Dave Biggers, You Owe Me an Apology

Normally, I like Dave Biggers.  I think a la mode—like other appraisal software companies—has always been (and will likely always be) an advocate for appraisers.  I am not saying any of that has changed, but I feel like Mr. Biggers owes me, and all appraisers, an apology.

Ever since I first heard of Collateral Underwriting (CU), I have been a bit—and at times, much—overwhelmed at what it might mean to me and my peers.  Frankly, there have been times that I have been downright scared of what CU might do to my thriving appraisal business.  Don’t get alamode-logome wrong, I think I run a tight ship and am proud of the quality of my appraisals.  However, I work a very rural market and providing iron-clad support for adjustments is not always possible.  Let’s just say, the horror stories I have been hearing about paired-sales and regression tools has caused me a little bit of anxiety.  The only solace I have had is learning that Fannie Mae will be looking to my peers for adjustment models.  I am pretty sure my peers will have no easier time providing rock-solid adjustment evidence than do I.

This is where Dave comes in.  Yesterday, I read the following open letter from him to appraisers:


Can I just say, this is the first thing I have read about CU that has made me shout for joy?  It was a little embarrassing as I read it while I was sitting in a church meeting.  The other parishioners must have thought I had a Day of Pentecost moment, but no, I was just happy to read what Mr. Biggers had to say about the upcoming CU and the approach we, as appraisers, ought to take with it.

So why am I calling on him to make a formal apology?  Just that it did not come sooner.   Dave, you could have saved me a lot of heartache over the past few weeks if you had just told me to cool my heels much sooner than you actually did.

I hope you all caught my sarcasm and I want nothing more than to thank Dave Biggers for an excellent perspective on a complicated issue.  I hope his optimism plays out in reality.  Thanks again for supporting appraisers, Dave!

Dustin Harris, Creating ‘Value’ for Real Estate Appraisers

35 thoughts on “Dave Biggers, You Owe Me an Apology”

  1. I like Dave’s letter, but I am still scared (and I don’t even do lender work). This is the first time where our clients will have more data than we do, good appraisers (maybe appraisers that do more research and find out things about comps that their peers do not) could get flagged or black listed because they are not in lock step with their peers, and there is no transparent process for when you get on a black list, why you’re on the list, or how to get off. http://www.aqualityappraisal.com/Four+Reasons+Real+Estate+Appraisers+Fear+Fannie+Mae+CU

    1. Face it Dustin, your passion is your blog and you constantly need material. As soon as I read your comments
      on UC I new you were creating a “Sense Of Urgency” This is of course a very popular form of advertising. In all honesty
      I would bet that if you could make the same income blogging as you do in appraisal work you would give up the appraisal
      WORK. Nothing wrong with that and I wouldn’t blame you because the appraisal industry is alot of WORK and one big pain in the ass!

    1. Might be a church where the “frozen chosen” congregate. Try a holy ghost church where the pople are laid out and jerking in the aisles when he shows up !!!

  2. Excellent Biggers’ blog. I have been working on a public records data system based on improvement to property and land to property ratios as a defensible and time efficient basis for calculating and applying value adjustments on the market grid. These ratios are applied to all the selected comp sales associated with a particular assignment where an estimated value/SF of improvement or value/SF of land becomes the basis for calculating the necessary adjustments. This approach could perhaps be used in lieu of the more laborious and no more credible statistical methods currently being used. Perhaps even sail by Fannie CU criteria. I am sure that various forms of what I am mentioning are already being employed by appraisers but feel free to contact me if a la mode has any interest at above email or 941-704-0595. Thanks. JM

  3. What an odd title to use when you say your intention was to deliver a compliment.
    I’m not one of your fans Dustin, but I try to take you seriously and find merit in what you say. I look at appraising from the perspective of a profession, of which there isn’t yet much evidence of. I think you are a lot more interested in business and that probably explains why I just don’t usually find what you have to say as relevant to what I think is important.
    And why you think Dave Biggers owed you an earlier message of comfort is obscured in your blog. Why do you think Dave is obligated to keep you from being afraid?

