In a nutshell, when this new FEDERAL law takes effect, Mortgage Brokers, Realtors Buyers and Sellers will have NO control over the appraisal process. None of the above can call an appraiser and get an appraisal done and then bring it to the lender or bank for a loan. Banks must order the report directly from the appraiser or a third party will do the ordering hired by the Banks. These third parties are what we call Appraisal Management Companies (AMC's). The banks are hiring these companies to puts a layer in between the banks and the appraiser for more independence and less lender pressure on the appraisers to "make the value".
**Any of the above individuals CAN order an appraisal directly from the appraiser if their reason for the report is not for a LOAN, IE; to determine a listing or sales price, to obtain current value, a divorce, estate, tax rebuttal appraisal, PMI removal, etc. That is NOT prohibited and is actually encouraged in this ever changing market ***
Note: Realtors, buyers and sellers will not be able to call the appraiser or email them to tell them that they do not agree with our values. That is undue pressure and it NOT allowed. As an appraiser I am happy about that, because to be honest, most of the "comparable properties" that are provided by Realtors, buyers and sellers are not comparable, but that is another whole post all together. I am here to help you today! READ ON.......
Here is where REALTORS, buyer and sellers DO have control. Just the other day I was appraising a Lake Lanier property (our specialty) and I was surprised and very HAPPY to see that in the sales contract under the special stips page was the following statement:
" Buyer shall have all the rights and provisions manifested by the Appraisal Contingency provided that the appraiser the buyers lender selects has COMPETENCY to perform an accurate Lake Front Property appraisal and has completed at least 10 appraisals on Lake Sidney Lanier waterfront properties within the past 3 years" Said qualifications of any and all appraisers hired shall be provided to the Listing Agents in writing upon request."
That is awesome! I would suggest SELLERS rights are also protected in the contract, by stating that if the buyer signs an appraisal contingency in the contract, they should also REQUIRE an experienced appraiser in the property be it Lake, Golf Course, even a particular neighborhood. I would also suggest that in the case of a special property like Lakefront that the experience be even greater at least 10% of their work is completion of this type of appraisal over the past 1 year, not 3 years as things have changed over the last year as you well know. Many lenders are requiring that the property appraised by the appraiser is no more than 30 miles from the appraiser's office. I would suggest that you narrow that down and state that the appraiser must live in the SAME COUNTY as the property being appraised.
I can't tell you how many times a lender sends someone from ATLANTA to Lake Lanier to appraise that property and unless they have considerable experience on this lake, which most do not as their primary work is closer to the city of Atlanta (45 miles from Lake Lanier) you have a disaster waiting to happen when it comes to the appraisal!
So you DO have control and you need to start adding this type of language to every sales contract. Trust me when I tell you that BANKS and especially the Appraisal Management Companies (see my previous post on AMC's) DO not care about competency of the appraiser. They select the one that can do it the quickest and the cheapest and if that happens your DEALS will fall apart on a regular basis.
Please pass this along to every Realtor you know, repost it, blog about it NOW. If you do then you can take control back on this HVCC law when it comes to appraisals on your sales deals.
If you have any questions about this new law, let me know it is just around the corner.
Mary Thompson
www.marytappraisals.com
While there is truth to this it sure does not make those of us who have been working hard to keep our mortgage payments current feel a whole lot better. Many will start falling behind on their payments just to get bailout help...sad but true.
But here is the real deal on how appraisers are dealing with the valuation of your home in this foreclosure crisis. We DO NOT typically use foreclosed sales to compare against your home. We first evaluate your individual neighborhoods, streets, subdivisions and trust me when I tell you it can vary street by street in today's market.
If and only IF your subdivision, street or neighborhood is full of foreclosures, more so than your typical arms-length transactions, then we WILL using foreclosures as our primary source for analysis. WHY? because these sales have now defined your neighborhood. If there are more sales in your area which are not foreclosures then we will use those sales primarily.
Therefore your home may NOT necessarily decline in value due to a few scattered foreclosures in your area. Now here is where it gets a little muddy in the water....If you have a home right next to yours or a couple of doors down that has been foreclosed upon and especially if it looks "run down" and obviously vacant, this WILL have an effect on the value of your home to some degree regardless of the number of foreclosures in your area. WHY? because if you were looking to buy a home and the one next door to yours is quite frankly and eye sore, this has an impact on how the market perceives your home. Sad and not fair but true!
