Appraisal Scoop

OFHEO: U.S. Monthly House Price Index Estimates 0.6% Price Decline From June to July

Full Release at:

http://www.ofheo.gov/newsroom.aspx?ID=466&q1=1&q2=None

Appraisal Standards Board Issues September Q&A's - Sales History, Coercion, Confidentiality and Licenses

The Appraisal Standards Board (ASB) has issued their September 2008 USPAP Q&A - Download Sept_2008_USPAP_QA.pdf

Sales History for New Construction - I have received an assignment to appraise a property with newly constructed improvements. Because the property includes new construction, there is no prior sales history of the property as it now exists. However, I do have information pertaining to a prior sale of the site (without the improvements). Does Standards Rule 1-5(b) require me to analyze this prior sale of the site?

Appraiser Coercion - Does USPAP require an appraiser to certify in the appraisal report that he or she has not been coerced to provide predetermined results?

Confidentiality and Review Appraisers - A few weeks ago I performed an appraisal for a lender client. I was recently contacted by an individual who claims that she is a review appraiser that has been hired by the lender, and wanted to ask me some questions about my appraisal. Can I discuss my appraisal with her?

Copy of License in Appraisal Report - I have several clients that request I include a copy of my state appraisal license in each appraisal report I perform. Does USPAP permit me to do this?

Click here for the answers!  Download Sept_2008_USPAP_QA.pdf

Part 2: AMCs will make you Go Bankrupt It's as easy as 1, 2, 3!!

"In the first part of this article, I brought forward some questions and opinions regarding AMCs. In this, the final part, we get into some bigger questions and I ask for some help from good ole Uncle Sam" - Woody Fincham

Money Driven, Ethics be Damned

AMCs don’t allow appraisers to charge their own established fees; they force them to reduce them so the AMCs can add their fees on top of the appraiser’s fee. In order to keep the report price attractive the only give they can get is from the appraiser. Why should the appraisers pay for the services the lender needs? Just considering the cost of petrol appreciation over the last 5 years, the cost of appraisal services should be going up as well, but here we are needing specially trained, college educated, licensed professionals, but the exact opposite is happening.

The training, continuing education expense, and time needed to properly do appraisals (not to mention the overhead to run the business part of it) requires professionals that do this full time and are career minded people. The day of the person who saw opportunity in the housing boom to do something to make more money is gone. The country needs better appraisers than that, we need long term professionals that appraise because it’s in their blood, not to pad the wallet.

"You have to also look very closely at this important fact: AMCs are not regulated on any level by the States or the Federal Government. They are offering a solution that will give the lender what they want, but without much cost, if any, to the lender."

The volume of work that a large lender like Countrywide, Wells Fargo and other big lenders have really offsets fair market competition. Considering the sheer volume of work each of these companies need a month, they go out into the real world where appraisers are small business (most of the time they have less than 4 people in the company) and talk them down on their prices. I read a report the other day that stated 3 out of 4 jobs are because of small businesses. I guess its ok for overly paid executives at these large AMCs, and the lenders that higher them, to ruin an industry so long as it suits their needs. I have spoken with my Congressman, Randy Forbes, and I am still waiting on the man to get back to me. Congress doesn’t care about this specifically; they are too removed from the issues to see how it all works. (All I can do is to refuse to vote for the man, and refuse I will on every position he ever runs for.)

They are using the volume carrot to attract appraisers. For a well respected appraiser who is designated and having been in business for a decade or two to accept this kind of work is almost comical. Many established firms will simply decline the ridiculous fee amounts, and can afford to do so because they have plenty of other work to do. So that leaves the AMCs to troll for the appraisers that are not well established. Being established does not make one appraiser more ethical than another one, but when you have so many new people to the industry, shouldn’t the quality of the work be the primary concern for these companies?

What’s worse than negotiating down an appraiser, is that when a lender first goes on board with an AMC, the AMC often times will not give the appraiser any choice. The mentality is simply to completely disregard the ethical relationship the lender had with a competent appraiser and tell them you will either accept the new fee or else you will be removed from use for the lender. Here are a few examples:

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ASFMRA & LandsOfAmerica.com Team Up - Central comparable sales program for rural properties

The American Society of Farm Managers and Rural Appraisers (ASFMRA), the premier organization for rural consulting services announced today a partnership with LandsOfAmerica.com, LLC (LOA), the nation's leading rural land listing service. Together the two leaders in the industry will provide comprehensive services to members.

The ASFMRA and LOA partnership will provide a central comparable sales program for rural properties to ASFMRA members as well as listing opportunities. The program will benefit not only members and rural real estate professionals but also the buying public by providing and promoting the vast database of rural land properties for sale on the LandsOfAmerica.com website.

