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Power Tools for Appraisers:
Archive of Earlier Posts
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May 24, 2006
Multi-Million Dollar Home Sales Robust
Despite a slight cooling in the real estate market, sales of $3-million plus homes  have not felt the pinch for the first quarter of 2006. Chicago, Naples, Florida, San Francisco and Washington D.C. are among the areas experiencing a surge in million-dollar home sales. Not all regions are enjoying this high-end boom, however. Sales of these homes in San Diego, Fairfield County, Connecticut and Lake Forest, Illinois are seeing prices dipping.
(df)
May 10, 2006
Appraisal License Reciprocity
Thinking about relocating to another state? Wondering if your appraisal license is transferable? Check out the Appraisal Subcommittee of the Federal Financial Institutions reciprocity chart. It lists agreement and endorsement requirements by state. Additionally, find contact information for all the appraisal licensing boards in the United States.
(df)
May 4, 2006
Is there a ghost in the house?
While taxes and death are among life's certainties, many buyers feel squeamish about purchasing a home where someone actually died. According to an article in the New York Times, it seems the method of passing rather than the actual death is the real concern. If a suicide or murder took place the home may command a lower price and sit on the market longer. Case in point, the Menendez home (where Erik and Lyle Menendez murdered their parents) sold for $1-million less than its value while Jacqueline Kennedy Onassis' Fifth Avenue home has appreciated substantially.
(df)
April 20, 2006
Appraisers in the "Top Ten"
According to Money Magazine, a job as a real estate appraiser is among the top ten in the U.S., based upon a number of factors including employment opportunities and compensation. Since appraisals are required for a number of transactions, a downturn in the real estate market will have little impact on these jobs.
(df)
April 11, 2006
Impact of Historic Designation
During a one-year period ending September 2005 some 34,000 properties in the U.S. received historic district status, double that of only five years ago. Homeowners and communities seek this status for two reasons – to increase property values and to hold on to the past by staving off the impact of developers. While property values can increase by 5 to 20 percent and property taxes may be reduced, there are drawbacks to this designation. Home owners must maintain the property to specific standards and lack of new development and growth can impede a city's progress.
(df)
March 31, 2006
Is Modern Architecture Edging Out 'Pre-War' in Manhattan?
Manhattan's stately, lush pre-war buildings (the envy of generations of New Yorkers) are losing their status among younger, affluent home buyers. What their parents long found desirable has given way to modern simplicity, convenience and high-tech amenities. Shunning the understated style not to mention co-op board approval, young buyers are embracing contemporary glass structures. Will the appeal of these new structures have the lasting power of the pre-wars? Only time will tell.
(df)
March 10, 2006
Property Values and Proximity to Public Transportation
Are residential and commercial properties affected by nearness to public transportation? The success of the Hiawatha Line in Minneapolis suggests this is indeed the case. Not only have businesses seen increased revenues from commuters, but property values along the Hiawatha Corridor rose 83% between 2000 and 2004. Studies by the American Public Transportation Association suggest that the areas near commuter rail lines experience increased property values. These include larger cities such as Chicago, Boston, Atlanta, Washinton D.C. and Dallas.
(df)
February 24, 2006
Zillow No Substitute for the Real Thing
The Appraisal Institute has raised questions about Zillow.com, a new beta-mode website offering free valuations of residential properties. The Appraisal Institute's sampling indicates some home values were off by as much as 40%. They also raised concerns that consumers may make a decision based solely upon the Zillow estimates rather than a real appraisal with a homes' features, upgrades, zoning issues and comparables taken into account.
(df)
February 9, 2006
Ameriquest $325M Settlement Impacts Appraisal Ordering Procedures
In the wake of a settlement with Ameriquest due to allegations of deceiving borrowers and putting pressure upon appraisers to inflate home values, Ameriquest is now centralizing property appraisals. In addition to financial penalties, reports Realty Times, Ameriquest must adopt new policies to select appraisers from panels created in each state and prohibit Ameriquest employees from influencing appraisals.
