A few days ago I published a critical piece on the appraisal industry for Bloomberg View called Guess What’s Holding Back Housing.

There are many great people, incredible talents and solid organizations within the appraisal profession. But in my opinion only 20% of the industry are truly competent professionals and the remainder are merely varying degrees of form fillers.

I have been an appraiser for 28 years and it is apparent that the industry is dying a death of a thousand knives. One of the key reasons for this slow death is the lack of national leadership and the extreme fragmentation since most appraisal shops are comprised of a single or just a handful of professionals. I’d also like to offer that the majority of our profession seem very willing to make unsupported negative inferences on reviews of a colleague’s work such as appraisal field reviews or troll columns like mine.

Like I said, 80% of the profession are really not professional. Many of these appraisers have not looked up from their clipboards in quite a while and take an objective look at the world around them.

I have found appraisers throughout my career to be hyper defensive about the quality of their own work (I am definitely one of them on occasion). Just ask any bank review appraiser what it was like to call an appraiser out on an unsupported analysis. And just ask any appraiser what it is like to get meaningless criticisms from a bank appraisal reviewer over nothing germane to the value opinion.

A few week’s ago a colleague sent me a link to the first empirical study on the impact of HVCC on the appraisal profession by the Federal Reserve Bank of Philadelphia. The thrust of the study was the analysis of “low appraisals.”

When I used the term “low appraisals” in my piece combined with their editors choice of post titles: Guess What’s Holding Back Housing all bets were off.

It was “game on”, yet I’m in the appraisal trenches with all of them. The most amazing thing about the adverse reaction was that most of the appraisers who trolled the comment section or sent me scathing emails never read the Fed’s working paper on the analysis which was the basis of the post. The core of the working paper is only about 10 pages double spaced in length yet they were more willing to troll a colleague than undertake a professional debate.

I could chalk this unprofessional reaction to the battering our industry has taken over the past decade – I certainly feel that way – but it doesn’t explain everything. Because our industry has no real voice in related public policy, we continue to be marginalized by robotic institutional processes such as AMCs, AVMs and upper management that still sees our services as merely a cost center.

When I received the first email troll comment, I queried his email address and called him up right away. He was surprised that I found his phone number but we had a pleasant discussion. He was concerned that I would out him.

I exchanged emails with several of the email ranters and the replies were much more civil. I also did this with a few of the commenters on the post.

Although the majority of these responses are rambling rants, they shed some light on the state of the appraisal profession.

Take a look at a sample (I redacted their last names, firm names and contact info):

Hello Jonathan-

I’ve heard good things about your firm and its work, so I am doubly shocked by the headline in your article “Guess What’s Holding Back Housing,” and the implication that somehow appraisers are to blame for the sluggish pace of the housing recovery. There’s no question mark at the end of the “Housing.” It’s not a question, but more of an accusation. You do know we’ve been through a severe recession, don’t you? That in spite of the increase in employment that has taken place we have created a lot of part-time jobs and done away with a lot of high-paying full-time jobs. Labor force participation is way down. You do know that lending standards have tightened? Are you aware of these facts? I ask that because your article conveys ZERO understanding of any of these fundamentals.

The term “Low Appraisals” manages to be erroneous and stigmatizing at the same time. That an appraisal is “low” tells me nothing about the quality of the appraisal. It may be a great appraisal. It may be a terrible appraisal. It says nothing about whether the appraisal conforms to regulatory guidelines and industry standards and is a credible opinion of market value. I NEVER use that term when referring to an appraisal. I have dealt with many irate customers throughout the years and I always take the time to explain to people what an appraiser is supposed to do – which the general public frequently does not understand. The term “low appraisals” is also stigmatizing. If “low” appraisals are “holding back housing,” well that is not a good thing, is it?

As a leader in an industry which is poorly understood by the general public, I am saddened that you would take the space granted to you to further the misconceptions people have about appraisers and what we do. It is NOT our job to “make” or “hit” a number. When we make that the job is when the problems start happening. You could have explained to Bloomberg’s readers that appraisers have to weigh an offer for a property in light of market evidence. If the evidence to support the sale price is not there, an appraiser is doing his or her job in NOT “hitting the number.” Your use of the “low appraisal” term suggests that the appraisal is somehow flawed. If the appraisal is flawed, it is not because it is “low” but because it does not incorporate appropriate data and/or analysis.

In all my time in the appraisal industry I have always offered irate clients a change to point to specific, substantive errors or omissions in any appraisal when they do not agree with its findings. The overwhelming majority of the time the client, or broker, or other interested party has nothing to say. They are angry because the number is “too low.” They don’t know or care if the appraisal is well done or poorly done. All they care about is that it is “low.” I hope you will use your prominent position in the industry and your access to publications such as Bloomberg to speak the truth about what appraisers are do, not further misconceptions.



I called William directly and we spoke at length.

