Appraisal Scoop

Runt's Rants - How Appraisers Can Juggle Life and Work

We have been working hard in this column for several months now...business, business, business! Yet part of what I have discussed is the balance possible to be achieved in owning a business.

The balance to take control of your life and not let work dominate to the exclusion of other facets. I practice what I preach. Today I offer proof and discuss why that balance is really an investment in the business.

I've mentioned before that my Internet dominated business structure had it's origins in the introduction of the fax machine, the chunky first PCs, VisiCalc, and other seed software. I saw the potential to develop flexibility in how I structured and managed my business. The Internet was not very developed, but when it arrived it was added to the growing list of tools that I sought to master to gain more control of my life.

Today I often get into discussions with others about work; how much time and energy is devoted to that part of their lives. My wife is a good example. She works in a school system, the finance manager for a middle school. Millions of dollars flow through her control. Schools are big business these days! We live north of the city of Houston. Her school is in the southwest part of the city. Her 50 mile commute to that job amounts to two stressful hours each day!

Before we moved to our present home seven years ago, she was one half mile from her school. I kept asking her; "Are you sure you want to move that far from your work? Would you consider a transfer to another school closer to the new location?" She made the decision to stay at the school where she was comfortable.

Today the commute is a major stress source and energy drain for my wife. It also is for others I chat with regularly. Three in our own Acorn family. Often they envy my lack of a similar commute. How lucky I am!

Luck had nothing to do with it. I planned it . . . .Click below to read on!

Freddie Mac Tightens Home-Lending Rules

  Freddie Mac, one of the biggest investors in U.S. mortgages, plans to toughen its standards and stop buying certain types of risky loans that have been linked to a high number of delinquencies and defaults.

The decision, announced yesterday, is the latest sign of the deep problems roiling the subprime mortgage market, which caters to borrowers who could not qualify to buy a house with a conventional loan, including people with blemished credit records.

During the recent housing boom, subprime lenders eager to cash in on the home-buying frenzy relaxed their standards. They allowed borrowers to take out mortgages with low teaser rates that ballooned after the first few years. Now that the higher rates are kicking in, many borrowers are struggling to make their monthly payments, and dozens of small lenders are losing money, shutting down or filing for bankruptcy protection.

Freddie Mac's decision to clamp down on these types of mortgages signals heightened alarm about the course of events. If the damage is not contained, a crippled mortgage industry could destabilize the economy, several economists said.  Click here to read the complete article.

Source: Washington Post

House Price Slowdown and Mortgage Debt Buildup Are Taking a Toll on Household Balance Sheets

The market value of homes owned by U.S. households rose by 6.3% during 2006 to a record $20.6 trillion at year end — according to recent Federal Reserve estimates. The “holding gains” (excluding net purchases) came to 4.8% over the course of 2006, down from 10.7% in 2005. The annualized holding gain for the fourth quarter of last year was down to 3.0%, reflecting the progressive deceleration of national house price appreciation from peak rates recorded in the latter part of 2005.

Home mortgage debt rose by 8.9% during 2006, down from the extraordinarily rapid rates of 2004 and 2005, but still quite robust. Household equity in homes rose by 4.0% over the course of the year to a record $10.95 trillion at year end, although the annualized gain came to less than 2% for the fourth quarter. Furthermore, the debt-to-value ratio moved up to 46.9% by the end of 2006, continuing the upward trend of recent years.

The weakening of house prices is likely to continue during 2007, causing housing wealth and housing equity to stagnate, and possibly even decline, and the debt-to-value ratio is destined to rise somewhat further.

While not alarming, these developments inevitably detract from the investment aspects of homeownership and reduce the degree of support provided to consumer spending by housing wealth accumulation.

Source: NAHB

Tiger Woods To Demolish $48 Million Mansion

Tiger Woods is not only becoming a golf course designer but now has his hand in demolition.

He and wife Elin have decided to bulldoze their existing Jupiter Island McMansion in favor of a smaller main house and two guest cottages. I have never been inside of a twenty-three thousand square foot home, but at ten times bigger than my "castle", I'm betting that it echos at night.

Of course, if you're Tiger Woods, that "smaller" house translates into half the space of his current living area with two additional guest houses on the ten-plus acre waterfront compound.

Perhaps it was Elin who first made the case for several smaller homes as opposed to their current spread. When the baby is born and Woods returns to his regular PGA Tour schedule, there will be two sets of in-laws pawing at the newborn.

As Samuel Johnson once said, "No money is better spent than what is laid out for domestic satisfaction."

Source:  WorldGolf.com Blog

Video: Local appraiser's license revoked, Colorado state promises broad crackdown

They say that "any publicity is good publicity" but I'm not so sure that holds true for real estate appraisers!?

A Colorado real estate appraiser accused of fixing the numbers and ruining lives, appears to be on the run. This is a follow up to a story News First (KOAA.com) broke back in 2004.  That's when several new homeowners found out that their Pueblo homes were up to $50,000 cheaper than appraiser Jerry Friberg told them. See video.

The Colorado State Division of Real Estate has since revoked Friberg's license, and two homeowners sued him claiming fraud. One case is still pending, but in the other one, Friberg was ordered to pay the homeowner $76,000. Disciplinary Action - view.

Click here for the complete article and video.  Thanks to Steve Smith, MAI for the news tip!

NAHB Study Sheds New Light on Life Expectancy of Home Components

By any reckoning, a home is expected to last many years and serve several successive generations. But what about the individual components that comprise the house? How many years of service can a home owner reasonably expect from a roof or a door, a window or a whirlpool tub? 