(df)
February 2, 2006
Appraisal Institute Consumer Brochures
The Appraisal Institute has created several brochures which will help educate consumers with the appraisal process. The topics range from Understanding the Appraisal to Finding value in a real estate appraisal career to Professionals providing real estate solutions.
(df)
January 26, 2006
Heating Costs & Appraisals
Increasing natural gas and electricity costs impact more than monthly heating bills. This article from the Louisiana Chapter of the Appraisal Institute warns that rising energy costs could offset property gains and produce rent increases. A study by the Urban Land Institute and PricewaterhouseCoopers suggests that energy prices, along with a number of other factors, will curb growth in the real estate industry over the next year.
(df)
January 18, 2006
FBI's "Operation Quick Flip"
Several federal agencies including the FBI, HUD, IRS, U.S. Postal Service and the Department of Justice have announced an initiative to combat ever-increasing mortgage fraud. While mortgage fraud is one of the fastest growing crimes in the country, California, Nevada, Utah, Arizona, Colorado, Missouri, Illinois, Maryland, Georgia, and Florida show an especially high prevalence of this offense. The Appraisal Institute has praised this investigation in a letter to the FBI.
(df)
January 06, 2006
New Student Appraiser Guide
The Appraisal Foundation has created a Student Appraiser Guide. It was developed for those new to the field to assist in understanding the prerequisites for appraiser credentials. It discusses regulations, continuing education and includes useful checklists for trainees covering educational and task requirements. The guide also includes increased AQB requirements which must be met by 2008.
(df)
December 21, 2005
HUD/FHA Revised Single-Family Reference Guide
HUD has updated their procedures for appraising FHA family-insured mortgages. (Note: you will need to register for access to the guide.) This guide supplements HUD's handbooks, mortgagee letters and other official policies. Also, the use of the Fannie Mae revised appraisal forms is mandatory beginning January 1, 2006.
(df)
December 13, 2005
Air rights selling for $430/square foot in New York
Developers have paid double the going rate for air rights above the famous and upscale Park Avenue. They are banking on a very high-end, limited availability market. A Methodist congregation in Manhattan has decided to sell the air rights above their church for $30-million.
(df)
December 6, 2005
"Micropolitan" characteristics
Not metropolitan, not rural, the Census Bureau has a new category called micropolitan areas distinguished by housing characteristics, affordability, urban qualities and prices rather than geography. This Appraisal Journal article helps explain this category which includes housing running the gamut from most affordable to least affordable. See the U.S. Census Bureau's Micropolitan Map by county.
(df)
November 17, 2005
Where appraisal fees are highest
In a recent state-by-state survey of lenders, Bankrate.com explored average closings costs for residential transactions around the U.S. New York and Hawaii have the highest closing costs (all over $3,600), while Kansas, South Dakota, and Wyoming have the lowest (under $2,300). The survey also outlines appraisal costs for each state. Hawaii and Alaska are by far the most expensive, at $511 and $512 respectively, followed by Montana ($344) and Washington ($341). Otherwise there was little variation in appraisal costs, with most other states falling in the range of $309 to $319. (Click on a state to see the appraisal and other closing cost details).
(fh)
November 16, 2005
Impacts of lawsuits over construction defects
Lawsuits over construction defects are becoming almost as common as new home construction sites. States from New York to California are grappling with a boom in construction defect litigation. What effect do allegations of defective construction have on the properties themselves? You'd logically expect the property values to decrease, and according to a case study of a project in Denver appearing in the Fall issue of the Appraisal Journal, you'd be wrong. On the contrary, properties sold after a lawsuit was settled actually gained value : "The actual average gain on resale for original owners was $24,018, or 22% of the owners' original purchase price." The reason for the discrepancy, the authors say, is simply that the buyers and sellers didn't take the lawsuit's allegations into consideration when settling on a sales price. The case study "provides an objective method to use in analyzing any drop in sale prices or diminution in value in a condominium project where allegations have been made concerning detrimental conditions due to defective construction."