How can you, a highly recognized real estate appraiser, write an article
for Bloomberg suggesting that appraisers are partially responsible for
the weak housing market when the quality of the appraisal reports was
not analyzed? How can anyone, or an agency make such a suggestion if the
reports weren’t analyzed? I am a retired general real estate appraiser
who reviewed many reports and to do so required a knowledge of the real
estate market in which the report was prepared. In my own opinion, again
without an analysis of any reports, it is more likely that the
appraisers are better now and are NOT trying to hit the target as was
the case prior to the 2006, 2007 blowup because they are under so much
scrutiny from the lenders. For example, no more calling an average
property “above average with no repairs necessary” when, in fact, the
property has a few problems. The local appraiser group has shrunk as the
worst ones are no longer in business, as is the case of many of the
unscrupulous lenders who employed them.

My response to the above:

Hi Thomas,

Thanks for sending the note.

It’s actually quite easy to write about it. I disagree with your observations about today’s quality. It is very poor.

I have reviewed thousands of residential appraisals, been an expert in a number of national litigation cases and the quality right now is just as bad as it was during the boom, but different. The Fed study I referred to in the piece inferred a quality problem as a result of the metrics presented. Talented professionals like I’m sure you were are no longer entering the industry.

Yes the mortgage broker-orientated appraisers are largely gone now but the new generation of appraisers working for AMCs are just as bad, but in the opposite direction. Now we have an industry working for half the market rate who need to cut corners to be able to complete the report. With AMC’s it is much more common for the appraiser to be missing local market knowledge and to drive much farther to their assignment.

Mortgage appraisers today who work for AMCs tend to be biased low because they don’t know their market area cold which is just as bad as being biased high back during the boom.

I want our industry to provide a neutral well research product. The problem is the the clients don’t care and see us as a commodity rather than a profession.

Again, thanks for sharing your thoughts.

Thomas did not respond.


Summarized: Appraisers were responsible for the housing bust AND now for holding back progress in the housing market.

Funny how that is……..that so many cover the above as truth and that few actually write about the actual purpose of the appraisal process. I suppose it would be harder to headline an article like that and draw readers in.

I enjoyed this part in particular; “The quality of appraisal reports wasn’t analyzed, but the paper suggests that it may have declined.”

I look forward to reading more.



My response to Adam:

Hi Adam

Summarized: you need to drop the righteous indignation lathered in sarcasm approach. It’s not productive unless you are merely a troll.

Otherwise I assume you are an accomplished appraiser. Would you like to discuss this tomorrow? I’d really appreciate dissecting the disconnect.

Let me know.

Adam did not respond. The more sarcastic the commentary, the more afraid appraisers like Adam are to engage in reasonable discussion.

I don’t think you have all the correct information. For only a $400 to $500 fee an appraiser will make sure I don’t pay too much for a house. Nor pay the real estate agent a 7% commission which on a $500,000 home would be $35,000. Nor pay $300,000 in interest to a mortgage company.

So are “low ball” appraisals really the problem? Or were “inflated values” the problem? Or is it that appraisers keep the other guy honest?

Sorry sir, but I want to not get ripped off!


My reply:


Thanks for the reply. On a bank appraisal, the appraiser’s client is the bank, not the borrower – a common misunderstanding.

We had a continuing dialogue.

