New Way to Value: Collarteral Valuation Report??? (CVR)

By
Real Estate Appraiser with Highlands Ranch Appraisals, LLC CR100001997
http://actvra.in/dYn

Ok follow appraisers, has anyone tried the new Collateral Valuation Report (CVR) or also known as comp Cruncher. Well I have and it is great I really feel like I am a professional Appraiser with this and have all the verification and analysis at my figure tips to be the most effective in my work. It is based off of statistics and uses regression analysis. The results are the best I have ever seen in an appraisal.

Lenders view the CVR as a highly attractive alternative to replace BPOs. They are more accurate, more reliable and have a lot of analytical features. These CVRs are good for portfolio loans, default management, alternative loan modification programs.

This report can be done with in hours as most of the data is uploaded through the software. (just like when you pull your comps before the inspection, and market conditions). Yes I said within hours. I got it down to about 3 hours total (plus that includes a drive-by). I only do them for ones that are near me and ones with enough data to be able to pull a good regression analysis.

The way it is laid out with the satellite petometry views of each side of the subject, the way all the data is pulled from your MLS and imported in, and all the graphs that are made for you to view. You end up with a regression value, and sales comparison value and a listing value. Three different values sso then you cane support your opinion based off of those results. The regression supports all adjustments and helps support the sales comparison. Of course the listings are there more for a future outlook. The report looks like it is done by the most professional expects in the industry.

When it comes down to it you make a lot more per hour than an appraisal and it is more enjoyable to do!!! As you know appraisal reports are requiring more and more and more. These reports do the best job to get the job done more efficiently then before.

This is the new thing don't wait and miss out. As U.S Bank is now ordering them. Need a sample report I will send you one.

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Rainmaker
90,211
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

This is a great product for alternative appraisals other than loans.  I too have finished this training & see great potential in this in reclaiming some of the work we have lost in recent years to BPOs.  I think your 3 hrs is probably a fair estimate of time, maybe a bit less on some easier tract homes. Bradfords claims of 1 hour or less seem too optimistic, even for a desk top one. I hope to see this product grow in volume, especially since this type of product is not under UAD.

Jul 05, 2011 12:15 PM #1
Rainer
206,703
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

An appraiser who considers using an AVM as part of an appraisal should first read USPAP's Advisory Opinion 18 (AO-18, see link below) which states in part:

 

1 ADVISORY OPINION 18 (AO-18)

2 This communication by the Appraisal Standards Board (ASB) does not establish new standards or interpret

3 existing standards. Advisory Opinions are issued to illustrate the applicability of appraisal standards in specific

4 situations and to offer advice from the ASB for the resolution of appraisal issues and problems.

5 SUBJECT: Use of an Automated Valuation Model (AVM)

6 APPLICATION: Real Property, Personal Property, Intangible Property

7 THE ISSUE:

8 What steps should an appraiser take when using an AVM as a tool in the development of appraisal, appraisal

9 review, or appraisal consulting opinions and conclusions concerning an individual property?

10 In addition, what steps should an appraiser take when he or she is using an AVM only to process information

11 and communicate the AVM's output but is not performing an appraisal, appraisal review, or appraisal

12 consulting assignment?

13 BACKGROUND:

14 This Advisory Opinion addresses how an appraiser may use an AVM.

15 An AVM is a computer software program that analyzes data using an automated process. For example, AVMs

16 may use regression, adaptive estimation, neural network, expert reasoning, and artificial intelligence programs.

17 The output of an AVM is not, by itself, an appraisal. An AVM's output may become a basis for appraisal,

18 appraisal review, or appraisal consulting opinions and conclusions if the appraiser believes the output to be

19 credible for use in a specific assignment.

20 An appraiser can use an AVM as a tool in the development of appraisal, appraisal review, or appraisal

21 consulting opinions and conclusions. However, the appropriate use of an AVM is, like any tool, dependent upon

22 the skill of the user and the tool's suitability to the task at hand.

23 This Advisory Opinion applies when an appraiser uses an AVM in connection with an individual property. This

24 Advisory Opinion does not apply to mass appraising.

25 An appraiser needs to know, before using an AVM, whether it is to be used:

26 1. to perform an appraisal, appraisal review, or appraisal consulting service, or

27 2. solely to provide the client with AVM output.

28 When an appraiser uses an AVM to develop his or her own opinions or conclusions in an appraisal, appraisal

29 review, or appraisal consulting assignment, all of the USPAP rules governing that assignment apply and all of

30 this Advisory Opinion is relevant.

