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Appraisers' forecast for 2014

www.Appraisalport.com   – another great poll!!

How do you foresee your workload and income changing in the next year if the government slows its purchase of mortgages and/or interest rates begin to rise?

I see things slowing a lot. (36.4%) 1,886 votes
I see things slowing a little. (38.5%) 1,993 votes
I don’t’ see any real change (18.9%) 978 vote
I see things picking-up a little. (3.8%) 198 votes
I see things picking-up a lot. (2.4%) 126 votes
Total Votes: 5,181

My comments: I suspect it will slow down but I don’t know how much. Lots of appraisers are turning down work every day now. Time to prepare for the upcoming slowdown, with the inevitable reduced fees. Fees are now based on supply and demand of work.

Make as much money as you can on each appraisal you accept.

The July issue of my Appraisal Today newsletter, see below, has an excellent article on negotiating with AMCs to make more money.

I also have an article on getting started doing divorce appraisals. I have always taken non-lender work, since I started my appraisal business in 1986. I would not be in business today if I didn’t have it to help me get through the down cycles of appraising, both the big and small swings in volume of business.

Appraisal Today newsletter

Posted in: appraisal

Change in the number of appraisers since 2000!

My comment: I like to use California data as trainees were licensed, giving a much better picture that asc.gov, which does not include trainees, only licensed and certified. The number of residential appraisers has always gone way up and down, dependent on mortgage lending volumes. Lenders will start allowing trainees when the number of appraisers get too low. About half the residential trainees/appraisers lose their jobs in the downturns. Nothing new. Commercial appraising has always been much steadier as there was reliable, steady work.

This was posted 5/25 by George Hatch on the very active http://appraisersforum.com 

I’ve been keeping track of the number of licensees in my state (California) for a long time now. As of this morning this is what it looks like:

– The low point in numbers was in 2001-2002, but the percentage comparisons are made against 2000.
– The number of fully licensed/certified residential appraisers last bottomed out at less that 6,000 heads before nearly doubling by 2008.
– The number of CGs have steadily declined each year during the entire time frame except that we had a one-time bump (~170 heads) in 2007 prior to the increase in qualifications criteria.
– Even though the number of fully licensed/certified residential appraisers is 23% lower than the 2008 peak it’s still 36% higher than it was 10 years ago.
– The number of CGs has dropped to within 19 heads of the previous low spot in 2003, and remains 17% lower than the 2000 number. I would imagine this year we’ll lose enough more heads to result in the new low.
– If any of you residential appraisers (in CA) are actually giving serious consideration to restarting your puppy mill operations just remember that the CA market is still grossly overserved relative to the number of appraisers prior to 2005. You’ll be cutting your own throats – again – the next time the markets bust.

Appraisal Today newsletter

Posted in: appraisers

What You See Is What You Get: 15 Examples Of Novelty Architecture

All on one web page
banana, shoe, milk bottle, handbag, tomato, etc. Plus the city where they are located.

I have written about some of them before. Here they are on one page!!

A fun link to check it out!! There are a few comments.
http://www.architizer.com/en_us/blog/dyn/87822/novelty-architecture-ducks-arrested-development/#.UaafA0qDmSo

Appraisal Today newsletter

Posted in: appraisers, Strange homes

Purchase vs. refi appraisals

By Ann O’Rourke

I recently spoke with a savvy appraiser who is turning down all purchases. Too much hassle and way too much pressure.

In many markets, including mine, there are many multiple offers way over list on almost all sales. In my market, appreciation is increasing on an almost daily basis.

I call multiple offer bids “auctions”. The eventual sales price may, or may not, be market value – the most probable sales price. We had them here in the 2000s boom.

I spoke last week with a local Alameda resident who asked me about appraising her house for a home equity loan. She had read about non-local appraisers coming in way too low. I explained that appraisers are licensed and subject to laws. Also, borrowers could not choose the appraiser. I also explained about the crazy local market. I asked her about the equity in her home. It was a low LTV, so I told her that the value she “needed” was much lower than prices today. I also told her that an appraiser may not be used – an AVM may be used. If an appraiser is used, it may be a “driveby” appraisal where the appraiser did not come inside.

