Many of the data collectors that are used for hybrid appraisals have little to no training and many do not receive background checks. The idea of this service is much like the use of similar technology used to run Uber and Lyft. (Fannie Mae and Freddie Mac) believe that anyone with a smartphone can perform the same duties as certified appraisers. Although appraisers are not home inspectors, the appraiser makes note of property conditions, as it relates to value, and other issues that may need further investigation by an expert in that particular field. As a homeowner or home buyer, do you trust in a data collector that may not be qualified to notice a problem with the foundation, the condition of the roof, or any other defects that the appraiser explains in detail in their appraisal report. An appraisal is an up-to-date, unbiased professional evaluation of a property and its improvements to determine the market value of a residential home.  Starting in July, the Government-Sponsored Enterprise (GSE’s) will now allow remote inspections on certain loans. Desktop appraisals may save a few gas miles, and certainly will provide opportunities for a coterie of private sector companies, but they are NOT superior to traditional appraisals.  

The property data reports Fannie Mae and Freddie Mac will be using will require Data Collectors (DC) to provide information on key elements of comparison such as the type and quality of exterior features, including; roof damage, such as (discoloration and sagging), foundation flaws, water damage, poor drainage and grading issues. Appraisers are required to measure homes based on the ANSI® Z765-2021 (“ANSI standard") and be within 1/10” of a foot. There are no measurement requirements for (DC’s). They must also consider the type and condition of all interior components; kitchen cabinets and countertops, the type and condition of the flooring, mechanical deficiencies, and functional obsolescence. Do they even know what functional obsolescence is? An appraiser who allows some unidentified person (DC) to perform appraisal practices in the preparation of his or her report is in violation of Uniform Standards of Professional Appraisal Practice (USPAP). Having someone besides a licensed/ certified appraiser contribute Significant Appraisal Assistance, without identifying that individual in the report, is also a clear (USPAP) violation charged back to the appraiser who signed the report. One of the single most significant issues that appraisers face when performing hybrid appraisals is the reliance on third party data. This will increase with the complexity of the appraisal problem. Therefore, there is no surprise that the increase in use in these types of valuations is not welcomed by most residential appraisers.

It also requires the (DC) to certify he or she has “unbiased professional conclusions,” no interest in the property and no interest or bias toward the parties involved in the transaction. Data Collectors have no code of ethics, code of conduct, or any other regulations that appraisers have. Certain companies are allowing the listing agents to be the data collectors. That is actually a conflict of interest. Appraisers follow a code of ethics, (USPAP) and have no financial obligations tied to the property and provide a third-party unbiased opinion of value.

It is important to ensure financial institutions and the secondary market participants are fully aware of the collateral that they are relying on to avoid weakening banks and secondary markets. Do these DC’s understand the importance of the key factors that drive the real estate market? 

• Neighborhood demographics

• Highest and Best Use. If this factor is missed, the value of the subject property can vary significantly. 

• Internal and external functional obsolescence; such as water towers within the fall distance of the subject property. 

• Location; Are neighboring properties properly maintained?

• Square footage; Appraisers are required to measure within one-tenth of a foot. That is not true for data collectors, because there are no standards. If the square footage given to the appraiser is wrong, then the valuation itself is in question. Bad data in, bad data out.  

These new policies will cause the loss of thousands of middle-income appraisal jobs, and the economy will suffer if the general public cannot depend on appraisers to act as independent professionals and provide credible results. Hybrid appraisals create a lot of liability for appraisers and are just another way for AMCs and lenders to make excessive profits at the expense of the consumer. Allowing this to happen may lead to 2008 bank failures all over again, but on a much broader scale.  



Please join us by signing this petition, and we will do our best to warn partner organizations, realtors, and the general public, on the Dangers of appraisal waivers and hybrid appraisals. Together we are stronger, and we ALL must fight to Save Our Profession. The GSE’s are taking professionalism out of the appraisal profession. The time is NOW! Contact your Congressman, State Legislator, Governors, and State Appraisal Boards. We all can agree that some changes need to be made to the industry, but this is NOT it.

Don L Ross

Don L Ross

Founder & CEO

Urban Coalition of Appraisal Professional