Appraisal Scoop

How Do I Sell Myself? Appraisers Want To Know

Author: Jeff Patterson, owner of Residential Appraisals - For the past 25 years, Jeff has been providing residential appraisals for most of southern and central Maine.  Jeff's clients range from private appraisals to working with brokers, banks, litigation support and expert court testimony.

In the past 25 years I have gone through numerous seminars pertaining to selling and marketing.  This does not make me an expert, but what I can say without doubt is that if you don’t ask for the business you will not get it.  With that in mind I have separated my principles of marketing in four parts . . .and will present them in this two-part series.

• Marketing 101 - It’s all about numbers
• Marketing 102 - Profit is all about effective marketing
• Marketing 103 - Recording what works and what doesn’t
• Marketing 104 - It is all about your plan

Marketing 101 - It's All About The Numbers

101 Marketing is about numbers, the more people you ask for the work, the bigger chances you have you’re going to get a yes. You have to ignore the no’s, and simply concentrate on how many “no thank you’s” you have to go through in order to get a “Yes”.  While supply and demand for your services comes into play, it comes down to the less demand the higher your numbers “no’s” you have to go through.   That is to say, in a low demand market you have to advertise your services more to get the same amount of orders you did when there is a high demand.

Let’s say you’re looking to market your services several different ways.

1. Telephone calls
2. Mailings
3. E-mails
4. Door to door solicitation

The more business you solicit the more your going to receive, and each way will have different results.  At this point and time the 80/20 rule should be acknowledged, which states that 80 percent of your business will come from 20% of your clients or marketing efforts. Meaning in your given area, 20% of marketing campaigns that will work and 80% will not.  So in order to be successful you have to get use to rejection.

Once you understand this, your effective marketing comes into play or marketing 102.  Before I digress into marketing 102, let’s acknowledge some percentages of returns from some of the campaigns.

Mass marketing is one of the cheapest methods of marketing.   However the return might be less than 02%.  That is to say, you send out 1,000 e-mails or post cards you can expect 20 inquires. . While telephone calls typically give you a 20% return so out of 100 calls you will get 10 inquire.  Door to door is hard to get a handle on, however my results have been about 25%.  Which means 40 contacts give you 10 inquires.

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The power of the "collective pen" - HVCC Call To Action!

AUTHOR:  Patrick Egger is a Certified General Appraiser located in Las Vegas, NV. He teaches continuing education classes on the housing market, appraisal issues for real estate agents and appraisers. Click on Outside The Boxes for a collection of Patrick's articles on Appraisal Scoop!

"If its going to be ... its up to me" ... uttered by the immortal Dale Carnegie. We talk about the "Skippy's", enforcement, low fees, AMC's, pressure, etc. and many of us have the attitude that (like the weather), nothing can be done about it. Let's not forget that somewhere along the line, we (as a profession) trained (or failed to train correctly) the "Skippy's", accepted low fees and bowed to pressure. Appraisers lament about a lot of water under the bridge that we really can't do anything about, or can we?

There was an article the other day (based on 40,000+/- comments of which, 31,000 came via Alamode in a two-day period) that OFHEO is considering changes to the HVCC. It would seem that the power of leadership and organization provided by Alamode (and Dave Biggers footing a large printing and postage bill) made an impact.

At the Alamode Convention in Chicago, Dave asked the attendees to meet with their Congressional representatives and voice their concerns with the HVCC. While I agree with that process in concept, I do not think it is practical. As a profession, we are not organized and proactive, we are individuals, reactive and disorganized to say the least, concerned with what's on our personal tables now.

That said, I do think we have the ability to make a statement that will have an impact. I talked briefly to several of the team members from Alamode and suggested that Alamode provide the "talking points" in the form of a petition that appraisers could download and use to gather signatures registered voters.

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Editorial: Sen. Chris Dodd Rides the Tiger - Tied To Countrywide Loan

Author: Greg Hartley - Blue Moon Appraisals 3216 Gaylark Road, Bmingham, AL  35216

Election year politics have just taken an interesting, if somewhat obscene, turn with the recent revelation that Senate Banking Committee Chairman Christopher Dodd, D-CT, may have received preferential mortgage terms on two mortgages in 2003.  Sen. Dodd, a former presidential candidate, is reported to be a potential vice-presidential pick by Sen. Barack Obama.