I go on the local broker tours almost every week. I had not been to one for a few weeks and went out yesterday. WoW – what a change!! Prices are increasing at a faster rate – easily up to 4% or more per month.

If I was doing lender appraisals today, I would not accept purchase appraisals either. I hate being a deal killer and subject to pressure. Plus, it is very, very difficult determining current values now.

Appraisal Today newsletter

Posted in: appraisers

StreetLinks AMC's new AppraiserPlus Program-paid on inspection, no micromanagement?

My comment: Hmmm… we will see what happens. Maybe too many appraisers took Streetlinks off their approved AMC list?

Full Streetlinks press release:

May 23, 2013 /PRNewswire/ — StreetLinks Lender Solutions(R) announced today the August 2013 launch of its AppraiserPlus(SM) program. AppraiserPlus(SM) significantly enhances the professional partnership between StreetLinks and appraisers by removing the traditional hurdles of micromanagement and post-completion appraiser payment cycles. StreetLinks’ lender partners will continue to benefit from exemplary quality and service levels, with the assurance that they will never be responsible for an AMC’s failure to pay the appraiser.

“I have said many times that we want to make a positive impact on our industry and to continuously make it better than it was when we entered. AppraiserPlus(SM) is consistent with that goal by providing measurable benefits to appraisers and lenders through real partnerships — not traditional vendor micromanagement,” said StreetLinks President, Tom Hurst. “This program allows appraisers to focus on running their businesses and brings back the days of “COD” style payment. This announcement is a year in the making and as an original founder of StreetLinks, this is the most exciting announcement of my career.”

For years, traditional AMCs have put all appraisers into a single bucket and micromanaged every aspect of the process, resulting in real or perceived nuisance calls, texts and emails that interfere with the appraiser’s productivity. While StreetLinks has never set appraisers’ fees and has remained loyal to exceptional appraisers, the company also approached each order with a standardized follow-up process. AppraiserPlus(SM) changes that trend by restoring the days when appraisers were trusted to run their businesses and provide great service and quality reports, in addition to receiving the majority of their payments at the inspection versus weeks or months later.

AppraiserPlus(SM) will limit or remove calls, text messages and emails to participating appraisers during the appraisal fulfillment process, thus allowing appraisers to spend their time inspecting properties, compiling data and writing appraisal reports. Appraisers will have the opportunity to remove nearly all follow-up questions, revisions and stipulations by completing a StreetLinks QX review prior to report delivery. Additionally, AppraiserPlus(SM) will generate ACH payments to appraisers the same day the property is inspected.

Appraisers accepted into the program agree to consistent and fair service metrics and quality control requirements. Hurst noted that this will also ensure lenders that the best, most qualified appraiser will be handling each report.

“We have spent years developing great partnerships with our clients and continue to see unprecedented growth and capture market share. This program will strengthen our partnerships with appraisers while driving additional value for our clients,” Hurst added. “With multiple AMCs recently closing their doors, some lenders have been put in a tough spot — including being left to pay millions in situations where the AMC collected the funds, but failed to pay the appraiser. AppraiserPlus(SM) mitigates such risk, making it a win for both appraisers and lenders.”

About StreetLinks

StreetLinks Lender Solutions provides innovative and comprehensive suite of valuation services and lending technology solutions to banks, lenders and other mortgage industry firms. StreetLinks’ commitment to quality and service, embodied by our partnership approach to clients and appraisers, continues to set us apart as the nation’s premier lending solutions partner. Our products and services are used by thousands of mortgage bankers and appraisers nationwide to simplify and improve everyday business operations. For more information, visit www.streetlinks.com/landing/AppraiserPlus.

