What is the Double Tree of Casorzo? Can we see some parallels between this odd situation and the appraisal profession?
In Piemonte, Italy, there is a cherry tree that has grown on top of a mulberry tree. Its not the prettiest site to see. How did such a strange thing happen?
The cherry tree was not grafted to the mulberry tree. Some suggest that a cherry seed may have been dropped onto the tree by a bird. The conditions were right for it to begin to grow. Eventually, the cherry tree became full grown, atop the mulberry tree. Its roots penetrated through the hollow trunk of the mulberry tree, extending down into ground.
While this is an unusual occurrence, its happened before. The unusual thing about this situation is that the cherry tree grew into a full- grown tree versus most trees in this situation, never growing to full size.
How long will both trees thrive? My guess is, until conditions become challenging to the trees, like drought, or some other external occurrence. At that point, the more mature, better grounded tree, will probably continue on, whereas the cherry tree is likely to die, or at least weaken considerably.
AN INTERESTING PARALLEL TO THE APPRAISAL PROFESSION
Like the Double Tree of Casorzo, an interesting phenomenon has been developing in the world of real estate valuation. For several years now, there has been no end to the articles written about the ongoing changes to the real estate appraisal profession. Appraisal waivers, bifurcated appraisals and evaluations are terms that invoke many emotions in appraisers.
About four years ago, I remember reading an article on the topic of future changes to the appraisal profession. It predicted that valuations of many homes, in which a lot of data was available, would be completed by more automated systems.
More complex properties would require a more traditional appraisal completed by an appraiser with the skills necessary to perform more complex appraisal work. This was before there was really any mention of, at least that I can remember, appraisal waivers, bifurcated appraisals and evaluations. Or at least they were not such a big topic.
The appraisal profession was predicted to experience the growth of something new. A tree of a different kind. When I read this article, I could see how this could happen. Especially due to the massive amount of data being collected by lending institutions and the GSE’s in recent years.
THESE CHANGES ARE HAPPENING
What that article predicted has come true. Some appraisers are completing appraisals without ever leaving their office. They based their appraisals upon information provided to them by their clients, namely lenders.
Some of these lenders rely upon field inspectors. These inspectors collect information on the property to be appraised. The third-party inspector may be an appraiser, or someone else. Some appraisers are also performing evaluations. Again, never physically seeing the property. This kind of product may be likened to the cherry tree. Like the cherry tree on top of the mulberry tree, this is a bit of a precarious situation. The success of these new products is yet unknown.
Currently, most appraisals are still being performed in a more traditional manner. A property has to meet certain criteria in order to qualify for one of the newer valuation models. Hence, many traditional appraisals are still being completed for properties that are not considered to be complex. While that is the case, the use of these newer valuation types is growing quickly.
Just like conditions needed to be ripe for the cherry tree seed to be able to grow into a small tree, atop another tree, conditions are ripe, in the current real estate atmosphere, for some of these changes taking place.
Market conditions have been good for an extended period. It seems that some have forgotten the practices that led to the financial crises of 2008. Higher risk loans are again making a comeback. Today, many lending institutions are more interested in faster and cheaper valuations, leading to riskier collateral decisions. Some financial institutions know that their decisions are risky. They have calculated that risk into their business strategy.
There are certain situations in which these different valuation products can be useful. However, if these types of products become popular for purchase transactions, it is likely to lead to big problems in the future. I don’t believe that these products are faster or cheaper. If used in the wrong way, they could do some serious damage to the market. Time will tell. New things are always exciting, at first.
A PARASITICAL RELATIONSHIP
There is a parasitical relationship that exists with the Double Tree of Casorzo. If the mulberry tree were to die, the cherry tree would probably not survive. Likewise, much of the data that these modernized valuation products rely upon, comes from data that is extracted from information obtained by more traditional appraisals. That is the primary reason for UAD formatting. It’s all about data collection. Of course, data is also being collected through other sources as well. New data needs to feed the big data machine.
If appraisers stopped performing the more traditional appraisals, some of these newer valuation products would probably not be able to survive in the long term.
In my opinion, when it comes to mortgage lending, appraisers are not going anywhere, anytime soon, much to the chagrin of some.
Clearly, things are changing though. I entered this profession in September of 1997, when I began my appraisal apprenticeship. This profession, like any other, has gone through many changes before and after that time. So, change is nothing new.
WHAT TYPE OF TREE DO YOU LIKE?
