At the Valuation 20/20 virtual conference, Flagstar Bank Chief Residential Appraiser and Operations Manager Tony Reese discussed the way appraisers used to do business and how such methods would be a welcome sight today.

Reese also gave a hearty “thank you” to all the appraisers out there for what they were doing, taking the risks, and letting them know that even though they were not mentioned with the likes of the frontline workers, they are truly viewed as such.

Reese’s discussion initially focused on an email that was received from a vendor. The message speaks for itself, but he wanted to know what was going on? There is a good deal of unprofessionalism occurring right now by appraisers, he admitted, and he wanted to know why.

“Appraisers long for it to be the way it used to be,” Reese told conference attendees. “They don’t know who their clients are anymore because, for the most part, they have no communication with them. The only communication they every have anymore is an automated response requesting status or a revision. When you step back and really think about it, the only communication an appraiser gets is to tell them to hurry up, or to tell them that they are wrong.

“Negative communication and reinforcement all of the time has been proven to impact behavior and development,” Reese added. “We wouldn’t raise our kids like this. We wouldn’t even raise a dog like this, but we think that it is OK to treat one of our vendors like this.”

Reese pointed out that in the digital mortgage age, the appraiser might be the only person that the borrower has contact with representing the bank prior to closing. The borrower’s impression of the bank could be formed largely by this interaction.

The customer experience, he stressed, is so important in all areas of sales today.

“We have entire teams devoted to improving the customer experience, but we have nobody that has ever been concerned about the vendor experience, even though the customer experience is greatly impacted by their interaction with the vendor,” Reese said.

Reese introduced his concept of “Who moved my cheese” as a real-life example of how the industry had changed and how a good number of appraisers were dealing with it, though he said it was on the extreme side.

So, Reese discussed what appraisers could do to make this a little better for all sides and take an optimistic approach to dealing with change.

“Commoditization has occurred in the industry, and we need to face the fact that we are not going back to the way it was 30 years ago,” he said. “Speed and fee have taken precedence over quality and service. We might not like, but no matter how hard we try we are not going to change it. With that said, after talking to appraisers and my staff, I wanted to see what we could bring back to make the process better for the vendors.”

Reese pulled metrics from one of his busier counties in Michigan and looked at retail appraisals for a 90-day period. He found that Flagstar averaged 88 different valuation vendors per month, and that each of these vendors received an average of 2.76 appraisal orders per month.

“So, I asked if what we were doing, by spreading this out to so many appraisers, was counterintuitive to building a partnership. We are probably not a significant client to them, they don’t do enough work with us to become familiar with all of our guidelines or requirements, and we certainly were not doing anything to incentivize them to perform better. There was no real reward for providing a better work product or service,” he said.

“We put together a project that is just getting underway now to see if we can make the vendor experience a little bit better. We are training our reviewers and coordinators to be more consistent when reviewing so the appraiser knows what the expectation is up front. We are reverting some of our automated processes back to manual, which will allow us to assign more work to and reward the best appraisers,” Reese added. “Also, and this is a big one, we are going increase our fees. By doing this we are telling the appraisers that we are going to make a concerted effort to make your job easier, we are going to increase your fees, and if you perform well we are going to increase your allocation of orders in your market to reward you for your hard work. We want to develop trust and a good partnership with our vendors and to let them know that we appreciate what they do.”

Reese’s summary spoke to his hopes of an improvement by mixing a little bit of the old and the new. Regarding the appraisal profession, he suggested that:

• Some things can’t go back
• The industry has been commoditized
• Speed and fees have taken precedence over quality and service

“I am betting on the appraiser here. I am replacing automated processes with manual ones, but I think that by working with a smaller group of the best appraisers I will be able to offset the costs of this by having less revisions and better quality reports,” he said. “So, now I am just waiting to get this going and start seeing the results.”