Appraisal Scoop

Appraisers' Valuations for Tax Filings Come Under Microscope With New Law

According to the Wall Street Journal article by Arden Dale, Feb. 27, 2007; "It may soon become trickier to get an item appraised for tax purposes. The Pension Protection Act, passed in August, puts appraisers in the sights of the Internal Revenue Service by saying they can be penalized for valuations the agency later decides are off the mark."

"The move marks a big change because taxpayers, not appraisers, historically have borne the brunt of a wrong valuation. One result: The cost of getting something appraised may well rise."

"Appraisals are used for a number of purposes in tax filings. For instance, noncash assets donated to charity are often appraised so the donor can claim the value as a deduction on his income-tax return and lower his tax bill."

Click here for the full article.

Beware Hackers Targeting Your Wi-Fi Hub

This one's scary. A new type of pharming attack uses a compromised Web page and a little bit of Java script to reach into your wireless router and reprogram its DNS.

That lets the malware change the address for your bank, say CitiBank.com, from the real site to one that looks exactly like it-but is designed to steal your identity.

In order to attack your system, the malicious script needs the username and password that control access to the router's configuration. Way too many people leave these set to the default values, which are readily available at web sites like Default Router Passwords Database.

By simply switching to a strong password you derail this attack. Simple and free! Whew!

UPDATE: You can read Zulfikar Ramzan's full explanation of drive-by pharming here.
 

Humor? - NAR's Chief Economist - Housing Headlines

Thanks to Kevin Depew comes this hilarious history of Housing headlines:

"According to NAR "chief economist" David Lereah, the housing data released yesterday afternoon "confirms 2006 was the year of contraction."

Now that implies Lereah might have, at any point last year, actually suggested that 2006 might be the year of the contraction, which the data now apparently confirms. 

Let's take a look:

Source:
Largest Home Price Drop Ever!
Kevin Depew
Minayville, Feb 16, 2007 8:03 am
http://www.minyanville.com/articles/index.php?a=12177

Create Realistic Virtual Tours with Photos and Maps - MapWing.com

Redbug Technologies announces the launch of Mapwing.com, a Web-based software application for building, sharing, and exploring virtual tours online. Mapwing.com makes it easy for anyone to turn their digital photos into interactive, walkthrough virtual tours.

Unlike other virtual tour programs, Mapwing.com allows users to design maps that connect each photo to a corresponding location. Users can share tours with people from around the world and even integrate them with personal Web sites such as MySpace.com®.

Mapwing.com is especially well suited for tourism and real estate, where users can quickly upload photos, design floor plans, and add comments to create an interactive virtual tour.

Paul Hayes, a real estate agent from Keller Williams Reality, a national chain, said agents using Mapwing.com can post more photos of a property at less cost.

"Mapwing.com is a superior product compared to what is available for Realtors today. It opens up a virtual tour to any property."

Mapwing.com tours can be emailed, downloaded, burned to CD, and linked to from any Web site or real estate Multiple Listing Service.  Mapwing has a growing gallery of users sharing tours such as this one: http://www.mapwing.com/explore/view_tour.php?t=llSlbb8SllvA0l    

With Mapwing you can:

• Design an interactive map or floor plan
• Add photos and associate them with location points
• Provide comments about each image
• Connect points together to create a walkthrough experience
• Place hotspots that link to close-up images or Web sites
• Have a Web hosting and a dedicated page for your virtual tour
• Post your virtual tour to the Mapwing gallery
• Send your virtual tours to an address book of contacts
• Link to any virtual tour's page via the Web or email
• Embed a thumbnail of any virtual tour in a Web page or blog
• Embed your entire Plus or Pro virtual tour into a Web page or blog
• Download your Pro virtual tour and burn it to CD   

   

FDIC Outlook - Winter 2006

The recent slowdown in residential construction could reduce the demand for mortgages and commercial real estate and construction loans—activities that have been important factors in loan growth for banks and thrift institutions in recent years. That’s according to the Winter 2006 edition of FDIC Outlook released today, which analyzes economic and banking conditions in each of the eight FDIC regions.