Contact Information:

Tom Hurst

tom.hurst@streetlinks.com

317-215-8182

Link to streetlinks web site:
https://www.streetlinks.com/landing/AppraiserPlus

Appraisal Today newsletter

Posted in: AMCs, appraisal, appraisal management company

How to fix the appraiser shortage

MOST INVESTORS DON’T ALLOW THE USE OF TRAINEES.
 
LENDERS WANT MORE APPRAISERS, AMCs WANT MORE APPRAISERS,  FEE APPRAISERS WANT TO BE ABLE TO HIRE TRAINEES.

Investors are imposing lots of requirements on the lenders that sell them loans, including not accepting reports signed by trainees and supervisors. Every investor seems to have different requirements. If the lenders don’t do it, they won’t be able to sell their loans to specific investors.

The “good old days” when Fannie set the requirements with a few lenders adding more are gone.

There are a few portfolio lenders (don’t sell their loans) or lenders who work with investors who will allow trainees, but they are very few.

THE ONLY WAY TO FIX THE APPRAISER SHORTAGE IS TO ALLOW THE USE OF TRAINEES WITH THE SUPERVISING APPRAISER INSPECTING THE SUBJECT AND THE COMPS.

THE ONLY WAY THIS WILL HAPPEN IS IF INVESTORS ALLOW THE USE OF TRAINEES.

I have never heard of any time that lenders did not allow the use of residential trainees. This is the only way to handle the huge cycles of residential lending.

We too often forget the boom and bust of lender requirements for mortgage loans. Just a few years ago brokers could order appraisals and trainees could sign on their own. The 2008 mess is still being cleaned up. Lenders are afraid of loan buybacks. We will just have to wait.

All appraisers started as trainees, even before licensing. They were not called “trainees” but they needed to be trained and educated.

Appraisal Today newsletter

Posted in: appraisers

Appraiser retirement plans?

AppraisalPort poll – retirement plans
Poll Results
www.appraisalport.com

Not considering Social Security, my Retirement Plan consists primarily of:

401k/IRA and savings 611 votes    14%
401k/IRA and investments 917 votes    20%
401K/IRA and pension 172 votes    16%
Savings, Investments and pension 412 votes 9%
401K/IRA alone 329 votes            7%
Investments alone 197 votes        4%
Pension alone 45 votes            1%
Savings alone 280 votes            9%
Income or other Property(s) 457 votes 10%
I need to start a plan 1,074 votes    24%

Total Votes: 4,494

My comment: Many active appraisers are getting older (as is our national population). With about half of appraisers 50 or older, many of us are thinking about retirement. The “old days” of retiring at 65 are declining fast. In the past, there was often mandatory retirement at 65 to allow new workers to enter the market. That is gone, except for a few occupations.

Last night I watched a new Frontline (PBS) documentary on retirement, focusing on mutual funds. I thought I was knowledgable, but I realized I was not. I had a company 401k when I worked in a corporate real estate job many years ago. I didn’t really analzye how my money was being invested. I cashed it out to start my appraisal business. I did not realize the high costs investors pay to mutual funds. Also, the severe impact on employees of the shift from pensions to 401ks as businesses quit offering pensions. One of my brothers had all his 401k invested in his company stock, which tanked and has never come back. I warned him, but the stock price was zooming then.

I will be 70 next month and starting to collect Social Security. Like many fee appraisers, I starting cutting back on appraisals several years ago. I don’t need as much money now as I did 10-20 years ago. I am no longer willing to work 7 days a week, 12 hours a day. As we get older, all of us are physically less able, which means no more 2-3 inspections per day plus hours and hours of driving, etc. for residential appraisals. Fortunately we can always do desk reviews, hire someone to drive us around and help with inspections, etc.

Stress is also a factor. I am no longer willing to put up with clients that are a real hassle. Unfortunately, the hassle factor keeps going up and up with AMCs.