The foreclosures in your area or on your street and their proximity to yours has an effect from that point outward as if in a circle. The further the foreclosure/s are from your home, the better off you are!
Again, let me repeat, if you only have a few foreclosures scattered about your development, street (unless you only have a few homes on your street) or defined neighborhood, chances are you are not going to be heavily impacted as appraisers will use non-foreclosure sales whenever it is reasonable to do so and is not misleading to the lender to do so.
One thing I want to make clear! Appraisers do not determine the value of your home...Let me repeat this. Appraisers DO NOT determine the value of your home.....The MARKET DOES! We analyze the market and as long as we do this correctly and as long as we utilize properties that are truly comparable to yours and make the appropriate adjustments for any variances, then the market LEADS us to the appropriate opinion of value....So don't blame the appraiser for the value of your home okay? It is the market you need to blame.
One final note. Appraisers are supposed to protect banks from lending risks. Banks need appraisers to analyze NOW more than ever what the market is doing, what the value of the property is currently, what the trends have been and where they are likely headed.
Banks & Mortgage Companies in the past did not really care too much about the fact that we were trying to protect their interests as they wanted to close loans. Sad fact but true and that is why we are in this mess Today. Appraisers many times are considered a necessary evil and Lenders pressured many Appraisers to do what they wanted. Unfortunately many succumbed to that pressure.
Banks are now going the opposite direction and running scared. They are dictating to appraisers what the comparable properties should be. They are non believers in what our reports are telling them. Before they wanted the highest possible value, now they want the lowest. They are telling us based upon some National Report that we MUST report our area as declining! Well here in Georgia there are some area that are NOT declining but STABLE. I personally do not let lenders dictate to me and I know for a fact I have lost business over this...but I digress...
Bottom line is they are still not letting us do our jobs! We have no vested interest in these properties, if they had let us do our jobs from the start, we would not be looking at a Trillion Dollar plus spending bill. Can you tell I am just a little frustrated. I AM!
So as a consumer what can you take aways from all of this. Keep up with what is going on in your neighborhood and do not let lenders determine the value of your home. You get a copy of your appraisal report, review it carefully. If you do not agree with it, protest it! Many banks use review appraisers who either have not even seen your home or who have only driven by your home to refute the original appraisal report. Don't let that happen to you because these review appraisers do not know the home like the first appraiser!
As Realtors, you can do the same thing. You have access to the same information we as appraisers do and even more than we do as you guys see many of the INTERIORS of the comparable properties used by appraisers which we do not see. Sure we have photos of the interiors if you post them on MLS/FMLS but the pictures do not always tell the whole story! So help your clients in this lending process by not letting them reduce or change the value of the first appraisal report without good reason.
Okay I am off my soapbox now, I hope this has helped you to understand how appraisers operate in this market or at any time.
Any questions, just ask!
Mary Thompson-Certified Real Estate Appraiser
www.customslideshowcreations.com Custom shows for your next listing!
Here is the deal: The Obama stimulus package includes loan re modifications across this country if you are "under water" meaning your mortgage is higher than your home is worth. Lenders, Fannie and Freddie are planning to and already do use Brokers Price Opinions (BPO's) to determine value for the homes in question or those that will qualify for this program.
In the state of Georgia as well as about 23 other states per the Legislators that were speaking at our meeting yesterday, this activity is against the law. WHY? Because Realtors and Brokers are acting as appraisers in the valuation of the property in question. In other words they are engaging in unlicensed practice of appraising.
This practice is also in violation of FIRREA (Financial Institutions Reform Recovery and Enforcement Act of 1989). Appraisers cannot list and sell homes without a Realtors license, so Realtors should not be allowed to value property without an Appraiser's license.
BPO's by law are only legal when they are used to determine a list price on a property....PERIOD. So check your states laws on this as you may be breaking the law!
Also of note in the State of Georgia and likely many other states it is against the law and in violation of FIRREA for Appraisal Management Companies (AMC's) to order appraisals from appraisers as they are NOT the CLIENT. Appraisal orders should be coming directly from the client or in this case THE BANKS!
I urge every Lender and Realtor to check the laws in your state to see if you are in compliance with FIRREA and state laws regarding BPO's.