The FDIC report also shows that the ongoing expansion in service industries such as professional and business services appears to be offsetting the effects of the slowdown in housing and, to a significant degree, the Midwest automobile sector.

Click here for the complete report: FDIC Outlook

Rapid Changes Foreseen for Home of the Future

The pace of change in the American home is expected to accelerate dramatically in the next several years, according to 60 NAHB interviews with some 500 architects, designers, manufacturers and marketing experts asking them about what they expect to be prevalent in average and upscale homes in 2015.

The big news is that single-family homes are expected to end the growth spurt that has persisted, with some cyclical interruptions, since 1973.

“We don’t think the size will rise anymore,” Gopal Ahluwalia, NAHB’s vice president for research, told an audience at the International Builders’ Show in Orlando, Fla. earlier this month.

The high cost of housing has forced consumers to start making trade-offs, and higher quality is trumping additional space, Ahluwalia said. The new single-family homes that were completed during the first three quarters of last year had floor areas averaging 2,459 square-feet, he said, up from about 1,500 square feet in 1973.

The consensus of the professionals who were polled by NAHB was that home size would slip into the 2,300 to 2,500-square-foot range by 2015.

However, compounding the picture are projected changes in the composition of the U.S. population that favor ethnic groups who tend to have larger households. Compared to a 2.8% increase in the white population between 2000 and 2010 and a 2.4% increase by that group from 2010 to 2020, Hispanics are poised to grow by 34.1% and 25.1%, respectively, during those periods, and Asians by 33.3% and 26.3%. In 2015, Census Bureau projections show an average 2.46 persons per white household, compared to 3.36-person Hispanic homes and 3.45 in Asian domiciles.

What they have been losing in square footage, however, home buyers have been getting back in volume, and higher ceilings are here to stay, according to the survey findings.

Forty percent of those participating in the research said they expected changes in homes to be more significant or greater in the next decade than they were in the past 10 years and 41% indicated that they would be about the same. Among the issues they said would bring these changes were accessibility for the aging baby-boom population, technological advancement, green construction materials and environmental concerns.

Click here for other findings of the Home of the Future Study.

The Socratic Method and the Appraiser

A friend passed along the following story with a cute punch line.  It reminds me, however, of a more serious thought, one I spoke about at our seminar on Wednesday, Appraising In A Changing or Declining Market.

As licensee's what is expected of us from the public, the users of appraisal services and their investors, mortgage insurers or regulators? If you read and understand  the Preamble to USPAP, the Ethics and the Competency Rules, along with the Mission Statement of your License Board, and the Appraisal Foundation; one is left with the feeling that a whole lot is expected and assumed about us and about our behavior, about what is contained in our reports.

Before I share the story, open your mind to the concept that there is an expectation that the public and users of appraisal services have about the truthfulness and reliability of our work.  If we function as Advocates instead of Neutrals, that trust is violated.

If the market is going down and we say it is stable, we are violating that public trust. If the property is in Poor condition and we call it Average-Minus . . . .etc.

The kernel of the Socratic Method is one of questioning. I was first aware of it in a college course on Philosophy. It was made famous in the 1970's TV series The Paper Chase in which the crotchety old professor, played by John Housman, would ask one question after another of his student's, digging deeper, plying the depth of their knowledge, etc.

As licensees, the public, by virtue of hour our function is defined, by USPAP Ethics and Competency Rules, has the right to believe our reports are truthful, accurate, correct.  They have no reason to expect the report might be biased to favor the client who paid the fee, the cause of the client, the approval of a loan a predetermined value, etc.  In fact we certify that we have not done any of those things, certify that we functioned in an unbiased and objective manner.

This week alone, in my office we have seen situations where the accuracy and veracity of the appraisal was on the face of the document seriously questionable. The issues ranged from:

• reporting a property to be in a City that it was not in,
• to misrepresenting the Market Trend as Stable when it has been Declining for 10+months,
• to misreporting the Zoning where the house was on commercial and the report stated residential,
• to misrepresenting the value by improper Scope of Work,
• to inappropriate market data selection,
• to lack of data verification and meaningful analysis.

