Serious Issues with Hybrid or Bifurcated Appraisals
There are a variety of serious issues related to the much-discussed hybrid, or bifurcated, appraisal process. These concerns include USPAP compliance; competency of property inspectors; quality and thoroughness of property inspection data; external depreciation; functional obsolescence; foundation settlement; infestation; negative drainage; extent of updating, modernization, or renovation; effective age; depreciation calculations; site characteristics; water frontage and view; HUD/FHA/VA/USDA Minimum Property Standards or Requirements; safety of occupants from non-licensed, unregulated, uninsured, and relatively unknown third-party property inspectors; and ultimately, the Public Trust.
The USPAP Ethics Rule stipulates that the appraiser must preserve and promote the public trust inherent in appraisal practice by observing the highest standards of professional ethics. This includes not performing an assignment in a grossly negligent manner. The appraisal inspection is the final facet of truly defining the appraisal problem. This is at the core of required competency. All of the above-referenced concerns are dictated by the property inspection. After over 25 years inspecting thousands of properties or various architectural styles, ages, sizes, qualities of construction, located in hundreds of different neighborhoods, I can attest that the property inspection is critical to the appraisal process and should only be completed by the appraiser signing the certification.
Arguing otherwise, under the guise of expediting the appraisal process, thus the loan origination process, saving the borrower money, and increasing the integrity of the lending process, and the entire banking system, is ingenuous arrogant, and truly misleading to the consumer. How can having two parties involved in the appraisal process, instead of simply the appraiser, cost less and save the borrowing consumer money? How little is the appraiser going to be paid to complete the analysis of someone else's property inspection? How will the required extraordinary assumptions affect how thoroughly the appraiser reviews the property inspector's information? How many appraisers are going to be willing to take less money, assume more liability, and complete these new hybrid appraisal assignments? (You want an appraiser shortage?!) How many lawsuits will surface based on the myriad concerns related to the burgeoning number of new hybrid appraisals? If widely implemented and embraced by sufficient appraisers, how long will it take before the powers that be realize that the whole idea of hybrid appraisals has resulted in the calamity it was warned to be? With appraisal wavers, the increasing deminimi, AMCs, scope creep, stagnant fees, an aging profession, and now hybrid appraisals, it is a perfect storm to bring about the end of the appraisal industry and profession. Two things: From who will they steal the ever-current market data that they currently strip from thousands of daily appraisals to fuel the various AVMs? And more importantly, who will the lending industry blame for the next loan crisis and economic recession after they eliminate the appraisal profession?
History to ponder. HVCC. Dodd-Frank. S&L crisis. Fed policy. TARP. Government Sponsored Enterprises. Conservatorship. 1004MC. HUD Lender select.
I for one will not embrace these new-fangled, hybrid appraisals. I will not aid in the degradation and ultimate elimination of the only independent, impartial, and objective facet of the real estate transaction. As a licensed and designated realty agent, REALTOR®, and certified and designated real estate appraiser, I do not see hybrid appraisals as a benefit to the appraisal profession, or the borrowing consumer. Please vote NO!