I do not quit. Not ever. I have a different perspective based on lifelong lessons from my father.
I did not quit when a lost helmet in the last play of the season made it painful to block during high school football. That effort got me my school letter despite being 3 quarters short. It was worth the headache.
I did not quit Boot Camp in 1969 when at 129 pounds and six feet, very few thought I’d make it. To this day I am proud of my earned title United States Marine.
I did not quit when my city council (more…)
Many agents have asked; “Does this square footage stuff really matter to me? Isn’t it more of an appraisal issue? Fair questions. Let’s take a look at one sale where the agent now understands just how square footage affects a listing value. It was a hard lesson in the importance of square footage, and one they will not soon forget.
The house was listed at $259,900. The tax records showed the heated living area as 2,318. After completing a CMA, it appeared that most homes in the neighborhood were selling between $110.00 and $114.00 per-sqft. Taking an average of $112.00 and applying that to 2,318 sqft, the agent and owner agreed to list the house at $259,900. There was never a discussion of measuring the home, no talk of the square footage from the appraisal when they bought the home, there was never any discussion about square footage. It was simply assumed that the square footage in tax records was accurate. It is the “official record” according to many agent’s viewpoint. This was just the way it was done in their office, and the thought of any potential square footage problems never entered the thought process. (more…)
Arizona Gov. Doug Ducey on March 12 signed into law SB 1480, legislation that eliminates the Arizona Board of Appraisal effective July 1. The ABOA’s administrative functions will be reassigned to the Department of Financial Institutions. This provision was included in the state’s FY 2016 budget that passed the legislature March 7.
Arizona will join a handful of states that don’t have an appraiser board or commission. According to the Executive Summary accompanying the Governor’s budget proposal, the action was necessary because the shrinking population of licensed appraisers was depleting ABOA revenues and that was “threatening the ability of the Board to fulfill its statutory obligations.” (more…)
I heard from an old friend today that worked as an appraiser in Raleigh, NC for at least a dozen years. Shortly after 2009 and the HVCC, he (like so many others) started looking for career options. After appraisal reports kept requiring more and more pages, had more and more restrictions (far too many that were totally useless and had nothing to do with the home’s value), and his fees kept going down instead of up, he discovered that it would take him less time to get a law degree that it did to get his appraisal license. And, that he would get paid for his time and education. When you think of a doctor or an attorney, does a real estate appraiser cast an equal shadow for skill, knowledge, pay?
At a time when more and more demands are being made on the appraisal profession, the most highly qualified are being lost to other industries. Today’s appraisals seem to be geared towards “statistics,” like there is a magical “statistics fairy” that provides high quality real estate information (more…)
The Law of Unintended Consequences is a law, like Murphy’s Law, which is always lurking in the background to foil the attempts we humans make to control the world around us. It is particularly true of government attempts to reduce crime. A couple of examples follow:
I used to love air travel. I was a flight test engineer at Boeing and for many years I flew all over the world for both work and recreation. Then came the shoe bomber. Now I wait in long “security” lines while thousands of security workers peer at video screens as billions of pairs of shoes go by and more thousands of security workers watch as billions of travelers shuffle along in their stocking feet. Do I feel safer now?
Then came the underwear bomber and now billions of travelers will have to suffer through crotch inspections by full body scans. Am I even safer now?
I used to love appraising. Long before there was any appraiser regulation (more…)
Podcasts are a growing medium for both education and entertainment. Research shows it has grown over 25% per year for the past few years. As an appraiser, I find myself spending a lot of time at my computer as well as traveling to and from appraisal inspections. I discovered podcasting about a year ago and have not turned on talk radio since. Podcasting allows me to specifically pick the topics I want to hear and listen to them when I have the time to listen. I love ‘em.
Recently, a few friends of mine turned me on to the Serial Podcast which is produced by This American Life. Unlike the podcast topics I typically choose (which are mostly informative), this one is entertainment. It is like reading a John Grisham novel or watching a really great episode of CSI; only this is a true story. (more…)
It appears that we, as an industry, have finally reached that all time high of stupidity in action. I was recently instructed by an appraisal management company to provide additional MLS sales on a grid to demonstrate market support for my opinion of value because I agreed with the origination appraisal. Had this been something other than a typical residential subdivision where the appraisal used sales from the same development, perhaps I would understand this requirement. Still, one wonders at what point have we crossed into the twilight zone of appraisal review. (more…)
Real estate markets cooled down in the fourth quarter of 2014, and despite historically low interest rates, refinance volumes dropped as well. The increasing pressure on lenders and real estate agents to maintain loan and sales volumes has brought about renewed interest in appraisal accuracy and increasing concern that residential real estate appraisals are inflated.
A recent Wall Street Journal article asserts that
“home appraisers are inflating the values of some properties they assess (appraise), often at the behest of loan officers and real estate agents, in what industry executives say is a return to practices seen before the financial crisis.”