The Associate Press and Wall Street Journal reported on Friday, June 13, that Sen. Dodd reportedly received special treatment from Countrywide Mortgage when he refinanced both his Washington townhouse and his principal residence, saving about $2,000 a year in interest payments on the townhouse and $700 a year on his home in Connecticut.

The savings in interest for both home loans totaled about $75,000 over the life of the loans. How very interesting it is that a senator who is trying to flesh out a plan to rescue homeowners may have benefited from the actions of a leading offender in the mortgage meltdown.

Sen. Dodd said, "As a United States senator, I would never ask or expect to be treated differently than anyone else refinancing their home." Maybe he didn't ask to be treated differently but it doesn't appear that he turned down the loan terms down, either. What is really funny about this fiasco is that Sen. Dodd has criticized Countrywide as a company whose practices he has called "abusive."

Sen. Dodd was also named as a "Friend of Angelo," apparently a special program that awarded discounts and waived fees for people who know or are considered friends of Angelo Mozilo, chairman and founder of Countrywide Mortgage. Yeah, I'm in the business and I had to beg "Bob" to give me a 1/2% break on the origination fee when I refinanced.

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FHA Extends Financing for Immediate Purchase of Foreclosed Homes

Measure seen to bring stability to home values and accelerate sale of vacant properties

WASHINGTON - In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration today announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.

• For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders.
• The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.

"A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community's recovery," said Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. "The action we take today will allow homebuyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country."

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Appraisal Institute - Their Residential Database and FNC's Impact on the Appraisal Profession. What's Your Opinion?

The most recent newsletter by Appraisal President, R. Wayne Pugh, MAI, addresses technology and other forces impacting the residential appraisal field, including property databases, AI Ready, FNC, automated valuation models ("AVM"), Appraisal Institute residential report forms ("AI Reports"), the Home Valuation Code of Conduct ("HVCC"), the Cuomo/Fannie Mae/ Freddie Mac Agreement, and Appraisal Management Companies(AMCs).  Download AI_061208_Newsletter.pdf

Read the lead segment below . . .

Approximately 10 years ago, the Appraisal Institute Board of Directors foresaw the advance of technology in the appraisal field, the oncoming standardization of data formats, and the potential development of databases relating to real estate.  Given the strategic opportunity of these developments, the Board decided that it would be best to have an appraisers' database rather than databases developed by others. 

The thinking was that appraisers would "control" the data they contributed to the databases and would profit from their choice to sell that data.  The Board also decided that it would be most beneficial for the Appraisal Institute to be the leader in establishing appraisal data standards rather than have others impose their own standards on appraisers.  In other words, the Board wanted the Appraisal Institute to be the leader among inevitable forc es tha t would bring benefit to appraisers and the public, instead of ceding leadership to others who might not have the appraisers' and public's best interests in mind.

The result was the creation of the Appraisal Institute Residential Database (AIRD) and the AI Ready residential appraisal data standard.  AIRD was established through a joint venture agreement between the Appraisal Institute and FNC.  The Appraisal Institute made a minority interest capital investment in the joint venture and licensed some of its trademarks, including AI Ready, to AIRD for use in connection with the residential database. 

In 2002, FNC expressed an interest in purchasing the Appraisal Institute's minority interest in AIRD.  As part of this sale, the Appraisal Institute received an option to purchase shares in FNC should FNC go public, be sold or be merged into another entity.  The Appraisal Institute also received royalty payments from FNC for the use of the licensed trademarks in an amount that allowed the Appraisal Institute to recover its original capital investment.

The Appraisal Institute currently has no ownership interest in FNC and receives no royalties or profits from FNC.  The Appraisal Institute simply owns stock options that could be converted into cash if and when FNC goes public, is sold or merged into another entity.  The aforementioned license agreement runs through 2012. 

While the AI Residential Database no longer exists, the AI Ready Standard continues to this day.  This appraisal data standard, developed largely by Appraisal Institute residential members for the benefit of appraisers, is fast becoming the pre-eminent appraisal data standard in the field, helping to ensure a consistent, high quality standard for appraisers to use and bringing brand recognition to the Appraisal Institute and its members.  A multitude of residential software vendors whose software is compliant with the AI Ready Standard use the licensed AI Ready logo.

Unfortunately, the market recently has been flooded with misinformation about AI Ready, with some coming from parties who have financial interests in raising concerns about AI Ready. 

For a detailed explanation about AI Ready that addresses much of this misinformation, please see the Q&A : Click Here.