Appraisal Fraud in its simplest definition is an inflated or misleading report. It is either done intentionally, out of incompetency or is a forgery.

Click below for the REST of the story . .

 

Runt's Rants - Grow an Appraisal Business Series Part Five - Growing People!

This series has dealt with starting and building an appraisal business. We've discussed how to measure your hourly income, considered marketing, and discussed a business start up model that can be used by any business to quickly and accurately analyze your cost and then develop a pricing structure, depending on what phase of the business growth cycle you are in.  Hopefully you've used all of those tools and suggestions to analyze your situation and consider a plan.

Today we are going to discuss how to build a team in your business to allow growth, and eventually to allow you as the owner more free time to devote to your other interests, be they business or personal.

Building a business that is less dependent on your constant presence requires a long term plan and discipline on a daily basis to make the decisions that foster that objective.

Before I launch into the things I believe are necessary to achieve that end, I want to first emphasize that it is not the only way to have a successful business. It's just one way. Remember my stew analogy; the impossibly complex list of ingredients that make a good stew are often augmented by what is available. If an ingredient is not present, it doesn't mean the business can't be successful. It just means a different path to success will be taken.

My view of a business is as a living organism. I really see it that way. Something that we mold with long term objectives and daily decisions and actions that support the long term goals. That's what really sets me off on the quest each day....it's a creative process.

Click below to read on . . . .

Real Estate Recession - What's An Appraiser To Do?!

The following article is by Steven R. Smith, MSREA, MAI, SRA, Smith Realty Advisors,  The opinions expressed are the author's and do not necessarily represent those of the Appraisal Scoop blog.

For those who have not figured it out yet, we are in the second year of a Real Estate Recession that will last about 2-3 more years before we have hit and can measure the bottom.  If you make a living doing loan production appraisals for loan brokers, life will be hard, unless you cave in and give up the goods, make the deals work.

Forget technology issues, forms vendors, the large picture has changed and it will be the worst, the first national Real Estate Recession since the 1930's impacting virtually every State, Canada and Mexico!

Looking back on the last 4-5 years, what percentage of residential appraisal values were pushed upward to accommodate the deal or help make it work?  If values were pushed up 5% or 10%, then the artificial values amount to 20-50% of the present Sales Price levels, according to the math.  Add the issue of the Housing Affordability Index and the situation becomes apparent.

In my Region, most cities are under 20%. Less than 20% of the Households can afford the average home.  The Real Estate Speculators have left the market. The 1031 Tax Exchangers have left too. The Cash Back Buyers and Flippers are still here, trying to do one more deal. Some appraisers who tried to hang onto their integrity are already out of clients, others have already left the industry.

Click below to read on . . .

Property Rating Program Developed to Help Buyers Choose The Home of Their Dreams

The most frustrating and time consuming part of buying or building a home is the selection process. Most couples buying, building, leasing or renting a property end up in a confrontation over what property best meets their needs. While one party may be focusing on the kitchen, the other party may be searching for the best garage. Rate A Home was created to help select the perfect property that incorporates the needs of both parties, with virtually no hassle.

The company’s slogan is “Helping You Choose”. Since the spring of 2005, Rate A Home (located in western Michigan) has been streamlining and simplifying this process through an extensive web-site which offers many helpful free services to consumers, plus powerful, bottom line sales advantages to Realtors®, Brokers and Builder subscribers. Today, Rate A Home is serving subscribers across the United States and Worldwide.

National Sales Rep Stan Barnes commented… “Our web-site is the most extensive and customer service oriented home selection site available on the Internet to anyone, anywhere, in the world today.  Our Rating Program is the only one of its kind. With numerous Real Estate choices on the market today, buyers are sometimes touring 50, 75 or even 100 properties to find the one that meets their needs. One of the most helpful memory tools Rate A Home offers, is the extensive ‘Buyers Walk-Through Check List’, which helps track the amenities of each home toured”.

Click below to read on . . .