Posts Tagged appraisal

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

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.

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.

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.

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!!