Appraisal News and Business Tips

4-20-17 Newz// The Narrowest House, State Appraisal Boards, Low Housing Inventory

Keret House- The world’s narrowest house makes for an awkward, four-foot-wide living space.

Excerpt: Designed by Polish architect Jakub Szczęsny, the Keret House in Warsaw is wedged inside a four-foot crevice, nicknamed a “cushion of air,” between two buildings. The Keret House stretches over 30 feet tall but is simultaneously only 28 inches wide at its narrowest point-thinner than a stovetop-and just four feet wide at its widest.
My comment: Check out the fotos and full article. Wow!! I have written about narrow houses in this weekly email before, but this is definitely the narrowest!!
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When You Get Notice of a State Complaint…

By Ted Whitmer
If you are an appraiser, it is likely that at some point in your career you will receive notice that a complaint was filed against you. In one particular busy year in Texas, roughly one in six residential appraisers were filed against with the Texas Appraiser Licensing and Certification Board. When you run the number of complaints in one year against the number of appraisers, one can expect a complaint every eight to ten years.

First Things First
When you receive notice of a complaint, the clock begins and you have only a certain amount of time to answer the complaint and provide the workfile. In some states that time period may be twenty days or less. The following are suggestions of what you should do.
My comment: We all make mistakes, even if only an occasional typo. State Boards can be very aggressive. Unfortunately, your E&O does not cover this. Some companies offer additional state board coverage and advice on an attorney. Do not reply to anything without consulting an attorney. I have known Ted Whitmer, appraiser and attorney, for a long time. He is an expert.
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State appraiser regulations – what’s happening? 

Source: April 17, 2017 Appraisal Institute Washington Report and State News quarterly e-newsletter
It can be tough keeping track of what the states are doing. The Appraisal Institute has a list of summaries of what the states are doing plus links to the legislation.
The Appraisal Institute reported that 37 bills affecting the valuation profession are pending in 23 states.
AMCs are the most popular topic.
What is your state doing? How does it compare with other states?
No direct link available. Scroll down the page to: “IN THE STATES”.

http://www.appraisalinstitute.org/advocacy/washington-report/washington-report-state-news-current-issue/#10 

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Tired of the AMC Rat Race?

Get much higher fees!

No UAD, no underwriters, no treating appraisers like they know nothing. 

 
Get started in attorney work by doing divorce appraisals!!
In the April 2017 issue of the paid Appraisal Today newsletter 
 
Most residential appraisers who have lots of high fee non-lender business are doing divorce appraisals. Much steadier work than lender appraisals, which are horribly cyclical. 
There is a lot of divorce work available for residential appraisers. Often commercial appraisers do them, especially MAIs, but they lack the expertise you have. You specialize in residential appraisals and have local expertise.
You won’t be competing with AMC appraisers who bid against each other and get low fees when business slows down. The typical divorce appraisal fee is significantly higher (300% or more) plus $150 per hour (or much more) for court testimony, travel time, etc.
 
Topics in the article include:
  • Reporting format
  • Fees for appraisal and deposition
  • How divorce appraisals differ from lender appraisals
  • Court testimony
  • How to break into this market
  • Marketing tips
  • Where to get classes and books
To read the article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
 
If this article got you one attorney appraisal, 
it is worth the subscription price!! 
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To purchase the paid Appraisal Today newsletter   go to
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Listing/sale shortages and appraisers

My comments: In many markets, there are very few listings and sales, driving up prices. For appraisers, this means difficulty keeping up with (and proving) increases in home prices (and lender reluctance for using time adjustments). Use of older sales does not give an accurate value if prices are increasing (and some lenders do not allow the use of older sales). Maybe you acan reference the articles below in your appraisal, especially Trulia article. The three articles below discuss this problem, from different angles.

I recently appraised a property with 2 homes, not unusual in my city, but not a lot of sales today. The effective date was March 15, 2015 (date of death). I found similar sales of 2 homes on one lot that sold very close to the effective date. Today, two years later, there is only one listing and very few recent sales.

Why is this happening? Various reasons include:
Home owners are reluctant to sell:
– Cannot find another home to buy.
– Property taxes can go way up, especially in California.
– Increased interest rate on loan for new home.
– Capital gains tax on higher priced homes.
Low supply of new homes
– Shortage of construction workers, a significant problem
– Little vacant land available and resistance to in-fill housing
– Few entry level homes – lower profits than move-up homes
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Trulia: U.S. Home Inventory Hits Record Low Since Housing Market Began Turnaround In 2012

Marks eighth consecutive quarterly decrease

Excerpts: The number of starter homes on the market dropped by 8.7%, while the share of starter homes dropped from 26.1% to 25.9%. Starter homebuyers today will need to shell out 2.9% more of their income towards a home purchase than last year;

The number of trade-up homes on the market decreased by 7.9%, while the share of trade-up homes dropped from 23.9% to 23%. Trade-up homebuyers today will need to pay 1.6% more of their income for a home than last year;
The number of premium homes on the market decreased by 1.7%, while the share of premium homes increased from 50% to 51%. Premium homebuyers today will need to spend 0.6% more of their income for a home than last year.

Full report with interesting graphs:
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Scarce housing inventory is a market disruptor

Excerpt: Two things need to happen to ease the housing shortage in the U.S. First, we need to build more new homes. Relative to the number of households in the U.S., we’re only building homes at about 65 percent of the long-run average. To up production, we need federal, state and local governments to work together to develop policies that make it easier to build housing in areas where we need it most. Second, we need existing homeowners to put their homes on the market. One such policy could be to reduce the capital gains tax for all properties, whether investor or owner-occupied. Such a reduction might encourage long-time owners to sell their homes and thus increase inventory.

http://www.scotsmanguide.com/News/2017/04/Scarce-housing-inventory-is-a-market-disruptor 

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Are factory-made homes the future of housing?

Excerpt: The future of U.S. homebuilding depends on more people like Cyndicy Yarborough, a 26-year-old former Wal-Mart clerk with no background in construction.

At Blueprint Robotics in Baltimore, she works in a factory that builds houses like cars, on an assembly line, using robots that fire thousands of nails into studs each day and never miss. Yarborough operates a machine that lifts floors and walls and packs them onto a flatbed truck, the final step before delivery to a development site where they’ll be pieced together.

https://www.bloomberg.com/news/articles/2017-04-17/robots-may-help-build-your-next-home-and-solve-a-labor-shortage 

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org 
 
Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.
Mortgage applications decreased 1.8 percent from one week earlier
WASHINGTON, D.C. (April 19, 2017) – Mortgage applications decreased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 14, 2017. This week’s results do not include an adjustment for the Good Friday holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index increased 0.2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 1 percent lower than the same week one year ago.
The refinance share of mortgage activity increased to 42.4 percent of total applications from 41.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.4 percent of total applications.

The FHA share of total applications increased to 11.0 percent from 10.7 percent the week prior. The VA share of total applications decreased to 11.1 percent from 11.3 percent the week prior. The USDA share of total applications remained unchanged at 1.0 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.22 percent, from 4.28 percent, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to its lowest level since November 2016, 4.15 percent, from 4.24 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.09 percent from 4.14 percent, with points increasing to 0.36 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.50 percent, from 3.51 percent, with points increasing to 0.41 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs decreased to its lowest level since November 2016, 3.27 percent, from 3.33 percent, with points increasing to 0.26 from 0.17 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100

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