Can i industry sign banking maine form now
[Music] welcome back everybody deposit that podcast we have five special guests here today and one of them is my co-host my little son so you will see him at some point you're here I'm crying but anyway he's welcome so I want to welcome Mike and Andy to the show welcome gentlemen thank you thank you you know one of the most important things in business I believe is has always been relationships right and I think people forget how valuable they are and it's also very hard to maintain a relationship through turmoil and a lot of people in business in general usually get a bad rap for the industry economics and also you know the rules and guidelines that put into place and often people are in between other people regarding certain rules that don't make sense and apply so for those of you don't know back from 2009 and 2012 a lot of appraisal guidelines and rules and requirements were changed to make it harder for lenders and real estate professionals to do business so the fact that these gentlemen are sitting here today and I've used them exclusively for over 10 years now is something that I know I'm proud about and I'm also you know very honored to have them not only as business service providers but friends so what do you guys think about when people come in and they you know hire you guys and they automatically say appraisers think appraisers suck you know no one's reliable oh we dealt with you you guys take too long they've never dealt with you before how do you guys handle that a good question number one I think times have definitely changed as you mentioned earlier 2009 to 2012 it was a new age for lenders to use services like our company they were used to picking up a phone talking to an appraiser they had a relationship with that appraiser probably with asti appraiser I have this property 15-under Broad Street you think I can get 200 fifty thousand four yes okay go ahead he can go appraise the property and if he couldn't they pick up the phone and talk to the next appraiser to see if they could get him the value and if they could they would you know go hire that person that's not to cut you off do you think that there was anything wrong with a bank or a lender or somebody calling up an appraiser and saying hey what do you think do you think you can make this value or not in your opinion from your experience do you think it was wrong or do you think people abuse that power why raise a good point I think it was abused I think as a former loan officer myself now on this side of the fence there is that instinct to gather the right information lead a client to a predictable outcome so knowing what sales are out there gauging the property gauging where that might end up and being able to determine a proper loan amount of proper interest rate those are all good intentions where it started to go awry is it kept being pushed and pushed and pushed nothing was ever enough correct so like like Andy was kind of hinting at you were you know people that had incentive for the loan to close commissioned Realtors commissioned loan officers liberals whatever in itself all have incentive to get a deal done and so when they find themselves in a situation where numbers are tight and they need that little bit of extra bump they start making phone calls and applying pressure and driving up numbers where they start to get outside of the realm of reality and you know it puts banks in a bad position because now they're lending money on an asset that's not really worth what they thought inflated price correct and so you get the situation that you have today with a lot of people being upside down banks taking heavy losses when they have to recoup the properties you know if they down means when you owe more than that home is were understood so that that's really where the lines got blurred went into a very dark gray area so the industry as a whole looked at that and said okay we need to separate those commissions incentivize people from being able to apply that level of pressure to an appraiser I feel like the industry kind of set your company up set your position up set your role up to almost a failed oath and here's why I say that right I know me personally part of the reason why I couldn't stand the mortgage business especially in that time frame I still did it I was like torturing myself but is even though we were direct lender we were a bank we deal with secondary market investors right so we would mind their own money but we need to make sure that we're able to sell the loan so we weren't the middleman per se but because banks were having a hard time selling loans in a secondary market underwriters were so afraid to pull the trigger on a gray area deal that they would have to wait for the secondary market investor to get back to them on their feedback almost like an attorney opinion letter so in your guys cases you guys are the middleman between the appraiser who's actually valuing the property and the bank that's hiring you as a client right so how much does that suck truly because at the end of the day if I I know I've I probably talked to Mike just much as I talk to anybody else in the past ten years especially during my career from a reliable standpoint and that's the reason why I always deal with message should be to you you've had you know a great success in a person right was just hard to find as well but he's reliable he'd get back to me and again we had that working relationship where I knew he would never tell me something just to tell me something but I've had instances where appraisers have said Mike we'll have the report to you the appraisal report to you tonight or tomorrow by 8:00 a.m. I then go tell the seller attorney the buyer attorney the bank attorney the listing agent the buyer everyone in their mother the home insurance company hey we're supposed to have the appraisal within 24 hours we're looking to close in three days and then they praise doesn't committed for two days it's a Friday and now the underwriter can't review till Monday now that just screw up the whole system for five days now so how do you guys feel like you're managing that middleman in an age where the no man was essentially getting cut out one of the most important things with any partnership that you have with one another is to under promise and over deliver okay so expectations expectations absolutely okay that the number one thing and when you talk to hey Liam like some of the other guests that'll be on to the Rachel hi girl it's it's important to set everybody up with the right expectations I mean from a standpoint if you're purchasing a home and you're dealing with a realtor and you're dealing with a lender and it should be the lender and the realtor asking the questions up front of the homeowner and also of the buyer what are some things that you see in the home that could be fixed before you go out there so repairs or stuff that may not pass inspection report absolutely because what's the worst thing to do is go out in the freezer you'll deal with the realtor you know you have an unpermitted garage or I have you know here in New York you may have a third unit that's not illegal or no certificate of occupancy correct that's gonna force the appraiser to have to go back out additional time additional money is gonna have to be spent and time is money right and if