 

I urge all appraisers who consider using the CVR to fully read and understand AO-18, especially lines 17-19.

http://www.uspap.org/AO/ao11_20/ao_18.htm

 

 

Jul 05, 2011 12:34 PM #2
Rainmaker
90,211
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

A CVR is not a AVM.  A AVM is an "automated valuation model" that does not use any or very little appraiser input in the process.  A CVR although it uses a regression analysis within the appraisal, requires significant local appraiser input. And then, if the regression, which is only a part of the analysis appears a bit low or high to the appraiser, the appraiser retains control over the final reconsiliation. The regression analysis part of the report becomes an aid or tool in the analysis process.  The appraiser can analyze comps & may see similarities that the regression analysis may miss & switch comps out for the best outcome. So, let me say this again, the CVR is not a AVM.  

Jul 07, 2011 05:14 PM #3
Rainer
206,703
Jesse Skolkin
Independent New York State Certified Real Estate Appraiser - Fresh Meadows, NY

Craig:

AO-18 defines an AVM:

"15 An AVM is a computer software program that analyzes data using an automated process. For example, AVMs

16 may use regression, adaptive estimation, neural network, expert reasoning, and artificial intelligence programs."

It further states:

"88 In an appraisal assignment, an appraiser must have a basic understanding of how the AVM works in order to

89 reasonably determine that:

90 1. use of the AVM is appropriate for the assignment;

91 2. the output of the AVM is credible for use in the assignment; and

92 3. the AVM does not exclude relevant market measures or factual information necessary for a

93 credible calculation."

 Based upon AO-18's definition, I would argue that CVR is an AVM, and that if you had to argue that it isn't before your local state board, you'd face an uphill battle based on the definition noted above.

Even if it isn't an AVM as you contend, it would be reasonable and prudent for an appraiser to follow AO-18 by having a basic understanding of how the CVR works, that it is credible for use in an assignment and that it does not exclue relevant market measures or factual information necessary for a credible calculation.

I'm not saying that CVR is bad, good, average, or anything else.  I'm saying that appraisers who utilize software programs should understand the ramifications of doing so and follow USPAP at all times.  Software companies are in the business of selling software.  Appraisers are obligated to follow USPAP.

BTW, Bradford is already using this blog to market CVR.  I received an e-mail about it which you can see at the link below:

http://appraisalworld.com/i/m/index.php?option=com_content&view=article&id=124:cvr-3rd-success-story&catid=48:aw-announcements&Itemid=236

Jul 08, 2011 06:11 AM #4
Rainer
192,939
Jack Hughes
Hughes Appraisal Group Inc. HUD/FHA Approved) - Lehigh Acres, FL

I would love to see one and find out where to get the training. My email is rastaappraiser@embarqmail.com. Seems like a good way to recapture business

Jul 08, 2011 07:14 AM #5
Rainer
30,516
Danell Estrada
Highlands Ranch Appraisals, LLC - Highlands Ranch, CO

Jesse it really is not AVM. You do have to take statistics to understand how Regression works. You have control of what sales and listings go into it. (Just like any appraisal the search for sales and listings is the same as you usually do and put into a excel format). The end result is actually three different values. A sales comparison value (like a regular appraisal, a listing value (future outlook that should help support value opinion in stable market after sold to list ratio percentage is taken out and the regression value. Of course the appraiser picks the final 3-6 sale comparables and 3-6 listings for these values. Regression value is a make up of all the sales you pulled and each sale is given a ranking (ranking is controlled by appraiser to reflect each individual market) and Regression value is made, if an outliner is notice appraiser can remove it. It ends up being a faster process of picking the best comparables. Then appraiser gets to reconcile the opinion of value with these three different out comes. It really is all controlled by the appraiser the computer only produces a excel format of sales you picked and ranks them by how much you rank each item.

The regression analysis also supports each adjustment you make, making it clear and verifying what you have adjusted does indeed need an adjustment. The results of this statistical analysis pulls together percentages and amount of adjustments to find common ground of the value of items (like GLA) and then actually shows you a range for each adjustment and the most probable. Appraiser still gets to decide what amount each adjustment is. So really appraiser has full control.

 I could keep going on but I really think you need to see a sample and if you actually went through the training then you would completely understand the process and how it is not an AVM. These CRVs are USPAP approved or lenders would not be ordering them right now.

Jul 09, 2011 03:16 AM #6
Rainer
30,516
Danell Estrada
Highlands Ranch Appraisals, LLC - Highlands Ranch, CO

Jesse I really like how you state so clearly the standards of USPAP. All that you have stated that should be done to make regression analysis credible is true of these CVRs. I will send you a sample.

Jul 09, 2011 03:23 AM #7
Rainer
30,516
Danell Estrada
Highlands Ranch Appraisals, LLC - Highlands Ranch, CO

Thank You Craig for your knowledge and insight on CVRs. I really am starting to get the hang of it. And doing CVRs verses a full appraisals actually feels like I am Appraising more and doing less leg work and data import. It feels like this is the future of good appraisals with well supported adjustments and analysis on graphs and well supported data you pulled yourself.

