Appraisers are concerned about the current trend toward minimizing the human factor in the assessment of a home's value.
Although many believe that Freddie Mac's pairing with Mortgage Guaranty Insurance Corp. and TRW Redi Property Data will enable lenders to speed up their loan making process, others say there are possible pitfalls with further automation.
If lenders and underwriters opt for completely computerized appraisal systems, there is a "severe threat" that instances of inaccurate appraisals will increase, said Michael Mattox, president of Atlanta-based Premier Appraisals. If they take the appraiser completely out of the loop, collateral assessments will suffer, he said.
Appraisers that come in too high may keep lenders from getting adequate collateral, while those that are too low could put homeowners at a disadvantage if they attempt to resell.
Many software underwriting models hitting the market now rely on tax information to assess home value - which may be a dangerous mistake. Tax data bases are rarely accurate, Mr. Mattox said. Homeowners, in an effort to keep their property taxes low, are not apt to report renovations, he pointed out.
The use of real estate agents to make some sort of property value assessment is also frowned on by appraisers. If one uses untrained real estate brokers, who are essentially salespeople, the likelihood that they will catch a problem with the property is reduced, Mr. Mattox added.
Cost is the real reason lenders attempt to cut corners in the appraisal process, Mr. Mattox said.
Premier Appraisals is attempting to turn appraising into a low-cost, high-volume business to address that issue. The development of the Nova software program, which automates much of the reporting and analysis functions that appraisers must perform, is an attempt to achieve those goals.
The system allows appraisers to offer several types of reports, depending on the degree of detail necessary, for various prices, but keeps human judgment in the process. "We're attempting to walk the middle ground," Mr. Maddox said.
The company is on an aggressive acquisition campaign, in an attempt to shift the appraisal business from a cottage industry to a nationwide enterprise. Premier announced the purchase of H.A. Yeargin & Associates, a Florida-based appraisal company, last week.
In addition, the company has plans for acquisitions in Washington, D.C.; Nashville; and Orlando. Premier is currently working with First Union Bank of Georgia and Southtrust Bank of Georgia, among others.