I just read the article on Bloomberg View and I have to say, as a certified real estate appraiser, I am a little offended. I know the graphs and the statistics show that there has been an increase of real estate sales and refinances that are killed by the appraisal. I also agree that the HVCC and later the Dodd-Frank Act has increased the number of what are called “low appraisals”. I think the problem myself and many other appraisers have is even the often incorrect use of the phrase “low appraisal” itself. As in all professions there are always going to be the few that don’t do the job correctly or even those who falsely skew the results. The other 98% of the appraisers out there are just giving the honest truth, as we are required to by our ethics and the law. Most appraisers including myself have a great respect for the fact that we are there to protect the borrower and the lender, or the seller and the buyer in the case of a sale. I have read many articles in realtor or mortgage professional trade magazines and online blogs about these “low appraisals” and the bad “low ball appraisers”. The story often goes like this; A realtor Jane Doe describes how “bad, low appraisals” have killed 4 of her last 10 sales. She says the problem has gotten worse and she has been a realtor for 20 years and appraisal quality is at an all time low. The truth is that most agents, like appraisers are honest professionals who are doing a good job. The issue is their job is to get a buyer and seller to agree on a price… so that they get what they want and money can be made. They are advocates for “brokering” the deal and work on commission. There are few checks and balances in that system, it is self regulated by the free market, which is great… most of the time. What sometimes happens is this: The house for sale is a nice 2,000 sf, 3 bed 2 bath ranch home in Niceville Subdivision, the seller feels his house is worth at least $250,000 and the buyer loves the house and they feel that $240,000 is the highest they can pay. The house goes under contract for $240,000 and 2 agents and 2 clients are happy… for now. Then when the appraisal comes back at $225,000 everyone thinks it is a low appraisal, 2 agents, 2 clients, 1 loan officer, etc. all want the house to be worth the agreed upon $240,000. The problem is the appraiser is doing his job and found that out of 30 total sales in Niceville S/D, 8 of them are similar ranch style homes that are in “average” to “very good” condition selling between $190,000 and $220,000. Most of the ones that best match the size, condition, # of garages, amenities, etc. have sold for about $215,000 after + & – adjustments are made for differences. That is what is known as “The MOST PROBABLE PRICE a property will bring in a competitive and open market”, not the highest price “if you get lucky”, or the price you can get “if the buyers are from out of town and don’t know the local market”. The scope of work we agree to is just that, the most probable price. Lenders want to know that if the loan stops performing that they actually own something that is worth what they lent on it. If 90% of homes like the one in this case sell for $215,000 and I value it for $240,000 I have not done my job correctly. If the loan defaults 6 months later when the buyer losses his job and the bank loses money because they can’t find that rare buyer willing to pay too much, I have harmed them. If the buyer of that house gets relocated in 6 months and cannot sell it or has to take a loss when he realizes he can only get the usual $215,000, I have harmed him. The agents and loan officers that made the high commissions 6 months ago have nothing to fear, they did their job and got the deal done. The appraiser will be the one that will be getting the call from the attorneys. That is something that needs to be remembered. We are NOT paid on commission and our work is scrutinized by underwriters to test us constantly. It is in our best interest to do the right thing and value a property fairly, not too high or too low…. And that is what we do…. and get pressure in one direction or the other if values are going up or going down. That is why the average age appraiser is over 55 years old and few are joining the profession. Being a punching bag for doing the right thing gets old as fees go down gobbled up by the AMC’s that Cuomo forced on the industry as the cost of living, gas, business expenses, insurance, etc. goes up.

P.S. Look at Cuomo’s involvement and gain, in creating a forced middleman in the modern appraisal industry.



Thanks for your thoughtful reply John.

The phrase “low appraisal” was the metric selected by the Fed and the basis of the study. It strikes a nerve in appraisers and rightful so. They used it in a mechanical way versus the way NAR might complain that appraisers are killing their deals. Still, the appraisal quality of the industry is worse today compared to 10-20 years ago. Are there good appraisers out there? Of course. I am. You sound like you are. But the industry is dying and part of the reason, but not the entire reason, is us. We have no leadership and are simply being marginalized – the outcome in my opinion is a lower quality product that reduces the reliance on our industry.

Thanks again for sharing your thoughts.

John replied again with a very well articulated description of the state of the appraisal industry.

I agree that we need to do more. In Louisiana we are pretty good about regulating AMC’s and there is a requirement for them to pay C&R fees but many still don’t. I am sorry if I sounded rude in my first e-mail but as you know the low appraisal thing strikes a nerve with most of us. I would love to see a large powerful national organization that truly advocates for appraisers the way NAR does for realtors. That would be the real answer. Getting most of us in one organization I agree is the problem since we are lone wolves in many ways.


  1. Ryan Lundquist September 29, 2014 at 9:47 am

    Thanks Jonathan. The appraisal industry really needs strong national leadership and an extreme personal and professional makeover if you will.

    • Jonathan Miller September 29, 2014 at 11:07 am

      Agreed – there are great appraisers out there. One would think lowball fees, dehumanizing interactions with financial institutions, ridiculous claims made about automated values and lack of interest in allowing the industry to be a neutral benchmark to make lending decisions on collateral would be enough to bring appraisers together. The exodus of the talent pool from bank related work to other types of appraisal work will continue.

  2. David Wimpelberg September 29, 2014 at 11:13 am

    As usual, Jonathan is spot on. I’ve also been railing about the professionalism issue for at least a decade. There was a notable change in the industry post-1998 or so, due to the combination of low entry standards for licensing and a real estate market boom; in summary the opportunity to make money fast with little training. A whole lot of people came into the business who couldn’t give a damn about appraising or professionalism. These people never associated with other appraisers or appraisal organizations; in fact, they were viewed as detrimental to their profits. Now we have a whole lot of low-skilled, angry “appraisers” that are railing about something to be done, not realizing that they are a big part of the problem.

    • Jonathan Miller September 29, 2014 at 2:01 pm

      Thanks so much David – a bunch of my peers who played the high volume, hit the numbers game are now out of business. Best, Jonathan

  3. Tom Horn September 29, 2014 at 11:24 am

    Due to the difficulties we seem to have in getting a national presence I think the recent increase in state coalitions is a move in the right direction. Phil Crawford has talked about this on his “Voice of Appraisal” Youtube show and Matthew Biggers with Alamode Software is strongly supporting these coalitions. By gaining strength at the state level I think we can then be more effective at the national level.

    • Jonathan Miller September 29, 2014 at 11:55 am

      I think you’ve got something there Tom. Thanks for sharing.

