APPRAISAL WAIVERS - THE GOOD NEWS!

One of the big topics of late in the real estate appraisal and lending industries is the proliferation of appraisal waivers and the recent announcement that there are likely to be more loans eligible for waivers in the future as they’re increasing the loan to value eligibility requirements. The old eligibility limit was 80% loan to value for the loans that qualified for an appraisal waiver, and the new eligibility limit, as announced by the FHFA last month, is 90% loan to value, and up to 97% on loans where some type of appraisal inspection has taken place.

What does this mean for you as an appraiser? What does this mean for you as an agent? And what does this mean for you as a lender? Is the world ending? Well, probably, but not because appraisal waivers limits have increased. Either way, it’s concerning on several levels, but, if you know me, we aren’t going to waste any time wallowing in defeat or self pity, so let’s chat about what to do about it and how to profit in the most ethical way possible when this all happens in 2025.

If you’re not aware of what I just talked about regarding appraisal waivers and what it all means, well, you’re not going to get an in depth analysis from me. The 30 second version is simply that appraisal waivers and property inspection waivers (PIWs) have been around for a while. Since Fannie Mae and Freddie Mac, the 2 biggest backers and buyers of money in the mortgage market, have been getting increasingly better at collecting data from the market via appraisals, the UCDP portal (it’s literally called a ‘data’ portal!), and a variety of other means, they have gotten better at assessing the risk they’re willing to accept when making or backing a loan.

Now, for those of you who have already stepped up on your appraiser soapbox to start screaming about the public trust and the coming market crash and the ineptitude of the government, and all the other things appraisers love to complain about, let me stop you. That’s not what we do here. We all get it, the government is inept at best, complicit and nefarious at worst, but you should know that shouting about it on social media won’t change that, and it also doesn’t pay your bills.

What I am always more interested in talking with you about is how to lead the most uplifting, promising, happy, health, profitable, and prosperous life possible, and wallowing in the misgivings of the powers that be ain’t gonna get us there. No, I don’t like it. No, I’m not happy with it. No, I don’t support it. But, also no, I’m not going to waste my most precious resources; my time, focus, and attention on complaining about it. I’m going to do what I always recommend to you all and that’s to figure out where the silver lining is and how to either take advantage of or create your own opportunities to help the world be a little better, and also make a little money doing what you do best.

So, while this episode is primarily for my appraiser brethren and sistren, I’m going to be dropping some advice for my Realtor and lender listeners as well regarding appraisal waivers.

One of the first, and maybe most important things to understand about appraisal waivers, and you’re going to want to write this down and practice this, appraisers, is that an appraisal waiver is NOT a confirmation of market value, nor support for the sale price, by Fannie Mae or Freddie Mac. One of the biggest misconceptions out there about waivers is that, when a buyer receives an appraisal waiver, they are receiving a thumbs up by the lender that the price the buyer is paying for that house is the market value of the house. That is not what an appraisal waiver is. An appraisal waiver is simply Fannie Mae or Freddie Mac saying that they are ok with the risk on the transaction, and they will relieve the lender of any liability of a potential buyback on that house should the owner be unable to make their payments and the loan fails.

Let me say it again for the cheap seats because this is what my appraiser and Realtor listeners need to understand; an appraisal waiver is not confirmation of market value nor support for the sale price. It is only a statement by Fannie or Freddie that they are ok with risk on the deal and are willing to forgo having a professional appraiser give an opinion of market value on the transaction.

Agents, and especially buyer’s agents, if and when your buyer receives an appraisal waiver on their transaction, your job is to make sure they are well informed and well advised and acting in their own best interest. That means that it’s your highest duty to inform your clients that an appraisal waiver is not a confirmation that what they paying for that house is what the house is worth from a market value standpoint and that it’s only the lender saying they are ok with the risk on the transaction. If your clients want to know what the real market value is, they should still get an appraisal and I’ll share some strategies with you a little later in the show that allows you to take advantage of the waiver while also still being protected.

Appraisers, listen up! It’s your job to inform the agents in your market of what I’ve just said 7 times now: an appraisal waiver is not confirmation of the real market value of that house, nor support for the price they’re paying for it. I see appraiser moaning and complaining on social media forums about appraisal waivers to people who have zero ability to change anything for them.

If you want to control your own destiny, you’re going to have to do it with your words, your voice, your personality, your brand, and your attitude. It does you no good to go on an appraiser forum somewhere and complain about the coming market crash because of all the appraisal waivers. That behavior brings you zero new clients and zero dollars into your bank account. The things you can do involve educating your market, not just about what an appraisal waiver actually is, but also what options they have available to them in the event they receive a waiver.

