This clip of Coest2Coest talks about the use of MLS photos and the advantages as well as disadvantages of this being a requirement when completing the appraisal report. This episode of Coest2Coest we sat down with Jared Preisler, SRA and Certified appraiser for DataMasters! We talked about the use of technology and the ever-evolving role of the appraiser within the mortgage banking industry and other areas.
Coest2Coest Video Transcript
The MLS photo and jared, you can comment on this anytime I am for the use of the mls photo. Right. And the reason I'm for the use of the mls photo is that was the way the house looked at the time too when it was sold and it's one of those things too where it's like it's your best representation.
Fritz Schaper:
It's a high quality flow, right? It's public record. Okay.
And also too, you know, I'm with you. And by the way, I just want to make clear this doesn't mean because our order requirements are that you have to take original photos and may be clear. You need to take original photos. That's an investor requirement. Unfortunately, Brian and I are not the investors who drive the market. Uh, so we don't make these rules, but if we did, we would be in agreement on this because not only is it a better representation of what the property was like at the moment it was sold. This is an issue of appraiser safety. I've had conversations with multiple appraisers were there shooting a comp photo and they get pulled over by the police. Okay. And their, their pod, you know, they've got to talk their way out of that arrest or that gets a neighbor chasing after them. Okay. Or right. That happens a lot to pressure. So I'm with you. I'm with, I, I, if it were, if I were able to change something in this, then I would agree. I would say MLS photos would be absolutely accept acceptable for any comp. What do you think of that?
Jared Preisler:
I agree, I agree a hundred percent. I look at the photo that I am driving the house and it's got a brand new roof, the roof having two or three years left and then I get the comment, well why didn't you make an adjustment for me ruth? Well, because it wasn't new or why do you make a negative adjustment? Or there's a brand new fence up around the yard or an rv parking pad or new doors and windows and paint and all that kind of stuff because you're there three months later. And so definitely it's a representative.
Brian Coester:
I mean sometimes six months later, right? Even 60. So yeah, I mean, and, and, and, and, and this sounds like this is a little more granular and practical, but it's one of those things too where it's like, okay, like realistically speaking, if you're doing an appraiser, I mean everyone understands that they have to do the best job they can, but realistically speaking, if you go out, you look at 10 comparables and then all of a sudden you're getting to write up a report and there's one that you miss and you gotta go all the way back out there. Just a second. Another photo that's just not practical. Especially if you're in a rural area, it's just not practical and ends up creating either a, it creates a dilemma. Do I drive 45 minutes an hour to go take the calm photo or you know, I didn't see the first time. Do I not see it the second time? You know what I mean? Because it's just, it's unpractical at some level to drive old.
Jared Preisler:
And from, from a management standpoint, you guys on the management side, the delay that van comes to your client to get the best comparable and you've seen 17 photos of that house on the analyst that the agent took a, they got a little video about it on tour. Um, it's, you know, it's got a youtube or a facebook video as well. And what's really the necessity you're holding up now it's gonna take me an extra 12 hours to get the report back to you or, or 24 hours and I want to give you the best street for. So I don't want to exclude that one or, or not use it. And that's the other option is okay. I turned it in on time. Practically, it's a practical choice. It's a choice. What do I do?
Brian Coester:
Sometimes it doesn't affect, it doesn't affect, it doesn't affect the, it doesn't necessarily affect your credibility by necessarily excluding it. But I always thought like sometimes you would have liked to, you know what I mean? It's just an extra. It's just, you know, here's a, a, you know, ace in the hole. Now that helps solidify the relationship, you know, or solidify the, the.
Fritz Schaper:
I just have to put this out there. Again, disclaimer, and I just have to be clear on this. Again, we're discussing the appraisal process. We're discussing a lot of things here. However, again, I just want, I don't want to have happen because it's going to happen is I'm going to have an appraiser come back to me when they have revision that says you have to get an original calm photo. They're going to come back to me and they're going to send you this link and they're going to say, you said on live on tv that I didn't have to do it. No, let me be clear. It's still part of my scope of work that I want the original calm photos. I am in agreement. We're all in agreement. That's really not the most effective way to do it. However, again, that's the investor requirements. So that is the requirement. So I just need to make clear plan.