I urge every Appraiser to contact your local appraiser boards to find out if AMC's (appraisal management companies) doing business in your state are allowed to send you orders. I don't know about you, but AMC's are a lose/lose for everyone. They cut our fees in half, they use those appraisers who will do it the fastest and the cheapest without regard to expertise and they charge the LENDERS more than what we charge them for the typical appraisal report!
Another thing everyone should know is the AMC's have ZERO regulatory oversight. In a nutshell they can do what they want with no legal repercussions. Same thing with BPO's they do not have any regulations like we do (USPAP) to ensure that they are producing credible information and if the banks are allowed to accept BPO's as valuations for home, this is a major source of concern for everyone!
Realtors are pros at listing and selling properties and providing an idea as to what the home will sell for but they are not trained to value homes for banks, Fannie, Freddie or HUD. They are not trained to know what adjustments should be made for the numerous amenities a property may have. I get asked all the time from Realtors what adjustments I make for basements, pools, garages, etc. etc.
One other very important point: If Realtors are conducting BPO's for lenders for a potential listing of the home, they now have a VESTED interest in that home, therefore this makes for an unbiased opinion of its worth. As appraisers we are not allowed to appraise property that we have an interest in unless we fully disclose our interest and quite frankly I would reject this assignment and most banks would reject appraisers doing appraisals on properties in which they have an interest.
Many issues here and with the horrible state of affairs that we are facing in the housing market, now more than ever we need proper valuations of these homes so that they can be sold or re modified.
As I stated in my last featured post, about foreclosures and the appraisal process, if we are left to do the jobs for which we are trained, we will provide accurate valuation services for Banks or anyone else. There is no reason not to!
We cannot afford to put ourselves in further hot water here, we must follow the laws and utilize those people that are best suited for the job at hand....Appraisers.
I ask everyone here to write to your commissioners and advise that Lenders need NOT take the easiest and cheapest way out here when it comes to the loan re-modification process or foreclosures or we will suffer further loss. Lenders are losing big bucks and they want to save money, but using people who are not trained to provide opinions of value is salt in the wound and promotes further risk and losses to these lending institutions. I DO hope you agree!
Realtors: Do you even like doing these BPO's? What I hear from our local Realtors is they hate them, the lenders want them yesterday and they want them CHEAP for all the work you do on them. You are in business to SELL real estate, not do desk top evaluations/ BPO's all day for lenders.
Let's put this valuation where it belongs...with the Appraisers.
Please re post and pass this along to as many people as you can! I am contacting TV stations, local government officials and I intend to write a letter to Obama himself. His stimulus package is supposed to create jobs and in effect he is putting many appraisers out of business!! I know Realtors are suffering big time too, but PLEASE make sure you are not violating the law in order to put some money in your pocket and creating further issues down the road.
Thank you for your efforts and past support of my posts here.
I have the news on Lake Lanier Listings and Sales for the second half of 2008. These are based upon FMLS stats for homes that were coded as being Lakefront or Lakeview properties with at least a single slip boat dock in place. Figures will not be exact, but they are a good representation of activity on Lake Lanier.Listings:1. There are 394 CURRENT Listings with an Average Listing Price of $722,000. This is a 13% decline in average list price since first half of 2008. The number of listings was 368 so about a 7% increase in number of listings.2. There are 11 pending properties with an Average List Price of $447,300. There were 12 pending sales first half of 2008 but average was much higher at $870,00. This number is really not as significant as this number is much smaller and you cannot control which homes happen to go under contract at a given time.3. Out of the 394 listings, 181 properties were listed from 7/1/08-12/31/08 with an average list price of $895,000. This is up just slightly from the fist half of 2008 of $870,000.Sales: 1. There have been 31 closed sales. The average sales price is $671,000 with the average Days on Market at 107 (Listing prices range from $152,500 to a high of $2,350,000). The average list to sales price ratio was 6.7%. The average sales price is 22% higher than the first half of 2008! Days on market was essentially the same (109 first half of 2008). This sales price average brings us closer to the average sales price we saw in the first half of 2007 at $623,000. So great news here!
