Hybrid appraisals good for the banking industry; bad for consumers(borrowers)
There is no one in the process of buying a house that is not in it for the money. Real Estate Agents, AMC's, Lenders, Sellers, Buyers. Too many first time buyers and those of moderate means are not experienced in the real estate market so they rely heavily on those that are. Unfortunately most of those people stand to gain monetarily if the contract goes through and, too many times, none of those peopel care to point out the "warts" that a property may have or the fact it is over priced, or the fact that the neighborhood is declining. Even many lenders are more interested in moving their money than they are making good decisions about the loan process. After all, they are passing the risk on to Fannie Mae, Freddie Mac, VA, FHA 99% of the time so where is the risk for them. "Make the Loan happen!" There is one professional who does not stand to gain from the culmination of a sale and that is the appraiser. His role is to report the values in the marketplace. He is trained to inspect the property through the eyes of a disinterested professional who can recognize external, physical, economic and functional obsolescence, all of which impact value. There is no hybrid appraisal, evaluation, AVM or desktop appraisal that can do this. In the case of hybrid appraisals, the inspector has one hour of training in order to recognize the many forms of obsolescence and to accurately measure the house according to national standards. Licensed appraisers have the training, education and experience to accurately determine these market factors. There is no other professional who can accurately value a property and determine the many forms of obsolescence. An AVM or evaluation performed by anyone other than a professional appraiser cannot determine the market boundaries that define the values in that neighborhood. AVM's and Hybrids are one of the worst products on the market for collateral evaluation. Houses are inspected by anyone other than a person trained to inspect a property with an eye for valuation. Appraisers are expected to accept these reports at face value or spend untold hours ensuring the data they have received is credible. Yet the lenders and their AMC's are only willing to pay an appraiser $75-$150.00, assuming that appraisers are going to fill out their forms with no research on the house, on the neighborhood, on the market and on the data needed to make adjustments to comparables in the cost approach. These products are a travesty to consumer protection. They are an attempt by the lending industry to bypass the professional appraiser whenever possible in an effort to get values from other sources that do not do the depth of research and analytics that professional, educated, trained and licensed appraisers provide.