Brian Coester:
So jared, so, so, um, let, let's, let's talk a little bit about, um, the, uh, the training process, right? So, so you've, you've trained some appraisers, right? You've, you've, you've, right, you use it and now I guess now the instructor, so you obviously know a lot about this, this process, um, you know, they've recently re are trying to reduce some of the training requirements. We're removing some of the college educational requirements. I'm removing some of the, a licensing or a man because you know, education, you know, and just kind of lightening it up a little bit. Um, do you think it's something that's necessary? I mean, do you think, you know, historically the need for degree, you know, it's like, uh, you know, becoming an appraiser is almost like getting on an MBA at some level, right? Um, and you know, when in all reality, you know, doing a, being trained as an appraiser and not having, being a good competent appraiser has nothing to do with lessons early. Having a degree because, um, you know, you know, be measured in degrees in measuring the intelligence, right? If you pass the test to pass the test. Right.
Jared Preisler:
I've trained both those go back in the day when they didn't have to have a degree. And those that did have a degree that the only part that I think that the degree helps with he is whether there might be a couple of things and somebody might argue differently, but in the writing or putting into onto a paper what you're thinking about the home or the subject property are the comparables in the market. It seems to be that those that have had to do that in a classroom setting a bit challenged, um, you know, Mike, that might come more naturally or easier for them. But, but honestly that in the report writing side is the only thing. But there's certainly those that can write very well that I've never ever gone to college. And to me it's more the more important side. As the experienced site. When I, when I had somebody come and train, the very first thing that I had been to do was look at comparables and help clean the data or verify the data.
They didn't select the comparable. And then the next thing I wanted them to billing the cost approach, the cost approach. They had to figure out what the components of the property, where the value of those individual components and that got them very, very well rooted in a foundation of, of cost versus value and that was just my process and others do it other ways and it wasn't until they had a little bit more experience that I said, okay, let me see which comparables you would use for this home that we just walked or whether we just inspected. And it was always much faster training them that way because they've got that foundation. I think that experience foundation in the industry. I've trained somebody that never had home before. Oh my gosh, that was the longest training ever. Um, you know, they were young, they were excited about the business and the industry, but they had never been to the closing table. And for them to understand why the report was being asked before where it was going to be used later. A very, you know, they couldn't connect that, those, that, that just have experience in real estate I think is much more important than a four year degree or an associate's degree. Or, um, yeah, you can certainly get experience that way, but, but it's better in our industry. I think boots on the ground.
Brian Coester:
Let's talk about, let's talk a little bit about cost approach, sales comparison approach, income approach, right. So fanny, traditionally, historically it's use all three approaches, right? Um, and then over time it's basically been sales comparison approach, right?
Jared Preisler:
Perfect. Well, I use fat still requires you to consider it all approaches and records by all approaches, no matter, no matter what the client wants the advantage and the Fridays, so you still have to go through that, that uh, you know, process a sandwich approaches best is or, or is the appropriate approach and less to incredible result. And is the appraisers responsibility not the client's responsibility to dictate that. I'm, I'm a big fan of the cost approach and in my market though is, is very relevant. If I was on the east coast and homes are two or 300 years old or 250 years old, I don't know, I might think completely different about it, but in my, in my market that I work in a hundred and 20 year old, home is rare.
Brian Coester:
It's funny cause cause um, personal opinion. I think a lot of the crisis could have been avoided if you know, back to that in 2003, four, five, six, seven. Um, if all three approaches were used because it would have, you know, when you're doing all three, right, there's a level of practicality, right? So this house is listed and sold for 500,000. So you've got five comps and soulful funding for out. But then you could build it for 3:15. And from an income approach perspective, just the general market capitalization rate in the area would determine. It's like, let's say it's worth 3:75 or 3:35.
Source: Brian Coester Youtube Channel