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Have AVMs gone too far (those little theives)?

By Sara Goodwin

Real Estate Appraiser with Estimation Nation Corporation

October 08, 2007 04:12 AM

Whether you (as an appraiser) know it or not, you may be giving your information to FNC which turns around and sells it to AVMs per this article:

http://www.alamode.com/News/07/070125.aspx

and then a link here: http://www.washingtonpost.com/wp-dyn/content/article/2007/01/19/AR2007011900089.html

[Appraisers] claim that their appraisal reports are being systematically looted of key information without compensation or permission.
Appraisers say that one of the dominant electronic real property data companies, FNC of Oxford, Miss., is "extracting" proprietary data compiled by appraisers and reselling it to lenders and others who may load it into AVMs. To add insult to injury, appraisers say, they pay FNC $5 per report when they send valuations to lenders in electronic form using FNC's online platform, AppraisalPort.com.
"We are paying them and they are stripping out our work product without paying us a dime," said Patrick Turner, a Richmond appraiser.
Angela Atkins, a spokeswoman for FNC, said the firm is within its legal rights and extracts only property-description data from appraisal reports, not proprietary narrative analyses or value estimates.

The information that this company claims to glean off the reports is information that can be found by going to a county database (albeit the appraisal is most likely more accurate).
I always thought my associate was being a bit over-protective of his work by copyrighting it, now I see this might be a good idea.
It begs the question, which of our 'intended users' are selling off proprietary information? Shouldn't the borrowers and appraisers know this in advance? Might an appraiser actually 'black list' a lender (for once) if they knew that they're information was going to an AVM?
Imagine going one step further in this twisted circle ... can a local tax assessor's office turn around and purchase this information back from the AVM to give a 'more accurate' mass appraisal data?

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Shane Leady

Apella Business Solutions - Zolfo Springs, FL

Sara,

This is a great topic! I have not posted or commented much on this and I think that your blog will make for a first, I can not think of a better place to start!

As an appraiser I do not use or do business with any company that uses AppraisalPort. While some may see it as lost income I as many of my peers have a problem with the charging of fees to deliver the completed product. I respect that it is a business decision and/or preference.

As an appraisal Management Company that is owned by an appraiser the rule is simple NO INFORMATION SOLD EVER! Why? Our company is designed for the appraiser(s). If information is shared it is only per the guidelines of the client and between appraisers. Any AMC that puts the vendor behind them in my view is not worth doing business with, hence another business decision where as an appraiser I do not do business with the above mentioned companies. Once again I understand that there is cash flow loss at hand, however it lies in the bigger picture.

I would also like to note that we only accept PDF because while it is not 100% full proof it is a little better then open software such as mentioned and we feel that we should not need access or pass words. As an AMC our job is to market and relay and not alter. I use to be able to tell homeowners that their information would not be supplied to the tax man by me. It upsets me that I now can not keep my word because of someone else.

I have followed the copyright issue for sometime now... actually from the beginning and from the beginning I figured that this would be the "Loop Hole". Sadly I was right.

Currently I am working on a system that may help with this problem and will start to share on it close to the first of the year. While it will not stop the methods of companies such as mentioned above it is something for the good of the appraiser.

So does the appraiser need to inform the "intended user" that some of the information may be gathered by a third party for resale? I think that disclosure may be the best weapon of choice for appraisers here as I do not see another option, other then appraisers requiring AMC's to sign an agreement where they will not sale information, but that is weak. I also hold little faith in any laws being passed on the appraiser's behalf so I think that you are on the right track.

Appraisers need to understand that just like a factory or any other business production can not be done with out labor and so do AMC's.

Thank you for the great post!

Oct 09, 2007 02:54 AM

Sara Goodwin

Estimation Nation Corporation - Portland, OR

Portland, Oregon Appraiser

Hi Shane -

That's great that you are going to such links to protect your appraisers (as well as yourself)!

I always send .pdf as well... and I make sure there are page numbers throughout the report so no pages come up missing. I like Nick's security features... he password protects his .pdf and the password is always the last four digits of the borrowers telephone number. If they don't have access to the borrower's number, why should they be looking at a copy of their appraisal?

I use this copyright note at the bottom of my addendum statements now that I borrowered from a fellow-appraiser:

Copyright Notice - All materials and information contained in this report are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Sara B. Goodwin or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content. Permission to use materials and information contained in this report is granted only for the "Intended use / Intended users" stated above. No part of this report may be used to gather data for databases such as automated value model software or other valuation services. Copyright © 2007 Sara B. Goodwin

I have never been questioned by it, but the appraiser that provided the wording was once asked to remove that statement from his report before the lender would except it. Can you imagine that?

Oct 09, 2007 03:19 AM

Thank you. I like the pass word access. Thank you for the comment idea too and I do not understand why they would want it removed. I hope that the appraiser was able to talk them out of that.

Oct 09, 2007 06:03 AM

I believe this was what they were adamant about removing:

No part of this report may be used to gather data for databases such as automated value model software or other valuation services.

... as I'm sure they were planning to sell off some/all of the information to an AVM...

and thanks for the Associates add as well! I'm horrible about getting that together - I'm attempting to get my AR poop in a group, so that might just be next on the list.

Oct 09, 2007 09:08 AM

I've heard that too, Michael - I'm a big fan of making my WinTotal report a .pdf (but not through Alamode's system) and sending it separately - I'm sure they still have a way to grab my files when they do 'updates'.

I'd be honored if you'd use the copyright info. I borrowered it from my old boss as well.

Oct 30, 2007 12:25 PM

Have AVMs gone too far (those little theives)?

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