Appraisal Scoop

IRS Defines "Qualified" Appraiser - Are Designations Required?

In Notice 2006-96; 2006-46 IRB 1 (19 Oct 2006), the IRS issued transitional guidance with specific definition of a "Qualified Appraiser."

The Pension Protection Act of 2006 (PPA 2006), Sec. 170(f)(11) creates new guidelines and penalties for appraisals and appraisers. A qualified appraisal now will be defined as one that meets "generally accepted appraisal standards" and follows the principles of Uniform Standards of Professional Appraisal Practice (USPAP).

Under Sec. 170(f)(11)(E)(ii)(I), the appraiser must have experience and competency in evaluating the type of property, verifiable education and experience and must declare that he or she understands a substantial or gross valuation misstatement could lead to civil penalty under Sec. 6695A.

Under "Transitional terms -- qualified appraiser" the section states:

(1) Appraisal designation. An appraiser will be treated as having earned an appraisal designation from a recognized professional appraiser organization within the meaning of § 170(f)(11)(E)(ii)(I) if the appraisal designation is awarded on the basis of demonstrated competency in valuing the type of property for which the appraisal is performed.

Is the above just a "Definition" or is it a "Requirement" that appraisers must hold a designation from an appraisal organization??  Click below to read more . . .

68 Million Zillow Property Records Free To 3rd Party Websites - FTC Complaint Filed

Realty Times' report "Zillow Gets FTCillowed" says that "On the heels of its announcement that it is allowing free API (Zestimates) on all consumer websites, the company was hit with an FTC complaint."

Zillow's API reportedly has 68 million property records available, which will now be free of charge to third-party consumer websites. "By implementing the API, other websites can recreate Zillow's functionality on their domain, turning member sites into mini real estate portals that include detailed information from Zillow's extensive database on millions of homes."

Full Story: http://realtytimes.com/rtapages/20061027_zillowftc.htm

Can you check comps for me? I don't want to waste my borrower's time or money!

How many times have we ALL received that call from an out of town lender or broker that's either shopping for a value or MAYBE (I'll give them the benefit of the doubt) just in need of a little help on qualifying a borrower?

Stuart Fearer SRA of Tamarac, Fl (electronicappraisers.com) gets lots of those calls too, but rather than just blow them off, he's taken the approach of EDUCATING the callers on how they can get the information they need more efficiently:

"Any time you can get the requester to perform the comp check themselves, (ie; sending them to Fastweb, the County Assessors web site or zillow.com and tell them to print the comps from the screen after the zestimate) you avoid any appearance of wrongdoing or USPAP violation. I usually "sell" them on this by pointing out that they can get instant gratification instead of calling up a bunch of reluctant appraisers."

"I point out the time they save on this and all future requests and how they will be "empowered" by pulling up their own comps. Then I tell them to call me if it's in the range of the comps to place the order or even if it is close. I have actually gotten orders from doing this."

Click below to read Stuart's "Zillow Comp Check Instruction" email . . .

Using Graphing Techniques to Support Time Adjustments

There are lots of different lines that can be drawn into the graphs. The three included here  Download TimeAdjustments.pdf (321.7K) were done to provide illustrations of different ways to present data.  What do you do when you do a Trend Analysis, create your own graph or use published data from DQ or CAR, etc?

Time adjustments are increasing and the trend is downward. The rate varies by neighborhood. Do what you think is best to deliver a credible report, one your PEERS would agree with.  It is only important if we have to defend it. We have to defend our work more in a down market than in a rising market. And, we are in a down market that will last for 3-5 years. So, might as well learn, embrace, employ the best procedures possible to stave off suits.

Our reports can be our best defense, if we use good appraisal procedures, good scope of work research, verification and analysis. Often when things go wrong later, and the appraisal is looked at with a more critical eye. the quality of the work will forestall a suit. Or just the opposite.

My prediction is that appraisers will be sued in larger numbers in the next 1-5 years than in the history of the business. That is OK with me, many should be. I just want to be in court as the expert, not the defendant. Experts get paid a better hourly wage.

Click here for the complete article - Download TimeAdjustments.pdf (321.7K)

AUTHOR: Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors, 936 San Jacinto St., Redlands, CA 92373, Real Estate Appraisals, Consulting, Expert Testimony, Forensic Reviews, Fraud Research and Analysis, Litigation Support, Fraud Training  909-798-8855, fax: 909-798-0139

Tired of dropping your DISTO?

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The DISTO Sling Back fits comfortably on your belt and includes a thumb screw which attaches to your DISTO’s tripod connection.  Unlike other belt clips that are made from plastic, the Sling Back is made of chromed metal and includes a life time warranty.  The 36 inch line is made of nylon coated Kevlar and is attached to a super duty retractable spring insuring that your DISTO remains safely at your hip.

Click here to learn more.