Jake Massengale, CEO of LOA says, "It is a big undertaking and a long term program, but with the reach that both of our groups have within the rural real estate market, we think it is a goal that can be accomplished."

LOA provides listing services for rural properties including farms, ranches, timberland, mountain, and waterfront real estate on their network of over 250 rural real estate websites. Members of LOA can utilize this beneficial new program to share information about properties they are involved with selling. As a result, they are able to search the entire program for comparable sales through their main website at  http://www.LandsofAmerica.com

The ASFMRA provides members with management, valuation and consulting services to the agricultural and rural property community with their immense network of professionals. "We are pleased to have this great new partnership with LandsOfAmerica.com. This has proven to be a great new tool in the tool box for managing, valuing and selling rural property," says Merrill E. Swanson, ARA, District VP, serving on the Executive Council for ASFMRA, "I have found that LandsOfAmerica.com is a very cost effective and successful advertising medium to expose rural land listings to a wide variety of prospects. The ability to advertise listings not only on LandsOfTexas, as in my case, but on all of the associated websites provides very good exposure on a national basis. The knowledge of these listings on LandsOfAmerica.com provides appraisers a head start for confirming comparable sales. The new comparable sales data system being developed by LandsOfAmerica.com should greatly aid Appraisers, Managers and Brokers in the American Society."

With the ASFMRA and LOA teaming up to provide these services to their membership base, it increases the exposure of rural properties nationwide and provides valuable tools for sharing information and valuing properties. This information is intended to be a starting place and used in a general way. Members are cautioned to always verify the integrity of the information by a professional.

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AMCs Will Make You Go Bankrupt - It's as easy as 1, 2, 3!!

The evolving market that residential appraisal firms work within is anything but business as usual as of late.  It seems that there is some rhyme and reason to the big appraisal management (AMCs) firms that operate across the country in how they are setting their pricing.  It has almost always been this way, but with times getting leaner and leaner, appraisers are really starting to take notice. 

For everyone to be on the same page, AMCs are companies that act as a third party company between the lender and the appraiser being used to value the property being appraised.  For the sake of fairness here is what Title/Appraisal Vendor Management Association (TAVMA) defines an AMC to be:

“ An appraisal management company, therefore, is an outsourcing solution that is paid by a lender-client to act on the lender/client’s behalf to engage real estate appraisers and to perform the administrative functions involved in the appraisal ordering, tracking, and delivery process.  The AMC recruits, qualifies, verifies licensure, and negotiates fees and service level expectations with a network of third-party appraisers, administrative duties like order entry and assignment, tracking and statusing, pre-delivery quality control, and preliminary and hard copy report delivery. It also involves ongoing quality control, accounts payable and receivable, market value dispute resolution, warranty administration, and record retention”.

Now, that is a very pro-AMC definition and for the most part correct, but there are some things to look at a little closer.

US & Them - There are basically two camps of appraisers that work within the residential appraisal market that deal with lenders.  There is the side that gets the majority of their work from lenders who use AMCs, and there are those that don’t. 

More often than not, the appraisers who depend on AMC work predominantly receive much lower fees for doing the work.  I have seen this in my area where AMCs will contact me to do a report that is traditionally $350 for, the lowest so far, $190.  That is such a low rate that normal appraisers often scratch their heads and wonder how someone can competently do this kind of work.     

Usually the ones that do work with AMCs depend on volume to make money.  When the boom market was running high, no one bothered to really take issue with it.  I know that I had been solicited to do some of that work, but declined it having more work than I could do at the time.  Now, I am on the verge of doing what many of you are doing or considering yourselves:  working at reduced fees, or looking for other ways to supplement income.  That is a sad reality considering more than a few of us are better at our jobs than a good majority of our peers.  Even worse, we are the ones that want to do this as a long term career, not just make money doing something.

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NAR Recognizes "The Appraiser's Water Cooler" as a Facebook for Appraisers

Thanks to NAR's Appraisal Insight blog for a "shout-out" on The Appraiser's Water Cooler!

Facebook for Appraisers

For those of you who want the social interaction of Facebook without all the poking, status updates, and lame pictures of high-school friends, Appraisal Scoop has the answer. It's called:

The Appraiser's Water Cooler

This is a social networking forum for appraisers. It appears useful, and anything that increases appraiser interaction and communication is a plus in my book. So sign up.

Source link: click here

While you're visiting NAR's Appraisal Insight blog check out these hot topics:

• Appraisal Foundation President expects Announcement on the HVCC Soon
• Congresswoman Biggert promotes Appraisal Independence
• Will Conservator Repudiate HVCC Agreements?
• Are Lenders Abandoning AMC's?

Implementation Date of the Home Valuation Code of Conduct Postponed?