  4. Paul Sobol September 29, 2014 at 11:54 am

    I can’t thank you enough for articulating what I have been saying for the past several years. I have been an appraiser, working in the Hoboken, New Jersey market for the past 22 years. Over the past several years the market is being overrun with appraisers that lack, at the very least, geographic competency and overall competency. I receive several calls a month, from local brokers, asking me to review “low appraisals” on properties that are under contract. These appraisals consist of “boilerplate” comments and no true analysis. I think that the lenders are happy to get a low appraisal on a sale, forcing the buyer and seller to renegotiate and thus building in additional equity for the lender.

    Keep fighting the good fight for the 20% of us that value our profession.

    Best Regards,
    Paul Sobol

  5. Jonathan Miller September 29, 2014 at 12:01 pm

    Paul – you’ve definitely made my day. Best, Jonathan

  6. Marc September 29, 2014 at 1:15 pm

    I’m disappointed with your response to John (and with your overall attitude towards my industry). I am a 51 y.o. who has been in this industry for more than half his life and has managed to survive and sometimes even thrive. John raised some specific issues related to actual situations he sees in his market area. Unless I’m missing something he has a compelling argument as to why he considered a sales price to be inflated based upon specific data. You gloss over his comments with a non-specific generalization once again. As an appraiser the last thing I want to do is “kill” a deal. It creates extra stress, work, and forces me to deal with people who are far from impartial….but if the value isn’t properly supported – so be it!

    • Jonathan Miller September 29, 2014 at 1:54 pm

      Thanks for your response Marc. For the record, it’s “our” industry since I have been appraising for 28 years and I am about your age. Ok, I confess. I’m turning 54 tomorrow.

      I can’t follow your logic in terms of what it has to do with my response to John since he didn’t have a problem with it and wrote a nice reply. A lot of appraisers seemed to give specific examples re: if the price is too high, then they appraise the value below the sales price. I didn’t gloss over that – it’s a given and not the point of the article, the study or my followup comments. Still, I appreciate your passion and thanks again for the comment.

  7. Erocks September 29, 2014 at 2:35 pm

    Why is this always so complicated??? An appraisal is ONLY an opinion of value from a 3rd party “experienced” professional who should have something to lose if found to be willfully omitting and/or manipulating data. An appraisal is ONLY a reflection of current data vs the subject property… we are not prognosticators or crystal ball readers. We report what we see and the other parties should decide what to do with this data, not just request additional comps. If we see weakness or strength in the market we should report it – and report it without pressure of being yelled at and called names. We DO need a national coalition and/or union for support. However, there were plenty of rules in place in 2007 – but NO ONE was ENFORCING THEM!!! The AMC model is a complete disaster and has done NOTHING to create a more CREDIBLE report – only better spelling and MORE redundant data which they claim is “quality”. The data is still being omitted and manipulated to get past AMC reviewers and checklisters. It’s all redunculous and there is ‘NO REALITY IN REAL ESTATE” at the present time.

  8. Joshua Walitt September 29, 2014 at 6:19 pm

    I agree we lack strong national leadership. Our leadership is spread throughout (too many) national and regional organizations.

  9. Sabbie September 30, 2014 at 3:52 pm

    “Holding back housing” implies that the most beneficial outcome for society is to have housing prices rising constantly. You’ve been drinking the Realtor kool-aid my friend. Stability in the housing market is a more worthy goal, and affordability too. The boom and bust cycle that has been created in housing benefits the few, mainly the wealthy and the lucky. Housing used to mean a roof over your head and a way to save for the long term, now it’s all about getting rich quick. And God forbid the appraiser injects a measure of caution or sanity into the feeding frenzy.

  10. Doug Leff September 30, 2014 at 7:50 pm

    Thank you for the article Jonathan, as I too agree with your comments and thoughts. I am seeing many things have not changed since the blow up in 2007. There are still appraiser’s out there turning in poor appraisals with a lack of research and support. Therer are still Realtors out there putting the pressure on the appraisers and the lenders like before. Thus, if you the appraiser, did turn in a well developed report, but could not “hit” the number, that Realtor and even the Loan Officer form their own blacklists to block you. The Realtors love to use the term, “low appraisal”. By the way, not only I am an appraiser, but I also have a real estate broker’s license. As with everyone else and you, I agree, we need “one” national voice. It is time for the different appraisal organizations to come together as one, especially the Appraisal Institute and NAR, Appraisal Section. The longer we don’t, they probably won’t have to worry someday done the line, because they won’t be needed!!!!

  11. Barry R Cleverdon September 30, 2014 at 8:38 pm

    Having taught real estate appraisal classes for over 20 years I view the industry today with fewer appraiser who are taking classes to become better quality appraisers. Many take the minimal requirement of classes. Just completed a sales analysis class. Had 3 attending. Review class next week and 1 enrolled. Last property analysis class was with 4 attending.

