The Appraisal Institute 2021 Annual Conference was held in Orlando, Florida from August 7 – 11 at the JW Marriott Grande Lakes.<\/p>\n\n\n\n

A.I. President Rodman Schley, MAI SRA opened the meeting and noted that the residential appraisal community is under fire, in particular from the Brookings Institute. The Brookings Institute<\/a> believes that appraisals, along with lending practices, zoning, and real estate agent behavior, often have racial bias, which contributes to low value for homes owned by Black Americans.<\/p>\n\n\n\n

One \u201csolution\u201d that is being floated is to do away with the sales comparison approach, and rely on the cost approach instead. Most appraiser\u2019s will understand that this solution is flawed, and point out that the cost approach requires an estimate of land value, which is usually itself obtained from sales comparison. The approach also requires the consideration of physical, functional, and external obsolescence. In theory, a well executed sales comparison approach and a well executed cost approach should result in the same value. These facts about basic methodologies used by appraisers may be unknown to advocates of the Brookings Institute study. (Or more concerning,<\/a> they may not want to know).<\/p>\n\n\n\n

None-the-less, the Appraisal Institute recognizes that unconscious bias does exist, and has plans for programs that reinforce ethics, education, and training, with an additional effort to recruit more diverse appraisers. A.I. is developing a 7 hour unconscious bias course<\/a>, and will update A.I.\u2019s Code of Professional Ethics, along with Co-hosting seminars with the Brookings Institute.<\/p>\n\n\n\n

On April 20, 2021 the US House Financial Services Committee approved HR 2553, the Real Estate Valuation Fairness and Improvement Act. This new legislation would establish a task force to study underwriting standards, and provide resources to promote diversity within the valuation profession, among other things. The act has the potential to greatly impact the day to day operations of appraisers.<\/p>\n\n\n\n

Conventional wisdom says that it is always better to be at the table rather than be on the menu. As such, in March 20201 Rodman Schley wrote a letter on behalf of the Appraisal Institute to Maxine Waters<\/a>, Chairman of the House Committee on Financial Services. In the letter Rodman supported the legislation, and encouraged the development of flexibility in mortgage underwriting, including allowing appraisers to consider sales in other geographic markets with similar housing stock, and consider a range of value for a property rather than a single point.<\/p>\n\n\n\n

MISMO Standards for Commercial Appraisals<\/strong><\/p>\n\n\n\n

In March of 2010, Fannie Mae and Freddie Mac required the submission of residential appraisals in UAD format, (Uniform Appraisal Dataset). The UAD was an effort to standardize formats for certain fields, (dates, values, condition and quality ratings, etc). Once standardized, these UAD appraisals were then submitted to electronic portals using an XML file format. The XML file format was the brain child of the Mortgage Industry Standards Maintenance Organization, (MISMO).<\/a> MISMO is an effort by the financial services industry to digitize loans.<\/p>\n\n\n\n

These additional appraisal burdens no longer apply only to residential appraisers. According to A.I.\u2019s Legislation & Regulatory Update, the MISMO organization has approved a commercial appraisal dataset<\/a> as of June, 2021. As such it is likely that banks and other lenders soon will require commercial appraisers to provide portions of their work product in electronic form, a form that allows their data to be scraped and traded among lenders and GSE\u2019s (just like residential appraisers have had to do for many years).<\/p>\n\n\n\n

In summary, the valuation industry, and the appraisers who work there, are going to be impacted by coming changes. In 1963 Leon Megginson summarized Darwin\u2019s Origin of the Species and wrote, \u201cIt is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is one that is best able to adapt and adjust to the changing environment in which it finds itself\u201d. To survive, appraisers are going to have to change. Again.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Appraisal Institute 2021 Annual Conference was held in Orlando, Florida from August 7 – 11 at the JW Marriott Grande Lakes. A.I. President Rodman Schley, MAI SRA opened the meeting and noted that the residential appraisal community is under fire, in particular from the Brookings Institute. The Brookings Institute believes that appraisals, along…<\/p>\n

Read More Read More<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-142","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n