Appraisal Scoop

Who's On First? or You Can't Tell The Players Without A Program!

The National Community Reinvestment Coalition, a Washington, D.C., nonprofit, has filed a complaint with the Federal Trade Commission alleging that Zillow does not adequately disclose the degree to which its free automated home valuations can over- or underestimate a property's value. The site is "likely to cause substantial injury to consumers who rely on the inaccurate representations made by the company," the complaint alleged.

In a confusing twist, a nonprofit group formed by NCRC to promote best practices in the appraisal industry has hired a company to provide Appraiser Assisted AVM services!

The NCRC offshoot, the Center for Responsible Appraisals and Valuations, is contracting with Eppraisal LLC to operate its www.BuySmartProgram.com Web site, which offers consumers appraisals using an automated valuation model in conjunction with the services of an appraiser.

NCRC vice president David Berenbaum said there is no contradiction in NCRC's complaint against Zillow and CRAV's use of an AVM on the www.BuySmartProgram.com Web site.

"The product being offered is an appraisal involving a site visit. It is not limited to an AVM," Berenbaum said. "We do not have a problem with accurate AVMs, especially if they are combined with (the services of) an appraiser."

Berenbaum said Eppraisal LLC is a subcontractor with no influence over policy decisions at NCRC or CRAV.  Based in Mayfield Heights, Ohio, Eppraisal LLC offers access to a network of 10,000 appraisers through its Web site, www.uappraiseit.com. Their web site says: "For the past 5 years the nations largest banks and mortgage companies have been using patent pending technology, together with the expertise of a local appraiser, to deliver an AVMAA, the only appraisal product proven as accurate as an exterior only inspection by a typical appraiser, within 36 hours and for only $110.

Article source: Inman News

When is an AVM NOT an AVM? When it's ZAIO?!

With all of the home valuation products that have hit the market this year, are you getting as confused as I am? 

First we have AVM (Automated Valuation Model) providers that claim that they are NOT appraisals and therefore not subject to rules and regulations that traditional appraisal products are. 

Now we have Zaio that says its products are appraisals (and USPAP compliant) but that they are NOT an AVM???

Appraisal Central, in their article "DANGER OF ZAIO Corporation - they're building a better AVM", says:

This company (Zaio) has its head office in Calgary Canada. Their intent is to come up with a more accurate automated valuation database that includes photographs of the exterior of each residential property in the U.S. They want appraisers themselves to provide these pictures, along with a written description of the home(s) and neighborhoods they're in; so that ZAIO can gain leverage with lenders by telling them an actual experienced and licensed appraiser provided this information. The reason?  This Canadian company wants to be on the forefront of providing Lenders with data they can use to do more Automated Valuations Modules (AVM). 

So IS Zaio an AVM?  Read more >

10 Ways to Stumble in Commercial Real Estate

As the residential market softens, many hands-on real estate investors are turning their attention to the commercial side, believing that they can find more opportunities in office buildings and retail space than in flipping houses and converting buildings to condominiums.

Commercial real estate is a business in which even one misstep can quash a deal or have a negative impact on your earnings for years. That makes it important to identify pitfalls in advance. Here are 10 common mistakes that experts say are often made by neophyte investors and, occasionally, by those more seasoned,  Click below for more >

FinCEN Announces Huge Increase In Mortgage Fraud Reporting

On Friday November 3, 2006 the Financial Crimes Enforcement Network (FinCEN) revealed that suspected mortgage loan fraud in the US has risen by 35 percent in the past year.

FinCEN conducted an assessment, which was based on an analysis of Suspicious Activity Reports (SARs) regarding suspected mortgage loan fraud, to identify trends and patterns that may be useful to law enforcement, regulatory authorities, and financial institutions offering mortgage loan products.

Click here to read the full report from FinCEN

FinCEN had noticed that SARs for mortgage fraud had risen by 1,411% by 2005. Many of the SARs reviewed included more than one characterization of suspicious activity in addition to mortgage fraud.

“False statement” was the most reported activity in conjunction with mortgage loan fraud, while “identity theft” was the fastest growing secondary characterization reported. In total they found 82,851 SARs had been filed in the 10 year period April 1, 1996 to March 31, 2006.

FinCEN said its findings in the assessment are supported by the recent rise in the number of pending law enforcement cases involving mortgage loan fraud.  Thanks to The Mortgage Fraud Blog.

Appraisal fraud and fraudulent property flipping were described in 111 of the sampled reports (10.55%).

Appraisal fraud is frequently associated with fraudulent property flipping. Filers indicated on 48 (42.34%) of these reports that they suspected the fraudulent activity was perpetrated with the collusion of mortgage brokers, appraisers, borrowers, and/or real estate agents/brokers.

Click below for more . . .

New Real Estate Blog Directory

There have been several attempts in the past by pioneers in real estate blogging to create a list of blog sites that cater to the real estate industry.  Most have been half-hearted attempts using a "blog-rolling" type technology or designs that rely on the blog owner to manually update the list.

The new Directory of Real Estate Blogs seems to have hit upon a design that should work!   The design incorporates both industry "categories" and then sub-categories by state and country.  There's a search engine feature that also helps narrow in on the desired site.

When I went to register the Appraisal Scoop blog, I noticed that there was a Home Inspector category but no category for Appraisers.  I dropped a line to the site owner and they immediately added the Property Appraisal Blogs category to their list.