    Too many appraisers take on line classes because cheaper and easier to take.

    Why are less than 25-30% of appraisers nationally a member of any appraisal organization? Why are less than 25% designated?

    Why are so many appraisers with 5-25 years of licensed status trying to get certified only because of 1/1/2015 requirements. Why did they not do it before.

    When it takes 5-8 hours to do a basic URAR why are appraisers stating that they do 2-3 a day?

    Why do appraisers cut corners like using MLS pictures, having others take pictures for them, have others view the subject yet the appraising signing the report did not see the subject?

    Why do so many appraisers fail to write adequate reports?

    Too many appraisers admit they have not read the FNMA requirements in the Selling Guide. Same with FHA.

    So many why’s.

    The quality of appraisals being done in current market represent lesser quality than 10 years ago.

    Reviewers report so many poor appraisals. Yet reviewers on staff tell me they must review 12-15 reports a day. That’s less than 30 minutes for the review.

    Many state the system is broken.

    The HVCC has damaged and destroyed many appraisers careers. In CA 44% of license & certified appraisers have abandoned their licenses since about 2006. Many for economic reasons.

    There is no national leadership. Congress does not indicate caring about appraisers.
    Lenders have a bigger capacity to lobby for their cause.

  12. Adam Smith October 1, 2014 at 12:07 am


    I think the (perhaps arbitrary) 80% of incompetent appraisers, of whom you’ve spoken, today are too busy trying to do as little as possible, in order to justify the low fee they’ve just accepted, in order to beat out some other poor slob who bid low, while attempting to develop new ways to text during C.E. class unnoticed (because we all know that C.E. is B.S.) to consider supporting a national effort to organize, or join forces to ensure representation. I believe that too many appraisers may fear a higher standard being imposed and would be against the idea for that reason alone.

    The older appraisers don’t have to change the industry, they just have to survive in it long enough to retire, and hope they make it before major changes set in.

    What we need is better education and stricter requirements for licensing, to ensure the quality of appraisers, and that all appraisers have the same set of tools going in and can demonstrate how to properly use them.

    We need non-elective continuing education of sufficient length and proof of knowledge of subject matter before passing and renewing our licenses.

    We need to hold Ourselves to a higher standard of quality and accuracy, and broadcast that standard so the public at large can see that we are serious about doing this thing right, so as to improve the public’s (and clients’) image(s) of appraisers and confidence in our abilities.

    In my review experience, the least credible appraisals (not necessarily done by the least competent appraisers) have been those done for the lowest fees with the fastest delivery times. It seems that many may choose to deliver less-than-credible work, letting the fee and terms (that they have agreed to) justify their choices. They gamble, not just with their licenses, E and O insurance and careers, but with the future of the industry and market as well.

    Does anyone reading this have any recollection of hearing anything in a C.E. class, spoken by a fellow student/attendee along the lines of “…and they want all that for a $235 fee!”?

    The definition of “low appraisal” is not important. What’s important is that such a term is in common usage. We should ask why it is, and if the answer has anything to do with appraiser competency, each of us must then take our own necessary steps to ensure that we are doing our work competently, despite the fees we’re willing to accept. Competency leads to credibility and credibility leads to nothing that isn’t good for appraisers and their clients, the industry and the market.

    Last note: Low appraisals might partly be the result of appraisers overcompensating to the conservative side due to the thrashing they’ve recently taken over the recent U.S. Housing Crisis. That would be simple human nature.

    • Jonathan Miller October 1, 2014 at 3:41 pm

      Thanks Adam. Great insights. Thanks for sharing.

    • Erocks October 2, 2014 at 12:01 pm

      I always counter the “low appraisal” with “oversold house”.. an appraisal is nothing but a reflection of the current market – we are not prognosticators or crystal ball readers of the future. If the current “borrower” is sold that the prices are going up – they should be willing to pay a little extra to get the home – this “proves” that prices are going up – not forcing the appraiser to make extraordinary adjustments to justify a higher price. Our job is to show risk if risk is seen…. it is the realtors job to “sell” the house.

      I tell people all the time it is OK to pay more than appraised value – if you like the house buy it. If you don’t have the money – maybe you shouldn’t….