you can fix all those type of things and understand them upfront even the littlest of repairs with a railing on steps whether it's down to the basement on a porch or things of that nature if you shorten up the time you make everybody happy err for everybody's on board with what those expectations are then you can better understand and better grasp when that reports gonna come in and possibly the range that it should come you know it's funny right and that those are all phenomenal points I think you hit down the head where like when I first started in 2007-2008 it was normal for a bank to take 30 to 90 days to close a deal regardless of the deal type or other stated income no income hard money is different quickly so I was like look I need to close deals in like five to ten days before dodd-frank obviously because the longer it takes the more people get pissed off so if I could beat up and consolidated this process that's why I've always dealt with you guys cuz it was now it was 24/7 let's get this done let's be efficient by getting the appraisal back if you remember the average appraiser was taking two weeks at one point if not more than that to get a report back because everyone had gotten at Bizness everyone had said there's no deal flow so at one point there was a massive shortage of appraisers they're still there still a message shorter still today so 10 11 years ago when I got into starting this business there was a hundred and eighteen thousand or freezers only two thousand per state essentially given in some states like Maine you have a hundred and sixty-seven for the whole state for the whole state right okay and even some of those people while they're [Laughter] okay but the point is that you know one hundred one hundred and eighteen hundred twenty thousand people decade ago is now down under a hundred thousand the average loss the average age of an appraiser disease is approaching 60 years okay any young guys really good entry and they're slow and technology took over so now they're having a probably learning curve that that happened as well there's a lot more sophistication in the automation of the appraisal process I remember when I first started before I started this business the back in 2002 you used to write an appraisal report with pencil and paper and take Polaroids and stick it on there stick it on the actual report and actually mail it was before the iPhone to the law but you know things have changed and and again you know people that are in their 50s and 60s like myself we're not the most technical of people may I'm 32 and I struggle at times with certain technology short so with you know more forms coming in and you know the analytical piece which I'm sure one of the other gentlemen will talk about later in the podcast it's made it harder for people to stay in the industry from the appraised standpoint so now you get into areas where there aren't that many appraisers and you've reduced that population of appraisers and now starts to drag out the appraisal process once again I will have you know three four years ago if the police is like Colorado and Washington and Oregon it wasn't uncommon to take a month to get an appraisal done is that at that point is that due to again not having enough people with service or is it due to data not being as easily accessible in that area 10,000 orders 1,000 guys servicing people to get them to take a premie might be a little bit tougher that window we need to bring in flavor fresh blood to keep that common and you look at where population in the country is shifting and things of that nature sure you know we we had a person that we used to deal with quite a bit in the Philadelphia area that person went out to Denver because he saw the opportunity there I'm able to make additional money because you know was more of a premium but population is growing greatly out there and it's non-stop business for him so at what points I know you told me recently you scaled your company you bought a couple other companies you're looking to acquire more I'm assuming just at what point did you feel like you're such a good grasp on the business in general where you felt comfortable not only deploying more capital doubling tripling quadrupling down because of all the changing guidelines and regulations obviously so at what point did you feel like it was a safe move to say you know what we've hit our capacity now it's time to go out and you know go vertical I think the most important thing is building a foundation for your company and getting to a place where you believe that you have a customer base that feels as though they can come to anybody within your organism you mentioned earlier Rachel and that you deal with Mike that you dealt with for over a decade you feel comfortable going to them with any type of issue and then being able to handle that for you okay have you maintained that loyalty though because they listen like anything else you know people like to poach steel recruit if you will how do you personally as an owner of a company maintain loyalty where your core people have been there and they're loyal to you and they have your back because I believe they truly have your back I believe that you treat themselves like you would want to be treated we empower them to be able to make decisions we give them the opportunity from from the standpoint Mika's on this on a sales side okay he can go anywhere whenever in this country to go find business okay he knows that he has a team behind him that he's developed internally and then on top of that he has the company team behind those people as a last line of defense so speaking if need be to utilize those people to help in any way shape or form and I think when you empower people to be able to do what they want not have to micromanage people let them come in do what they want to do listen there's people in my company that happy doing what they want to do every single day okay and you need people like that they're gonna come in every day you can trust what they're gonna be able to do you know that when they pick up the phone and talk to a client they're gonna talk to them in the right way they're gonna be able to help them and whatever facet that they can okay and they should be able to answer any question and somebody has and then there's gonna be those people that want to grow and look to develop themselves into different roles within the company and as an owner in the company you want to be able to allow those people to continue to grow give them opportunities and hopefully every blame the company's shooting to be in my position one day or another to go back to your question about you know why why invest and and go and look for different things we put ourselves in the marketplace in different parts of the country though that we are very strong in and that's it that's in the mid-atlantic that's in the Northeast that's in Florida okay and and in California and we have five offices now in the country Irvine California Overland Park Kansas Chaska Minnesota our corporate offices and gibbsboro North New Jersey and then we have office in Greensboro North Carolina during the course of the last year as you mentioned I went out three other businesses we try to diversify ourselves into different geographical areas and to expand our customer base into different types of customers that we service and