I was surprised that only 10% answered real estate. The appraisers I know who retired early all invested in real estate. I only have one investment property, a duplex. But, rents go up over time in my area and are steady income. A much more steady income than stocks and bonds. My other source of retirement savings will be the sale of my publishing business some day. I have never planned on selling my appraisal business. It is possible, but I did not set up my business for future sale. Also, newsletter businesses sell for a lot more and there are plenty of buyers. One of the reasons I started my newsletter is that there is a very active market in selling business to business newsletters, like this one. I really like appraising and this newsletter, so I plan to continue both businesses. But, I will be cutting back more on appraising. Even if I am no longer writing appraisal reports, I will always be an appraiser!!

Appraisal Today newsletter

Posted in: appraisers

The First Rule of Real Estate is location, location, location. But, do lenders care?

Not every property fits well on residential forms. Today, many don’t fit due to the incredible scope creep.

Savvy appraisers are screening appraisal requests and turning down any assignment that will cause “problems” when submitted. Many appraisers are very busy. Every minute spend on a tough appraisal is time that could be spent on appraisal that takes much less time, not counting all the stips. The time to take the “tough ones” is when business is slow. If an AMC doesn’t like it when you turn down assignments, drop them and get a new AMC to work for. There are plenty of them desperate for appraisers.

Lender appraisal commoditization, and the UAD, have significantly decreased the focus on the importance of what appraisers provide – expertise in a local market. Every market, and submarket, is different and unique. In many areas, the markets are changing on almost a daily basis.

More and more frequently, appraisers are not trusted and local experts. The incessant requests to “consider” comps from public records, change the “wording” of a phrase, appraiser vs. public records sq.ft., cats in photos, etc. Do they even care about local knowledge? Is it just fitting everything into a form that can be easily “reviewed” by software and unlicensed persons that focus too often on what is irrelevant to the value opinion? Is this information what clients (lenders and investors) really want?

More important, the wide use of non-local reviewers with no local knowledge really makes it hard to explain what is happening so it fits into their rigid criteria.

For example, in some markets location on a busy street is not a factor that affects market value and in others it has a significant affect on value. Or, location on the first floor in a condo project is a plus, and in others it is a minus, for various reasons.

Don’t let lender restrictions affect your value or what you put into your report!!

Appraisal Today newsletter

Posted in: AMCs, appraisers, lender appraisals

Number of certified appraisers way up!

Certified Appraisers at All-time High, Opportunities Coming:
Appraisal Institute study

My comments: Licensed appraisers are dwindling as FHA and many lenders will not accept their appraisals. The AQB only determined certified appraiser qualifications. When licensing started, many states set up a licensed category because there were fears of an appraisal shortage as no one knew how many appraisers existed pre-licensing. Unfortunately, state licensing requirements varied widely, with some states (i.e., IL and OK) having very minimal requirements.

Appraisers are aging. That is true of many types of work, primarily due to the aging of the baby boomers. When I started my business in 1986, the AIREA (merged into the AI) survey said the average appraiser age of their members was in the early 50s (most were commercial appraisers). Few appraisers started appraising as their first career, so appraiser age has always been higher.

The positive spin is that there will be a shortage of appraisers in the future. This is nothing new as residential lender appraising has always been boom and bust. 70% of appraisers are residential. Another positive factor is that the post-licensing qualifications of  appraisers has gone up with more certified appraisers.

========================================================

Text of AI press release:

The percentage of appraisers with a state certification is at an all-time high, the nation’s largest professional association of real estate appraisers announced today. With more than half of U.S. appraisers aged 51 to 65, the Appraisal Institute anticipates opportunities for new appraisers.

The Appraisal Institute has analyzed the Appraisal Subcommittee National Registry data since 2006 using a consistent methodology, and the long-term trend is clear:

· The number of appraisers continues to decrease at a rate of about 3 percent per year;
· The appraiser population could decrease 25 to 35 percent over the next 10 years due to age attrition and fewer new entrants.

“In spite of a higher level of appraiser qualification overall, the lack of career prospects for trainees and few new people entering the profession are legitimate and serious issues, yet opportunities do exist to reach the next generation and employment options will, in fact, likely be enhanced in the coming years,” said Appraisal Institute President Richard L. Borges II, MAI, SRA.