  4. I also had been worrying like everyone else, wondering how can you possibly make 1 adjustment for GLA on all of your appraisals all of the time with no consideration to quality, it seemed like no one ever mentioned that. But when I read Dave’s letter a week or two ago it also made me feel much better about the whole situation. I decide to continue on “business as usual” which meant always having support in my workfile for everything I do!

  5. When you re-posted the article from the ACI people, I was going to refer to the Biggers article which I just read, which was a little better or a little more assuring to my feelings and thoughts on CU all along. Nice to know that Alamode will provide us some free tools to hopefully back up some of our analysis or assure what we are doing is within the range of reasonableness. I still think some appraisers will just run data with some of these tools, throw it in their report, thinking they are covered, when they in fact didn’t even analyze the data these tools produce. I was trained by a genius of a MAI in litigation work of both residential and commercial properties as well as a seasoned residential guy. From their I have taught myself and in my opinion mixed the world of what is provable and what is reasonable. In these residential appraisals, I believe it is our duty in these residential appraisals is to minimize the range of the market, with adjustments, to provide or infer an indication of value. That being said, though I get the gist of regression and what it can sometimes accomplish, in my Chicago markets, no statistics or model is going to be able to analyze such things as condition, regardless of these silly UAD classifications, which have their differences in interpretation by each appraiser. Items such as condition, or higher end homes with basement finishes, do not appear to be items that can be definitively adjusted for, in a statistical sense, and always need an appraisers interpretation, thinking from a buyers eyes, to view interior photos, drive by the property etc, not sure how these models can give you a price per bedroom, when condition will vary. In cookie cutter subdivisions, or where everything is the same, sure! On another note, a large group of appraisers should be worried, and should educate themselves, rethink how they slap reports together with unreasonable adjustments, errors, omissions, and things like the same adjustments on a 100k house as on a 650k house. Hopefully it will catch up the hacks, and not catch up the knowledgeable appraisers who use proper reason and take pride in their work. And this Ed guy, geez, I get a lot of Dustin’s stuff is geared towards business, but a lot of it is free, so subscribe to it or don’t as everyone knows a lot of his titles, sangs are in some weird context to grab our attention.

    1. Excellent point on condition adjustments, which could also go to quality in many cases as well. The other thing CU will not give you is what to adjust for. It may compare the measure of what others have adjusted for, but it will still need expertise on what to adjust for. I am a bit concerned that modeling is somehow going to magically replace good judgment/experience in a particular market. The old adage of garbage in garbage out is paramount to the current situation. Button pushing will not effectively replace skill, hopefully. The other concern is “low risk” comparables, that to me is going to be the biggest challenge coming out of the new CU database. They seem to be looking to lower lending risk by choosing the comparables for the appraiser?

  6. The problem I’ll have in Washington, DC is that I actually measure my subject property and more times than not, the GLA is greater than the tax assessment GLA which many of the appraiser use because it is obvious they to not have plat books nor accurately measure their subject property that I will later inevitably use as one of my comparables. DC is renowned for having inaccurate tax assessment GLA’s because much of the housing has additions not reflected in the assessment records. And, in suburban Maryland, it is not uncommon the see a tax assessment GLA of a prior existing house on a site that has a new structure 3 or 4 times the GLA of the prior dwelling. How does one reconcile these discrepancies that will occur during the CU process? Also, I was trained to make adjustments where warranted; it a stone front or different elevation warrants an adjustment, I’ll make it because the market supports it even it the Quality of Construction does not accommodate these kind of adjustments when the overall quality in the rest of the dwelling is the same. All these UAD and CU guidelines dummy down the appraisal process and do not allow appraisers to do the job they are paid to do and that is to reflect every adjustment in the appraisal that the market supports regardless of the narrow UAD and CU guidelines. If you want to cheapen the value of a profession appraisal why not just do away with appraisers and go with your Zillow and Regression Analysis BS. You will save your client borrowers some cash but. in the long run, you’ll be leading the lending industry down the path to another financial crisis and collapse in the house market. But, who really cares other than the appraisers, because our tax dollars with bail out the lenders again and leave many homeowners without a home AGAIN. Wake Up America.

