The National Association of Home Builders’ “Comprehensive Blueprint for Appraisal Reform” is not a black and white document but one like the process it seeks to improve, subject to interpretation, said an executive with an appraisal management company.
Alice Sorenson, chief investment officer at LRES, said reports like this come across her desk all the time because they come from thought leaders and have the ability to influence where the markets are going. NAHB went around creating the report the right way, but she has a number of issues with its conclusions.
For example, the report addresses regulatory framework and oversight. Sorenson commented in reading the report, someone might think there is no regulation at all for appraisers.
In fact, NAHB’s opening comment in the section on regulation is “The system for overseeing and regulating real estate valuations is inadequate and ineffective.” In a press release about the report, NAHB immediate past chairman Barry Rutenberg is quoted as saying “a modes investment in appraiser licensing and certification would go a long way towards improving the appraisal system.
But Sorenson declared the appraisal business has all of the
“We were sure back then that FIRREA and all of its rules relating to appraisers and appraisals would get the independence” that the process needed to have, she continued.
Another section of the NAHB report calls for the creation of a real estate data superhighway with a national real property registry and supporting networks.
Sorenson said there are those in the valuation industry who retain data for their own use. It does give these people a competitive advantage.
NAHB is calling for the creation of a real estate exchange. This REX would be a not-for-profit data exchange consortium comprised of commercial and private data providers and sources to serve industry participants (e.g. builders, appraisers, lenders, etc.) by facilitating information exchange on both a commercial and contributed basis.
The NAHB data sharing framework “doesn’t work with my capitalistic attitude. Data is a consumable supply and those data aggregators should be able to amass their data and sell it on the open market for whatever price they get,” she said.
Sorenson said she thought there is “a bit of naivety within the article, that maybe (NAHB) took too simplistic an approach to these problems.” The report proposes several solutions, all of which she claims to be in practice in one degree or another.
Furthermore, some of the suggestions would be costly to implement. Those costs are quite likely to be borne by the consumer, she said. The report did not address the cost issue.
Marc Savitt, the president of the National Association of Independent Housing professionals and
"Although I join the NAHB in their frustration with the current appraisal system, I disagree with their cure.
“True appraiser independence’ can be achieved by restoring relationships and communication between all licensed housing professionals. Excluding certain segments of the industry from process has proven to be detrimental to consumers," he said.
Sorenson said there is a problem with the current system, but she would not label the way things are now as dysfunctional. She agrees with NAHB in principle but the extent to which the report portrays the problem is extreme.
She does support the call for form reform. They were originally designed for data entry, but now they are being used for things they were not intended for.
Fixing the forms could lead to more accurate results and more easily interpreted results, she continued.
Still, the report is a step in the right direction because it got people to think about the approach being taking to appraisals, Sorenson concluded.
