Appraisal News and Business Tips

3-22-18 Newz//The Way Things Used To Be, Can the Appraisal Profession Be Saved?, Cultural/Religious Effects on Value

Can the Appraisal Profession be Saved?

By George Dell, MAI, SRA
Excerpt: What does it mean “Can the profession be saved?” Does anyone else care except us?

The second question first. Who might care? Clients who have developed a trust for you and who are comfortable with the traditional ways of doing things. There is a group of us and of them who like doing things as always. It’s comfortable, requires little change, and is a ‘safe’ way of doing things.

But who might not care? We can break these down into two subgroups: 1) those that dislike our getting in the way of their deal; and, 2) those who genuinely want something different, more modern. For now, let’s dismiss the first group, and consider those who do want a better product, a better service.

What do you think? Post your comments!!

Are Colonial Homes on Their Way Out?

Excerpts: Home styles run the gamut from traditional Colonial to Mid-Century Modern. But which is the most popular? Craftsman homes, according to a recent Harris Poll conducted for Trulia that surveyed over 2,000 Americans over the age of 18. The winner was voted in by 43 percent of respondents, with ranch-style homes as the runner-up at 41 percent, followed by Colonials at 36 percent.

According to Trulia’s search algorithm for style keywords, the following homes are the most common:

  • Colonial – Typically found in the Northeast (Maine to Virginia)
  • Ranch – Located in areas across the country (Alaska to Tennessee)
  • Cape Cod – Found in Eastern coastal states (Maryland to New York)
  • Victorian – Most common in San Francisco, also found in Louisiana and Utah
  • Mid-Century – Typically located on Western coastal states (California to Washington)
More info, plus link to full trulia report at:

The Way Things Used To Be

By Dustin Harris
Excerpt: “We haven’t had a raise in two decades.” Give me a break!

It’s a common complaint in our industry that real estate appraisers haven’t had a raise in two decades. The argument goes that twenty years ago, the standard fee for an appraisal was $350. Fast forward twenty years and it’s still $350.

That’s a great sound bite, but the actual logic is deeply flawed. In real terms, we’ve had a huge raise thanks to the massively reduced amount of time we spend on our appraisals. It’s something I’ve written about before (Never Had a Raise in 20 Years), but I was reminded of it recently when I took a little trip to the real estate board office in my local city.

Click here for more and to read some of the 85+ responses and add your own. Very controversial!!

My comment: In 1986, my first residential lender sfr appraisal fee was $195. Now I am up to $650 (up 333%). I never lowered my fees after the recent declines. My first commercial appraisal (small strip center) was $1,500. Now I am up to $4,000 (266% increase). What are your fees like? Post to the link above!!

Cultural & Religious Effects on Value

Excerpts: A few weeks ago a local Realtor contacted me about a unique situation with one of her listings; her clients attempted to sell their home at market price but to no avail. The seller is the original owner of the property since 1999, which is located in a planned unit development. So what, you might say?

The Realtor explained that the subject property is situated in a predominately Hindu neighborhood and the dwelling faces the southwest direction. As a result, buyers of this ethnicity, in this particular community, will never consider a property with this directional location based on their cultural convictions. As I listened to the Realtor’s concerns, I immediately thought of other communities I had worked in that also had their own cultural and religious beliefs that affect value and marketability. However, rules and regulations deter appraisers from reporting true neighborhood conditions based on race, religion, sexual orientation, familial status, etc. So what do we do?

Well written and worth reading:

http://www.workingre.com/cultural-religious-effects-on-value/

My comments: I have cultural issues sometimes, such as homes where there was a death in the family in the home, direction the front door is facing, addresses that are changed by the owner’s request, changes in over time if a house backs to a cemetery, etc. It sometimes is in the listing but I usually call agents (and other appraisers) to see what is happening.

What will happen to mortgage lending for the rest of 2018?
How will it affect your appraisal business?
How will you prepare for the changes?

Increasing rates, trade war maybe, Dodd Frankenstein changes, home affordability, etc. etc.

I discuss many of the issues: conflicting forecasts, a look at past trends since 1992, etc., etc. Plus, more important, give you advice on how to adjust to the inevitable ups and downs of mortgage lending.
In the April 2018 issue of the paid Appraisal Today, available to paid subscribers.
To read the article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
 
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Some of the World’s Priciest Real Estate Floats on Open Waters

And that’s before potential $900,000 annual maintenance fees

Just For Fun!!