    1. Jim,
      As a former Marylander myself…doing appraisals in 7 counties plus D.C….I agree with everything you said. Had I known 25 years ago that there would be so much government interference in this profession, I would have never gotten into it! Now, appraising in Florida and STILL surprised at how many appraisers don’t measure the subject. As usual…it’s the sins of the lazy and unscrupulous that the good ones have to suffer for! Which is exactly why this CU came about. We appraisers are nothing, if not flexible. We can ride this one out too, hopefully until retirement. I just hope I’m around to see what happens when all of the older appraisers retire or die…and no new ones are coming in since they have essentially obliterated our business!

  7. Dustin –

    I’m sorry. 😉

    Honestly, we waited largely to have more concrete data. Bradford shot off right out of the gate with fear and snake oil, then ACI came out with a credible but still kind of empty message (but still not fear-inducing). We took the time to actually watch how CU worked and to study the flags and their importance. And until we did that, we honestly couldn’t have sent an email saying “chill out” because we might have been wrong.


    1. I thought I felt an earthquake this morning… or perhaps hell froze… but Dave “apologized”? What’s the world coming to?? -lol-

      Kidding aside, thanks Dave for your clear, thoughtful, and measured response to the CU.

      When Dave talks, people listen, and that’s a good thing!

        1. Hey Dave, when will the 2nd annual survey come out that shows appraisal fees by way of with and without AMC involvement come out? That’s right, you sold out.

          Seek the truth.

  8. Ernie is correct. As an appraiser for 40 years, how many times have we been scared by FNMA and their attempts to have the appraiser “guarantee” that they have made a good loan. As a former teacher, one of the first things taught is that Market Value is an OPINION, not a fact to be found in the market. As such, the one thing that FNMA does not get is that JUDGEMENT plays a major role in appraisal, and that judgement is only as good as our experience. Appraisal techniques are used to support adjustments to some extent but even with the techniques, judgement is needed by the appraiser in applying the techniques. Even though FNMA says this new “score” given to the appraisal report will not stop them from purchasing the loan, I’m sure lenders will do just what they did in the 1980’s when FNMA Guidelines first came out and they said that the guidelines did not have to be adhered to, but just addressed. We all know what lenders did with the guidelines. Just as they thought the appraisal had to be changed to meet guidelines, they will interpret this score as something that needs to be changed by the appraiser to increase the score. There is some good news, recent changes by FNMA eliminating the 10%/25% adjustment limits and allowing the use of sales over a year old are an indication that FNMA may realize that the appraiser’s judgement, along with an explanation, will produce a more accurate opinion. For experienced appraisers who are confident in their work, just keep doing quality work and this too shall pass.

  9. I refer residential jobs to my colleagues who the experts in that discipline of appraising. That said, it seems to all of us that residential appraisers who do form work for the feds are in for a new ride.

    Paired Sales Analysis:
    Some courts already see paired sales analysis as “voodoo appraising”, (i.e. Smith v. State of Indiana). It ‘s my understanding that paired sales theory was a developed for pedagogical purposes and was never intended to be used in the “wild”. Beyond a new subdivision analysis or pre-existing “cookie cutter” neighborhoods, paired sales becomes especially difficult. As we know, it requires knowing the motivation of each purchaser. Yet the adjustments that are so-called “paired analysis” derived, are applied liberally.

    Our common practices seem to be just handed from one generation to the next. We are in a new world, this we all know.
    This new world is filled with new buzz words like “Big Data”. Like some, I am of the opinion that it will require some new practices. My suggestion is that these new practices be “pushed up” from those of us in the trenches and not “pushed down” from quasi-politicians who are trying to keep the heat off of them from people like Gov. Cuomo of NY. and Congress.