To read the entire newsletter click here: Download AI_061208_Newsletter.pdf

Fannie Mae's National Underwriting Center (NUC) relaxes requirement to submit completed orders in AI Ready format

According to representatives of Fannie Mae:

"Since relocating our appraisal ordering process to AppraisalPort in April, we have discovered limitations within various appraisal software providers using the AI Ready format when trying to send the level of documentation that the NUC requires."

Dear Valued Fannie Mae Appraiser,

You are receiving this notice because you have in the past, or are currently completing appraisal work for the National Underwriting Center (NUC) at Fannie Mae.

Since relocating our appraisal ordering process to AppraisalPort in April, we have discovered limitations within various appraisal software providers using the AI Ready format when trying to send the level of documentation that the NUC requires. As a result of these limitations, the NUC is relaxing the requirement to submit the completed orders in AI Ready format.

Starting immediately, you may send the completed reports as either a PDF or an AI Ready document to NUC.

This notice pertains to those appraisers who are completing work for the NUC. IMPORTANT NOTE: The NPDC/REO Department requires all reports to be delivered in the AI Ready format.

Download FNMA_NUC_AIReady.png

Thank you,

Fannie Mae, Dallas, TX

I do wonder why the National Underwriting Center (NUC) for Fannie Mae can see the AIReady's limitations in delivering the "level of documentation that the NUC requires" but their National Property Distribution Center (NPDC/REO) can't?!

Runt Rants - Energy Crisis is Similar to the Appraisal Crisis

AUTHOR: Ken Verrett is the owner of Acorn Appraisal Associates, a 22 year old firm offering a wide range of quality appraisal services to the Financial and Business Communities in the greater Houston SMSA

Watching the dramatic rise in the price of oil the last few weeks, the resulting rise in the price of gasoline at the pump, and the actions of our elected representatives and those seeking election is both entertaining and instructive.

• Entertaining to watch folks complain about the result but not identify or agree on causes. 
• Instructive because there are parallels to what the Appraisal Profession has experienced in the last few decades.

Neither the Democrats nor the Republicans have anything close to a policy to address the energy problem Both have had ample time and ample opportunities to do so. They certainly can’t agree on the causes. One side wants to increase the search for new oil reserves. The other worries about the environmental impact of that alternative and prefer to regulate increased mileage standards. Both want to find alternative fuels, alternative energy sources, but neither are willing to describe the costs to voters of taking bold action. There is even a lively debate about the amount of usable oil reserves left in Earth, and that debate centers around the term Peak Oil.

Peak Oil is not about running out of oil. It is about the crossing of demand and supply curves and what results when that happens.  It is about lead times to develop alternatives.  It is about the implications of such crossings of the curves as it relates to a critical commodity.

Energy Costs and Our Business

It’s not a just an interesting political problem.  It’s an appraisal business problem.  Today in Acorn I am dealing with the implications of $4.00 gasoline.  We give a mileage allowance.  Should the allowance be increased to compensate the staff?  Should Acorn encourage the demand curve change by granting increased mileage allowance for those with fuel efficient autos? Whence does the cash to achieve that arise? 

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Part 2: Slow But Steady Wins the Race - Virginia REAB Hears Petition To Prohibit Use of Appraisal Delivery Webportals That Transmit Altered Appraisal Reports

Author: Woody Fincham: This article is the second of two first hand accounts of Virginia Real Estate Appraiser’s Board meetings.  These are the author's own opinions. They are not intended as an attack on FNC, INC or any one listed in the article. The article is intended to inform the general appraisal public of the landmark Virginia State Appraiser's Board policy process.  See Part 1: Click Here.

June 4 - Richmond, VA - REAB Committee Meeting Regarding Dodd Petition  -  Today was the very first committee meeting concerning the Dodd Petition.  It brought together several people from the last State Board Meeting.  The committee is chaired by Pat Turner, with Harry Little, Richard Pruitt, and Diane Quigley.  Of course typical staff from DPOR is there, as well as a public audience.  Included in the audience besides myself: George Dodd, Jane Allen, Tim Butler, Alex Ulinski and Neil Olson.  It was both heart warming we had as many as we did attend, but also a little discouraging there were not more. 

Mr. Turner kicked off the meeting stating that he felt no new regulations were needed, nor was there a reason to allow for the petition to go through as written.  The books already had the proper language in them to give the state a reason to take notice.  Mr. Turner also stated that certification 24 in the 1004 was one of the main problems that the board will have with converted reports for web-portal uploads.  He felt the actual language there, was straight forward enough to indicate the way some of the portals work, FNMA guidelines are not being met.