Excerpt: It’s among the world’s most-expensive real estate per square foot, where the oceanfront views never tire, and where the price of entry buys access to the otherwise inaccessible-165 apartments aboard The World, a condo cruise ship. Its intensely private residents spend a third of the year, on average, gliding to the planet’s farthest reaches: Antarctica, Pacific atolls that haven’t seen a ship in two decades, and Ascension, a volcanic outcropping halfway between Africa and Brazil.

Great photos and interesting comments at:

My comment: Wish I didn’t get seasick. Darn!! I do like the onboard tennis court. They should stripe it for pickleball courts!!!

Slumping volume, too many million dollar listings, & rising rates

February 22, 2018 By Ryan Lundquist
Excerpt: We love sensational real estate headlines, but here’s what tends to happen. We talk about something like it’s the biggest thing ever, it ends up being no big deal, and then we move on to the next thing. It sort of reminds me of Y2K because there was so much fear about worldwide chaos, but then nothing happened. All bark. No bite. Anyway, let’s talk about a few issues, and you decide if these are hyped-up “Y2K real estate trends” or not. Then I have a big Sacramento market update for anyone interested. Any thoughts?

Check out the analysis, reader comments and great graphs here:

My comments: What is your market like? Mine is very similar to his. Do what Ryan does, write about your local market, become famous and give up lender work!!

Senate Bill 2155 passes – what will affect appraisers?

Of course, it could all change in the House, up or down for appraisers.
Source Appraisal News Online (Appraisal Institute)

Nearly three dozen valuation organizations supporting revisions to a bipartisan Senate bill that passed March 14.

Excerpts from March 13 coalition letter to the Senate Committee on Banking, Housing and Urban Affairs

March 21 update: The bill now clarifies that a bank must engage at least three appraisers on the bank’s approved appraiser list, in the local market area and in compliance with existing appraiser independence requirements. It also establishes a reasonable timeliness standard.

“These provisions will help ensure that banks make a good faith effort to place the appraisal with local market appraisers, consistent with the bill’s intent,” the organizations’ letter stated.

Excerpts from the March 13 letter: We understand the intent of Section 103 is to exempt a bank from existing appraisal requirements where the bank has difficulty placing the assignment with a local appraiser. In that sense, the bill is not an outright exemption – but an allowance – relating to rural residential appraisals. Specifically, the bill provides an appraisal exemption to residential mortgage loan originators if the bank has attempted to place the appraisal assignment with at least three appraisers. The bill is applicable to primarily residential loans held in portfolio where the loans generally are prohibited from being sold or transferred. However, without further clarifying provisions, we believe the provision could be used inappropriately by banks to avoid fundamental risk management requirements altogether, for example, by attempting to contract with out of market appraisers, or presenting unreasonable or below market assignment conditions or requests.

Reducing appraisal requirements increases risks to the taxpayers, who stand behind FDIC-insured institutions. We too have concerns with the business and regulatory environment for appraisers, which is the primary issue contributing to problems that many banks are complaining about today. To this point, we encourage the Committee on Banking to examine adherence to existing safety and soundness regulations by financial institutions and the underlying business and regulatory environment of real estate appraisers, finding ways to make the appraisal regulatory structure more efficient and attractive to the next generation of appraisers.

My comment: Now that the Senate bill has passed, it is time to think about saying something to your House representatives. I will let you know more soon.

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 1.1 percent from one week earlier

WASHINGTON, D.C. (March 21, 2018) – Mortgage applications decreased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 16, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since September 2008, 38.5 percent of total applications, from 40.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.0 percent of total applications.

The FHA share of total applications decreased to 10.3 percent from 10.4 percent the week prior. The VA share of total applications increased to 10.7 percent from 10.3 percent the week prior. The USDA share of total applications decreased to 0.8 percent from 0.9 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.68 percent from 4.69 percent, with points increasing to 0.46 from 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) remained unchanged at 4.55 percent, with points increasing to 0.37 from 0.33 (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 decreased to 4.69 percent from 4.73 percent, with points increasing to 0.81 from 0.76 (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 increased to its highest level since April 2011, 4.12 percent, from 4.07 percent, with points increasing to 0.51 from 0.46 (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 3.83 percent from 3.93 percent, with points increasing to 0.68 from 0.45 (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.

Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105
Alameda, CA 94501 Phone 510-865-8041
Fax 510-523-1138
Email   ann@appraisaltoday.com

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