    Some suggestions:
    I would suggest that local “guild” type organizations need to be formed. Appraisal organizations like the AI, ASA, and IFA for all their pros and cons, as we know are too slow and too generic for tackling the problem of grid adjustments. The “guild” idea has been kicked around for a long time. Its time may have come. Instead of a national guild however, I suggest each local market area organize for very specific purposes. Some “guilds” already exist. I know of one in Westchester County, NY. Local area “guilds” can uniformly collect data, share data and methodology. This will be one way to support and defend local market area adjustments. The data already exists. On the local level we need to do the data “scrubbing and cleaning”. Our value proposition to the client is: 1) all the unpublished data points that we collect with our “eye and ears”, information that the public data sites never has access to and, 2) Our locally derived and supported analysis of the local market data. Just as some clients won’t hire you if you are not a member of the local board of realtors or have access to the local MLS, it may prove valuable to a client that the appraiser belong to a local “guild”. In this way the reports would have to say that the data sources were provided by x, y and the “such and such area guild”. As appraisers it would be up to us develop a database that is highly sought after and be reputed to have the level of credibility to go with it so as to be in demand by our clients. How the data and the analysis becomes normalized will be up to each local area.

    This idea may not work in all local markets. It is an idea that may be worth pursuing however. If not for protecting us from having the regulators tell us what to do, at the very least it would increase our credibility with clients overall in this new era of easy access to general information. I would be interested in hearing other pro-active ideas from the readers of this blog.

    Eric A. Sterling Jr.
    Sterling Appraisal Company

  10. BOB SAYS…..


    1. The Appraiser Coach


      I think you missed the point. Oh well, I apologize to you and anyone else who did not get the satire. Now, back to recess.

  11. I believe Mr. Biggers’ letter was more or less directed at Jeff Bradford and Clickform’s. Bradford Technologies is reportedly developing a new package (Redstone) to supposedly address CU and will fully support comparable selection, adjustments… The webcast from Mr. Bradford definitely plays on fears, as was brought up in Mr Biggers’ letter. I never cold get an answer from Bradford Technologies regarding if their Restone models its analysis the same way as CU does (what is the point otherwise?), on what data regression models will be run… For example, I understand CU applies data and defines neighborhoods by Census, which will not work in my area – in one census area there are large custom homes on acreage, a couple more recent tract home subdivisions with 2,000 – 4,000 sf houses, and another subdivision with 1,300 – 1,600 sf lower quality homes. How do I defend a GLA adjustment on a 1,400 sf house (even if regression, paired and grouped sales are used), if CU is using a model that includes the entire census tract?? Again, never got an answer…

    The package from Bradford Technologies may or may not work as promised, but Bradford Technologies is planning to charge for the service on a per use basis, I think between $5 – $15 each use. I have been using Clickforms for years, and it seems over the past few years they have not so much been an advocate as a company trying to bleed appraisers to death for every feature they offer – and many of their services are worthless, if not dangerous. Thank you Mr. Biggers for reminding me not to panic and possibly pay fees for things that may not be necessary.

  12. And more people have either attended the Fannie Mae webinar and/or read all the Fannie Mae info on their website. (which is designed to quiet all the concerns & questions and have us all go along)

    So, this is just “another milestone” and “this is a tool to help all of us work as a more cohesive unit.” And…”Collateral Underwriter is an additional tool for the lender to utilize when determining a risk factor for assets that they will be lending on. This is not another AVM or anything along those lines.” …..” I think if we as appraisers provide accurate data within our reports that is supported, we should experience a smooth transition to Fannie Mae’s new Collateral Underwriter.”

    If all this is true……why are we as appraisers the ONLY ONES restricted access to this amazing data base? Especially since we are the ones who contributed ALL THE DATA as it was farmed off of our reports since the UAD was put in place? And wouldn’t it seem to make sense that appraisers are the ones most qualified to review / analyze / utilize this type of data?