Alright, let’s talk mindset and business strategy for appraisers in the face of a potential increase in appraisal waivers coming in 2025. I’m going to give you 5 strategies in this episode that will put the ball back in your court when it comes to controlling your destiny and creating a compelling future. Here are the 5 strategies in no certain order:

1. Productize and Packagize
2. Specialize
3. Pretty Influential Market Professional
4. Become hyper local
5. Hone your messaging

What does productize and/or packagize mean? It means that you have to always be developing products and packages for your potential clients. By the way, this goes for lending transactions as well as non-lender transactions. If you know me, I think every single one of you needs to be building a solid non-lender focused appraisal business if you want to be as successful as you can possibly be. That doesn’t mean you have to dump your lender-based business, it simply means to shift your focus to developing a market based and focused business instead of a government vendor or contractors style business.

Most of the appraisers out there rely heavily on lender-based appraisal orders, which means you’re a government contractor. Other than maybe a few banks out there that might loan their own money and hold portfolio type loans, the vast majority of banks, credit unions, and mortgage companies are simply trading money they borrow from Fannie Mae and Freddie Mac. They borrow it for a short time at a certain interest rate, they write some loans with that money at a higher interest rate, they make a spread on the borrowed money and on loan fees, then they sell the money back to Fannie and Freddie as a packaged set of interest-bearing payments on a home loan. That’s an oversimplification of the process, but that is essentially what happens.

When you understand what is happening in that process, you suddenly realize that you have simply been a government vendor for your whole career as an appraiser. You use the government forms, you follow the government’s rules for producing the ‘product’ (the appraisal), you get hammered on the government bias words, and so on. You’re a contractor for the government, which can be lucrative work, but you have little control over the flow. Your business is dependent on the market, the interest rates, the government policies, and a bunch of other things completely out of your control, which many are realizing now.

What this all means is that you’ve likely been raised to believe that there is 1 product or form for a certain type of problem. There’s a 1004, a 2055, a 1073, and a 1025. This kind of thinking has cost you thousands, if not millions, depending on how good you are and how long you’ve been in business.

You may not know this, but there are a bunch of lenders in your market that do unique and creative lending and they don’t need one of those forms we just mentioned. We’ve developed several lender based ‘products’ for mortgage companies in our market that look very little like the traditional forms you’re used to producing.

How did we make that happen? By being out in our market and in conversation with our clients all the time. You have to have a variety of products and packages for your lending and non-lending clients so that they know they options beyond the standard government forms. We don’t have time on this episode to go deep on each of the different product offerings I recommend, but I do go much deeper on this in the Appraiser Increase Academy, which you can try out free for a whole month at www.coachblaine.com/freemonth .

I just did a 2-hour training on this topic with a variety of different scripts, products, and packages for our coaching members that I guarantee will add tens of thousands to their business over the next few months alone if they implement. The big takeaway for you should be that you have to imagine if a successful businessperson, an inventor, and a great salesperson had a baby, and that baby is you. Stop thinking like a government contractor waiting for damn handout in the government cheese line. Run your business on your terms and start to develop products and packages that lenders and the ‘civilian’ market will find valuable and be willing to pay for.

A few of the products we offer are a PCR, which is a $200 property condition report that Realtors order like hotcakes; restricted reports for a variety of different needs; desktop reports; basic market and neighborhood reports; and, of course, measurement services. We have several bridge loan products we created sell to lenders as well, but the main point is that, until the market knows you offer all of these different products and services, you’ll always be waiting for someone to cram their problem into your one product hole. They need an appraisal; you sell them a 1004 or a GP appraisal. If you want to survive the evolution of this profession and thrive going forward, you must start to get creative.

So, that’s what it means to productize and packagize. You have to start thinking in a different framework than what you’ve been trained to think in. Most of you are in the heavily walled garden of government contractor thinking, which is marked by a distinct ‘lack of control’ mindset. It’s also a very limited way to think when it comes to how to get your expertise, knowledge, market wisdom, and influence out to more people in your market.

I can’t tell you how many times I’ve spoken on this or taught appraisers about this kind of thinking and who they should be networking with and the first question they ask is, ‘how does that get me an order? I don’t understand how that will get me on a new appraiser panel’.

