Q/A with William Fall of Valuation Partners
(MBA NewsLink recently posed questions to William Fall, CEO of Valuation Partners, Sugar Land, Texas. Fall is founder and CEO of William Fall Group and its AMC subsidiary, Valuation Partners. A General Certified Appraiser credentialed in five states, Fall has taught real estate valuation courses at the university level and has served as a supervisory appraiser for numerous apprentice/trainees. He can be reached at wfall@valuationpartners.com. The company’s website is https://valuationpartners.com/.)
MBA NEWSLINK: Why does the human element remain so important in the inexact science that is the valuation process?
WILLIAM FALL, VALUATION PARTNERS: Nothing can replace the powers of human observation. Certainly technology has come a long way and is of critical importance to real estate valuations, but technology can only do so much. There are thousands of factors that go into determining a property’s value, and every property is unique.
Whether it’s interpreting the data related to an assignment, viewing the subject property, or understanding the complexities of a neighborhood, human expertise plays a critical role. No algorithm can come close to analyzing the broad range of influences that drive real estate values at the local level.
NEWSLINK: What steps does Valuation Partners take to help keep the appraiser’s work relatively independent of the mortgage loan originator?
FALL: There is no perfect system that ensures complete independence of the appraiser. However, we have created guidelines that support Dodd-Frank appraiser independence requirements, and we have carefully built firewalls that coordinate the proper exchange of information between each party to the transaction. In addition, our client services teams work closely and proactively with our clients to preserve sound communication protocols.
To ensure each appraiser’s work remains independent, Valuation Partners provide a Certificate of Appraiser Independence with each appraisal report. The AIR assures all parties of the objectivity of the appraiser, and it states that the appraisal report was created without any influence on the value or misrepresentation of the property, comparable sales, or general market conditions.
While we have strong relationships with appraisers nationwide, as a matter of policy, we do not in any way try to get involved with their value conclusions, and we never ask appraisers to provide an opinion of value before the actual report is completed. I might add that Valuation Partners is not affiliated with any bank or mortgage company and we do not accept orders from lenders that request a specific appraiser, either.
NEWSLINK: How have compliance issues made your company’s role as a third party more important to the valuation process?
FALL: State and federal oversight of the mortgage industry continues to increase, which is why more lenders are coming to us for help. While third party compliance is ultimately a lender’s responsibility, our strong industry experience brings high confidence in understanding and executing compliant activities on a daily basis.
Every appraiser that works with us undergoes a thorough qualifying process, and we conduct ongoing oversight, too. In other words, with every appraisal order, we revalidate the appraiser’s license status, certifications and E&O insurance coverage, just to give clients that extra peace of mind.
As a trusted third-party vendor, it is essential for us to understand and constantly correlate the wide range of regulations and new rules with the appraisal process. This level of commitment provides our clients with a high level of compliance confidence.
NEWSLINK: Some markets have a glut of appraisers; others don’t have enough. What factors help create an appropriate balance in a particular market?
FALL: The easy answer is supply and demand. In healthy markets, there is a balance between the two. But the industry needs to look deeper into this issue. With the average appraiser now in his or her late 50s, the housing industry is facing a real loss of expertise through attrition. This trend is already hitting home in markets like Colorado and Oregon, where appraisal turn times can run several weeks long.
In many markets, there may seem to be a balance in the workforce. But it is important to think long term. Considering the possibility that 24 million new households will be created in in the next 10 years, I believe our industry could be facing a real challenge.
NEWSLINK: What is the industry doing–and what can it do better–to attract younger professionals, such as Millennials, into the ranks of appraisers?
FALL: Unfortunately, not much is being done to attract young professionals to the profession. Worse, the current barriers to entry are a real discouragement to individuals who are interested in an appraisal career. Right now, appraiser candidates must complete an extraordinary number of hours under the supervision of a certified appraiser, who often has little time or motivation to train someone who may eventually become his or her competition.
In my opinion, the best, most sustainable solution is to create an optional career path in which the requirements are based more on competency, not necessarily the length of time one spends in apprenticeship. I think our industry has a lot to learn from the legal and medical professions, where professional advancement is based on ability, not necessarily any length of time.
NEWSLINK: Where do you see the valuation industry in the next year? The next five years?
FALL: Certainly the industry has a number of challenges to overcome, but the profession isn’t going anywhere. In fact, I see the future of the industry as extremely promising for individuals who are willing to adopt new technologies and embrace modern business practices, because these are the tools appraisers will need to meet future challenges.
Meanwhile, all signs point to continued economic recovery over the long haul. All things considered, I am optimistic about the industry’s future–as long as we remember the hard lessons of the recent past.
(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor does it connote an endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions; articles and/or Q/A inquiries should be sent to Mike Sorohan, editor, at msorohan@mortgagebankers.org.)
