Hybrid Appraisals are a Bad Idea
There is currently a proposal to allow the use of hybrid appraisals or bifurcated appraisals, where unlicensed individuals conduct appraisal inspections on behalf of a licensed or certified appraiser. This is an inherently bad idea and should be struck down. To date, there is no better method to obtain a credible opinion of value than utilizing a well-trained licensed or certified appraiser. Why tamper with the best thing going?
There is no question that the highest quality appraisal products result when a licensed or certified appraiser, or a properly trained appraiser trainee inspects the property. Appraisers have taken state approved licensing classes, passed state licensing exams, served under a licensed or certified appraiser mentor and have fulfilled all the qualifications required by the state to promote the competent appraisal of real property. Appraiser trainees have passed the same state approved licensing courses as required for licensed appraisers, have passed the same licensing exams as require for licensed appraisers and are directly supervised by an experienced appraiser. The bar is set very high in the appraisal industry as appraisers help maintain the public trust. The use of inadequately trained inspectors that are not trained and/or directly supervised by licensed or certified appraisers would only tend to dilute the quality of the appraisal process and would result in a decline in the reliability of support for loans submitted to the secondary market. How could this possibly be a good idea? Why circumvent the safeguards put in place to protect the public?
For years, lenders and appraisal management companies (AMC's) have resisted the use of appraiser trainees, despite their many significant qualifications and their direct supervision by appraiser mentors. Now the use of untrained, or inadequately trained property inspectors, who are less qualified than a licensed and directly supervised appraiser trainee, is suddenly supposed to be a good idea? Not only would the quality of the appraisal process be compromised, but consumers will be misled as they will likely believe the property inspector who visits their home is an appraiser. And how many will be asked to pay the same price for a bifurcated appraisal as a proper appraisal?
It is also likely lenders and AMC's will be unwilling to take the blame when poor quality hybrid appraisals lead to foreclosures and short sales, as it is common for lenders and their AMC representatives to force appraisers to sign indemnity agreements. Appraisers will be stuck shouldering the responsibility for anything that goes wrong, even though they would have little control over the process. It would be unfair to ask appraisers to take the blame for a process that would likely be forced upon them.
It is in the best interest of consumers to allow the appraiser to be in full control of the appraisal process. The public will be best served if appraisers or their directly supervised licensed trainees inspect properties for appraisals. A hybrid appraisal utilizing a property inspector in place of a licensed appraiser, a certified appraiser or a licensed appraiser trainee will compromise the quality of any appraisal and can only increase the risk to consumers and the general public. Why on earth should we put our friends, neighbors and relatives in a position where they may have to bail out GSE's on account of bad decisions that can be avoided?