The MortgagePress.com's eNewsletter TMP Informer "Your Weekly Mortgage Industry News Resource" is powered by the familiar AllRegs.com which is a trusted source of information.

Their 9/17/2008 edition includes a Fannie Mae Single-Family Update to lenders on the status of the Home Valuation Code of Conduct (the "Code").

The Link to full document link in the article was returned with [AllRegsOnline was unable to locate the document (id: 'fnma/annoc/LL03-08')].

I also did a search of http://www.FannieMae.com and https://www.efanniemae.com/ but could not find the source alert or update document.

If YOU can locate the original document/alert please let us know the link send me a copy and I'll upload the document here.

Author: Brian J. Davis, RAA - Brian Davis & Associates - Brian has over 24 years of appraisal experience in Central, IL and hosts the Appraisal Scoop blog and the WinTOTAL Users Group an email forum for appraisers.

What is one of the quickest ways to gain widespread name recognition and build your appraisal business?

What is one of the quickest ways to gain widespread name recognition and build your business? You may think that it is related to the internet or expensive direct mail campaigns, but the answer is a much older advertising agency standby.

Give up? It is the press release. Some refer to it as a media release or news release, but whatever you choose to call it, a press release can do wonders for your business. In addition to helping you gain widespread recognition, press releases are also inexpensive compared to other marketing initiatives. As a matter of fact a successful press release amounts to free advertising. That’s right, I said free.

Now you may think that this is a technique that only large appraisal companies can benefit from. If you are thinking that, you are mistaken. Anyone can reap the benefits of a press release and that includes one-person operations.

Briefly, a press release gets a story about your company in the news. Press releases have proven to be one of the most effective forms of advertising available. Traditional ads are becoming less effective because people are inundated with them everywhere they go. On the other hand when your company is the basis for a story and not just another advertisement, guess what happens? Credibility and recall rates skyrocket. You get the exposure you need and don’t have to pay expensive advertising rates to get it.

Okay, now that I have your attention the next question that is probably on your mind is how do I go about writing one of these press releases? The steps are actually very simple and you don’t have to hire an advertising agency to prepare one.

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FHFA Announces Appointments of Chairmen of the Boards of Freddie Mac and Fannie Mae

Washington, DC – FHFA Director James B. Lockhart today announced the appointments of new non-executive chairmen of the Boards of Directors of Fannie Mae and Freddie Mac. John A. Koskinen has agreed to serve as the non-executive chairman of Freddie Mac. Philip A. Laskawy will serve as the non-executive chairman of Fannie Mae. FHFA directed new boards to be formed for both Fannie Mae and Freddie Mac to ensure solid leadership and good corporate governance.

“Both men bring distinguished experience to their new roles, and I thank them for their public service during this difficult period,” said FHFA Director James B. Lockhart. “Good corporate governance at the Enterprises is especially important right now, and I appreciate the willingness of both of these men to provide Board leadership during these challenging times.”

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Fast-Cheap-Good: The quest to diversify and sell our professional expertise

As appraisers we tend to see the world from the perspective of what we are exposed to.  Our sources of information come from those that derive a profit for us, through the sale of software, subscriptions and dues.

Software providers, appraisal organizations and vendors tend to focus on the mainstream of our work . . . the lending industry.  These companies allow us the ability to discuss the applicability of their service as it relates to their revenue generation.

As we squabble over our ever reducing source of our own revenue and discuss applicability of BPO’s, AVM’s, AMC’s that compete on the basis of fast and cheap services   More so than not our conversation of what are the minimum acceptable standards are, what are the expectations of our clients, and what is legally correct as oppose to prudently correct get emphasized.  Although the opinions and explanations of our leaders sometimes creates even more confusion based on the answers and interpretations we receive.  Even more frustrating many times the opinions of our leaders tend to reinforce their own revenue stream or the revenue stream of their association. 

"Because most appraiser revenue comes from the lending industry, we tend to overlook the niches in which the quality of our analysis, the reliability of our reports."

That said, there are other markets, niches we can provide that are not so concerned with prices, speed and cost.  They are more concern with accuracy, reliability and professionalism.   Appraisers can extend beyond the mainstream of the industry, to capture a market by doing what we do best.  Gather information and coming to a conclusion.

My personal quest to determine how can an appraiser sell quality?   This search brought me across Gary Crabtree’s site http://www.affiliatedappraisers.biz  .    

Gary provides a trend analysis, similar to what many people are learning for the first time through several wonderful providers of education, products and services.  He provides it on a regular basis and charges a fee. Download 07_08_Monthly_Housing_Report_Crabtree.pdf

I asked Mr Crabtree if I could interview him for this article and he agreed.  The result of our conversation is posted below.

Click here to continue reading . . .