(fh)
October 24, 2005
Are homeowners associations good for property values?
Homeowners' and condo associations provide any number of services, from road maintenance to trash collection to medical care. Some 54.6 million people live in neighborhood associations, but are they good for home values ? A study in the Fall issue of Regulation looked at several neighborhoods in Northern Virginia and found initially that houses within homeowners associations (HOAs) sold for significantly less than those without HOAs. But after factoring in the homes' ages and interior characteristics, the authors found something interesting: "Holding all else equal, we estimate that consumers value a three-bedroom home in an HOA about as much as a four-bedroom home without an HOA. We suspect that most people consider this a significant increase in value, which helps to explain why HOAs have become so popular."
(fh)
October 17, 2005
Fannie's new forms "not conducive to alternative uses"
Fannie Mae's new appraisal report forms officially go into effect on November 1, just a few days away. Appraisers using the new forms "will need to do more to verify how they found information on comparable sales" and "also will require more detail on prior sales of listings of the property over the last couple of years," says a report in yesterday's Chicago Tribune. In the past, Fannie Mae's forms were also used to report appraisals for divorce settlements, appraiser consulting services, and other non-lender purposes, but the new forms "are not conducive to 'alternative uses' because of the specific language within the forms," according to a recent article in the Appraisal Journal. The article goes on to explain the changes and looks at a new Appraisal Institute form specifically designed for alternative uses.
(fh)
October 14, 2005
Interest rates up, appraisers down
Interest rates are heading up, the number of mortgage refinancings are heading down, and as a result, reports the Denver Post, "the proportion of Colorado real-estate appraisers renewing their licenses is dropping." Twenty percent of Colorado's appraisers opted not to renew their licenses last year, according to the state's division of real estate. "Rising interest rates likely aren't the only reason license renewals are down, said Mick Shannon, owner of Avanti Appraisal Group in Lakewood. Appraisers are increasingly under pressure to appraise homes for more than their true value."
(fh)
October 5, 2005
2005 USPAP effective dates extended
The Appraisal Standards Board of the Appraisal Foundation has announced that the 2005 USPAP will remain in effect until at least June 30, 2006. The schedule change will allow the Board to take action on several proposed edits to the USPAP and allow the appraisal community some time to adjust to the changes. The 2006 USPAP will be released early next year, and will be in effect from July 1,2006 through Dec. 31, 2007. (The 2005 USPAP can be found on the Appraisal Foundation's website).
(fh)
September 29, 2005
HUD streamlines appraisal process
The Deparment of Housing and Urban Development has taken steps to accelerate the home purchase process through the Federal Housing Administration (FHA) by eliminating two of its forms and updating procedures. Appraisers and real estate agents applauded these actions, which include the elimination of two forms, including the Valuation Conditions (VC) form. As well, FHA will now utilize four of Fannie Mae's industry-standard appraisal forms.
(df)
September 26, 2005
AVMs useful, but not perfect
Despite opposition from many appraisers, automated valuation models (AVMs) are growing in popularity among lenders, and by some estimates are involved in as much as 50 percent of originations. But the models still have a long way to go , according to the August issue of Mortgage Banking. Too much focus has been given to testing and modeling, the article says, when the industry should be focusing on the models' credibility and use in business practices instead. "With the exception of the GSEs and a handful of national lenders, to date, the industry's approach to model validation and implementation has been disappointing."
(fh)
September 21, 2005
Consider the appraiser's tasks to find a good deal
Responding to a question about how renters can make sure they're getting a good deal, the Rental Savvy Q&A column in Sunday's Los Angeles Times came up with an interesting answer: think like an appraiser. The column suggests that renters look at many of the factors appraisers consider in determining value: neighborhood, age of the property, price, size, noise, condition of appliances, and so on. "Professional appraisers consult public records or listings for information, but the researching tenant has other resources, such as local listing services — both the Internet and hard copy — and neighborhood 'For Rent' signs with phone numbers to call for specifics."
