Over the past several years, I have had the experience of meeting and conversing with literally thousands of appraisers from every state in the Union as well as from countries across the world. Though I have not kept track of the exact number, I would estimate that my conversations with appraisers is now approaching several thousand. Some meetings are superficial, but others are deep and meaningful. My experience has given me the unintentional consequence of having a somewhat unique perspective on the condition of today's real estate appraiser.
Though it is probably never good practice to haul out the broad brush, I find it is useful at times for practical understanding. There are many exceptions to the following characteristics, but I think the gist of the generalization is sound. In my experience, there are two types of appraisers. I will attempt to use symbols to help with the conception of each.
The first type of appraiser will be compared to a compass. The later to a Global Positioning System (GPS). As an Eagle Scout, I have had a few run-ins with the rudimentary compass. At first, the tool can seem daunting. Though it always points to magnetic north, it is not as easy as knowing where north is in order to get to your destination. Furthermore, using a compass brings hurdles and hazards such as unblazed trails, swamps, or other natural (and man-made) obstacles. With a compass, it is not a matter of making a trek from point A to point B. There is a lot of straying, zig-zags, course-corrections, and meandering along the way.
Compass appraisers are practical appraisers. They understand their job and employ a great number of tools to get the job done. At the inspection, compass appraisers measure with accuracy, but round to the nearest half-foot. Their walk-through meets the criteria, but you will not find them opening every closet door or climbing in the attic (unless required to do so by the client). A compass appraiser typically gathers a sketch, data, and all on-site photos in less than 30 minutes. Back at the office, comparables are chosen based on practical search functions. Most sales can be found quickly, but odd homes or houses with unusual features may need a second or third pass. MC Addendums are considered to be busy work and reality trumps iron-clad proofs. Adjustments are sound, but they live in the real world where true paired-sales analysis is as likely as seeing big foot. Though their method may be maddening to others (specifically GPSers), they seem to still make it to their destination with decent accuracy. The mess they might leave behind them may resemble the proverbial bull after exiting the china closet, but they have arrived safely at their goal (true market value) nonetheless.
The day I purchased my first GPS system was a day I thought I had reached the pinnacle of what it meant to live in a first-world country. Though I look back on the large-bodied, small-screened, black and white gizmo as being a bit rudimentary, I thought I had died and gone to heaven. You mean, I can type in an address (assuming that it was an address that had been around for more than 5 years) and the unit would tell me the shortest or most direct route to get there? Though I could still not travel a strait-line between point A and point B, the GPS knew the waypoints along the route which would put me there in the least amount of time and cause the least amount of trouble. Every point was clearly marked. Every turn was distinct. There was no room for error. If I missed my turn (unlike the contemporary units), the GPS would start screaming at me to get back on course. There was no room for course correction in these early, antiquated systems.
GPS appraisers are vigilant. Though they also understand the final destination of accuracy, their path to get there is not taken lightly. Inspections for a GPSer can be a lengthy process often stretching over an hour for a typical tract-home. If the sketch is off by more than a few inches when the ending place meets the beginning, a GPS appraiser will often be found retracing their steps over and over to find where that extra quarter-foot was missed. I know some GPS appraisers who take four pictures of every room from each of the four corners. You can never have too many pictures. Comp selection for a GPSer can seem like overkill to a compass appraiser, but a GPS appraiser cannot afford to leave any comp unturned. If the perfect sale is out there, the GPS appraiser will find it. Naturally, subjective adjustments do not exist for this type of appraiser. No, every (and I mean every) adjustment is made with the greatest of care and fully supported by statistics.
It is impossible to know quantitatively how many GPSers verses compass approach appraisers there are. My anecdotal experience makes me think that there are likely more compass appraisers overall, but the GPSers are certainly more vocal. This is understandable. Compass appraisers are sometimes unfairly characterized as being sloppy. No one wants to be seen as a less-than-careful professional, so the practical and efficient tips and tricks employed by compass appraisers are often never shared for fear they might be found out. On the contrary, GPS appraisers are often proud of the fact that they derived paired-sales analysis from six different sales to justify that $2,300 fireplace adjustment. They will likely be the first to raise their hand and explain their methodologies at the next USPAP update class.
Some would like you to believe that one appraiser type is better than another. GPS appraisers will claim that compass appraisers can never get to the ultimate destination with accuracy if their path is not paved with statistical support. Compass appraisers look at GPSers and wring their hands with exasperation. "How do you even run a business when you spend all of your time in the weeds?" they might ask. Both have valid points. Compass appraisers have a downfall. Though their values may be accurate (whatever that means), their workfile is often not up to the standards of most State Board reviews. GPS appraisers also have a challenge. They are the first ones to complain about the 'low-fee, fast turn-times' of the modern AMC world. In their minds, it is impossible to be a professional appraiser under such circumstances.
There is no right or wrong way to do an appraisal (unless you are a GPSer and therefore all compass appraisers are wrong—of course, the opposite is also true). What we are looking for is a strong, supported market value. Both approaches can get you there. However, there may be certain types of assignments more suited to the different types of appraisers. In general, compass appraisers may be able to run a thriving business working for lending institutions as managed by AMCs. GPS appraisers may be more suited for non-lender work such as litigation. There is need for both types of appraisers in this world. In the end, it is important to know which type of appraiser you are and decide which types of assignments best fit your particular personality. It may also pay to observe some of the practices of the other type of appraiser and employ some of the better ones in your own appraisal business.
Dustin Harris, Creating 'Value' for Real Estate Appraisers
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