluding AMC “form-filler” types called “appraisers” in name only but don’t actually appraise in my viewThe expectation of 3-5 more years of current conditions was consensusBanks are looking to expand but are not going to be easing credit anytime soonMany appraisers there were busy working on distressed and refinance property assignments, not sales

All in all, a great time. I avoided sharing my lobster story again but obliged them about turtle litigation.

View the original article here

[Appraisal Stories] Aversion to Turtle Soup Prompted Mold Lawsuit

Posted by Jonathan J. Miller -Tuesday, February 7, 2012, 10:00 AM
No Comments

A number of years ago, my appraisal firm provided an appraisal for the purchase of a few thousand square foot loft in a new gut rehab conversion in downtown Manhattan. This Inman article on “Homes were reptiles roam” triggered my memory of this story, of which the details are a little fuzzy due to the time that has passed. Still, it’s worth sharing since it’s so bizarre.

Our firm was served a subpoena indicating we complicit in the newly discovered “mold” problem in the condo unit. I should point out that the developer, bank, mortgage broker, real estate broker, attorneys on both sides and others were also subject to the same lawsuit.

We reviewed the appraisal and did not understand why the buyer was coming after all of us. The unit was gut renovated and never occupied at the time of the inspection. We did not observe anything unusual.

Our attorney called on our behalf and got the story. The case was soon thrown out before we had to provide anything. The story goes like this:

One night the owner was dining out and saw the adjacent table eating “turtle soup.”The owner had an epiphany that his life’s work would be to “rescue” all the turtles he could get his hands on.Soon there were a few thousand (my recollection) turtles living in the apartment with the heat kept warm enough to keep them thriving.Mold began to grow within the apartment.The owner claimed the unit was not livable due to the existence of mold and began to sue everyone connected with the sale.The unit owner moved out and rented another apartment nearby and brought the turtles with him.Mold began to grow in the rental apartment.The lawsuit was thrown out.

Note: redacted to protect the guilty/innocent

View the original article here

[9/11] Appraisal Photos We Took Before And After

Here’s a few before and after photos we took while inspecting properties for appraisals in downtown Manhattan. I got the idea to share these from Curbed’s post on this (and was taken aback by the unusually nasty reader comments) and from this interesting piece on City Journal called The Vanished Skyline.

< - BEFORE | AFTER -> [click on any photo to expand]

I took the “before” photo from outside the World Financial Center in Battery Park City. I looked up and was blown away with the scale of the towers and the light. I made it a page on my fledgling web site and embedded the graphic in it. The pink “millersamuel.com” logo on the “after” photo was embedded on all our digital photos back in the day. It was really disorienting to take that photo.

We took this photo from the terrace of a downtown apartment a few weeks before and after.

Taken during an appraisal near the UN looking south on 9/10/01 and then a month later I believe.

View the original article here

My Life Story, One Appraisal At A Time

Roland Li wrote a nice profile of moi in the current issue of Brokers Weekly. They’ve done a nice job moving the publication online.

Check it out: Jonathan Miller tells it like it is

View the original article here