that has allowed us to continue to grow our business and you know in less than a year's time we would have doubled what we do from a production standpoint but also diversify ourselves and the products that we're offering for our clients and our expertise geographically around the country a Florida used to be our number one state in terms of doing business approximately twenty one twenty two thousand appraisals that we would do in Europe a number and and now the number one state that we service is Minnesota and we'll probably end up doing about twenty four thousand transactions there this year interest so again trying to look at how we can better offer our clients like yourself on TV timeout alright so we're back for that crying interruption so have a bottle so back to scaling the company you feel like you had the core people you expanded you picked your state's you obviously stuck to what you know now biggest concern in the industry in general real estate is typically is technology going to replace people do you believe that technology is going to replace a lot of your staff at some point yeah why is that so before I got into this industry I was in banking but on the operational side actually ran one of the Lord just check processing sites in the country oh wow okay bigger than a Federal Reserve Wow and I still remember one of the first days I was at the bank and one of the people who was training me said to me this check processing that we're doing now it's gonna go away in a few years it could be replaced by image processing and during my days in ba
king yes I was involved in image processing there's more checks now than 35 years later Wow then there was when I started more people more people but there and look image image processing took you know some of the things you can go sit there and deposit Moberly on you on your phone posit that the posit that exactly okay and and there's gonna be automation that's gonna help facility the overall appraisal process and things of that nature and there's some type of alternative valuation products that are now coming into the realm of possibilities that people can utilize to help you know and getting their loans done then things of that nature and it'll probably take some time for that to be adapted throughout the course of mainstream America in terms of mortgage processing and things of that nature but we were just talking yesterday some of the leaders within our organization about what we want to do in terms of being able to bring deliverables to the process to make it better from an automated process and that is you know wouldn't it be great to have a mobile app that's set up with all of our freezers across the country checked that knows that hey Jeff you're you're sitting in Manhattan right now on Broadway and I got a person that needs to have their home appraised right now you want to take care of that right now you're super for appraisals yeah I'd be interesting to bring that to the market now what hurdles do you have as far as compliance go moving forward do you believe do you think the compliance days are essentially behind those or stagnant at this point I know compliance is the number one thing in the appraisal industry nightmare keeps growing and and that's allowed us to have the opportunity to be able to look at other organizations we've kind of brought into the you know our organization so to speak from the standpoint of acquisition and that is the more compliance that's out there the more states are enacting various laws and things of that nature the the more cost that you have to put into it to back federally you know transactions in terms of that nature it just pushes the little guys out of out of business they just can't they can't compete because all they're doing all day is compliance tour not they're not doing anything to help develop the next level of automation as you mentioned that's mortgage banking is today so you know from from that standpoint you know compliance is the number one thing and you know we take that very seriously and our organization actually is and was the first organization in the entire entire country to be licensed the back in 2009 New Mexico was the first of the 50 states to pass a MC legislation in widow relations number zero zero one Wow and in fact August 9th was the deadline for all the states to here we are ten years later and there were still three states that came right up to the line as well as the District of Columbia was New Jersey Massachusetts and the District of Columbia that came right down to the last week in order to pass legislation to get that approved so we don't know who was the first to be enacted in all 50 states licensed but I can tell you our company was one of eight that was licensed by August ninth in all 50 states and the District of Columbia and again every day another states passing another law in terms of what they require in regards to complying and just hanging out and things of that nature and and it's just gonna get more and more and more and do see yourself being positioned to in a downturn acquire more valuable companies if you will or companies in different markets that you see an opportunity in absolutely and it doesn't have to just be from the appraisal standpoint and our last acquisition company that's based out in North Carroll Carolina while they do dual appraisal work and they are an AMC their primary clients for title companies that were looking for them to provide surveys that they couldn't get through their normal title means Wow so to be able to you know dive into that they do a lot of commercial where prior to this we were only probably 5% commercial business across the country allows us to take on different opportunities and again with that you draw in more customers that maybe when they've dealt with previously so Mike based on your experience do you think somebody I people that you know I usually ask you the questions people ask me questions that I ask you a Rachel on a group text right you guys always get back to you right away it's awesome you guys are more than helpful even like the favor side obviously should somebody who inherits a property or should somebody who is thinking about song a property get a private appraisal before speaking to a realtor in your opinion or is it almost like why do that I see that very often you know I have a neighbor of my good friend older gentleman he's selling his home moving to to Texas and you know he had spoken with a realtor who told them you know house is worth 460 and for a minute he believed that but he reached out and I'm like that sounds low let me get back to you and I pulled some those resources went through everything put together a little three-page report for them turns out you can sell the house tomorrow for 525 as motivations maybe the realtor wanted to bide himself or maybe you can do an investor or whatever but a lot of people that don't have a friend like me or a friend like you that's in the industry that news let's trust the real do you know getting an appraisal is that they have no outside incentive to give you anything but the truth now people often makes up the definition of an appraisal all right so it's like this house worth six seventy well it's not because an appraisal is defined to my knowledge as an opinion of value so when somebody comes to you and says hey you under praised