    There are 19 state appraiser organizations that have joined The Network of State Appraiser Organizations in order to speak with one voice on appraiser related issues. This is a big one. They have submitted a letter Jan 8, 2015 to The Honorable Melvin L. Watt, Director, Federal Housing Finance Agency in order to voice our concerns and ask for a meeting to address the CU. Here is the content of that letter;

    The Network of State Appraiser Organizations

    The Honorable Melvin L. Watt
    Federal Housing Finance Agency
    400 7th Street SW
    Washington, DC 20024
    Re: FannieMae Collateral Underwriter Program

    Dear Director Watt:

    On behalf of the independent state professional appraiser organizations signing below, I invite your attention to concerns expressed by the majority of real estate appraisers regarding FannieMae’s announcement making their Collateral Underwriter (CU) program available to lenders and their third party affiliates (but not to appraisers). We understand and appreciate the intent – to reduce the rejection rate of appraisal reports by FNMA through improved screening at the lender level.

    Our concern is that lenders and their appraisal management companies will take an overly conservative misunderstanding of the CU’s output and continue to implement processes that result in a degradation of the quality as well as the timeliness of residential appraisals. These misunderstandings contribute to actions such as FNMA’s recent elimination of some of their appraisal guidelines regarding net and gross adjustments. It can be difficult to convince lenders that these guidelines are not hard limits. The same is almost certain to occur with lenders’ employment of CU. The program’s identification of alternative property sales as possible better comparables for analysis will likely result in the rejection of reports and the requirement for appraisers to spend considerable additional time responding to questions as to why those other sales were not used – hence extending loan processing time and increasing fees. Since those alternative sales come from a database with information not presently accessible by appraisers, this is not a self-correcting situation.

    The solution that we recommend is to make the Collateral Underwriter program available to individual appraisers, including sales data, local market trends, imagery and other public records, that is being made available to lenders and their affiliates. The originating appraisers could then be alerted to the identification of the alternative sales as superior, and either utilize them or add appropriate explanatory commentary as to why they are not being included. This would improve the overall quality of appraisals by making selected property information from the FNMA database available to appraisers during initial appraisal development. It would also dramatically speed up loan processing time by eliminating delays caused by continuously growing requests for appraisers to reconsider the facts and conclusions in their reports. It is only logical for appraisers to have access to all the data possible. There is no apparent reason why this would not be possible, nor any potential downside or detriment to the process.

    Not providing FNMA’s Collateral Underwriter data to appraisers at the beginning of the valuation process not only disregards Appraiser Independence Requirements but also FNMA’s own guidance as noted in: FNMA Selling Guide (4/15/2014) B4-1.1-05 “Disclosure of Information: “Any and all information about the Subject property that the lender is aware of must be disclosed to the appraiser. The appraiser must determine if the information could affect either the marketability of the property or the opinion of the market value of the property.” Additionally, there is contradiction within the actual FNMA Uniform Residential Appraisal Report; as Appraiser’s Certification 12. “I am aware of, and have access to, the necessary and appropriate public and private data sources, such as multiple listing services, tax assessment records, public land records and other such data sources for the area in which the property is located.” Appraisers must have access to the data. Otherwise, it is not possible to certify what is unknown to be known.

    Providing the Collateral Underwriter to appraisers would significantly improve the residential mortgage process and further the satisfaction of FNMA’s own requirements of an appraiser.

    We would like to meet with a member of your staff to discuss this in greater detail. I am serving as the contact person for the state organizations signing below. Please advise me as to a proposed date and time for such a meeting. I can be reached at (704)752-6252 x101, or at peterg@homesightllc.com. Thank you for your consideration.

    Sincerely yours,

    Peter Gallo

    Appraiser’s Coalition of Washington
    Arizona Association of Real Estate Appraisers
    California Coalition of Appraisal Professionals
    Delaware Association of Appraisers
    Georgia Coalition of Appraisal Professionals
    Idaho Coalition of Appraisal Professionals
    Illinois Coalition of Appraisal Professionals
    Louisiana Real Estate Appraisers Coalition
    Maryland Association of Appraisers
    Mississippi Coalition of Appraisers
    North Carolina Real Estate Appraiser Association
    Ohio Coalition of Appraisal Professionals
    Oklahoma Professional Appraisers’ Coalition
    Real Estate Appraisers Association (CA)
    South Carolina Professional Appraisers Coalition
    Tennessee Appraiser Coalition
    United Appraisers of Utah
    Virginia Coalition of Appraisal Professionals
    West Virginia Council of Appraiser Professionals

    If you don’t see your state appraiser organization listed as a signer to the Fannie Mae letter, contact them and provide them the network organizer’s info; Peter Gallo, at (704)752-6252 x101, or at peterg@homesightLLC.com

    The more states we have in cooperation on this Collateral Underwriter issue…the better.
    We need your voice!
    Note: We had Kentucky join us yesterday!!

