ANSI and “Who Knows What”

Before 2022, appraisal reports contained an assortment of square footage details reported from different sources. The subject was measured by the “who knows what” method with different methodologies used all across the country. The comparables were a combination of tax records and MLS data, also mostly measured by the “who knows what” method. The credibility of the square footage data used in the vast majority of appraisal reports was highly questionable at best. Using a group of wrong numbers simply cannot provide a credible home valuation. Using two or three wrongs can’t make a right total. Give me ten appraisals from last year and a tape measure, and I’ll show you square footage errors large enough the change a home’s value.

Now, the square footage experts and all the intelligent appraisers in this industry are hard at work looking at ways to work around FNMA and the ANSI standard. We need to remember how many industries are watching to see how appraisers react to this change. If we try and find a way around ANSI, could this be another nail in the appraisal coffin? While appraisers are looking for short cuts, maybe those AVMs are starting to look better to some and big data has no problem making the kind of adjustments required now. Are they large adjustments? Absolutely, in some cases they will be huge. Why do we care? Aren’t they expected? We are creating problems before the problems actually materialize and pointing out problems to lenders who are watching our lead. How is finding a “work around” method leading the way in anything? Appraisers are at the center of attention with ANSI and home measurement quality. What could be a feather in the appraisal industry’s cap appears to be starting on the path of the easy way out instead of the path to achieve quality. Sure, everyone in the real estate industry needs to get on board with this measurement standard. But, appraisers taking short cuts is NOT the way to bring them on our side.

How is this going to help convince the other GSEs and especially the NAR to adopt ANSI when they just see appraisers looking for ways to “work around” ANSI instead of trying to find solid answers to adjustments, and letting them see how the adjustments truly look. When they have to explain these adjustments to their clients, maybe it might help them decide adopting ANSI might actually make sense, and sooner rather than later. Appraisers are in control for the moment, but that moment could be quickly passing unless we take the lead and not the path of least resistance.

If we use four numbers, all created with “who knows what” numbers, exactly how does this give us a credible report? And now, the cat is already out of the bag. The problems with square footage have already been exposed and we can’t get that Genie back in the bottle. No matter what happens with ANSI, are there going to be lenders, buyers and sellers, and Realtors® looking closely and square footage problems in the future? Before you sign on to the easy ways around ANSI, make sure you look at the Big Picture and think about how this will look on appraisers in five years from now. Let’s keep the professionals focused on solutions and not work arounds…