The appraisal industry has gone through a massive change over the past decade. As we sit here in Mid 2018 it only seems like more change is coming and a potential disruption is on the horizon. Lenders, Investors and loan originators are looking for alternative tools to ensure an accurate but also fast valuation. This webinar is a mirror of a presentation I did for the American Mortgage Conference in Raleigh North Carolina a few weeks ago.

1. Navigating the New Appraisal
Landscape and Beyond
Brian C. Coester, Founder and CEO
BCoester@coester.com

2. The State of Appraisals
▪ The general consensus within the valuation space is that it’s going
through an evolution and revitalization. Current market expectations
are looking for a faster and less expensive product that meets the
secondary market guidelines.
▪ Appraiser licensing is overcomplicated and has caused a continual
decline of new talent in the business. Licensing and trainee
complications have contributed to delays in certain market areas.
▪ Lenders, Investors, and AMC’s are looking for creative ways to use
the appraisal data to enhance current offerings to borrowers and
consumers.

3. The State of Appraisals
▪ Lenders and Investors are looking for a fast, accurate valuation that
meets the secondary market requirements, provides consumer and
investor protection, and is priced within the market.
▪ Lenders are looking for ways to use the appraisal process to create
a better experience for the consumer and realtor as we move into a
digital lending environment.
▪ The MBA, ABA, Appraisal Institute, REVAA and other trade group
organizations are all pushing for changes and technology adoptions.
▪ The changes over the last few years have been centered around
reducing cost and reducing the time to which appraisals are
completed, and looking for an automated solution.

4. Timeline of Appraisal Industry
1994 - Interagency Appraisal and Evaluation Guidelines established
consistent criteria for appraisal independence (revised in 2010).
2008 – Home Valuation Code of Conduct – Fortified existing rules into
current lending environment.
2008 – GSE’s and major investors remove the ability for trainees to
inspect without a supervisor present.
2010 - Dodd‐Frank Appraisal Independence Regulations take over
and sunset HVCC.
2012 – Uniform Collateral Data Portal – Collateral Underwriter
launched to score and asses appraisals completed to GSE’s
2017 – Appraisal Threshold – Use of Evaluations $250,000 to
$500,000 on commercial ($500,000 on 1-4)

5. Timeline of Appraisal Industry
2017 - The FDIC approved a final rule to raise the appraisal
thresholds for commercial real estate transactions from $250,000 to
$500,000. The threshold for loans secured by 1-to-4 family residential
properties will remain at $250,000; however, residential construction
loans secured by multiple 1-to-4 residential properties would be
considered CRE transactions.
2017– Appraisal Waivers – Day 1 Certainty (Implementation of the CU
Alternative Valuation Produce)
2017 – GSE’s post bulletin clarifying trainees ability to inspect
2018 - The Appraiser Qualifications Board (AQB) adopted revisions to
the Real Property Appraiser Qualification Criteria. These changes,
effective on May 1, 2018, will serve to reduce or eliminate
unnecessary barriers to entry into the real estate appraisal profession
in the US.

6. Decreasing Appraisal Population
▪ Addressing the decreasing
appraiser population is a
priority.
▪ Need for easier access to
licensing is being worked on.
▪ Alternative valuations with
current technology will enhance
speed and overall experience.
▪ Alternatives to the 1004 are
being worked on to get more
specific to the property.

7. Why are appraisals so problematic?

8. Learning from Other Countries
Australia - $185 for equivalent to a 1004 with a 2-3 day turn time.
– Difference:
•Consistent Underwriting criteria (no overlays)
•Consistent scope of work – Standardized
•Minimal to no revisions by lenders or underwriters
•Use of tablets and data feeds to deliver report

9. Current Issues
▪ Defining what a FTR is (Federally Related Transaction)
▪ Use of Alternative Valuation Products
– Day1 Certainty, Desktop Appraisals, AVMs + Inspection +
Reconciliations, Alternative to the 1004 – Turbo Tax Type form
▪ Lenders Questioning to keep the process “In House” or use an
Appraisal Management company (AMC)
▪ Dealing with appraisal fee disclosures inaccuracies
▪ Management of appraisal turn times and customer experience
▪ Consumer Experience in a digital mortgage world
– Appraisal Scheduling, Payment Collection, Delivery, Data, Accuracy

10. Overall Objectives:
▪ The objective of these changes:
–Reducing Turn Times on Appraisals
•Aiming for a 2-3 day overall turn time and 24 hour alternative
product.
–Use of technology and mass data for valuations. 1,500 data points and
over 30 photos of the property.
–Use of trainee appraisers or alternative inspector for scalability.

11. Current Appraisal Eco-system
Day 1: Order
Entry
Day 2: Appraiser
Schedules
Appraisal
Day 3 – 4:
Inspection
Takes Place -
Data Collection
Day 4 – 5:
Data Research
– Comparable
Data
Day 6: Delivery
of the report
Day 7:
Underwriting and
Review of report
Day 8:
Corrections
and Revisions
– Delivery
• Days are added to the
process by scheduling
issues, scope of work
complexity and undefined
underwriting criteria.

12. Appraising 2019
Day 1: Order
Entered
Day 1: Appraisal
Pre-scheduled
Day 2 – 3:
Inspection Takes
Place - Data Set
Delivered to
Appraiser in field.
Day 3: Appraiser
Reconciles Report
and Data on Site
Day 4: Underwriting
Department accepts
or requests
modifications from
the desktop or tablet
directly
Day 4: Appraisal
report delivered

13. Man vs Machine
Appraiser Machine
• Verify
Transactions
• Report Seller
Concessions
• Observe and
Report
age/condition
• Reconcile
Conflicts of data
• Measure property
• Identify non-arms
lengths
transactions
• Analyze Big Data
• Identify trends
• Help Assemble
Data
• Review Report for
consistently
• Schedule
Appraisal

14. Consumer Direct Education
Educational Material On:
• The Art of Home Appraisals
• Reverse Mortgage
Appraisals
• Home Maintenance
• Seasonal Trends
• Home Values

15. Thank You
Brian Coester,
Certified Residential Appraiser
BCoester@CoesterVMS.com
Cell Phone: 240-277-2900
Thank you very much for the opportunity to serve you.