Friends, think beyond the panel! Expand your mind a bit and start to recognize yourself as the market expert you should be and start expanding your influence. If you want to overcome the appraisal waiver dilemma, you have to start thinking outside of that whole paradigm. Whether or not the new appraisal waiver guidelines will eat into your order flow or not is the wrong way to think about it. The right way to think about is, “Perfect! Everything is going exactly as I imagined it would, and this new guideline will clear out even more of the appraisers who think in only one dimension.”

I hate to say it this way because I know it already has and will affect some of you listening, but only because you haven’t been running your business like you should. You bellied up to the government vendor food trough and thought you were a genius business mogul because you were turning down orders when interest rates were 3%. The market shifts, people you thought were your clients and biggest fans disappear, and you’re left screaming into the wind (or social media) about the danger of appraisal waivers, as if that will get your phone ringing off the hook.

It won’t. But developing a variety of different products that serve a variety of market needs, and then putting them into packages so that your clients and potential customers have several levels to choose from based on their financial situation and need have options will. It doesn’t happen overnight, but it does work.

The next strategy for making appraisal waivers null and void when it comes to your business is simply to specialize in some way. Of course, the most common ways to specialize for appraisers is to pick a type of appraisal service and go all in on that. Agricultural, complex properties, lakefront properties, celebrity and high-net worth type clients, and so on. Becoming known for some kind of specialty in your market, in my opinion, is always a good thing, as long as it doesn’t pen you into to only being called for that type of product.

My recommendation, and the path I chose, was to specialize in becoming the most helpful guy in my market and the company that solves all kinds of value issues. We don’t specialize in any one type of property, although we do all kinds of appraisals, but our specialty, and the thing we’ve become known for, is the easiest company to reach out to with questions and problems that need to be solved. This approach and mindset when it comes to a specialty has helped us build a massive network or agents, lenders, title companies, inspectors, investors, attorneys, and lots of different people associated with real estate.

It may sound way too simplistic for you because you think there must be some kind of secret sauce, some kind of technical superiority and mastery, or some kind of hack in order to be a specialist, and to some degree you’d be right, there is some secret sauce: In any industry where the vast majority of your competition hates their clients; to like your clients and to be really good to them is to be a specialist. In any industry where your competitors don’t like to talk to their customers, solve problems, answer questions, and share their knowledge; to do the opposite of that is to be a specialist. In any industry where there is secrecy and mystery around the process, especially if the results of that process have an impact on other people; to be the one to pull back the curtain and be able to simplify and articulate the process so that it’s no longer a mystery is to be a specialist.

Yes, you can specialize in farmland. Yes, you can specialize in complex properties. Yes, you can specialize in high-end or stigmatized properties. Those kinds of specialties are technical in nature, and they can be a great way to make a name for yourself and carve out a nice little corner of the market that all but guarantees a healthy business. But you can also become a specialist in the minds of your market by simply being the one everyone else points to and says, “call them! They’ll take care of you like nobody else!”

If you want to take control of your destiny and not be negatively affected by an increase in lender-based appraisal waivers, you must specialize in some way. The best time to have started specializing was 10 years ago. The next best time was 5 years ago. The next best time was a year ago and if you haven’t begun to specialize yet, it’s not too late. The best time to start, then, is today! If you want help with a strategy, call me, I’d be happy to jump on a call with you and figure out in what area you can start to specialize and become known as the authority in that way.

Which leads to the next strategy for overcoming and negating any negative impact that an increase in appraisal waivers may have on your business, which is to become what Daniel Priestley calls a Key Person of Influence. If you want to have an impact, which is often the end result of having influence, then you must begin becoming someone who has the ability to influence the thoughts and behaviors of others in a positive way.

I sometimes joking refer to this process as becoming a ‘P.I.M.P’, which stands for Prominent and Influential Market Professional (don’t put that on your business cards, by the way).

Regardless of what you decide to call this process, it entails the same activities, which are easily remembered as the 5 P’s: Present, Publish, Productize, Profile, and Partner. Let’s chat briefly about each one.

Present means that you have to have a regular schedule of being in front of people talking about a topic. I don’t really care at first who you’re in front of or what your topic is because, if you aren’t in the habit of being in front of people and talking about your topic, the who and what don’t matter as much as just doing it. At some point, however, it helps if you can start to be in front of people that you can have some influence with and create some impact for.

I can’t overemphasize how important, how impactful, and how valuable a skill it is to be able to understand a thing, articulate that that thing in an easily understandable way to the greatest number of people, create frameworks around your topics that make the topic easy to digest and understand, and to create distinctions about certain things that make you and your topic memorable.

