Appraisal News and Business Tips

2-8-18 Newz//AQB adopts changes, 11 Appraisal Trends, 7 Small Home Flaws

11 Trends Every Appraiser Should Watch for in 2018

Excerpt: Here are a few:
3. Potential revision of the URAR form
5. Is the $100,000 market disappearing?
6. Housing bubble conversations

Click here for more info:

The Ultimate Waterfront Property (Hint: It’s a Lighthouse)

Is the Week’s Hottest House . Back on the market now after listing in May 2016 – same price. Also the hottest house of the week Feb. 2 2018.

Excerpt: And if you want to be technical about it, it’s not really a home in any traditional sense. It’s a real-life lighthouse! Sitting in the Chesapeake Bay 3 miles from shore, the structure is waiting for a buyer with $249,000 to ride in on a wave of speculation and make it a home.

Check out the video at:
Check out the interesting listing fotos etc at:
My comment: I have always wanted to live in a lighthouse or on a small island. But I must have Internet access ;>

AQB Adopts Changes to Real Property Appraiser Qualification Criteria

At its public meeting on February 1, 2018, the Appraiser Qualifications Board (AQB) of The Appraisal Foundation adopted changes to the Real Property Appraiser Qualifications Criteria, as proposed in its Fourth Exposure Draft. The effective date for these changes is May 1, 2018.

Excerpt: What does this mean for prospective entrants to the appraisal profession, current trainees, and current credentialed appraisers who wish to upgrade their credential? Let’s go to the highlights, with details below.

– The college coursework requirement was removed for the Licensed Residential Appraiser credential level.
– Alternatives have been created to the college degree requirement for the Certified Residential Appraiser credential.
– The number of required experience hours and the minimum time periods for the three credential levels were modified.

Click here for more info
Link to AQB document: https://goo.gl/Y5Ca3i

My comment: Finally the AQB decides. Many years ago I attended an AQB meeting in San Francisco where a bachelor’s degree was proposed. I said it was an overkill due to the notorious ups and downs of res appraising. I do think business, statistics and econ classes are very important. Maybe some of the relatively few remaining licensed appraisers can finally upgrade.

7 Small Home Flaws That Can Be Big Deals for Buyers

Excerpt: Here are a few:
2. Ripped window screens
3. The location of your laundry room.
4. Sticky door locks. Live in a house long enough, and you’ll encounter a malfunctioning door latch or lock. That may be no big deal to you, but it may alarm buyers big-time.
5. Your bathtub or shower. Some people prefer showers, others want baths (particularly parents who must clean up small kids). So if you’re missing one or the other, watch out.

Interesting and worth reading at:

My comment: Any adjustments for these?? ;> It may help explain why some homes sell and some don’t or sell low. In my area, almost all listings are fixed up and staged. I will never forget selling my house in 2008. I fixed all the stuff that had been bad for years. I did not want to sell it!!!

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Appraisals for estates and trusts – the most popular non-lender appraisals

 

In the Paid Monthly Appraisal Today

 

Excerpt:
At a recent residential seminar I attended, one of the topics was non-lender appraisals. When the speaker took a survey of attendees, estate and trust appraisals was definitely the most popular.

These types of appraisals do not require court testimony. Most other types of non-lender work, such as bankruptcy and divorce, can sometimes require court testimony.  However, if you are willing to testify in court, you will have very little competition for assignments and significantly higher fees. A future article will discuss what it involved.

I strongly recommend considering this type of work, particularly since lender appraisals are moving quickly toward desktop appraisals. Also, we are already in a downturn.

For the past 10+ years almost all of my appraisal work has been for estates and trusts. Some were multiple appraisal assignments. A few years ago, I did a 19 property assignment in my city with a $15,000 fee. What types of properties did I appraise? 17 were residential rentals, homes and 2-4 units. I also appraised a 6 unit apartment building and a commercial property, which you can refer to another appraiser if you are not a commercial appraiser.

If you want to diversify from lender/AMC work, I strongly recommend estate appraisals. Any appraiser can do them. The only tricky part is going into the past, which is not that difficult. You are paid your full fees in advance (or 50% up front). The effective date of the appraisal is almost always in the past.
In this article I have lots of tips on how to do estate/trust appraisals plus practical marketing tips.
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U.S. regulators ready to ease check on property values – sources

January 26, 2018
Excerpts: – U.S. bank regulators plan to relax commercial real estate lending rules by allowing more deals to go ahead without an independent appraisal of the property’s value, according to several sources familiar with the discussions…
Banks are also pushing for regulators to loosen appraisal rules on home mortgage loans although this may require the blessing of other regulators, the sources said.
Well written with good info directly from “sources”

CFPB firestorm – changes to enforcement powers, notes from a range of experts & attorneys on the court ruling

By Rob Chrisman, Feb. 6, 2018
Excerpt: The Consumer Finance Protection Bureau’s mission is to protect the consumer. The bureau has its proponents and adversaries, and each cheered and jeered news this week. Let’s jump in and read what “those in the know” are saying about developments, not only in court but in changes to using enforcement actions to promote its regulatory message.

