Sound Off

UAD: Unintended Consequences

Dear H2,

UAD is another well meaning step to bring less judgment into an appraisal. The appraisal industry has been the victim of overzealous lending policy with sub-prime loans in excess of 100% of value.

Now the answer to every problem is a computer model. Again, the industry is being manipulated to satisfy a lending industry that is buried in a shadow inventory of bad loans. Lest we forget -- the Univac people were going to 'save NYC' with a computer model. This dismal failure nearly bankrupted the richest city in the country.

As the saying goes, "Numbers have a tendency to lie — and liars tend to number". There is no substitute for good judgment.

For many years we have relied upon reasonably truthful/accurate information from real estate brokers and salespeople, the very information these computer models use to decide upon a value. Years of experience are necessary to be able to read a broker's comments and separate the wheat from the chaff. Now the biggest players (i.e., the biggest
losers) are on the road to an AVM system.
The big AMCs are along for the ride. There will be no "reasonable" fee adjustments. As with most independent appraisers, you either "get on the bus and ride", or get off and starve.

The time, investment, and effort to produce a credible report are not conducive anymore to starting a career in this business. I have never been able to come to terms with the purported importance of an appraisal report that ends up being the least costly portion of a transaction. And then the appraiser is challenged on nearly every issue. Not so long ago, checking a box was supposed to eliminate pages of explanation. Now we are at the UAD with specific answers — of a specified length and format — so that the report can be more easily read or compared to the available AVM!

If you think I'm wrong, just take a look at all the new costly software you are going to need just to keep up. I think appraising has come to a sorry pass indeed.

Joe Johnson
Florida Certified Residential Appraiser