Good luck to you craig!!!

Jul 09, 2011 03:27 AM #8
Rainer
30,516
Danell Estrada
Highlands Ranch Appraisals, LLC - Highlands Ranch, CO

Jack I emailed you a sample and FAQs for you to reveiw. Appraisalworld.com has the CVR training and software.

Jul 09, 2011 03:28 AM #9
Rainer
20,992
Mike Lay
Appraisal House Texas - Austin, TX

Bradford must be doing a big marketing push, I have been getting "rah-rah" emails for the last 3 weeks from them and there seems to be a lot of posts similar to this on the message boards lately.   No offense Danell, I am glad you are getting these orders and doing well with them.

I was one of the first to sign up, paid for the class, and was as excited about it as Danell seems to be.  But then...nothing.  In over two years I have never received an order, despite being in a large metro area.  I found out later that the few banks that were using it were working through AMC's to distribute them, and/or large appraisal companies (Forsythe) that of course use their own appraisers if possible. 
Nothing wrong with all that, it's just business, but I keep pretty good tabs on the CVR and from what I gather it has not been a great substitute to BPO's due to the higher cost -- which are off substantially from what was originally estimated.  When I was taking the classes there was talk of a $175 or $200 fee, less $25 to Bradford, for what would be 1-2 hours of work at your office.  But what most appraisers who are doing them are saying, at least that I have heard from, are that the lenders want drive-by's instead of desk-tops, and they are getting a net of around $100 for 3-4 hours work. 
Apparently the fees are better and the work more available in less populated areas, but of course the more rural it is the less relevant the data is, and the less comfortable I would be with the conclusions kicked out by the software.
I'm not railing on it, I think it is a neat program and has value to a lender, but in many cases is not substantially better than a BPO, and in ALL cases it is not as good as a full appraisal.  But there is certainly a market for it, one that is growing, and for those of you doing the CVR I wish you plenty of success with it.

Jul 24, 2011 07:11 PM #10
Rainmaker
90,211
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I second what Mike said about being in an area where there is a Forsyth office.  They get a good percentage of all the CVR orders, by contract agreement, from what I'm told. Since they are a split fee shop with maybe less experienced appraisers, I'm not sure that qualifies as putting forth a great effort in hiring the best, most qualified appraiser as suggested by Dodd Frank. The AMCs who are listed by Bradford as the ones involved in ordering the CVRs are very difficult to get on with.  I think the order volume of CVRs is low, hopfully it will increase.  I think it is a good product, typically better than most BPOs & should be used a lot more.

Jul 26, 2011 06:46 PM #11
Rainer
30,516
Danell Estrada
Highlands Ranch Appraisals, LLC - Highlands Ranch, CO

Yes the lenders usually want a drive-by, but only of the subject property. I am getting a $150 for these and only stay close to my office so it is worth it. They take 2-3 Hours. I would not take anything less than that. If they wanted an inspection it would be the same as a full appraisal as you all know they always want more and more from us appraisers.

I would like to see a BPO that tops the CVR fromBradfordas I have not seen one better. Does anyone have one to show? I truly think that even with other items out there doing the same thing asBradford.Bradford's CVR tops them all. A good comparison on them would be a fun project for sure.

Jul 27, 2011 02:45 AM #12
Rainer
20,992
Mike Lay
Appraisal House Texas - Austin, TX

Craig, to your point about less experienced appraisers: Out of curiosity I looked up the local appraiser for the company we were discussing here in Austin, and according to the ASC website it is someone who moved here (or at least got her Texas license) last November after moving from Virginia. 
Now, she may be a wonderful appraiser with a ton of experience, and maybe she grew up here and knows the area very well.  I don't know, but at the end of the day do you want someone with potentially only several months experience living in the town they are appraising in?  Do you really get a feel for the real estate market -- or the city in general -- in a few months? 
Again, I'm not trying to offend anyone, since we all had to start somewhere, I'm just making the point that at least in this case, the "local knowledge" that some companies proclaim to have is a bit limited.

Danell, I don't think BPO's are better than CVR's, I just meant that most investors/lenders would prefer an "average" BPO for $60 over a $150 "better than average" CVR.  I hate BPO's, I have been handed a few on occasion ("well, this is what my realtor said it was worth!").  They just make me shake my head and wonder if the realtor who came up with the "price per square foot" sales pitch made any money from it.  But that is a whole different rant... 

Jul 27, 2011 11:45 PM #13
Rainmaker
90,211
Craig Chapman
Call Realty / Access Appraisals - Mesa, AZ
The Value Guy

I have heard that the lenders typically pay more like $100 or more for a BPO.  The REALTOR gets far less & the AMC that orders it gets the rest. Does that sound familiar to any of us? 

Jul 29, 2011 11:17 AM #14
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Rainer
30,516

Danell Estrada

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