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Press release:
CHICAGO (July 17, 2013) – More than three-fourths of U.S. real estate appraisers are very or somewhat positive about the demand for their services over the next one to two years, according to an Appraisal Institute survey released today.

Eighty percent of residential appraisers and 78 percent of commercial appraisers said they are upbeat about their future, according to the survey conducted in May-June by the nation’s largest professional association of real estate appraisers.

“Appraisers have faced a challenging real estate market in recent years, and it’s great to see that so many valuation professionals are feeling optimistic about the future,” said Appraisal Institute President Richard L. Borges II, MAI, SRA.

According to the survey, 95 percent of residential appraisers and 49 percent of commercial appraisers said there is currently more demand for their services than a year ago.

My comments: Hmmm… refi demand has been declining because of increased rates. “Starter” home sales may be affected – harder to qualify for buyers. Don’t know about all cash investors, a big part of the market in many areas. Commercial appraisal fees are still down in many parts of the country. But, it is good to see that some appraisers are optimistic, at least during the survey period of May 31-June 17. The commercial appraiser results are interesting as they are seldom surveyed. The results are similar to what I have observed locally.
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Additional results  from the AI survey (excerpts):

Trainee hiring

Trainee hiring will remain relatively weak for the next one to two – years. While commercial real estate appraisers comprise less than one – third of practicing appraisers in the US, they disproportionately employ more full – time appraiser trainees.

Commercial appraisers also hired more trainees in the past 12 months than residential appraisers did, and commercial appraisers said they would hire more full-time trainees in the next one- to two-years than residential appraisers would hire.

Nearly one-half (49 percent) of commercial appraisers surveyed said they employed one or more full-time appraiser trainees in the past 12 months. By comparison, less than one-third (29 percent) of residential appraisers employed one or more full-time trainees.
„h Of the residential appraisers who employ trainees, an overwhelming majority (93 percent) employs one to three trainees ¡V only 7 percent employs four or more trainees. Comparatively, slightly more than one-fifth (21 percent) of commercial appraisers employ four or more trainees.

Strong majorities of commercial and residential appraisers surveyed (75 percent and 80 percent, respectively) said the number of trainees retained in the past 12 months did not change. Concerning recent new hires, 14 percent of commercial appraisers said the number of trainees retained increased over the past 12 months. Comparatively, only 5 percent of residential appraisers hired more trainees.

Res appraisers – different clients than commercial appraisers
Substantial proportions of commercial appraisers anticipate more demand from financial institutions (47 percent), law firms/lawyers (33 percent), and government agencies (25 percent). Residential appraisers anticipate a different mix of business predominantly from AMCs (36 percent), financial institutions (34 percent), and property owners/buyers directly (33 percent).

Commercial and residential appraising are going in very different paths. These results reflect that dichotomy. Commercial appraisers are seen as professionals. Residential appraisers used to be seen as professionals but are now perceived by way too many clients as not reliable, probably because of the 2008 crash.

Click here to read the full press release
http://www.appraisalinstitute.org/newsadvocacy/news/2013/Real-Estate-Appraisers-Optimistic-About-Future-16-7-13.aspx

Click here to read the full survey results:
http://www.appraisalinstitute.org/newsadvocacy/downloads/fact_sheets/2013-Real-Estate-Appraisal-Outlook-Summary_Jun-28.pdf

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Appraisalport poll – 6/23/13

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. 2,083 votes 36%
I see things slowing a little. 2,210 votes 38%
I don’t’ see any real change 1,091 votes 19%
I see things picking-up a little. 218 votes %
I see things picking-up a lot. 139 votes 4%

Total Votes: 5,741

FYI, appraisalport users do residential lending appraisals. www.appraisalport.com
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My comment on the two survey/poll results: Quite a difference between the results of the two surveys!! Of course, the Appraisalport survey asks the opinion if rates rise and mortgage purchases slow, but most everyone sees rates rising. Also, it was a poll, not a survey. Appraisalport users work for lenders. Rates started increasing in May.

By William K. Black

Excerpts:

On July 9, 2013 I participated in a radio interview with a lobbyist for the 100 largest financial firms.  The San Francisco radio program host asked me what question I would ask the lobbyist and I said that any discussion should begin with allowing him to state his view of what caused the crisis.  In the course of his explanation, he bemoaned the fact that there was no warning about the crisis.

I found this ironic because I had just published that morning an article about how the appraisal profession warned us that the senior officers controlling the mortgage lending firms were engaged in pervasive “accounting control fraud.”

Note that the appraisers’ petition began in 2000 and was public.  When the regulators and prosecutors did nothing in response to the appraisers’ warning the appraisers delivered it to government officials to ensure that no one could say they were not warned.  What tends to be forgotten is that the mortgage industry’s leaders did nothing to restrain the fraud epidemic and a great deal to expand it.  A finance industry representative claiming in 2013 that no one warned the industry of the coming crisis when the warnings began no later than 2000 epitomizes the industry’s death of accountability, integrity, and candor.

My comment: Worth reading. Appraisers got what they wanted – freedom from mortgage broker pressure. But, at a huge cost – low fees and incredible scope creep. Fees are up now, but will go down when lending slows down. Maybe lenders will figure out that scope creep doesn’t help anyone and slows down appraisal production.

http://www.creditwritedowns.com/2013/07/housing-appraisers-warnings-fraud-crisis.html

First American Professional Real Estate Services Releases Automated Value Model For Commercial Properties

Press release excerpt:
First American Professional Real Estate Services, Inc., a leading provider of real estate transaction-based products and services through its Evaluations group, announced today the release of the Indexed Value Report (IVR), an automated valuation model (AVM) for commercial properties.

Used in portfolio management, loan extensions and new originations by commercial lenders and others, the new IVR model incorporates current commercial property sales data from assessors’ offices, covering more than 3,200 counties in the United States.

In an independent reliability test conducted by three professors from Minnesota’s St. Cloud University on 19,000 commercial properties sold within the last year, the IVR estimated that values for these commercial property sales across the U.S. represented an average of 87 percent of the purchase price and a median value of 103 percent of the purchase price. This is considered to represent reliable indications of value from an AVM. Additional information about the new IVR can be found by visiting www.firstamces.com .

My comment: Over the past  20 years, every so often I heard about one of these. None of them were successfully implemented and sold. Of course, the problem, as with residential AVMs, is data. Costar was rumored to be looking at one some time ago. I can’t imagine using assessor’s office information that is publicly available for a commercial AVM. Income and expenses are critical to determining values for many commercial properties.

Click here for the full press release:
http://www.firstam.com/news/2013/65278.html

Click here for more detail on the product and a link to a sample report
http://www.firstamprs.com/products_services/survey_site_coordination/commercial_evaluation_services

A Florida Bankruptcy court said Chase was not liable for appraisal fees not paid by Evaluation Solutions, which is in bankruptcy.

There has been a lot of online discussion about this. I don’t understand the legal issues.

Fortunately, Scot DiBiasio of the Appraisal Institute posted a succinct comment on the Appraisal Buzz email forum. Here is his revised version – succinct and easy to understand.

“This decision is from one Judge in a single U.S. Bankruptcy Court District – the Middle District of Florida.  Another Judge in the same, or different, Court could very easily rule a different way on a different case. And, it remains to be seen whether or not the valuation companies that objected to the Settlement Agreement in this case will appeal to the U.S. District Court or to a Bankruptcy Appellate Panel, where the outcome could change.”

Here’s a link to the recent WorkingRE article on the topic:
http://www.workingre.com/workingre/Bankruptcy-Court-Absolves-Chase-of-All-Liability-page.html