this or hey you over appraise this what's usually your rebuttal other than providing you know supporting documentation how do you get between that gray area of hey I think it's worth 550 hey I think it's worth 570 well I think the person coming back to you is probably going to come back to you saying they under appraised your house versus and and that's what we always say okay you believe you know the house came in at 550 you think it's worth 575 or 580 well why you know show me the evidence that supports that finding because people think oh how sold in my development for this my house has to be worth that okay I live in a development that has twenty nine homes okay some of those homes back up to water some back up to an apartment complex outside of that right okay the two houses as you enter into the development or on a double yellow line street okay they all have so there's a valuation differences between what your house backs up against whether there are trees your average person listening probably doesn't know that oh absolutely they don't so there are a value conflicts if you will and unless you live in a town home community where pretty much every home is the same and even in that case you know if you're in the middle of a cluster or four homes okay if you're in the middle versus the guy that's on the exterior you know you know there's a difference there could be two $3,000 there's people people think that well if my neighbor sold for 600 the night I should be 6 1 or 605 right right so and and Realtors think that way as well okay and I just had one this past week where person I believe they were looking for a sales price of 590 the home came in at 550 and they wanted to know why they couldn't get 590 and and the first sale that the appraiser used was the exact same home in terms of square footage that in Bath County was actually on that on the same street okay that home sold for 570 one thing wide and and yes they backed up the water and these people didn't back up the water they the subject had an enclosed patio but the sale that was utilized that was higher had a a patio was three times the size and obviously looking out on the water versus looking at somebody else's house behind them plays a big part of it and then another sale sold for 585 so they argued well my house is just like that house and I said no your house isn't just like that house because if you look at your kitchen and you look at your bathroom they're 30 years old you can see from the tiling you can see from the cabinetry and things of that nature and you go look at these you know this particular home online is granite countertops in the bathrooms you know marble tile in the bathroom substantial upgrades you're not gonna get dollar for dollar on what you paid for it but you have to say that the house is sold for five hundred and eighty five thousand and it's the same square footage and it's in the same development and it backs up to the same thing has to be worth more if it's not built in condition when you know you think I'm 30 years ago right so there was the argument right there and then you know they went back to their real estate agent the real estate agent came back with a couple of what you know they thought were comparable sales and like the problem is they're not sales they're listings okay but you just had two million right that's my house for ten mil it doesn't mean that someone's gonna buy some way so until somebody buys that that'll be the next driving factor that's the most recent sale in the development now you can go back out you can reappraise the house because when you appraise the house for the first time it's the effective date it's those sales that were available at the time I inspected your house develops your value so let manage this question and we're not obviously and at this point in the market I think it's important to touch on since we just went through the past five or seven years of this people front-running value so hey I bought this house there's condo today in Williamsburg Brooklyn for five hundred thousand now there's another one for 525 550 575 how do people typically purchase properties right where supply and demand comes in and people are buying properties higher than the current valuation and they're basically paying over ask we're getting into bidding boards well how do you guys handle that when you know for a fact someone's overpaying for the property and the appraised value doesn't come in I think we've seen a lot of markets not so much necessarily today but years ago yeah as things expand in the economy some markets appreciate it quickly I remember Vegas got really because a house might be worth what they're buying it for but backing it up with the cells to your point it becomes the challenge so that house now what's going in for 525 there's this rapid appreciation in the area a lot of times the buyers have to come to the table with that cash you know appraisers can use time adjustments to some degree but not a week but the problem is that the lenders now their hands are tied about a while ago that loan is only as good it might make sense but it's not gonna work on paper and continue to push the market that's not the case at the moment and so now become speculation as to okay well there is this rapid appreciation how do I pack it off interesting so I know you two gentlemen brought two other gentlemen here today you want to give a little intro of who they are what their experience is and what we can expect from them as far as information goes sure so joining us shortly will be Hayley Freeman Hayley is our chief valuation officer was that until you know he knows Hayley is a certified appraiser out of California and been in the industry for 40 years 40 40 he looks like he's 42 he'll that we started CBD also with us today is Mike Moore Mike is our Director of Sales and Marketing for a nationwide property and appraisal services Mike comes to us from Nashville Tennessee Mike's been in the in the industry for two decades now he's kind of running the pilot programs for us right now in terms of alternative valuation and we talked earlier today about you know what are gonna be some of the changes and how we look to you know conquer those going forward automation and technology yes okay and you know trying to shorten the time period it takes to appraise a house from when we get the order to when it's delivered to the lender and you know there's some things that are out there today that we are doing for some of our lenders to do that and you know it's probably going to be the way of the future whether it's you know next year or ten years from now you know just like imaging was in terms of check processing it's gonna be a form of valuation how well it's received in the in the industry and how its you know backed by the states there's always there's already some pushback by some states in the country that they don't believe that that's probably 75 years old I don't understand that so but I like you know might talk about that specifically when he joins us so you guys looking to take on new clients as well as far as mortgage companies banks and everything you guys are actively searching civilly well yeah absolutely I mean we've in the past year I've gone from performing a hundred thousand appraisals a year to now we're on pace to do about two hundred and twenty 5,000 appraisal