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Arm’s-Length Transaction for Appraisals
Arm’s-Length Transaction for Appraisals
By Dustin Harris
Excerpt: USPAP does not define the term arm’s-length transaction. Fannie Mae also lacks such a definition. Yet, both of them call for the appraiser to use only arm’s-length transactions as comparable sales…
How often do we appraisers get into the mode where we think we know it all? Occasionally, do we need to step back and look at the way we do things, just to make sure we are not missing something? Is what we know to be true and correct really true and correct? I raise this issue relative to the concept of what an arm’s-length transaction is. Are we truly aware of its definition and its application?
NOTE: Please scroll down to read the other sections of this long blog post on the Number of baths in new homes, $65 price cut on home, mortgage origination stats, etc.
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Number of Bathrooms in New Homes
Excerpt: The Census Bureau’s latest Survey of Construction (SOC) shows changes in the number and shares of bathrooms and half-bathrooms of single-family homes started in the United States in 2018. The latest year’s data show that 3% of new single-family homes started had one bathroom or less, 64% had 2 bathrooms, 26% had 3 bathrooms, and 8% had 4 bathrooms or more. The term “bathroom” as used in this post refers to a full bathroom.
Interesting analysis, worth reading To read more, click here
Why Calendars Are So Weird, and What Might Be Done About It
Imagine a calendar that is the same every year—sort of.
Excerpts: It makes sense that there are now, and always have been, multiple ways to declare, name, and codify the date around the world—calendars, basically. In fact it’s almost bizarre that the current calendar most of the world uses is as stable as it is—it only dates back to 1582. But not everyone is content to sit back and just live with the fact that calendars are imprecise, ad-hoc, and often annoying. Some people are trying to change them.
There is a bunch of problems with all of these calendars. One fundamental problem is that none of these divisions—weeks, months, years—divide cleanly into each other. And that means that each year must have an entirely new calendar, because December 25 can fall on any day of the week.
My comment: I love this article!! A bit technical in the beginning, but scroll down to “real life” examples. Every year in my office we try to find a wall calendar for the full year. It is very tough to find one we can easily see and is not expensive…
New CA Independent Contractor Law. Free January 10, 2020 webinar by Peter Christensen focusing on appraisers: “California AB 5 just for Appraisers”
Excerpt: On January 10, 2020 (9:30 a.m. Pacific) I am hosting and presenting a video webinar about Assembly Bill 5. This one is just for individual appraisers. I’ll be covering AB 5 (California’s new “gig worker” law) specifically in relation to individual real estate appraisers and small appraisal firms.
Here are some of the issues, I will be addressing:
What does the law mean for individual appraisers?
What adjustments should appraisers consider making in their businesses?
Why are lenders and AMCs putting certain items in new contractor agreements?
What if my small firm uses contractor appraisers? How can I deal with that?
Note: the webinar will be recorded and available for listening if you can’t make it.
My comments: Some AMCs are asking for EINs (Employer Identification Number) as a verification that appraisers have businesses. Some appraisers are contacting their CPA or tax advisor who say Sole Proprietors cant get EINs. Wrong!! Lots of misinformation out there. click here to get an EIN. I rarely use my SSN. Always use EIN whenever possible.
The law was done because some of the Uber and Lyft drivers want to be employees. For appraisers who work for AMCs it is a big issue. Both fee appraisers and AMCS don’t want appraisers to be employees. I have a long article in the January issue of the Appraisal Today newsletter. Other states are planning (or have) similar laws
Liked 2019’s mortgage rates? 2020 will be lower
Excerpts: The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973. It compares with 3.9% in 2019 and 4.5% in 2018, according to Fannie Mae. The current record was set in 2016 when the annual average fell to 3.65%…
For shock therapy, consider the annual average in 1981: 16.63%. That’s not the highest mortgage rates ever booked. Looking at weekly averages, the rate hit 18.6% in mid-1980 as the economy struggled with stubborn inflation.
My comments: I remember the early 1980s. High rates. Lots of appraisers laid off by banks. (Most appraisers worked for lenders until around the time of licensing, when lenders outsourced appraisal management to fee appraisers.)
Practical tips you can use today for getting more
appraisals done and make more money!!
Excerpt: “Just Say No”
No appraiser can do every appraisal assignment. If you’re a residential
appraiser, do you accept a commercial appraisal assignment? Would you accept an appraisal in a distant town you have never heard of?
One of the greatest time savers is using the word “NO”. The inability to
use this word leads to taking on too much work, procrastinating on more difficult assignments, and feeling very stressed out with a negative attitude.
I have turned down work regularly since I started my appraisal business. Over time it was easier as I know what types of clients and assignments I should have turned down!!
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New Law to Reduce Robocalls. What Does It Mean For Your Phone?
Excerpt: An anti-robocalls measure signed into law Monday by President Donald Trump should help reduce the torrent of unwanted calls promising lower interest rates or pretending to be the IRS, though it won’t make all such calls disappear.
The new law gives authorities more enforcement powers and could speed up measures the industry is already taking to identify robocalls. And when phone companies block robocalls, they must do so without charging consumers. This should help Americans dodge many of these annoying calls.
My comment: Finally!! It is very annoying to have to manually block robocalls on my iphone. Unfortunately, it does not apply to land lines with copper wiring. I regularly get robocalls on my business landline (set up in 1986), which I am never giving up. Maybe someday all robocalls will be blocked…
In 2019 a $65 Million Price Cut on a Mansion
Wasn’t a Big Deal
If you assume it was priced $100 million too high to begin with.
Excerpt: The offering price of a Los Angeles mansion once owned by Tony Curtis, and later Sonny and Cher, has swung radically in the last few years. It’s currently listed for $115 million after being offered at $180 million in 2017, showcasing a price cut of $65 million. According to the Los Angeles Times, it was purchased in 2016 for $90 million. And, after an original asking price of $110 million, a New York City penthouse in the ultraluxury Woolworth Building was relisted earlier this year at $79 million, a 28% cut.
The act of pricing homes well above their market value, known as aspirational pricing, has been adopted by sellers looking to generate attention around their listings. It’s used as a branding tool, says Jonathan Miller of Miller Samuel Inc.