(fh)
September 15, 2005
Historic designations pay off
Many cities and towns are making greater use of historic designation of properties and neighborhoods. But do properties actually benefit from being in historic districts ? A study in the fall issue of Real Estate Economics says yes. Examining properties in Elvis's hometown of Memphis, the authors found that properties in historic neighborhoods appreciated faster than those in other neighborhoods. The benefits don't apply only to older properties -- oddly enough, the authors also found that newer properties (those less than 10 years old) located in historic districts often had even better appreciation rates than older ones.
(fh)
August 22, 2005
Cell towers? Not in my backyard!
Everyone uses cell phones but does anyone want a cell phone tower in their neighborhood? "No studies have shown conclusive evidence that radio-frequency emissions are harmful at levels allowed by the Federal Communications Commission. As a result, the law prohibits rejection of a tower based on health risk," the Associated Press reported this past weekend. "Yet fear of the uncertainty remains." Results of a public opinion survey of homeowners appearing in the latest issue of the Appraisal Journal confirms that assessment. The article examines the impact of cell towers on residential property values based upon both residents' perceptions and actual property sales data. (For more on this topic, be sure to visit the Virtual Library's Field Guide to the Effects of Power Lines on Property Values).
(df)
August 15, 2005
A boost for appraisers from the Kelo decision
The Supreme Court's recent decision in the Kelo vs. New London case has created a frenzy of attention on the concept of property rights. As experts analyze the decision's impacts on eminent domain, Forbes.com asserts that real estate appraisers hold one of the keys to help protect the interests of property owners. "Know what your assets are worth. At a minimum, this will involve enlisting lawyers, accountants, real estate appraisers and perhaps an engineer or two to help you determine the 'highest and best use' for your property." (For more on the Kelo decision, surf over to the Library's Field Guide to Private Property Rights).
(fh)
August 7, 2005
Please go away
Is turning down new business ever a good idea? The Canadian Appraiser says yes: "One of the most common mistakes business owners make is to accept money from anyone who is willing to pay for their product or service - even if the customer is not the ideal fit for their business." The magazine offers seven situations in which it's okay to say no . When it comes to the well-being of your business, knowing when to pass a customer along to someone else can be just as important as attracting new ones.
(fh)
August 1, 2005
Is the competitive mortgage business negatively impacting appraisals!?
The August issue of Money Magazine suggests that the appraisal process is not always working as it should. As lenders cut costs, appraisers may be pushed to scrimp on quality in a number of areas including: pressure by mortgage companies to inflate appraisals; too low appraisals, due to old information; not joining realty associations. The article suggests increased diligence by the buyer.
(df)
July 21, 2005
Appraiser ID theft on the rise
Apparently it isn't terribly difficult to steal an appraiser's identity, according to an article from NAIFA. Simply finding a license number is nearly all it takes. License numbers can often be readily found on websites, business cards, or around the appraiser's own office. The problem has resulted in $40 million worth of forged appraisals in Illinois alone.
(df)
July 13, 2005
The legal effects of toxic mold on real estate values
A review of litigation of 10 mold cases whose settlements included large payouts (some higher than the actual value of the property) as well as considerable punitive damages. This Appraisal Journal article suggests a contingent valuation (CV) analysis as a means of investigating the effects of mold damage. Additionally, a survey was conducted to determine on what property a buyer would bid among four less-than-desirable scenarios include mold contamination. The mold-contaminated property scored lowest of all four options.
(df)
June 28, 2005
FDIC Appraisal Standards FAQs
The FDIC (Federal Deposit Insurance Corporation) and other regulatory agencies have prepared FAQs (frequently asked questions) regarding current appraisal standards. They suggest these be reviewed in conjunction with the Federal Reserve Board’s Interagency Appraisal and Evaluation Guidelines of 10/27/94, as well as the joint statement Independent Appraisal and Evaluation Functions of 10/28/03.