  13. GARY MASARSKY October 1, 2014 at 3:32 am


  14. Scott Wachter October 1, 2014 at 9:58 am

    I left this comment on a LinkedIn discussion where this article was mentioned. I thought it only fair to post it here.
    The first objection I have is with the original article “Guess What’s Holding Back Housing” article’s title. It assumes that first of all housing is being “held back.” My questions are, “To whose standard?”, and “At what level should housing be? The second objection is that since no other “culprits” are mentioned in the article, we are to assume that appraisers are the only ones “holding back” the housing market. The article is based on a working paper for the Federal Reserve Bank of Philadelphia which asserts that since the HVCC, there is an increase in the percentage of appraisals that fall below the contract price. After lots of impressive numbers and verbiage, the one thing the article does not mention is what the appropriate percentage should be. Another HUGE gaping flaw with the paper is that it starts with the contract price as the constant. It fails to address whether the contract price was inflated based on the market data. In a sharply declining market, I can think of a number of scenarios where the contract price would be too high: Some agents may fail to recognize or be reluctant to recognize the decline and list the property too high. Sellers may do the same and insist on listing a property higher than it should be. Some agents fall to the pressure to list higher than they would like because they know the next agent will do it (see Million Dollar Listing on the Bravo network for a real eye opener). Some listings may have been inflated because the existing loan is underwater but the seller needs to get out. To summarize; there is an inherent danger in relying on statistics that are fundamentally flawed from the beginning. Next I’ll turn to the “Lone Wolves” article. I found this statement from the article to be hilarious, “I’d also like to offer that the majority of our profession seem very willing to make unsupported negative inferences on reviews of a colleague’s work such as appraisal field reviews or troll columns like mine.” Isn’t that exactly what the author is doing when stating that, “80% of the profession are really not professional?” That seems like an “unsupported negative inference” to me. He is quick to attack the responders and to note when they don’t return his emails. I left a comment on his original article, “Guess What’s Holding Back Housing.” I have yet to receive a response.

    • Jonathan Miller October 1, 2014 at 3:39 pm

      Scott – thanks – yes, you left a comment yesterday and I didn’t respond to it (as if that was some sort benchmark of credibility). All I care about is the improvement of our profession which is in disarray. My link to this post was a continuation of the conversation. Incidentally the Fed paper doesn’t need to provide an arbitrary benchmark and had nothing to do with a quality measurement. As an appraiser, you seem to have a completely different experience than myself and my colleagues. If you can provide constructive criticism to foster debate – that’s optimal and how problems get resolved. If you’d rather continue the snark towards me (the author) then you have no interest in anything but winning some sort of argument. Hopefully you’ll go with the former.


      • Scott Wachter October 1, 2014 at 6:18 pm

        Jonathan, Thanks for responding to my comment. First, I’d like to address my your statements about appraisers not responding to your comments. It has nothing to do with credibility. It comes across as condescending; as though you put the commenters in their place. I was merely turning the tables to show you what it is like. Your response to me shows me that you didn’t like it either. That was my one and only point about that. As far as how I feel about the appraisal profession – my position was never stated. I may agree with your conclusion, but not how you arrived at it or how it was presented in your articles. Yes, the Fed paper does not need to prove an arbitrary benchmark and has nothing to do with a quality measurement, but your article, “Guess What’s Holding Back Housing” suggests that appraisers are at fault (and the only one’s at that). This is where the quality measurement becomes important. You are the one attacking the quality of appraisers and citing the Fed paper as evidence. Not only by the title of the article, but in comments such as, “It seems as if appraisers just can’t get out of the way.” Then your “Lone Wolves” article takes the issue even further by stating things such as, ” 80% of the profession are really not professional.” By using the article to support comments like these, you are the one who is attaching a quality measurement to the Fed paper. As far as the snark is concerned, I’m only mirroring what I read in the article (see above quotes for example).

        • Jonathan Miller October 2, 2014 at 9:47 am

          Hi Scott, Seriously, you’ve got to stop whining. Lets go beyond that and have a constructive discussion if you are still able.

          Question: Do you have an opinion on whether appraisal quality for the majority of the industry has fallen sharply after the financial crisis? If you see no change or an improvement from financial reform, perhaps you can provide the logic or share your insights? That would be helpful and further the discussion in a productive way.

          I observe the decline in quality every day as a 28 year industry veteran and so do my colleagues from around the country including independent appraisers, bank review appraisers and appraisal colleagues on state review boards.

          • Erocks October 2, 2014 at 10:23 am

            Appraiser quality likely has dropped as anyone with other options left long ago.. Anyone who got in the business post HVCC and have been AMC assimilated are nothing but form fillers who are not “allowed” to give true opinions or adjustments… just learn to fill out the form so it passes review, manipulate data as needed – NEXT!!

