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The MBA Interview: William Fall of Valuation Partners

By MBA Insights Staff

William Fall is Founder and CEO of Valuation Partners, Toledo, Ohio, which has provided real estate valuations for more than 35 years. The company does business with commercial and residential staff employee appraisers as well as through its appraisal management company throughout the USA.

Fall is a General Certified Appraiser credentialed in five states. He has taught real estate valuation courses at the university level and has served as a supervisory appraiser for numerous apprentice/trainees.

William FallMBA INSIGHTS: How has the appraiser's role changed over the past few years?

WILLIAM FALL: Fundamentally, the appraiser's role remains the same, but the amount of property and market data available to appraisers has grown exponentially. Current and future generations of appraisers need to be much more adept at handling of large data sets, and they must understand the proper application of all the different technology tools. There is also a need for greater competency in truly understanding how individual components related to a property affect value. Appraisers cannot make the mistake of using some "black box" to crank out an answer. They need to add value to the process by understanding the ingredients that drive value based on the subject property and the market area in question.

 

INSIGHTS: A recent Bloomberg article suggested that automation could effectively replace the human real estate appraiser. Thoughts?

FALL: Unquestionably, technology can advance productivity and it will continue to be utilized for better and faster valuation estimates. However, I do not foresee technology replacing the ability of the human mind to identity and analyze the many nuances that can substantively influence final value estimates. The functionality of floorplans, super adequacy issues and limitations of site configuration are examples of factors that can affect value yet are not likely to be "readable" by a computer.

INSIGHTS: The appraisal process is still fraught with issues, some of which end up killing a potential sale. What, if anything, can lenders do to minimize those "surprises?"

FALL: The loan process has a lot of moving parts, and the appraisal component is not much different than a lot of other functions performed by humans along the way. The most frequent pain point for appraisers is getting access to the subject property, which obviously creates timing challenges. One way this can be alleviated is by providing the appraisal company with multiple points of contact for gaining access to the property. Lenders also need to provide the appraisal company with credible information about the scope of work and relay any features of the subject property that will require extra attention. By doing these things, lenders can reduce confusion and help speed up the process.

INSIGHTS: Given that the appraisal is not necessarily intended to be an "exact science," what can appraisers do now to provide more certainty to the process?

FALL: From the appraiser's point of view, a property valuation has always been about "support and defend." The key is helping the reader of the report know how you formulated your opinion so they can understand the logic of the conclusion. Too often, appraisers make huge leaps of logic without proper explanation or attribution, which has the effect of undermining confidence in the report. Describing the thinking process that was followed is critical.

INSIGHTS: What do appraisers as professionals need to do differently to enhance their value?

FALL: Appraisers remain as one of the few parties in the transaction with no vested interest in the outcome of the transaction. The appraiser's value comes from preserving and ensuring public trust in the valuation process. The perception of appraisers by others matters. I don't know if I would call being courteous to others something that appraisers "need to do differently." But it does enhance value. So does performing one's job in a businesslike manner, dressing appropriately and being punctual. Each of these things impacts the perception others have about our profession. And they're important.

INSIGHTS: What steps do you take to ensure that your appraisers have consistency in training, licensing, etc.?

FALL: Many firms like ours underwrite the cost of providing continuing education for appraisers as well as other career enhancing activities. We also invest heavily on in-house training of all employees, and make sure they understand how to provide excellent customer service as well as the technical aspects of what we do. For appraiser training and education, we frequently utilize the resources of The Appraisal Institute. Increasingly, we have made online resources available to our valuation professionals, which has eased access to some truly high-quality programs.

INSIGHTS: Given the climate in D.C., what impact could repealing or rewriting Dodd-Frank have on AMCs?

FALL: From a valuation standpoint, a total repeal of Dodd-Frank would be a huge mistake unless there was a companion legislative piece that replaced its essentials. The concepts of appraiser independence and separating loan production from credit and risk were critical fundamentals behind Dodd-Frank, and these concepts should be retained. Regardless of what happens, the integrity and public trust in valuations must be assured.

INSIGHTS: What other trends have you been seeing in your business?

FALL: Like all industries, the appraisal business has been impacted by information security issues. Appraisal firms rarely work with a lot of personal or private data. Still, we need to mirror the requirements of our clients, which is no small task. Compliance and due diligence issues have also grown substantially over the past five years.

INSIGHTS: There has been a lot of talk about a coming appraiser shortage. Some appraisers suggest this is overblown, that there's only a shortage of appraisers willing to work with AMCs. What are your thoughts?

FALL: Attrition in the appraiser workforce has been well documented. Some locales are more affected than others, but overall, we are seeing a decline in numbers of about 4 percent a year. Fortunately, the Appraisal Qualifications Board of the Appraisal Foundation has begun addressing alternative paths to an appraisal career by proposing changes to appraiser licensing requirements. The AQB's initiative includes allowing online, competency-based training, which will actually increase the skills of the new appraisers without compromising quality or confidence in value estimates. I think where the AQB is headed bodes well for our industry's future.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)