That means FNMA’s loans may be technically un-sellable by their own rules.  That seems to be a very big problem to me, but I always say, I am just an appraiser some things are too big for me to understand.  Imagine what the media would do with that little bit of information, they would love to lead a story about how Fannie Mae and the rest have technically allowed these companies to help force appraisers to.  In my opinion, it seems like FNMA has no interest in seeing that appraisers are in compliance or not, they just started using  FNC, INC for their REO management. 

Why would FNMA want to use a platform that makes an appraiser back into a corner and change his workflow and scope of work.  Is FNMA indicating that they have no confidence in real appraisers and our proven ability to out perform electronic appraisals and other alternative valuation products?  They seem to think a BPO is something of value, and we all know better than that.  (Back to the matter at hand…)

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FHA Seeks to Ban Seller-Assisted Payments

Federal housing officials are trying again to ban seller-assisted down payments on federally insured mortgages, amid concerns about mounting losses tied to these loans.

HUD's Federal Housing Administration (FHA) will reopen the public comment period on a proposed rule that would ban seller-funded downpayment assistance on mortgage transactions insured by the FHA. The proposed rule will be re-published in the Federal Register and comments will be accepted for 60 days following publication. The rule can also be viewed on FHA's website.

Under the seller-funding practice, a third party -- typically a charity -- provides the down payment for the buyer and is then reimbursed by the home seller, often a home builder. This can help home sellers close deals with buyers who can't come up with down payments on their own.

In a speech to the National Press Club, HUD's Assistant Secretary for Housing-Federal Housing Commissioner Brian D. Montgomery warned FHA must take action because these loans, which now make up one third of FHA's portfolio, are causing substantial losses. 

This year, as a result of its annual re-estimate, FHA had to book an additional of $4.6 billion in unanticipated long-term losses, mostly due to the increased number of certain types of seller-funded loans in the FHA portfolio.

The rule would clarify that downpayment funds for FHA-insured mortgages cannot be derived from sellers - directly or indirectly - or any other party that stands to benefit from the transaction financially.

"The IRS, GAO and our own Inspector General have previously expressed concerns with these circular financing schemes.  Data clearly demonstrates that FHA loans made to borrowers relying on seller-funded downpayment assistance go to foreclosure at three times the rate of loans made to borrowers who make their own downpayments," noted Montgomery.

Related Sources:

• FHA Seeks to Ban Seller-Assisted Payments
• Prepared Remarks of Brian Montgomery at the National Press Club

How Many of you Have $10,000 Just Lying Around? - S. 2452 Home Ownership Preservation and Protection Act

I read one of Pat Egger's articles up here a few weeks ago and it had a Marvel Comics image and spoke of appraisers picking a side.  The Homeownership Preservation and Protection act seems to be at face value, a good thing. 

Here is a break down using the Library of Congresses Thomas system:

The following summary is provided by the Congressional Research Service, which is a nonpartisan government entity that serves Congress and is run by the Library of Congress.  The summary is taken from the official website THOMAS.  This is the date introduced to the committee.  It is still in its very beginning stages.

Home Ownership Preservation and Protection Act of 2007 - Amends the Truth in Lending Act to redefine high-cost mortgages and attendant lending practices.  Sets forth a new formula for points and fees for open-end loans, and provides for bona fide discount points.

Sounds harmless at this point, like most things written by politicians you have to dig into the meat of the bill to see who is at the short end of the stick. 

Prohibits: (1) prepayment penalties; (2) balloon payments; (3) yield spread premiums; (4) acceleration or debt; (5) evasions, structuring of transactions, and reciprocal arrangements; and (6) modification and deferral fees.

Here again, sounds like it has the consumer at heart.  God knows the entire home owning public was set out to dry with these types of problems. 

Prohibits creditors from financing, in connection with a high-cost mortgage, any prepayment fee or penalty, or any points or fees.

Since many homeowners are not savvy enough to catch these things, I can see why this would be a good thing.  It will result in lower profit margins for the lenders, but they make excessively much money as it is.

Prohibits an originator from making or arranging a high-cost mortgage loan that involves a refinancing of a prior existing home mortgage loan unless the new loan will provide a net tangible benefit to the consumer.

It is sad that common sense like this is required of a bill, but obviously lenders are predatory and one sided in regards to profit

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