so she's got chills it's big jump oh it's a huge job okay Mike still maintaining his hair though what's the secret miss then double the business usually means like double hair loss but how I mean there's always people that we can help and new clients you know we'd love to be able to assist and what their needs are no matter you know how small or how large they are again it's it's when your company this size okay it's more about developing the relationships and the partnerships with people than it is about always you know X amount of orders to stay in business and things of that nature where you know we've always developed and grown our business in developing the relationships and partnerships with people that we come in you know touch with and you know Jeff you're a part of that as you mentioned we've we have been partners in this for over a decade now it's crazy to think about and think about it how I know is you know we've we've developed a great friendship over the course I didn't start off to how I have to remember right there sometimes that Mike had thrown the referee shirt and I'm like listen you better keep him out of North Jersey because if he comes up here he's not gonna get out he's a woman in the Hudson River and you're probably like if he comes out to Philly then we're gonna take him into the real Philly and he's never gonna come back to Jersey so so I guess that's just me because Haley will talk about it as well Haley used to be a before Haley was a part of our family I used to work with Haley had a couple different lenders that he was at and you know just like when we first touched base it wasn't the smoothest thing you know from from when we first got started obviously you had a relationship with Mike and you know Haley had a relationship with other people within our organization and we didn't hit it off too well at the beginning and you know you know we here we are six seven years later friends and we actually you know I actually just met you remember oh no I know nine years of emailing here you know again emotion flying high I always say look you can't please everyone okay I'd love to please everybody but but you can't okay this is this is a human business okay and there's people that are gonna interact very well whether it's via email whether it's over the phone whether it's face-to-face on you know FaceTime or what have you and you know here we are a decade knowing you doing business with each other and we just know I just met you a month ago there's something to say about that so I think people I think real business people are always able after the dust settle settles to put the crap emotions aside shake hands like gentlemen if both people are aligned and where they're looking to go right like I never didn't like you as a person we just had conflicts over me wanting speed you probably dealing with thousands of other frustrated individuals and emotions got hot but we never took it to that point where there was a point in no return obviously Mike was instrumental in keeping us married if you will but it's not something to be smoking abou
your service and our loyalty and again that's that's part of having a family that you know right now extends over a hundred people within my organization there's people that are gonna get along with one another like that and then there's people that look no matter what I say it doesn't matter well I gotta find the right person to deal with each person that we have a relationship with that they have a go-to person within our organization that they trust and love okay it's about you as though they're the best thing since sliced bread okay and that's that's part of my role is to find that person in my organization to help you along with whatever struggles you may have both for yourself and for your clients yeah I think one of the main reasons we've been so successful over the past ten years is being able to you know everybody's great when everything is going great it's when there's a problem and emotions get hot and situations get complex you know we've been very good at being proactive about that sometimes we win sometimes we lose at the very least we've thrown all our cards on the table can you care you correct and so things get hairy it's the guys that could step up and fix the problems so because today we obviously have two sets of guests on one show which is awesome we usually leave the listeners with one thing to deposit deposit that really means what's your number-one advice for today for a listener it's a deposit through their brain they either implement psychologically or directly implement into your business I think you just gave one right like you know when tough times come you have to deliver an executor hunker down and not disappear so Andy but what would your number one piece of advice to deposit today into someone's brain is from a business standpoint or a personal standpoint well I'll kind of talk on two things if you don't mind one about your house know your house inside and out okay know what the situations are that if you were to go sell your house today what would need to be repaired okay because you want to take care of those type of things before you go and list the property okay it might cause you to invest five thousand dollars to fix some things up that if you didn't when you go and have your home valued you'd probably lose twenty five thousand dollars so it's worth that investment to do those little things the littlest things as possible okay remember you're not getting dollar for dollar back so they're not like you know go build a pool in your backyard for fifteen thousand and you're gonna get that one when it backs up against water so sell the property yeah the the important thing I think in in business okay is being able to and trust the people that you work with okay is that trusting them blindly or making them earn that trust I I think you have to allow people to bring what they can to the table okay and you have to be open to the fact that you don't know everything I always thought I knew everything until 30 till 30 but I you know again there's a reason why I have 100 plus people in my organization okay that is because I can't do everything no matter how much I would want to do everything I can't do everything and as I mentioned earlier there there's people that I may not hit it off with the first time I meet them for the first time I interact with them and I have to be smart enough to be able to be able to move that person to someone in my organization that's gonna want to make them feel like I can come here time and time again I'm gonna be treated like a human being I'm gonna be respected as an individual and when I have a situation you're gonna listen to what I have to say and you're going to find a way to solve my problem okay as Mike mentioned we're gonna do everything in our power to get a deal done for you okay and if we have to go out and get some supporting information that costs us money to do to back up maybe what an appraiser has already developed for you in terms of evaluation we're gonna do that we're gonna go out we're gonna look at other people's opinions and ask of them what they may see she's guard and we'll go the extra yard and we're not gonna go and say hey Jeff hey I need a hundred dollars to go do that because that's not what it's about it okay it's about being part of the