A new NAHB study sponsored by Bank of America Home Equity takes some of the mystery out of the subject with the caveat that numerous factors, including use, maintenance, climate, advances in technology and simple consumer preferences can have a dramatic effect on product longevity.  Go to the study (pdf format).

Click below for a few of the highlights of the survey . . .

Zaio To Acquire Realink Corp - United Systems Software

Zaio Corporation (TSX-V:ZAO) announced today that it has entered into a definitive agreement to acquire the assets of Realink Corporation, a privately held company with offices in Tempe, Arizona. Realink operates two divisions that provide services to the appraisal and mortgage banking industries. The assets are valued at US$3.4 million.

Under the terms of the deal, Zaio will issue 1,978,000 common shares and 2.5 million warrants allowing the holder to purchase the same number of common shares at a price of $3.08 per share. The warrants expire on December 31, 2007. The number of shares was determined based on 85% of the average closing price of Zaio shares since March 2, 2007 and an exchange rate of $1.17. The transaction is expected to close, subject to receipt of all regulatory approvals including the TSX Venture Exchange, within the next 45 days.

"Zaio's primary goal is to build out its network of appraisers as quickly as possible in order to satisfy the needs of lenders and 11 other targeted market segments with our 'instant' valuation solution," stated Thomas J. Inserra, chief executive officer of Zaio Corporation.

"Realink provides us with highly skilled and experienced professionals with great technological expertise in our industry and proven technical support, customer service skills and other needed capabilities. The acquisition also provides us with a viable method for accelerating the introduction of our services to lenders as we expand our geographic coverage throughout the US."

The United Systems Software division of Realink is the nation's oldest appraisal technology company and has relationships with 4,000 appraisers across the country. It was the first appraisal software company to sign an agreement with Fannie Mae for online appraisals. Access to Realink's 4,000 appraiser relationships will help accelerate Zaio's national expansion and assist the company with overcoming the challenge of matching its internal infrastructure growth with the rapid customer and sales expansion of the business. A benefit to Zaio's customers and existing network of Zone appraisers is expected as the integration of Realink's technology occurs throughout 2007.

Click below for more . . .

Calculate the current estimated dollar value of your home using OFHEO's House Price Calculator

The Office of Federal Housing Enterprise Oversight (OFHEO) was established as an independent entity within the Department of Housing and Urban Development by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Title 13 of P.L. 102-550).

OFHEO's mission is to promote housing and a strong national housing finance system by ensuring the safety and soundness of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation).

The OFHEO has placed a series of intersting Excel and Java housing calculators on their web site:

1. XLS CALCULATOR
2. JAVA CALCULATOR
3. OFHEO CALCULATOR USING HYPERION FREEVIEW/BRIO and ADOBE READER
4. VIEW YOUR MSA OR STATE'S APPRECIATION HISTORY IN A GRAPH

The OFHEO cautions users of the House Price Calculator:

Please remember that the current estimated value is determined based on average house price growth for selected geographic areas. Actual value will depend on the local real estate market, house condition, age, and many other factors. Consult a qualified real estate appraiser in your area. Title XI of FIRREA requires that any appraisal used in connection with a federally related transaction must be performed by a competent individual whose professional conduct is subject to supervision and regulation. Appraisers must be licensed or certified according to state law.

OFHEO Report: U.S. House Price Appreciation Rate Steadies

March 1, 2007 - WASHINGTON, DC – The rate of home price appreciation in the U.S. remained steady in the fourth quarter of 2006, extending a general trend of deceleration begun earlier in the year.

Home prices, based on repeat sales and refinancings, were 1.1 percent higher in the fourth quarter than they were in the third quarter of 2006. This is slightly above the revised growth estimate of 1.0 percent from the second to the third quarter. Prices in the fourth quarter of 2006 were 5.9 percent higher than they were in the same quarter in 2005.

Price appreciation in 2006 was substantially smaller than the tremendous price gains of recent years, which ranged from 7.4 percent in 2002 to 13.2 percent in 2005. The figures were released today by OFHEO Director James B. Lockhart, as part of the House Price Index (HPI), a quarterly report analyzing housing price appreciation trends.

“These data show that, on the whole, prices are still rising, albeit at a much slower pace,” said Lockhart. “This suggests that house price appreciation is, for now, more in line with historical norms.”

House prices grew faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. House prices rose 5.9 percent, while prices of other goods and services, excluding shelter, rose 0.9 percent.

“The continuing strength in the economy and decreasing interest rates for borrowers prevented a harder landing in housing markets during the second half of last year,” said OFHEO Chief Economist Patrick Lawler. “Last quarter, though sharper drops occurred locally, no state had average price declines of as much as one percent,” Lawler said.

Click below for charts and links to the full report . . .

2007 Housing Market - Enter the "No Spin Zone"

D.H. Horton Inc.'s CEO Donald J. Tomnitz said what most others in the housing business wouldn't when he proclaimed on Wednesday that 2007 "is going to suck, all 12 months of the calendar year."

His blunt assessment contrasted with much of the spin that has been coming from lenders, realtors, trade groups, home builders and others in recent months. There haven't been many straight shooters discussing the housing and mortgage market collapse.

That's why Tomnitz's quote resonated throughout the financial world. Plain and simple, he told it like it is, at least from his point of view.

Read the full BusinessWeek.com story by Rachel Beck: Click Here