Broader analysis suggests this is primarily due to:
· A sharp and long-term decline in the number of new people entering the field;
· A high rate of future retirements due to the high mean age of appraisers;
· Individuals leaving the profession due to challenging business conditions;
· Increasing government regulation;
· Wider use of alternative valuation technologies displacing some appraisers (especially in the residential sector); and
· A potential oversupply of residential appraisers. (Nearly 70 percent of all appraisers focus primarily on residential appraisals.)

While the overall number of appraisers is decreasing, the number of certified general and residential appraisers is on the upswing.

The analysis shows there were nearly 6,000 more certified general and residential appraisers on Dec. 31, 2012 than there were at year-end 2006. For the same period, there was a decline of nearly 16,000 licensed appraisers. About a third of the decline is because appraisers achieved certified status. A large majority of appraisers who left the profession in the past three years were licensed-only appraisers who were either relatively new to the profession or did not pursue certification.

The proportion of certified appraisers to total appraisers was 72 percent at year-end 2006. As of year-end 2012, the proportion was 87 percent; therefore, the proportion of appraisers with a certification is higher than it has ever been. While the total number of appraisers has decreased 15 percent since 2007, the data indicates that the appraiser population is more qualified overall.

Commercial, non-traditional (non-point-in-time) valuations appear to be a growth opportunity for individuals with advanced analytical, financial and mathematical skills, Borges said. He said that key growth markets might be working with accountants, financial analysts, investors and others on real estate portfolio management/analysis, purchase, lease and investment packaging. He also noted that additional areas of real estate valuation – right of way, conservation easement, taxation issues and litigation support (expert witness testimony) – could provide opportunities for professionals looking to enter the valuation profession.

Link to 2 page Fact Sheet of stats and graphs:

Appraisal Today newsletter

Posted in: appraisers

New AMC – 8 hour turn time!!

An AMC to Keep Pace With?
Q&A with Richard Johnson of Pacer AMC
April 1, 2013
Appraisal Buzz

BUZZ: How will you differentiate your company from the other 500 AMCs?

RICHARD: We have created a unique appraiser scorecard. We have an algorithm that measures the appraiser’s self esteem. We find appraisers who set a low fee, never complain when we are a slow pay, and love challenging assignments. We have no dress code. Appraisers just hate that.

We have spent a lot of time picking the best appraisers for our assignments. We call it dialing for dollars. We reward our processers based upon setting new lows.

Because we are the low cost provider we attract the very largest lenders in the US.. These large lenders too have an algorithm that includes input as to the cost of regulation. They have figured out the risk of penalties and fines is somewhere between slim and none. They have lobbyists to ensure that. We have hitched our star to their wagon.

BUZZ: What is this we have heard of your 8 hour Turn Times?

RICHARD: One of the ways we feel we can stay ahead of our competition is we have instituted an 8 hour turn time. We feel it shouldn’t be too hard to get all our appraisals done the same day they are assigned.

Of course we are not unreasonable though if a property is over 250 miles away we allow an extra 2 hours to submit your report.

BUZZ: With all the transparency, disclosures and Customary & Reasonable laws how do you get away with being the low cost provider?

RICHARD: It is really simple. We know our clients love AMCs because they get our services for free. It is the greatest business on the planet. The appraiser pays for the services for the lender. What a racket. We find appraisers who are willing to drive anywhere and do anything for an ungodly low fee.

We don’t worry about compliance because the appraiser signs an affidavit that certifies we have paid them a customary and reasonable fee. Have you seen the CFPB enforce any appraisal rules ? No of course not. Zero risk for lenders and AMCs.

My comment: be sure to click on the link and read the rest of the articled before you let your blood pressure go way up ;> It was published on April Fools Day!!

http://appraisalbuzz.com/an-amc-to-keep-pace-with

Appraisal Today newsletter

Posted in: AMCs, appraisal management company, humor
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