family being part of the relationship and I would want to do that for anybody in life family to the point where hey look we've tried every possible option for you okay and thrown resources at it and look sometimes you don't win and you got to accept that you got lost after that hey I've done everything humanly possible to help you get to the finish line and I think knowing that confidently in a service provider is invaluable I could tell you that of the thousand plus deals that I've closed probably 20% of my deals we have to work closely on call in favors for either speed getting it done quicker where our clients had to pay expedited fees or hey look Bank of America under appraisers property in my opinion by thirty forty thousand dollars here's the deal here's the contract you know look I believe this appraisals not right and you guys actually went to bat and we brought the deal in enclosed so I can't thank you guys enough for not only making my career more successful but really guys haven't you guys be my my backstop and I think any loan officer or mortgage bank listening to this you know if you don't have a good appraisal management company and you have a relationship with them get one you know reach out to these guys and really you know form a relationship because at end of the day you know some that you've known for ten years and my pain is gonna go to bat for you more often more likely than somebody you just met off the street that's tell you how great they are so I truly appreciate you guys friendship business-wise service provider wise and look forward to another you know 10 20 years or doing more business thank you now we're gonna TV timeout and we'll have the two smarter gentlemen that are looking smarter to come over and talk so welcome back for a half time we had to get my son an empty bottle to pretend like he's drinking but thank you guys for coming out and though you came from California and Tennessee so we appreciate you guys having out here in the Big Apple so start off by telling us really what you see as far as people making the biggest mistakes whether it's a consumer homeowner or a realtor when you know giving you an estimated valuation of the property well interestingly enough most home owners think their houses are worth more than they tend to be so realtor's when they go out and try in Christ the house will lots of times have to base it on the realtor's I based on the borrower's opinion of value the problem is is you guys talked about a little bit earlier is you have to have sales in the market that will support that so when bars typically think their houses are worth let's say a hundred thousand dollars an average home is selling an 80 we have a pool the pools not worth much unfortunately you lose that value gain and you end up at eighty two thousand dollars or something close to that if there's no sale in the neighborhood to support that we have a problem secondary market scores all appraisals from a technical standpoint so when when it's uploaded and delivered to the lender or when the lender uploads it to Fanning it gets risk score when the risk score is higher than two point five the lender is required to do diligence reviews on these lots of times that indicates the value is not supported by the data that the agencies have stripped off appraisals over several years so there's multiple multiple issues when your house is personally so back to what you're saying as far as consumers knowing the market how do you make that more of an education to a consumer because your average consumer is always gonna want more it's human nature for anything compared to what reality is what's been your experience improving that hate Zillow red fin red fins actually not bad what don't get stuck in the value they give you because it's if you say one more time as I wrote a book all the motors play with four Millennials I have a whole chapter dedicated to Zillow it literally says Scylla right and I made sure it's tank top said Zillow now I also bought those thought the first day it became available on the stock exchanges I thought based on their original business plan it would really help the industry but it just proved to not help the industry it actually hurt business and transactions and there was none for a long time we don't know how they we don't know they're algorithm to support this an appraisal has to be based on factual data in a certain time frame as well right within a certain time for example the house in 1980 it's worth you know it's irrelevant right yeah and even then information so being in the business forty years I mean you kind of rewrote the rules again I'm assuming you started off when you were writing the rules the first time so how have you adjusted to the game changing it's almost like what was passed interference is no longer passed interference and then there's a new rule that comes in that you came touch the quarterback so how do you personally adapt that it's all about change are you comfortable with change any part of this industry because it's evolving constantly when I started out in his example appraisals were done on a three by five card there was no license there was no exhibits like a 3x5 index card like an index cut into fours and write down whatever you're looking down personally was pretty basic Wow then regulations really didn't come into play until 1992 well in the early than late eighties early nineties after the collapse in 88 I think that was right yeah and so that's when licensing first came in I remember when Fanny came out with the firm first appraisal form 1004 they're now on their they're working on their third version but the second version is a current version we all see as Andy said earlier we then we went to pull arrange photos they're black white in color stapled onto the report 33 millimeters involved we ran out to the appraisal drop off the film at the one-hour photo Matt come back take them on and mail the reason when there tell him did it take to do appraisals back then some ways was faster some ways it was so less Big Brother but less technology a lot less yeah we would have to get our comp data individually it would be a lot more expensive from different sources now of course we all belong to MLS yeah we use the same information realtor's use which is the weight should everyone's had access to everything well because is that because most the time there were real no losses incurred by the lender so look I look at it as no one cares about anything until someone loses money or gets hurt right so because the market really was you know shaking stagnant lis going up pulsating steak and stagnant keep going up and rates wrong from 18 to 15 to 14 to 12 to 9 to 8 in a day right those swings are so massive that people really did weren't holding the loans long enough in my opinion in order to have losses 6 7 8 9 years down the road until we experienced those losses and now people are like appraisers fault right like Mike said earlier interesting so how do you gentlemen work together frequently when they have valuation questions to come from their clients really kind of changing the game with our alternate evaluation products industry there so what it really boils down to is like yes there's data everywhere everybody wants to use this data but there's also efficiencies that we're seeing kind of like what he was talking about