          • Scott Wachter October 2, 2014 at 2:39 pm

            Whining Jonathan? Seriously. If you’d rather use ad hominems and deflection instead of addressing the comments directly it’s hard to have a meaningful discussion but here goes. To answer your question about whether appraisal quality has fallen sharply, my reply is a qualified “yes.” It has been my experience that appraisal quality has been less than stellar for a lot longer than the recent financial crisis. To quote Warren Buffett, “Only when the tide goes out do you discover who’s been swimming naked.” During the housing boom of the 2000’s, the speed with which loans were closing hindered close scrutiny of appraisals and, as a reviewer myself, I saw a lot of crap appraisals come across my desk. The problem was that rapidly rising home prices covered some poor appraisal techniques. Unfortunately during that time a lot of appraiser trainees were hired but some appraisers were so busy that they didn’t have time to properly train them. I’m fairly certain that some good appraisers were robo-signing reports prepared by these trainees without even reading them. During the market crash I believe that many of the experienced appraisers called it quits since many were close to retirement age anyway or due to a loss of their client relationships with the signing of the HVCC. With the signing of the HVCC many newly licensed (but still wet behind the ears) appraisers suddenly didn’t need to rely on their mentor for business. The mentor probably didn’t have the business to hand out anyway. They also didn’t have to create client relationships by proving their ability. They just scrambled to sign up for every AMC available and hang out their own shingle. I am of the opinion that mentorship is needed beyond the minimum hours required to become licensed especially if the hours spent obtaining the license were not quality hours to begin with. Just to be clear, I am not placing the blame on appraisers so much as the circumstances that occurred.

          • Jonathan Miller October 2, 2014 at 5:31 pm

            LOL – Agreed.

            Regarding this – “I’m fairly certain that some good appraisers were robo-signing reports prepared by these trainees without even reading them.”

            At the moment the appraiser signs a report that is crap (even if they were a good appraiser before that moment)…that decision is their own and they are not a victim no matter what the circumstances. They have a choice. When they cross the line they then become part of the problem – I disagree that we should not place the blame on those who make that decision – ie did not review high volume trainees work. I saw good appraisers sell their soul during the boom and then subsequently go under. I view professional ethics as a one way street – once they become unethical then they can’t go back. That’s different from being negligent – whether or not they are unknowingly incompetent, much like the AMC scenario you described.

            I agree that current conditions have removed the feasibility of mentorship – in fact that is an excellent point that is not talked about enough. More coursework requirements doesn’t begin to teach a beginning appraiser without a guide. But think about your observation and the current domination of AMCs for mortgage appraisals alongside the thrust of my original estimate that 80% of appraisers are not very good. Perhaps we can argue about the percentage, but it is reasonable to say that it is a large portion of the appraisers out there.

            How does the industry change? I’m pretty sure I believe it is too late to turn this thing around. I hope I’m wrong.

  15. Erocks October 1, 2014 at 3:09 pm

    Again – let’s keep it simple. Appraising is not that hard.. but it does require ethics and we NEED consistency in reporting.

    We NEED to be organized and work TOGETHER to protect the market information that is being muddied by unethical appraisers and realtors.

    The ONLY people that can see through this muddy water are LOCAL appraisers who are held ACCOUNTABLE.

    The only way I see to have this done is to implement a rotation panel such as the VA. Federally mandated and managed by the States.

    No more ‘best marketing” appraiser.
    No more “faster, better cheaper” appraiser

    We ALL work together to maintain the integrity of the panel and the info being reported. For this we get some support by the states in possibly at least obtaining reasonable health insurance and/or other benefits.

    Go ahead and hate the idea – but it is MUCH better than what we have now which is AMC’s from other states making millions off of the back of the appraiser. True Dat.

    • Scott Wachter October 3, 2014 at 6:02 pm

      Just to clarify, when I talked about not blaming appraisers but the circumstances, I was thinking of the trainees more than the experienced appraisers. The process of adding new appraisers is a fairly slow moving one considering the number of hours needed to become licensed/certified. When the housing market heats up quickly, supply cannot keep up with the demand and I feel that many trainees had enough hours to obtain their licenses but not enough training to become proficient. As a member of several appraiser forums, I see many appraisers reaching out for answers to questions that should have been answered prior to licensure. I also see many answers by appraisers who believe that they are doing it correctly, but aren’t – a sort of Dunning-Kruger affect. Sure there are some who just don’t care, but I don’t believe that to be the majority. Another problem that I see that is inherent to appraising is that there is not one single go-to place to find answers to all appraisal questions. I think state appraisal boards could do a much better job at disseminating information with regard to changes in the industry. Concerning your last question about how we should change the industry; I’ll agree that it’s a little too late. In my opinion, we’re carburetor salesmen in an age of fuel injectors – functionally obsolete.

      • Jonathan Miller October 6, 2014 at 8:19 am

        Thanks for clarifying Scott – that makes more sense.

  16. Atom Levi, MAI, SRA October 7, 2014 at 4:24 pm

    Everyone is missing the point. We have the current situation because NAR (National Association of Realtors), CAR (California Association of Realtors), and the ABA (American Bankers Association) in 1990 when licensing of appraiser was proposed screamed bloody murder. They shouted that there were be a shortage of appraisers if qualifications were to strict. They said if the qualifications (the same being implemented on 01-01-2015) were to drastic it would result in not enough appraisers and deals would be held up and even killed because an appraisal could not be completed in a timely manner. The industry (personally, I consider it a profession but most consider it an avocation, not every a vocation) is the way it is because of the noted forces – they created the over-supply. It will be interesting to watch the decline of the number of licenses – personally I think only about 60,000 are needed nationally, presently it is 99,0000 – until we reach some form of equilibrium. At which time, if the powers that be have not done away with the need for residential appraisals the fees should increase and hopefully most of the bottom feeders will have disappeared. Just my opinion, I could be wrong – but the probability is low..