I’ve talked before about how one of your goals should be to become recognize, revered, and remembered. Trust me when I tell you that just being a good appraiser is not going to get you there. It definitely doesn’t hurt to be good at what you do, but you have to go several steps beyond just being good to be recognized, revered, and remembered. You have to take some action, even if that action makes you uncomfortable. And one of the most valuable actions to take in this regard is to be presenting to as many people as you can over time.

Publish means just what it sounds like: get your ideas out into the world via any or all of the mediums available to the masses in the 21^st century. You can blog, podcast, create a YouTube channel, get interviewed by others, guest post on other people’s blogs, write a book, or create a private Facebook community that you post to often. Get your ideas and voice out into the world.

We’ve already talked about productizing and packaging, so just listen to this episode a few times to really understand it. You have to start thinking creatively when it comes to what you offer your market. Get out of the government vendor mindset.

Profile means that you must manage your profile out in the world. If you have social media posts from 10 years ago that could be damaging to your image, your influence, and the impact you’re trying to have, clean it up. Google your name and see what pops up. If nothing comes up, you barely exist in the world from a marketing standpoint. If a bunch of stuff comes up and it’s all over the place in terms of topics and messaging, clean it up. You want to be known for the thing that you want to have influence in and not for 10 other things.

The last ‘P’ is for partner, which means that, if you want to go far, you have to start teaming up with those who can help you get there. Partner with Realtors, lenders, title companies, investors, inspectors, other business owners in your area, or anyone else that you want to have influence with, or who has influence with you.

Present, publish, productize, profile, and partner. The 5 P’s of becoming someone who has influence and creates impact for others, which will help you almost completely negate any negative impact that appraisal waivers have on your life and on your business.

The next strategy for taking control of your destiny and eliminating any impact appraisal waivers might have on your business is to become hyper-local. Hyper-local simply means to focus your efforts heavily on your local market.

There are a fair amount of you that get your business from banks and AMCs located all around the country, which there is absolutely nothing wrong with since the appraisal orders are still in your market. The problem is that it leads some appraisers to believe they don’t need to focus on their local market because the business is coming from a thousand miles away. This is the wrong way to think. It’s time to become hyper-local!

Becoming hyper-local means reaching out to and developing relationships with local banks, credit unions, mortgage companies, and the great agents in your market. Become a resource for them so that they can be better at what they do. When they get better, you get better work and the relationship blossoms.

Back when I was talking about specializing and becoming the local market authority as your specialty, this is what I was referring to: become hyper-local and become the authority in your local market. You put all of the strategies I’ve just laid out for you in this episode together and become the influential market professional that everyone in your market turns to when it comes to value questions or appraisal related topics. When you advocate for the success of others, the others will advocate for you.

I’ll end this episode with a reminder about the messaging that I started the show with regarding appraisal waivers. An appraisal waiver is not a confirmation of the value, nor support for the sale price, it is merely the quasi-government agencies that back the money indicating they are ok with the risk on the transaction, but that in no way changes or alleviates the risk to the borrower.

This is the messaging you need to be taking to your market. Don’t drone on about the public trust and the potential negative effects to the market risk of foregoing appraisals and how its leading to a market meltdown again. First off, nobody believes you give two shits about the public trust. You won’t even pick up your phone when a client or agent calls with a question, you tell them to call the bank. That screams, ‘I don’t care if the public trusts me’, which only leads to the public not trusting you.

And, I hate to say it friends, but, as this relates to the feeling you have that somebody out there is trying to do away with appraisers, they’ve done it to themselves. Their collective attitudes, the sense of entitlement, the rude and arrogant attitudes toward agents in the market, and the downright crappy product being put out every single day is a request, almost a begging by the appraisers to put the whole profession out of business.

You’ve had 50+ years to make yourselves indispensable and fantastically valuable to the market and, as an industry, you’ve spat on the shoe of the very people who pay you to exist by being rude, unapproachable, uncommunicative, difficult to deal with, and downright ornery; not to mention largely untrained and unprofessional (not everyone, of course).

That’s the bad news for those who fall into that category, but the good news for people like you and me who aren’t like that. In fact, we’re the opposite of that. We’re friendly, approachable, helpful, a valuable resource in the market and doing everything in our power to stay humble while making ourselves indispensable.

If you want to take control of your destiny and eliminate the impact appraisal waivers might have on your business, start by adopting these strategies today!