Appraisal News and Business Tips

1-4-17// Newz .National MLS Database?, No college degree?, .AMCs in trouble?

A National MLS Database?

Excerpt: Instead of considering the consolidation of the governance and management structures of the MLS, thereby providing coast-to-coast cooperation among brokers, we should instead focus on MLS data and technology infrastructure, and support the movement toward a national database system.

This would create a vast information network available to application developers who, until now, couldn’t offer tools to agents and brokers without expensive and time-consuming customization for every individual MLS.

My comment: The author is vice president of Business Development for Realtors Property Resource® (RPR®), created by NAR. More info at www.narrpr.com . Very interesting and worth reading. Poor real estate data has been a problem forever. Non-standardized MLS data is a nightmare for appraisers. This database would be accessible to appraisers, CU, and AVMs I assume. Of course, we all know how accurate MLS data is…

No bath tubs?

Excerpts: For years, the common wisdom among both brokers and designers was that every home needed a tub. But changing lifestyles and the demand for more space are now driving some homeowners to swap out their tubs for chic, high-end showers.

There is no definitive data on whether ripping out a tub could harm resale value – or any way to quantify how many people are doing that – said Jonathan J. Miller, president of the appraisal firm Miller Samuel. But “for a young family, not having a tub is an issue,” he added, “so the risk of impacting the value rises as the apartment size rises.”

My comment: Just something to think about… I often see bath tubs that are seldom used. But rarely see a home with no tub.

GSEs – revised appraisal forms?

Excerpts: FHFA Looking to Revise Appraisal Forms
As one of its 2018 priorities, FHFA says in its 2018 Scorecard that it wants to “research, assess, and begin planning for appraisal process modernization, which could include revised appraisal forms and data requirements.”

This particular issue has been discussed for at least the past 5 years. The current GSE forms were last updated in 2005 – 12 years ago. The 1004MC Form was added in 2009 (making the total minimum # of pages 7, not 6), and then the UAD overlay was instituted in 2011.

Read the full commentary and appraisers’ comments

My comment: nothing new. At a webinar I attended last year, Fannie said they are considering revising the forms. I have been hearing about this for many years.

Total Value of All U.S. Homes: $31.8 Trillion

Excerpt: It’s more than 1.5 times the Gross Domestic Product of the United States and approaching three times that of China. Total U.S. home values have grown $1.95 trillion over the past year – more than all of  Canada’s GDP or two companies the size of Apple.

Altogether, homes in the Los Angeles metro area are worth $2.7 trillion, more than the United Kingdom’s GDP. That’s before this luxury home on steroids hits the market.

In the New York City metro, total home values equal $2.6 trillion, more than the French economy – and enough money to buy 8,494 Boeing 787-10 Dreamliners.

My comment: Interesting plus a great graphic showing increases over time from 1998 to today. Of course, I wonder how they calculated the total value ;>

New in the JANUARY 2018 issue of Appraisal Today

  • How to connect with appraisers online. What’s the best way for you? There are lots of ways and I have used them all: email discussion groups, podcasts, Facebook, LinkedIn and chat boards. They are all different.
  • Is there a ban on evidence based valuation? by George Dell, MAI, SRA, ASA, CDEI Very thought provoking discussion of dissonance of the group culture of appraisal, core inertia from our standards and our education, “comps” vs. data etc.
  • Is it jUSt PAP? by Barry Bates Now that we have another edition of USPAP, our Appraiser Cumudgeon has lots of entertaining (and controversial) comments plus a great graphic.
  • How the new tax law affects your appraisal business – pass-throughs 20% tax deduction and estate tax changes
To read the articles, plus 2+ years of previous issues, subscribe to the paid Appraisal Today!! 