  17. Heidi H Ford October 7, 2014 at 6:41 pm

    Hi Jonathan,

    A couple of comments and then an observation.

    It is unfortunate that the Fed Report chose to use the phrase “low appraisals”. An argument can be made that brokers and sellers became accustomed to over-inflated appraisals pre-crash, and only adjusted their pricing strategies when “low appraisals” became the norm post-crash. One could have written the article from the reverse perspective, calling the low appraisals “normal”, and the pre-crash appraisals “overvalued”. Same data, different spin. Just a thought.

    You personally make a comment that the” quality right now is just as bad as it was during the boom”. How do you quantify quality? How do you track quality over time? If you are going to criticize metrics, you ought to provide some of your own, and not just rely on your “professional opinion”. I say this not to be snarky, but maybe it is a backhanded observation that truly measuring quality is tougher than it seems. AMCs love to rate turn time, response rate and clerical errors and call it a “quality” rating, but I would argue what they measure is almost meaningless.

    Lastly, it is my professional opinion that the appraisal industry will remain just as it is, unless the banking industry is reformed. When all is said and done, FNMA is the only bank for the US. Most of the traditional banks are nothing more than mortgage brokers, selling their loans to the government as fast as they can write them. More than half of conventional loans post-crash are placed with the government. There is no incentive to have a quality appraisal done, because the bank is not retaining this underwriting risk. They want fast and cheap and appraisals that will pass UAD. Nothing more. I am willing to bet there are different appraiser lists and criteria used by banks writing and retaining Jumbo loans and other paper lending institutions keep on their own books. Quality matters there, but it is a small fraction of the market and cannot support us all. It will not matter if we as an industry band together to promote higher standards of appraisals or appraisers. There is no financial incentive for big banks to care, and they won’t. No use hand-wringing about it either. No one ever said that life is fair.

    I hope you will keep writing, and

    • Jonathan Miller October 9, 2014 at 12:57 pm

      Thanks Heidi. Perhaps the phrase “professional” opinion means something different to some. To me it means that you have given something a lot of thought and looked at empirical evidence. Yes I firmly believe the quality is just as bad as it was during the boom but values are biased low instead of biased high. My opinion is based on my day to day practice of 28 years, many portfolio reviews for lenders looking at hundreds of AMC reports at a time, and my involvement as an expert in various national litigation matters as an expert on appraisal quality. Obviously quality has nothing to do with turn time rankings. AMCs can’t really measure quality because it is too subjective, but a good appraiser can look at a report and see whether it is crap within about 5 seconds. So yes I have formed an opinion, just like you might have formed an opinion about an adjustment for an amenity in a market you appraise in. Much of the vitriol pointed against me was for style points and not for substance, so I get that. In fact I called a number of the commenters or those who emailed me directly and there really wasn’t any disagreement with my overall premise. The trolling was only based on the title and the phrase “low appraisal.” Virtually no one read the Fed study yet many went into a blind rage at the terminology used and it didn’t matter what the Fed study actually said. As an industry we serve up a lot of righteous indignation when called out (self included) yet we continue to be marginalized.

  18. Merv Conlan October 8, 2014 at 12:07 pm

    OK< my vote goes to Mr. Scott Wachter

    who is this guy? Very good, thoughtful, organized, steady, patient. Impressive.


    • Jonathan Miller October 9, 2014 at 1:02 pm

      Yes I completely agree. It’s interesting that in the end, he agree with my premise – see comments below. He and others were enraged at terminology used and what that inferred. The reaction by all the trolls exemplifies a lot about what are the key issues with our industry today: isolated, frustrated, rudderless and being overrun by the AMC machine.

      • Ryan Lundquist October 9, 2014 at 1:05 pm

        Exactly –> “Key issues with our industry today: isolated, frustrated, rudderless and being overrun by the AMC machine.” None of these things will change without intention.

    • Scott Wachter October 9, 2014 at 2:41 pm

      Thank you so much for your comments Merv. They’re greatly appreciated. As a side note, I do not agree with Jonathan’s assertion that 80% of appraisers are not professional. It’s funny how the human mind can rationalize anything. Clicking the “unsubscribe” button now. Cheers.

      • Jonathan Miller October 10, 2014 at 1:30 pm

        Hi Scott – I didn’t say you agreed with the 80% estimate – anywhere. You and all others who were enraged by the piece, upon further interaction agreed that the profession has serious issues. I was hit hard for style points. You brought up a great point about how AMCs have removed the mentoring element and that has hurt the profession. You’re clearly a smart person and have lots to say. But you also do exactly what you gave me grief over – brush stroking over details to make your point.
        Funny how the human mind can rationalize anything. (forwarding to your email).

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