While some appraisers enjoy completing these newer products, many of these newer types of appraisal products are not for me. I don’t desire staying in my office pumping out 25 desktop valuations or evaluations a week. I enjoy the challenge of appraising unique and complex properties. I enjoy being out in the field, visiting with people and seeing what is going on in different neighborhoods. Observing the home I am appraising, and the neighborhood it’s in, with my own eyes, has many advantages. It gives me a much better feel of the market than simply looking at data alone.
Real estate appraisals are needed for many things other than for mortgage lending. When I read the aforementioned article about the changes coming to the appraisal profession, I realized that I needed to get serious about changing my business strategy, if I wanted to keep doing the kind of appraisal work that I really enjoy. My goal was, and still is, to diversify my business and focus on new sources of appraisal work. So what did I do about it?
I upgraded my website. A little while later, I started up social media for my business, like Facebook, Instagram and Twitter. I started posting commercials to attract people to my business, and to share appraisal related information with the public. Hopefully you have enjoyed some of my posts. I also started to speak publicly to different groups of loan officers and real estate agents.
In addition to all of that, I also started blogging. Why blogging? For several reasons. I want to educate the public on what we as appraisers do, and why we do what we do. There is so much to learn about real estate appraising. Most people have no idea. The topic of real estate appraising can be rather dry. That’s why I also try to add some humor to my articles. I like adding some funny pictures or videos to my blogs. Life is short. People are stressed. I find humor as a way of making dry topics a little more fun. While I take my work very seriously, I don’t take myself that seriously.
I have gone from a few private appraisals a year to one or two most weeks. The majority of the rest of my work comes from direct banks and hard money lenders, real estate agents and attorneys. I do complete a small number of appraisals from appraisal management companies.
My goal is to continue to provide great appraisal work and to have fun in the process. I enjoy what I do and wish to continue on that course.
A BIG THANK YOU
There are many people who have helped me tremendously by sharing my articles when they enjoy them, by liking my posts on social media and by commenting on my articles. Many have also generously shared information and tools that have helped me in my marketing and in my appraisal work. I truly never expect it, but I do always appreciate it!
I am trying to show my support to other appraisers who are putting themselves out there, by doing the same. It’s getting harder to read all of the blogs out there, because more and more appraisers are doing these same things, and that’s awesome! I believe it will pay off in one way or another.
TRY SOMETHING NEW
If you are trying to diversify your clients, don’t be afraid to try different things. Blogging, vlogging, social media, podcasting, public speaking or something else. Don’t be afraid to make mistakes. I’ve made mistakes, as I am sure you’ve observed. We all do. An appraiser friend of mine once said you miss every shot you don’t take. So try some new things. I think you’ll find it rewarding. If you find you’re not good at one thing, try something else.
By some estimates, the mulberry tree has a typical life span of between 25-50 years. A cherry tree has a typical life span of between 16-20 years. It will be interesting to see which lasts longer, traditional appraisal work or some of these more “modernized” reports. My bet is on the more traditional approach to appraising. The attraction of the fast, cheap, wiz-bang valuation products coming on the scene, can just as quickly disappear if economic conditions change. (And they no doubt will) But who really knows? Only time will tell.
No matter what type of work you do, work hard and be honest. Continue to upgrade your skills and always do your best to protect yourself. That’s true no matter what field your in.
SOMETHING NEW FOR BUSY PEOPLE
I realize some of my articles can get a little long. If you are like me, it is a struggle to read every appraisal blog out there. So, if you would rather just listen, here is a link to a recorded version. I am also working on a new podcast. This is not it.
If you’re fascinated with trees that devour things slowly over time, you might like this video. Enjoy!
As always, thanks for reading my article! I hope you enjoyed it!
Here are some links to other articles and podcasts I enjoyed recently! I hope you will also…
Why “Bifurcated” Won’t Work – Richard Hagar, SRA – Working RE
Housing Is Treading Lightly Around Our Wheelhouse Because We’re Flatly Tired Of Spinning In Circles This Summer – Housing Notes by Jonathan Miller
Hang’im Again Boys, He Ain’t Dead Yet! – Tim Andersen Is The Appraiser’s Advocate PODCAST
What Does The Recent Change In The Appraisal Threshold Mean For Home Buyers? – Birmingham Appraisal Blog
Dude, people want smaller homes (sort of) – Sacramento Appraisal Blog
What is an algorithm? (Part 2) – George Dell’s Analogue
What Are The Signs Telling You?- The Real Value Podcast