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AQB 4th Exposure draft on licensing requirements –

comments due by Jan. 12

Fourth Exposure Draft of Proposed Changes to the Real Property Appraiser Qualification Criteria

Proposed changes to education and experience requirements
  • College-level  education  requirements for the Licensed Residential and Certified Residential classifications, including Alternatives to the Bachelor’s Degree requirement for the Certified Residential credential.
  • Experience hours and  timeframes  required  for  the  Licensed Residential, Certified Residential, and Certified General classifications.
  • Path from licensed to certified.
  • Practical  Applications  of  Real  Estate  Appraisal – getting experience combined with education.

Click here to read draft

My comments: Read this 18-page document to see what the AQB is planning. Includes discussion of controversial issues. Lots of pressure on the AQB because of the perceived appraiser shortage.

I support eliminating the college degree requirement for certified residential. What is more important than a degree is having economics, statistics, etc. education. I did not have any business classes before starting appraising. It was a definite minus, so I got an MBA in 1980. Combining experience and education is a great idea, but has never been successfully implemented. Maybe someday…

The Appraisal Foundation – Hot Topics

 
Interview with John Brenan, Director of Appraisal Issues for the Appraisal Foundation

Excerpt of a few of the topics and comments:
It seems as though we are poised for some giant leaps in technology – big data, artificial intelligence, platforms. How is USPAP able to keep up with such rapid transformation?

The blogosphere is rife with cautionary tales about what appraisers cannot do per USPAP. Can you help dispel some of the myths?

Brenan comment: We are also looking at commenting on things like appraisal waiver requests, and issuing guidance on recent topics in the marketplace like hybrid appraisal assignments and alternative valuations.

My comment: short and worth reading.

AMC STUFF

Maybe some day I will find something positive ;>

Clarocity AMC may be in trouble
If you do work for Clarocity Valuation Services, you definitely should pay attention… lots of online negative business reporting.

Click here for more info:

My comment: Keep a very close watch on all your accounts receivable, especially AMCs. Business is predicted to slow down this year. AMCs will go out of business. I have written a lot about collecting past due billings. The Primary Rules: The longer you wait to get paid, the less likely you will get any money. The Squeaky Wheel gets the grease. In a major appraisal downturn in the 1990s, I lost no money. Why? I saw that the mortgage business was declining. When clients started getting behind in payments, my office assistant called them every day and never gave up.
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If AMCs used escrow accounts, no appraiser would ever go unpaid.

Excerpts:  Go ahead, just ask the AMC for a copy of their financial statements. Go ahead, just ask an AMC for references. Go ahead, just ask for a Dunn and Bradstreet number and credit report. Go ahead, perform the necessary due diligence every other business performs when granting credit. Even if you have been doing business with an AMC for a while, it is perfectly acceptable to ask for updated financial information.

There may be a better way. We are speculating here as we really do not have any first-hand information on how AMCs operate, but history leads us to believe AMCs do not use an escrow account to hold borrowers funds to pay the appraiser. If AMCs used escrow accounts, no appraiser would ever go unpaid.

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 paid monthly 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 7AM to noon, Pacific time.

Mortgage applications decreased 2.8 percent from two weeks earlier

WASHINGTON, D.C. (January 3, 2018) – Mortgage applications decreased 2.8 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 29, 2017. The results include adjustments to account for the Christmas holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.8 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 42 percent compared with two weeks ago. The Refinance Index decreased 7 percent from two weeks ago. The seasonally adjusted Purchase Index increased 1 percent from two weeks earlier. The unadjusted Purchase Index decreased 40 percent compared with two weeks ago and was 3 percent higher than the same week one year ago.

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The refinance share of mortgage activity increased to 52.0 percent of total applications from 51.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications.

The FHA share of total applications increased to 10.4 percent from 10.3 percent the week prior. The VA share of total applications increased to 11.2 percent from 10.6 percent the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged from the week prior at 4.25 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to 4.13 percent from 4.21 percent, with points increasing to 0.21 from 0.20 (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 increased to 4.17 percent from 4.15 percent, with points increasing to 0.40 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.65 percent from 3.66 percent, with points decreasing to 0.34 from 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.40 percent from 3.56 percent, with points increasing to 0.73 from 0.46 (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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