The Trump administration has apparently stripped the CFPB of enforcement powers in lending discrimination cases, sharply restricting the responsibilities of the Office of Fair Lending and Equal Opportunity. “That unit now will move inside the office of the director, where staffers will be focused on ‘advocacy, coordination and education.’

Lots of comments from different people in the mortgage lending industry at:
My comment: Appraisal requirements loosened? Makes sense to me as lenders have never liked appraisals messing up their deals.

Classifying Appraisers as Independent Contractors – an Issue for Appraisal Firms and Maybe AMCs Too

by Peter Christensen, of LIA Liability Insurance
Excerpt: A hot legal issue that is beginning to more often affect appraisal firms and similar businesses, such as inspection and field service management firms, is the classification of workers as independent contractors, rather than as employees.

In some lawsuits, plaintiff workers argue that they were improperly classified by firms as independent contractors and then claim that, if they had been treated properly as employees, they would have been entitled to compensation for overtime, as well as reimbursement for expenses. In other situations, the issue is a governmental audit for unpaid taxes or disability/unemployment contributions.

My comments: In 1986, when I started my appraisal business, I hired a trainee as an IC because “that’s what everyone did”. I soon found out that the CA state employment dept. had targeted appraisal companies misclassifying workers as ICs. The appraisal firms hired attorneys $20,000 minimum). A few passed the audit. Some declared bankruptcy. Others changed to employees. I changed my trainee to an employee ASAP.

I have been writing about this topic since 1992, when I started my paid monthly newsletter. I wrote about briefly in the January 2018 issue of the paid Appraisal Today in the article “How the new tax law affects appraisal businesses – pass-through deductions and estate taxes” It has not started yet, but lots of employees, including appraisers, will want to be ICs so they can get the 20% tax deduction. Relatively few staff appraisers, except government employees, get many benefits such as pensions, 401k, paid holidays, etc. Most are paid by the appraisal. Why would they want to stay as employees?

Class Action Against Corelogic – Independent Contractor vs. Employee

by Peter Christensen, of LIA Liability Insurance
Excerpt: A residential staff appraiser has filed an overtime class action lawsuit against appraisal management company CoreLogic Valuation Solutions. The appraiser is a current employee and works as a staff appraiser in Southern California. On behalf of herself and a putative class of similar CoreLogic staff appraisers, she alleges that CoreLogic’s compensation practices violate the overtime pay requirements of the federal Fair Labor Standards Act and California state labor laws.

The case will be legally interesting to watch because CoreLogic allegedly pays its employee appraisers on a “piece work” per appraisal basis with additional compensation for based on production and other factors. The plaintiff alleges that she and other staff appraisers worked an average 5 to 20 hours of overtime per week above the regular 40 hours, but that their compensation for the overtime hours did not properly include the “bonus pay” in calculating overtime compensation. Under the law, the overtime rate of pay must be 1.5x the overall regular hourly rate, even when the employee is paid on a piece work basis. Many appraisal firms pay their staff employee appraisers per appraisal and it will relevant for such firms to follow this case.

http://appraisersblogs.com/staff-appraiser-vs-corelogic-lawsuit

My comment: Big issue. This ripoff has been going on for a long time in many, many appraisal firms and AMCs who have staff appraisers. I always kept track of my staff appraisers’ time so they did not work more than 40 hours a week. Does anyone else do this?
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 
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Mortgage applications increased 0.7 percent from one week earlier

WASHINGTON, D.C. (February 7, 2018) – Mortgage applications increased 0.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 2, 2018.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 4 percent compared with the previous week. The Refinance Index increased 1 percent from the previous week. The seasonally adjusted Purchase Index remained unchanged from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 46.4 percent of total applications, its lowest level since July 2017, from 47.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1 percent of total applications.

The FHA share of total applications decreased to 10.4 percent from 10.7 percent the week prior. The VA share of total applications remained unchanged at 10.1 percent from the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest level since April 2014, 4.50 percent, from 4.41 percent, with points increasing to 0.57 from 0.56 (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 $453,100) increased to its highest level since April 2014, 4.47 percent, from 4.34 percent, with points increasing to 0.44 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.47 percent from 4.40 percent, with points increasing to 0.69 from 0.68 (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 increased to its highest level since April 2011, 3.92 percent, from 3.85 percent, with points increasing to 0.65 from 0.60 (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 3.77 percent from 3.79 percent, with points increasing to 0.42 from 0.41 (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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