ValcoMD has implemented a system that allows us to prepare and deliver a higher-than-average volume of work, at a better quality than the many local as well as national Appraisers. Our process mirrors a similar system that I implemented in metro NY over twenty years ago where our volume of transactions placed us in the top ½ of 1% of my peers nationally (click here for 2004 article). I actually “stole” the Collaborative idea from my Doctor. Back in the 1990s we began to see more multi doctor medical practices with specialists and delegated workflow and authorities. This Collaborative process allowed the Doctor to diagnose and treat patients (not collect forms, process insurance claims, maintain inventories and files, as well as preliminary patient diagnostics (blood pressure temperature, height, weight, etc). Thus, my Doctor could spend more time with me doing what he did best, practicing medicine and keeping me healthy and happy.
Within sixty days I redesigned our entire workflow and staffing model. Initially, many of our clients and customers expected me to do many of the things that a well-trained specialized team member was doing (even better than I would or could). Eventually our specialized staff became market accepted and our model was replicated by many other “Teams” as I am always willing to share best practices. We embraced workflow technology and tools at its infancy. I learned a lot the hard way and have not forgotten.
Today our trained and specialized staff makes appointments, updates clients, prepares diligence, performs non-complex inspections and sketches, and other reporting, writing and support functions. These tasks are not complex but rather specialized workflow-controlled tasks performed by a focused trained staff. I spend most of my day using my analytical skills and professional experience underwriting Appraisal Reports, working on complex inspections, issues and files, quality reviewing our team’s work as well as providing feedback and training to the team members.
Our Collaborative Model closely mirrors the recommended actions by Fannie Mae in January 2022:
Increase the use of alternative-scope property valuation approaches.
Build on existing safeguards to detect valuation errors.
Continue to modernize the appraisal process for home loans.
Foster diversity in the appraiser workforce.
Enhance the tools appraisers use to validate their opinions.
Good technology is imperative to quality workflow and a Collaborative Process. Simply, they make each other better. After our team and education, technology is our best investment. Technology cannot and will not replace the Appraiser or the Collaborative Process but only make them better through efficiencies. We are constantly reviewing new and existing technologies to adapt to and improve our process. Technology is a support tool for the team, overstep it’s intended use and it will destroy your team and perhaps the profession.
Today’s unique times (COVID, surge in mortgage volumes, ever improving technologies, rapidly changing markets and interest rates, etc.) demand that we adapt to the changing landscape as this is not 1992 anymore! Our clients demand of us to deliver consistent, credible, and competent Appraisals at scale.
In the past, a few (a significant minority) Appraisers abused this process by allowing staff to perform cradle to grave Appraisal work. That is a trainee performed ALL or most of the work to complete an Appraisal. We are NOT doing that and 100% oppose this approach. I participate, underwrite and personally sign EVERY Appraisal that has my name on it. As an old mentor shared with me: “Work is the way. There are NO shortcuts.” I only ask that you not blame only the Appraisers for these digressions as many self-serving Clients turned a blind eye to obvious deficiencies and trends for profit. QC systems later developed by the FHFA have significantly lessened these occurrences.
Lastly, I would like to address Appraiser diversity and inclusion. Our profession needs new blood, including enthusiasm and new ideas that will maintain our relevance (remember travel agents). The demographic of the profession is alarming and should warrant a wake-up call. According to the Appraisal Subcommittee (asc.gov) in 2018 the majority of appraisers are nearing retirement: 49 percent are between the ages of 51 and 65, and an additional 13 percent are 66 or older. As older, experienced appraisers retire, we need a new generation to step in, yet fewer people are entering the profession: only 7 percent of appraisers have been working in the industry for two years or less, whereas 52 percent have been in for 20 years or more. The present field of appraisers is also lacking in diversity, as 75 percent of appraisers are men and 87 percent are white. In 2019 I accepted and committed to the Diversity Pipeline Initiative and the Careers Building Communities Program. Our team demographically does not mirror me as any good team should not. I am proud of our team as well as frustrated as I know we can do more but are limited by market-based constraints that I will address in the next paragraph.
I have recruited and trained a talented specialized team. It is essential that the I, the Appraiser, manage and maintain our entire process. Our three largest obstacles to do this were Lenders that had to conform to Fannie Mae, Freddie Mac, FHA, USDA, VA and other guidelines, State Licensing Agencies as well as the Consumer. Some like Fannie Mae, Freddie Mac and the VA have adapted older guidelines to be more accepting of a more Collaborative model while others are still reviewing policy and ideals. I have great respect for and doing my daily best to meet and exceed USPAP guidelines. Many do not realize that USPAP does not require an Appraisal inspection. The 1004 form (over 20 years old) that we use for most of our Appraisals has dated and perhaps non relevant disclosures. USPAP gives us significant flexibility to deliver a compliant Appraisal, so should our delivery.
During recent times many eagerly welcomed bifurcated Appraisals with inspections performed by unknown third parties and potentially biased owner/occupants. The downside for third party inspections is real. Please remember, there is no formal training for this and no regulations or licensure requirement in place to actually oversee what third party inspectors do and how they do it. My team operates under my State issued Certified Residential Appraiser License. When I sign the Appraisal, I am responsible for their actions as if I performed them myself. No third-party inspector makes that commitment. That kind of commitment to the Public Trust is what USPAP strives for and demands of us.
By breaking down the process into individualized workflow allows our team to work remotely and spend more time at home, with family, earn more $ or whatever they want to do. We all understand that flexibility is NOT freedom, and that timelines and quality should never be compromised or sacrificed. Accountability to oneself and the team is essential. I encourage our team members who want to be cross trained that opportunity. I strongly support their education (ValcoMD pays for ALL QE and CE training) and broadening their skillsets as future Appraisers.
At the end of the day, the Appraiser must deliver a competent product. Read why Fannie Mae believes competency matters. For some Appraisers it could be a less than a handful a week and for others it could be that ten-fold or more. This will be a function of the individual’s ability and capacity to adapt and effectively use a Collaborate Process. It is NOT for everyone but only for the committed Appraiser who understands and is capable of managing its exciting potential. I know I’m ready!
We believe that a Collaborative Appraisal Model significantly reduces bias (conscious and unconscious) in the Appraisal process. As every Appraisal has multiple people (at least two, three or more) with varied perspectives, this reduces the possibility of potential individual bias as well as other technical and valuation conclusion errors within the report. This QC system, similar to production line systems, improve quality and strive for zero defects. As summarized in his classic book, Quality is Free, Philip B Crosby offers, “…quality is free, yet it is the most profitable product/service one can offer…”
We are doing our best to adhere to confusing, inconsistent, and sometimes conflicting guidelines. As such, sometimes, we may have to re-inspect or perform a duplicate or extra step to adhere to Client directives or requests. We apologize for any inconvenience as it affects the borrower, occupant, seller, Client, or anyone else. All we ask is that you be understanding of how, what, and why we do what we do.
We are striving to consistently, credibly, and competently deliver this and more; however, from time to time we still are asked to explain how and why our process is different from other Appraisers or the last Appraiser someone dealt with. Hopefully this addresses these and other concerns. As always, I’m available to discuss any questions and comments. Best, Glen glen@valcomd.com 301-882-3145
Thanks to Woody Fincham (coined the term Collaborative Valuation), Bryan Reynolds and Timothy Andersen (USPAP experts and instructors) for their thoughts and input into this.