  13. Dustin, just wanted to say I read your blog religiously and appreciate your satire and humor. However my favorite part about the blog is reading the responses from appraisers. Geeez people, lighten up! Can’t we all use a little satire in times like this?

    Additionally, it’s always interesting to see how poorly written some of the responses are. Run on sentences, poor or lack of punctuation, spelling, hard to understand, etc. If this is the way some of you write reports (and I witness a lot of it doing review work!), it possibly speaks to the quality of your work!

    Refreshing article by Dave Biggers. Our firm has been with Alamode and has been for 13 years, and with people like Dave at the helm I feel like we have friends who really care in the industry…

    1. The Spicy Italian

      Dan – I totally agree! If not for Dustin’s articles, where is the fun? Hey you guys who can’t take a joke – time to retire!

  14. Dustin, I also read Dave’s piece, but my reaction was much different than yours. Rather that joy, I was still afraid, VERY afraid. I also work in a less populated area where good comps are often hard to come by. Dave was obviously trying to calm the waters, but I didn’t see anything totally convincing. If the CU ranges will be wide, that may mean more that it will be possible to live with the new system, not that appraisers (and even more, accurate valuations) won’t be adversely affected. It may not be a sword thrust that executes the profession, but it may accelerate death by a thousand cuts. Survival is still a question. We’ll see….

  15. I feel like Dave does owe me an apology for his software not helping matters. I am in an office with four residential appraisers and we run a professionally maintained network. The alamode software does not provide any mechanism to clearly show which appraiser saved which saved comparable sale to the database. I have begged for a solution and am met with silence. Obviously the four of us have varying opinions regarding the ratings and even worse, one may use the MLS GLA and another a recent actual measurement. Imagine the possibility for conflicting data. I’ve had to get creative and use certain styles on source lines to try to determine if I was the one that previously saved a comp to the database. It seems like such an easy fix for the system to show which logged in appraiser saved a particular comp, but I guess not.

  16. Way to many appraiser’s are carrying their ‘feelings’ on their shoulder, lately. I have used WinTotal for over 12 years, have rolled with the changes in our industry and I read the blog from Biggers and although, I’m not necessarily a ‘believer’ in the positive attitude about it that Dave suggests, I am certainly not cynical enough to carry my feelings on my shoulder either. Dave is just like everyone else in the industry trying to make a living, selling a product and/or providing a service. Does anyone doubt. we in the appraisal profession are in for addition changes….I am betting this CU will change significantly in the next year, just a hunch. SO, bottom line is make a living the best way you can in this ever changing business, prepare all your reports like you’ll be defending them in a court of law and you’ll get through this one. Someone wrote that Washington DC is the real problem and I agree, But along with them, are the people who believe the federal government, FNMA, ad nausea have all the answers – they do not! And like many other, big government programs this CU will fail to produce results that they think! And, it like most other gov’t programs will change. Hopefully, sooner rather than later. So, stick with this profession and you’ll be glad you did. I know way to many that jump out when we went from pre-printed forms and dot matrix printers to something called a ‘software’ program. How’d that work out for those that stuck it out?

  17. Pingback: Dave Biggers, You Owe Me an Apology - Appraisal Buzz

  18. Thanks again for supporting appraisers, Dave!

    Google Dave Biggers today Dustin and click on Images.

    In holding a blonde in one arm, and a glass of wine with the other hand while traveling the world, do you really think Dave is supporting appraisers?

    Seek the truth.

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