Give it a try!  Enter [Appraisal] or [Your Town] in the search box and see what's happening on the blogosphere in your area.  If you come across Appraisal Scoop, be sure to click on Rate This Listing! and cast your vote on how we're doing.

Runt's Rants: What We Got Here . . .Is FAILURE To Communicate!

Last evening I attended the birthday celebration for one of my DILs (Daughter In Law).  Attending were her husband, mother and dad, brother, brother's lady, and my wife and I.  For those with DILs, you realize that In Law relationships are generally somewhat distant and guarded in the early years, especially when compared to the relationship of the immediate family of one's birth.  We are in those early years.

I was seated in a location ideal for observing the interaction between my DIL, her husband, and her brother.  It was a joy to observe.  Communication on a verbal and visual level that demonstrated a level of trust and understanding among the three to which all interactions should aspire.

As a keen observer of the world around me (aren't all appraisers experts in this area?)  I am forever alert to ways to improve and make more efficient the difficult and imperfect art of interpersonal communication in my business.  It is especially important in my current capacity as mentor to my team from a remote location.  We communicate daily, usually for a couple of hours, mostly via Instant Message, some email, and infrequently via telephone.  The challenge lies in making those communications clear, accurate, and absent of unintended conflicting signals.

At dinner last night, the exchanges between the three mentioned were quick, short, and conveyed accurately.  A word here, a glance there, a gesture, a knowing smile.  All without any unintended conflicting signals subject to misinterpretation.  That's the standard I want in my business!

Read on . . .   

CyberHomes.com Uses Appraisal & Review Information

According to Inman News' story Fidelity launches home-value site - Marty Frame, chief information officer for Fidelity National Real Estate Solutions " . . .noted that Fidelity's property data licensing business has about 160 million residential real estate records, and the company also draws from appraisal and appraisal review information in crafting its value estimates."

CyberHomes.com offers an estimate for a specified property and also an estimate range. The site also provides basic information about the home, interactive maps, average sales price for the area, a list of comparable homes that were recently sold in the area, and the ability to refine the valuation based on changes to the home. Site users can tweak the home valuation based on a long list of home improvements, such as remodels or additions.

Click here for the full article.

a la mode's recent newsletter says:  "Recently valuation data company FNC, Inc. posted an article by its chief legal counsel arguing that appraisals are not copyrightable. The U.S. Copyright Office and appraisers who have won copyright infringement suits are among those likely to disagree."

"AVM developers and advocates have always, until this moment, been oddly reluctant to admit that AVMs were interested in using appraisals as data sources. Now we have an admission that not only are they interested, they do, even if they have to ignore a copyright notice to do it. "

Illinois Governor Blagojevich Announces Results of Increased Crackdown On Unlicensed Mortgage Loan Originators

CHICAGO – Building on efforts to protect homebuyers from fraudulent practices, Governor Rod R. Blagojevich announced today the results of the State’s increased crackdown on unlicensed mortgage loan originators.

The latest inspections conducted by the Governor’s Mortgage Fraud Task Force (MFTF), found that six residential mortgage firms in the Chicago and East St. Louis regions used unlicensed loan originators to process more than 700 home loans.  Today’s announcement brings the total of companies and individuals slated for discipline by the Illinois Department of Financial and Professional Regulations (IDFPR) to more than 45, since unannounced inspections across the state began last March.

Quality, Meeting Deadlines, and Productivity Should Be Part Of Every Appraiser's DNA!

Many of you know my background...I covered that in my first post here.  Briefly, we have an expanding appraisal practice, with six experienced appraisers and one trainee.  Three administrative support staff.  The Boss, me, is in the sixth year of training the next generation to run our firm.  I've been basically just training appraisers, managing the company's growth, and teaching business management. 

Each of the last few years I've consciously moved further from the day to day operation, and now visit the office generally once a week to deliver payroll.  As we prepare for next year, I'll be even further divorced from the operation.  Just part of the teaching and training process.

Quality, meeting deadlines, and productivity are our main focus points, an integral part of our "Organizational DNA" if you will.  

In the early years it was easy for me to keep a close eye on those elements since I was on site all the time.  A business is a living organism.  At least it is to me.  I develop a feel for how things are running just by observing.  Similar to listening to an engine running....you can learn a lot just by listening and observing. 

"As I've moved away from the physical presence, a necessary step to allow the new leadership to blossom, keeping that overview of the key elements has become harder." 

Cost vs. Value Report 2006

The 19th annual Cost vs. Value Report shows that prices continue to climb for most remodeling projects at the same time the value of improvements at resale returns to 2002 levels. None of this should come as much of a surprise to industry professionals, who have been riding the crest of the remodeling boom for several years, and this year's data confirm the housing slowdown many parts of the country are experiencing.

A number of improvements designed to make the report more reliable and more useful has also affected both cost and value data. For starters, they took a fresh look at the specs for all 25 projects. The result is cost-to-construct figures (which include labor, material, subtrades, and gross profit) that are not only higher than in previous years but also considerably more accurate. Estimates of resale value are also more accurate than ever before, thanks to a record 2,188 members of the National Association of Realtors who completed the e-mail survey. Finally, they have introduced nine regional averages following the divisions established by the U.S. Census Bureau. They believe this data provides more useful points of comparison than the four larger regions used in previous years. 

Downloadable City Reports: PDF files for each of the 60 cities surveyed in the 2006 Cost vs. Value Report are available for purchase and immediate download from costvalue.remodelingmagazine.com.

Click here for the complete article with national averge Cost vs Value tables.