This is a legitimate concern. It is widely believed that faulty appraisals (more…)
FNMA has released a new training video that helps lenders understand how to PROPERLY use Collateral Underwriter, which in some cases has not been happening since Jan. 26, 2015.
By reviewing this info, you can learn how to write reports that pass the CU evaluations, and make your reports more complete and accurate. But keep reading.
One thing I find interesting is CU assigns a unique ‘appraiser number’ for every appraiser who has reports submitted by Lenders to the CU. They don’t just use the appraiser’s license number by itself. (more…)
Whether you believe Fannie Mae’s comprehensive rollout of Collateral Underwriter will finally weed out the lazy form-fillers or it will end up euthanizing the aging residential leg of the profession once and for all, is not the subject of this article. There are plenty of blogs, articles, and seminars that are wrestling with the efficacy of CU and its long-term impact.
To be sure, the profession has entered the new age of big data. Residential appraisers will need to navigate regression analysis, heat maps, trend lines, oblique aerial images, and especially how to tie it all together into something meaningful.
From a regulator’s perspective, the new paradigm creates compliance challenges for appraisers and AMCs. Collateral Underwriter will be analyzing its own model data and data provided by an appraiser’s peers. Everyone needs to be aware that Fannie Mae’s label of “peer” is not necessarily synonymous with the USPAP definition of “peer”. (more…)
I recently received an AMC update and reminder about the need for and why actual comparable photos are necessary. My reply:
Original Comparable Photographs: Scope of Work Point 3: Inspection of the comparable sales from at least the street. This requirement does not tie the appraiser to a specific time for that inspection. Geographical competence would have the appraiser in the area of the comparables many times, and depending on the appraiser’s experience, for many years. Taking a photo a month, six months, a year or more after the sale, does not represent the sale’s condition at the time of the listing/sale. If the assignment is done in February in our Michigan area, what good are comp photos when there is two feet of snow covering the house and site? This archaic lender requirement should be brought to the technological times of today.
Point 2: Inspect the Neighborhood. Are we to photograph the entire neighborhood? If you have to in #3 why not in #2? The reason being we can get aerial photos from the internet. But wait, can’t we get comparable comp photos from the same place? The difference being??? (more…)
Philosopher George Santayana once said,
“Those who cannot remember the past are condemned to repeat it”.
In light of recent actions in the mortgage lending industry, we all may be able to experience the thrill ride of 2007-2009 all over again…soon. You may wonder what actions I am referring to so let me share a brief list of what I will call the top ten contributing factors to the downturn I see happening by July of 2017.
- By 2017 it will have been 10 years since the start of the last collapse in the real estate marketplace. Since institutional memory is roughly 10 years, most of the people in charge of the big banks and the GSEs in 2017 will not remember what happened in 2007.
- Virtually all government mortgage lending programs have reduced down payment requirements to 3% of the purchase price. This is simply not enough skin in the game to keep borrowers from taking on more debt than they can handle. Not that many years ago buyers were expected to put 20% down so how do we get to 3% and feel good about it?
- Wall Street firms, money center banks, large home builders, mortgage banks, and big real estate firms are (more…)
On Feb 6, the Appraisal Standards Board finalized the upcoming changes to the next issue of USPAP. See the PDF for the actual document.
The highlights are:
Revisions adopted for 2016-17 USPAP
The following changes were adopted by the Board in a public meeting on February 6, 2015, and will be incorporated in the 2016-17 edition of USPAP and associated guidance material with an effective date of January 1, 2016: (more…)
FNMA’s CU is causing a big industry ruckus. ICAP member Keith Wolf, SRA, AI-RRS, created a survey in January because opinions being posted across multiple message boards and blogs are fragmented. The results of this survey are out and show that a vast majority of appraisers believe Fannie Mae CU should be transparent. Nearly 70 percent of appraisers said that they will increase fees to cover the extra work CU may cause and 80 percent believe that CU risk scores will cause lenders and AMC clients to request appraisers to fit comps to the CU model. Also 73 percent believe that CU transparency violate Appraiser Independence by influencing choice of sales to get a better CU score. Below you will find the results of the survey. (more…)
New written instructions published by USDA ‘require’ a COST APPROACH for the condo being appraised.
Interestingly, the pre-printed 1073 Form has NO PLACE on it to complete a Cost Approach – for good reason! While not impossible, it would be extraordinarily difficult to calculate a CA for a typical condo in a multi-unit building, without supporting documentation and a gigantic pile of cost info for the various components.
And in fact, appraiser’s certification #4 on the 1073 form says that neither a Cost Approach nor an Income Approach are included unless the appraiser considers them necessary to arrive at a credible value conclusion. There is a place on the 1073 form for an Income Approach to be reported, because often condos are rented to the borrower’s unrelated clients. Makes me really wonder if the person or people who wrote this new USDA manual totally understand the difficulty of doing a proper CA for a typical condo assignment. (more…)