with having the right people in the right place so what people are seeing is that appraisers are best at appraising properties giving their opinion about you do you necessarily need them out there inspecting and measuring a house no not really somebody else can take those pictures somebody else can measure the property they can do those things so you put the appraiser at their desk working on the valuation primarily and having a runner going hey 8x8 yeah whatever there's no more trainees for sure so with the alternate evaluation space there's a market now to where you can use a licensed inspector or an insurance inspector or some case a real estate agent someone to go out and do that inspection things up very quickly sounds like integrity of data though obviously yeah yeah if the appraisers is he actually doing the work or what's signing off on it what's the act of the well I mean remember from to make the correlation into banking where I know only known since I was 20 in 2007 is the old story was hey the underwriter was just told by the bank mortgage bank CEO present sign off on this loan don't look at it and then when you know all the indemnification came back but you remember from FHA and HUD and everybody it was down the writer was like well he just told me assign it but then but wait so you're admitting you signed it and didn't look at it you know but then that puts the person in the desperation position of if I don't do this I might not have a job if I do do this the owners responsible not me but people forgot that like their name was on the document right so I'm sure since you've been around 40 years you've been offered bribes I've been I'm sure your guys have been offered bribes I'm sure many people have called up and said hey I need this valuation baby at night but listen that's unfortunately the desperation of the nature of the industries were reciprocally in how do you prevent the desperation from controlling the outcome because I know appraisers per my first story don't 7:08 they're like look I'll get you every value needs I need to work I need the work I need to work and I'm like no you know like I only have a couple deals and you're not getting them and if you lead with that you're only going to deal with you so how do you prevent that there's different ways like I said earlier the agencies run their appraisals through a yeah system system they'd also score them we review all of our appraisals to make sure that at least the value of this concluded is supported by the data right and for QC purposes based on our clients needs so we have multiple ways to to look in reports sometimes it comes back from the lander if it's not obvious situation and sometimes it's caught later unfortunately because some people do scrupulous things that you just don't find out till later in the loan process but our job we review every report for quality and consistency to meet the lander requirements so a lot of people when you wake up to Tuesday's ago we know it's interesting so I feel like from a scalability standpoint people can really get in the industry right now because there's an opening as far as the age gap goes right so what is your guys proactive approach to bringing in younger trainees right to really get them to understand the business and scale the younger generations and you could be that mentor somebody earlier as well that the the bar has been consistently raised as far as the education requirements to get in there sure number of hours of experience you need to get into there it's I which I agree with to to be a certified appraiser you basically have to put in the same amount of time as it would be to be a lawyer to get a JD years bachelor's degree three years pretty and it tickets are much smaller on the appraiser side then it is a more work then they made it hard but they've eased it up some dish last year for but still it's a work in progress like everything they pass the law and when things aren't working the way they want they kind of go extreme which they did with educational requirements a few years ago now they're kind of backing off a little bit other barrier is it used to be any certified appraiser could hire three four five trainees they changed the rules to where you can only have two and they have to be basically registered under you so you're responsible for them you are anyway anytime you sign as a certified appraiser on the training you're responsible for everything in the report however this takes an extra so yeah all right so what are you doing in the event where I'm even example like North Jersey right now all right people are like hous
is worth 2.9 million and you wind up selling it for 1.8 million let's just say right now the house next door they're like look the house was a fire sale at 1.8 like people just went through a divorce they wanted to get out right it's really worth to to or it's really worth to for you know for a fact it was on there sold how do you as an appraiser look at that and justify bringing a deal in 15 to 20 percent higher based on the current comp that supports 1/8 how do you do that one comp does make a mortgage but however if there's two or three other houses in that price range that's the market so that's what we have you definitely do bracket it and you definitely give your professional opinion look there's no way this 1/8 was realistic as clearly bullet markets although Markham arm's length yeah five sales at a higher amount right at a low amount they've all sold within six months how much weight you put on I know I'm a local guy meaning like I believe real estate and landing is local right now look anyone can my trend the rule exception to the rule we're like yeah you get a mortgage you get a mortgage you qualify you don't but I had one person to call me up one time I think it was a Bank of America loan officer a knucklehead in like 2011 I'm on up saving a million dollar deal in Harlem the lady from Bank of America was in like Minnesota her appraiser was from like Canada you know I'm from America you know she said to me there's no way there's a property in Harlem New York worth a million dollars ago well clearly you haven't been the Harlem in the past thirty years because the hears of comp for two million dollars how much weeds you put on a local expert appraiser or evaluation Asst they should be local should be with local market has they have to know the markets and if they don't they have to get the competency to do it before they accept the assignment so they also have we we assigned the closest appraiser we can basically quality in distance to close deals yeah just broadcast orders out that's you bytes first and start to see like you can do so much rather than taking on deals somewhere far away yeah so for that reason I think initially you're seeing probably more of that where people are appraising properties from further away new products for us where do you see the biggest hurdle right now in today's current economic environment from an appraisal standpoint you do still well it was worth two weeks ago sure it's because they were burned so bad or it was a knee-jerk reaction from ten years ago that they still can't understand that I mean I respect it because at the end of the day you have to protect the lender land there has the most to lose they're landing the largest piece of the transaction right so I get all that