Appraisal News and Business Tips

7-5-18 Newz//Busy or Not?, Prices Dropping, Appraiser Hot Dog Stand

Who’s busy and who’s not?

Varies widely around the country. Maybe it depends on housing affordability? See articles below. But, it is really hard to say what causes the geographic variation for appraisers.

Many areas have seasonal variations, but now we are in the traditionally strong summer months, so it is clearer that some areas have less appraiser work.

How do you tell if it is down? AMCs dropping fees. Fewer emails, phone calls, etc.  Other appraisers complaining.
What about steady to increasing biz? Decent fees, turning down work, etc.

Changes in turn times and fees when biz slows down

Appraisers just don’t seem to understand that AMCs work for lenders and try to do what they want.

Why do AMCs/lenders want faster turn times?
AMCs work for lenders. They are competing on turn times primarily, like they always have. Business is very competitive and is declining.

Value pressure?
Is there more value pressure from some of your AMC clients?
Some lenders want to close as many loans as possible and keep profits from dropping.

Why do AMCs drop fees?
Direct lenders have their own fee panels don’t send out bid request to lots and lots of appraisers. Their fees don’t change dramatically. They have never focused on changing appraisal fees frequently. AMCs need lower appraisal fees to keep their profits up, just like you do. I have always thought of AMCs as very large appraisal companies that mostly fee out all their appraisals.

How to tell if prices are going down – listing, pending, expireds ratios

There are some markets (and submarkets) around the country where prices are dropping. Be careful!!

In my local market, condo/townhome prices are going up (lowest priced homes). But, detached home prices are fairly stable (too far from Silicon Valley for big price wars).

I have been through many ups and downs since I started appraising in the 1970s.

I use the ratios of listings to pendings in the overall market and market segments for an overall view. Lots of listings and few pendings is an early warning. Then I move onto longer days on market, then to expired listings.

I sold my home in March 2008. The prices had declined about 10% over the past year, but my house sold quickly, slightly over list with a few offers. I was very, very lucky. No one knew prices would go down over 30% within the next year. In lower priced nearby cities, values went down about 80%

Former appraiser’s hot dog stand a hit in Niagara Falls

Excerpt: Heigel, a former real estate appraiser, said he got the idea for his own lunch stand from a fellow mobile eatery he used to visit.

“There was one guy in South Buffalo that had a tremendous clientele – there was always a line in front of his cart. I said, ‘I’m getting too old for this. Now I’ll try this.’ “

My comment: Interesting article. Very entrepreneurial ;>
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Fannie: Inspection waivers, hybrids, UAD and forms changes – where is residential lender appraising going? 

In the paid Appraisal Today 

Excerpt: “Fannie Mae and Freddie Mac (the GSEs) have launched an initiative to update the Uniform Appraisal Dataset (UAD) and uniform appraisal reporting forms. The UAD and Forms Redesign initiative will leverage extensive stakeholder input to update the appraisal dataset, align it with the industry-standard MISMO® Reference Model Version 3.X, and overhaul the uniform appraisal forms to establish a more flexible, dynamic structure for appraisal reporting. This work is designed to provide greater clarity to lenders, borrowers, and investors; simplify appraisal reporting and reviewing; and build a foundation for appraisal modernization.”
In the June 2018 issue of the paid Appraisal Today, available to paid subscribers.  
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Appraisals in ENV format – Big Problems

Excerpt: From my perspective there seems to be an increase in the number of appraisal requests that require the ENV format. The conversion to ENV of your completed appraisal report is usually not an exact copy of the report which the appraiser completed and signed. Some forms may not convert, other may separate your photos from the text which go along with the photo and the order of the forms in your report may not be the same and there may be other changes to your report. This should be a concern to every appraiser since the client/lender, is not getting an exact copy of your appraisal. This means that the appraisal report you completed and signed is NOT a copy of what the client receives. Most appraisers have a statement in their reports that states something like the following.

Read the article plus appraiser comments.

Comment from appraiser who is required to use ENV: The day ENV dies for good will be a joyous day…

My comment: I did not know that anyone was using these antiquated forms with USPAP issues….

Are home prices really too high?

U.S. Homes Are a Lot Cheaper Than They Look, Harvard Study Finds

 

Excerpt: Before you call Harvard crazy, consider.
Despite the long, stratospheric rise of home prices in the U.S., the inflation-adjusted monthly payment on the median single-family home in 2017 was less than in 1987, when home prices were lower but interest rates were higher, Harvard University’s Joint Center for Housing Studies found

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Home affordability remains a debatable question

Excerpt: Home prices have pushed into record territory to begin the year, but the experts still don’t agree about the relative affordability of the U.S. market for people hunting for lower-priced homes.

Opinions fall into roughly two camps. Some studies suggest that just over half of the 50 largest cities have overvalued and unsustainable home prices, and others say the overall market is significantly more affordable than it was in the year 2000, when home prices were last considered truly normal.

Good overview of various studies
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Housing in the US is too expensive, too cheap, and just right. It depends on where you live.

A few topics:
  • House prices are affordable to middle-income households in most U.S. neighborhoods
  • Premium for oceans, discount for Great Lakes
  • Affordability is mostly a problem in large Northeastern and Western cities

Check out the full report plus an interesting infographic and lots of graphs:

https://www.brookings.edu/research/housing-in-the-u-s-is-too-expensive-too-cheap-and-just-right-it-depends-on-where-you-live/

My comment: I got mine!! Purchased in 1985 for $140,000… Median price in my city is around $950,000. Cheapest detached homes around $700,000 for a very small fixer on a very busy street.

USPAP Q&A 2018 #14-19 – June 2018

 Note: my comments are in parentheses
018-14: USPAP COMPOSITION, STRUCTURE, AND COMPLIANCE At The Time Of The Assignment (what does it mean)
2018-15: RECORD KEEPING RULE Government Agency Workfile Retention
2018-16: APPRAISAL REPORTING – CERTIFICATION AND SIGNATURES Prior Service and Professional Assistance Disclosures – Part 1
2018-17: APPRAISAL REPORTING – CERTIFICATION AND SIGNATURES Prior Service and Professional Assistance Disclosures – Part 2
(more on this controversial and confusing topic)
2018-18: RECORD KEEPING RULE 2018-19: RECORD KEEPING RULE Retention Requirements for Preliminary Communications after   Completion of the Assignment Testimony and Deposition

My comment: See what is of interest to you, if any.
Dave Towne’s comment:
“OK………the “time” period starts ‘now’ and ‘ends’ at some point later. Things happen with the assignment during those two time periods – which is what the Response means – not at a singular ‘time’.”

“Wouldn’t the phrase in USPAP “at the time of assignment” be better expressed by saying ‘during the time of assignment’? Or perhaps just a tad bit simpler: ‘during the assignment’?”

“You decide. And if you agree the USPAP wording could be simplified, send your written response directly to the ASB”
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.
SORRY, NO MBA DATA RELEASED ON WEDNESDAY JULY 4.
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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