Appraisal News and Business Tips

Posts Tagged appraisal

Commercial AVM??

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

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Quirky houses can make lenders nervous

Excerpt:

Want to live in a geodesic home or a reproduction of a medieval castle? Jumbo borrowers shopping for offbeat homes may face challenges in getting a mortgage.

Kristi Gillis and her husband, Bill Hollars, bought a geodesic home in Montera, Calif., for $700,000 last fall. The couple was preapproved by a major bank for a jumbo mortgage, but when they told their lender they planned to buy the domed home, the bank withdrew the financing. Every lender they contacted refused to discuss a loan because of the house’s unusual shape. “What was upsetting is that we thought we’d done everything right,” Gillis said. “We both were pretty shocked, and even the agents involved were surprised.”  (They did finally get a loan)

“An artsy person who lives outside the box will look at one house and think it’s stunning,” said Karen J. Mann, a Discovery Bay, Calif.-based appraiser who covers the San Francisco, Silicon Valley and Sacramento communities. “When an appraiser looks at it, it’s about what’s the norm for the area.

My comment: And the appraisals can be nightmares!! Fortunately, we can google the address and see the house before re-negotiating the fee or Just Say No!

Link to original article: http://www.marketwatch.com/story/quirky-houses-can-make-lenders-nervous-2013-07-02?siteid=rss

Chase not liable for AMC appraisal fees?

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

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This blog has recent full FREE email newsletters (that start with the date and Newz) plus excerpts from the email newsletters where you can post comments. This newsletter has been sent out almost every week since June, 1994. I started with 6 subscribers on Compuserve. Now it is up to 17,000 subscribers!! To subscribe to the free email newsletters and get them them when they first come out, go to www.appraisaltoday.com and sign up in the big Yellow Box!!

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Poll – Taking comp photos?

Poll Results 4/1/13 – www.appraisalport.com

With many ways available to view a property (ex. MLS and Google photos) how do you feel about having to always include your own comp photos?

Always necessary 1,928 votes 36%
Sometimes necessary 1,731 votes 32%
Rarely necessary 1,313 votes 25%
Never necessary 368 votes 7%
Total Votes: 5,340

My comment: interesting results. I have to take my comp photos, even if I have seen the property recently. I’m always afraid I will miss something… I guess I am just “old school”. Of course, I have only done a few desk appraisals or reviews. I just couldn’t seem to be able to do them. Oh well…

I love these www.appraisalport.com surveys!! Thanks to Steve Costello for doing them!!

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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.

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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.

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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.

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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

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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.

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