Ethical Business - Ethical Life

I described yesterday my great luck to be paired with Grayson Moss, an appraiser legend, at an Appraisal Institute golf tournament.  Grayson is 82 now and long retired, but spent half a century in the appraisal profession and served in many capacities in the Appraisal Institute including several years chairing the Ethics Committee nationally.

My group also contained three BHs ("Bright Horses" = Up & Coming Appraisers) from my team, and I made sure that all the great stories were shared with them.

But in reflecting on that golf round time together I realized that there was more to learn, and hopefully was learned.  One of the great things about golf is that the individual player is responsible for following the rules and penalizing himself if one is violated.  Self regulation. 

It was a scramble, an event where each player hits a ball off the tee. The best ball is then selected for the next shot, with all players moving their ball to that best location.  The player whose ball was selected as the best for that shot must then play first and all others play from a position as close as possible to the first player's divot.

Grayson was frequently the one to place a tee in the ground to mark the spot close to which the next players ball must be placed.  He didn't say anything.  He just did it.  After a few holes the BHs would place the tee in the ground instead of Grayson.

In another instance, one of the team members tapped his ball into the cup before other players had finished putting that shot series. Walking back to the carts, Grayson commented that technically had any member of the team made that series putt after the tap in, we would not have been able to count that putt, costing the team a stroke.  Thereafter, no one tapped in until all had putted.

Think it was a good choice to have Grayson Moss chair the Ethics Committee?  You bet it was!

At 82, four years into retirement, he's still teaching.  The lesson that day was that ethical behaviour applies to all of one's activities.

www.acornappraisal.net is a 20 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities. Our market includes the greater Houston SMSA, including Harris, Montgomery, Fort Bend, Brazoria and Waller Counties

Legends Of Our Profession or "Take A Mentor To Lunch"

Local AI Chapter golf tournament today.  I'm unloading my gear from the car and the pool cart pulls up to pick me up and deliver several to the club house.  Inside the pool cart is Grayson Moss! 

Everyone in Houston's appraisal profession knows Grayson. Started appraising in the mid 1940's.  Served in darn near every capacity in the local, regional, and national AI.  Several years national chairman of the ethics committee, probably his strongest of many strengths.  Grayson is now 82.

I told the pool driver that I wasn't worthy to ride in such esteemed company, and we all laughed.  Up at the club I learned that Grayson was a late addition and was added to my foursome.  What luck! They had him in single cart since the foursome had been paired, but I wouldn't have any of that.  I added his clubs to my cart bumped SBH (Senior Bright Horse) to the cart by himself.  SBH was the MC for the event anyway and needed to return to the clubhouse for the awards ceremony later in the day. 

I met Grayson in the 1980's when I was taking my AI classes.  Click below to read on . . .

Chase partners with First American

Joint venture to assist in property appraisals - Tuesday, October 24, 2006 - Inman News National home loan lender Chase has teamed up with The First American Corp. to create Quantrix Valuation, a joint venture designed to assist in property appraisals, the companies announced today.  The venture will be fully operational by the end of 2006.  Financial terms of the agreement were not disclosed. "Our venture with The First American Corporation will give Chase more direct control over the quality of property appraisals," Francis Kim, director of Chase Vendor Management, said in a company announcement. "This will allow us to help create a smooth home buyers' experience from mortgage origination to closing."  Chase's home mortgage division operates in 44 states.

What NOT To Do In Real Estate - 24 Years Old, $2.2 Million in the Hole

I'm a 24-year-old aspiring real estate investor from Sacramento CA. After going to few seminars I bought 8 houses in 8 months across 4 states with no money down. I fixed and sold 2 and then ran out of cash. I am now facing foreclosure on 6 5 houses. I'm learning my lessons, finding solutions and blogging about it. Comments appreciated!  - Casey Serin

That's the way that the I am Facing Foreclosure.com blog site starts out!  This guy's story has been picked up by the news media, blogs like The Motley Fool, and even NPR Radio.  If there's a poster child for everything that went wrong in the real estate boom, it just might be Casey Serin.

In one year, the 24-year-old website-designer-turned-real estate-flipper bought eight homes in four states — and in every case but one, he put no money down. At his peak, in April, Serin had $93,000 he'd taken out of the homes as he bought them. By July, he was broke, desperate for one last deal.

In a nutshell, click below to find out what the "10 Mistakes That Made Flipping A Flop" are.

Veros Launches Collateral Integrity Analysis Report to Defeat Mortgage Fraud

Predictive tool researches risk and fraud thoroughly before funding

RISMEDIA, October 24, 2006—Veros has introduced Collateral Integrity Analysis, a predictive indicator of mortgage fraud and market risk in real estate. The Collateral Integrity Analysis (CIA) report utilizes the latest technology to analyze, detect and accurately identify high risk properties, market areas, and transactions while minimizing costly false positives.