but there's also common sense where you know obviously common sense doesn't apply to our industry by any means right if it did you know we wouldn't be on the podcast educating people today I would have much more hair by 32 um I probably have two more kids that wouldn't be so stressed out for the past eight years but if you have a vision if you have a foresight of what's going on in a market you strictly apply the rules of supply and demand there's no way somebody can't tell me that this house sold for five hundred thousand today and there's only one other house on the market they shouldn't be entitled to a higher price and you can use eBay as an example eBay supplying the man the more rare of an item you sell the more the price could potentially go up so at what point does the market say we understand supply and demand we know based on today's market trends data inflation census that this house is actually worth it's going to set the record sale and we're going to be able to support that evaluation booming [Laughter] us to take all those factors into consideration supply and demand or is it going through a trend of increasing values you know it can be the opposite one thing you have to keep in mind is cost doesn't always equal that ever ever it's so that's and we have emotional parties who have no knowledge knows that they want X amount of dollars what's our loss potential loss yeah what can I get a second person to share for this property sure especially max FHA financing you know I think today once you move it's like a car like you're ready automatically I lost once you hire a realtor you point three and a half percent down but you're a realtor for five percent you died tomorrow you're negative 1.5 off the top so you know what always intrigued me about appraisals in general and I really got into commercial lending in investment lending advisory residential does not speak to commercial at all right I've had I'll give you an example there's a three there's a three family property compare apples to apples right a three family Oh based on comps this house is worth five hundred and fifty thousand well based on my cash flows were 340 what what do you mean I'm like well we analyzed cash flow on investment commercial appraisals and we analyzed most recent sales not factoring in rent to any capacity to a obviously evaluation standpoint do you think there will ever be a hybrid that's kind of the norm to the market I know you have a sales approach in the cost approach and all that income approach but at what point do residential lenders smarten up and say this price is overinflated because if we sell this house an investor may buy it and they'll only pay X price for it and you know because right now the agencies they have no idea yeah no idea on the brain legacy 1982 but yeah so they really don't care about the exit think they know but I look at as you know look I always say Residential's emotional commercial investments business black-and-white verse tons of gray or red if he Wilkes do you people see revenue get emotional do you think it'd be on the rather than just I mean I for a fact if I've done six or seven hundred FHA deals my career a multi families alone in New York City northern New Jersey marketplace maybe one or two past my cash flow analysis and that's scary to me that's scary especially in an environment where rates are locked in for a thirty-year period under five percent because you know I always look at it as well on a commercial mortgage but what if rates adjust and now your rate goes up five points or whatever the case might be if these people ever have to refinance or if someone has to then go and sell two three four or five years down the road they might sell for five hundred thousand dollars more but that new buyer is taking on what could be a potentially negative cash flow crazy so you don't really want to blend those two I don't think yeah business they hold the property and hire the lawyers practice don't do the same commercial appraisers do and that would just take from an economic standpoint it makes sense to protect the market yeah so in your 40 years of experience what's been is the two toughest times for you in the appraisal world definitely and what caused that you think the time I was commercial appraiser oh so you really got so yeah during the all the commercial banks closed down after that was being in the game for two years what's kept you in the game and where do you see the market heading from here based on your experience in the head you like tort you're torturing yourself and everything else yeah how much more pain can I endure and not jump off the bridge crazy right but but I love what I do now and because I do a little I do oversight I deal with reviewers I do with the praisers in the field they deal with lenders to evolving yeah I get to put all my experiences together and discuss it with CVO as first time I've ever heard that title she valuation officer [Laughter] interesting so as you heard earlier we leave the listeners with one thing to deposit into their brain and implement and you know people really like that because the main goal don't listen to the hour she'll walk away with 50 things no one's the implement 50 things in both your gentleman's opinion what's one thing you would leave somebody with after hearing you guys speak or based on your experience in the business each so you go first whoever each other's customers we need to work together because at the end of the day you might do you know we might do 20,000 transactions in a month every one of those is a borrower who cares about a home trying to get financed they're trying to purchase whatever the case may be and we need to put ourselves in their shoes every single time because it's not just a transaction it was treated like a client rather than a number right my advice move to California or at least don't move to Southern anyway if the appraisal doesn't come in it's not end-all there are remedies we can work we can work or the lender can work through to help out and potentially remedy that situation but the real point I want to make is when that appraisal comes in and you get it don't call the appraiser the realtor shouldn't call the appraiser this celery or the buyers should call the appraiser they should contact the lender they're working with and the appraiser management company who will then content we will go to bat with you any way we can to provide the most reliable report available the most so if I follow the hierarchy if you go rattle them in place don't call the appraiser because that there's first of appraisal independence rules that may come into play and the appraiser is gonna be less open-minded if we go through the normal process right you're pushing somebody opposed they don't go massaging it through well I really appreciate your gentlemen's knowledge wisdom we'll get all you guys information and whatnot and you know look at her breasts said earlier you know nationwide has been nothing but excellent to me for you know my entire career and you know now I can say I'm on the hard money investment side I look forward to continue that relationship hopefully continuing our dialogue how we can make the appraisal process more consumer friendly more service provider educational if you will and look forward to growing with you guys so thanks for coming I appreciate it [Music]