(df)
June 24, 2005
"A real numbers game"
Public radio's Marketplace adds more fuel to the debate on overinflated appraisals with its report on the "dirty little secret" of the home financing biz. Appraisal numbers generated to please clients rather than reflect reality are becoming a problem -- but how big a problem? Marketplace taps several experts, including NAR Appraisal Committee member Frank Gregoire, for their takes on the issue.
(fh)
June 20, 2005
Buyers: pay more attention to the appraisal process
In his nationally syndicated column this weekend, Kenneth Harney took a look at the issue of overinflated appraisals from the buyer's point of view. Different appraisal methods "frequently produce different valuations on a home. Make sure the appraisal you pay for is not simply the one that spits out the number the loan officer needed to give you the biggest possible mortgage."
(fh)
June 7, 2005
Fed questions quality of some refinance appraisals
Federal Reserve Governor Susan Bies told the American Bankers Association today that the U.S. has developed an "aggressive lending culture" for home mortgages that could spell trouble in some communities. A 40% increase in home equity lines of credit in 2004 is also raising eyebrows at the Fed. "There is a question about the quality of those appraisals" for refinanced mortgages, Bies said in a Reuters report. "We want to make sure there are not unsound business practices behind the rise in housing prices."
(fh)
June 3, 2005
Beyond a home purchase: other reasons to contact an appraiser
Most consumers realize it is wise to hire an appraiser when buying or selling a home. However, there are many other reasons to seek the expertise and guidance of an appraisal professional, as outlined in this handy checklist. This interesting list may provide new and lucrative avenues in which to market your specialized skills.
(df)
June 1, 2005
Some useful appraisal tips -- for brokers
In commercial deals, buyers and owners are often ill-prepared for the appraisal process, which can lead to delayed closings or worse. An online-only article in the May-June issue of Commercial Investment Real Estate explains how brokers can do a little footwork to help streamline the appraisal process for all parties involved. If you're working with impatient brokers or confused buyers, this article can be an eye-opener.
(df)
May 26, 2005
Don't get stressed about distressed property appraisals
Appraisal of distressed properties is a challenge that requires a skilled and experienced professional. Expertise in this area can prove lucrative to an appraiser, particularly during leaner economic periods. The Spring issue of The Appraisal Journal highlights issues which must be considered when faced with this type of appraisal, as well as suggested steps owners may take to improve the value of their properties.
(df)
May 19, 2005
Are your clients considering AVMs?
No one doubts the value of the internet to the consumer. However, when making the biggest purchase of a lifetime should one really economize by obtaining an online appraisal? Colorado appraiser Ron Harp advises consumers that AVMs may not present the entire picture and perhaps a free online appraisal may be worth exactly what one pays for it.
(df)
May 9, 2005
Appraisal fraud in the spotlight
The spectre of appraisal fraud is getting more attention in the press, this time from today's Christian Science Monitor. The problem could get worse if the housing market slows significantly, the report says, although Congress is unlikely to take up appraisal reform anytime soon. In the meantime, the Monitor offers some tips to avoid appraisal fraud, including hiring state-certified appraisers with professional designations.
(df)
May 5, 2005
Looking for some tips to help in your day-to-day business?
The Northern California Appraisal Institute has fifty tested and proven ideas to help appraisers get ahead. There are some great tips and advice for both new professionals and veterans alike, the best of which include learning how to manipulate MLS data, tips on measuring, and building niche markets for your area of expertise.
(df)
May 3, 2005
Update on Fannie Mae's appraisal report forms
Fannie Mae recently issued several modified appraisal forms, and the Winter issue of Appraisal Journal takes a look at some of the impacts the forms will have on the profession . With explanations of new terminology and guidelines on the issue of property flipping, the article takes a detailed tour of the new forms, finding mostly positive changes for appraisers.
(df)
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