** In the second half of 2007 there were 72 closed sales with an average sales price of $681,000. Average list to sales price ratio was 9.4% and average days on market was 117. So we are not far off other than number of sales from these figures.Please Note: There are many homes that have been on the market much longer than this. The days on the market number is skewed if the home was listed for many months and then relisted after the first listing expired, with a new FMLS number and date. The days on market is only calculated from the last time the home was placed on the market with a new listing number and date. Many homes fall into this situation, so in reality days on market is likely much higher. **This has been our experience when appraising lake property and checking to see how many times the home was listed with new dates and FMLS numbers.Expired and Withdrawn Listings:In 2008, there were 531 homes that had expired listings with average list price of $847,000. Average Days on Market was 145. Again this number may be skewed. Many have been relisted and currently back on the market. The number of expired listings is 38% higher compared to the first half of 2008. The average list price is 13% higher.
There were 127 withdrawn listings in all of 2008. Average list price was $1,086,000. Many of these were relisted.What does all of this mean?The bad news is there are loads of listings for more competition between properties and the number of sales is less than the same time last year. The GOOD news, there were more sales in the second half of 2008 than the first half of 2008 and the average sale price is 22% higher bringing us closer to sale averages of the first half of 2007! Fantastic News!
Also, the average list to sales price ratio has decreased by 1.3%.Other than the over abundance of Lake Lanier Listings, if the average list price stays stable, then it would stand to reason that our average sales price for the first half of 2009 will increase. It did the second half of 2008 so we expect that trend to continue.
**What appears to be happening here is that people are reducing their listing prices and there is a narrowing between the average listing price and the average sales price. The home sellers are getting realistic on the current market of their lake homes and the buyers are starting to increase in numbers, exactly what we need to start turning this market around!
The average sales price was only slightly lower than this same period last year.
Also the other great news is that the lake is just over 14.0 feet below full pool which is 4 feet higher than it was this time last year....Also great news.
With all the doom and gloom in the news about the real estate market, we have something to celebrate here! It may not feel that way to many lake home owners trying to sell, who have had to reduce their prices to remain competitive, but we are heading back in the right direction and that is a good thing as Martha Stewart would say.
Enjoy the good news and I will be back with you in the summer for the first half of 2009 Lake Lanier Sales Stats. In the meantime subscribe to my blog and you can stay abreast of the Lake Lanier News on a regular basis.
"Congress voted on a $790 billion economic stimulus bill that includes a modest expansion of a first-time homebuyer tax credit and restores to $729,750 the upper loan limit in high-cost areas for Fannie Mae, Freddie Mac and FHA loan guarantee programs." http://www.inman.com/. The prior limit was $417,000.
This may help those on our North Georgia Lakes, including Lake Lanier, Sinclair, Oconee, Chatuge, Nottely and others to sell and buy these homes.
Of course we need to see an increase in JOBS in order for people to be able to afford these higher priced lake homes. My concern: The jobs that are being created do not appear to be the higher paying jobs that people will need to afford high priced housing. But there are always those who will qualify for these loans and now that this loan limit has been almost doubled, it could shake lose those buyers that have always wanted a lake home and can now get the loan which was so elusive in the past.
Happy Valentines Day to everyone out there.
If you need someone to appraise a Lake Lanier Home you are thinking of selling or buying, you need a Lake Lanier expert appraiser and you have found her right here: http://www.marytappraisals.com/
As a real estate appraiser, it is front and center just how severe the housing crisis is today. The Realtors here on AR know this all too well.
With a new president in the White House, the photos of the White House this morning when it was snowing and news about the housing crisis; being able to buy houses for the same price as a car, it got me to thinking....I wonder how the White House would fare if it was appraised TODAY.
I would love that assignment. I wonder if the White House has ever been appraised? Getting comps for this one would be a real challenge. Although I have seem some stately homes on acreage with huge pillars in front right here in the Atlanta Area, but somehow I think there would have to be a huge LOCATION adjustment.
Maybe I would go to other countries and use those Rulers residences as comparables, BUT when did they sell last? Certainly not in the past 3-6 months which the lenders require us to stay within when using comparables. Well maybe there are some listed for sale? NOT LIKELY! Of course someone buying this piece of real estate would likely pay CASH...No jumbo loan would cut it for this house!
The home was built in 1800 but renovated at least every time a new president took occupancy. Depreciation adjustment? Well of couse we have to look at its effective age, not its actual age. Cost approach to value would be an interesting development, but then the home is so old, maybe we can just say the cost approach is really not applicable in this case.
HOWEVER, this may be the only approach we can use given the lack of comparable sales. Use cost minus depreciation, plus land value and exterior improvements and you have the value for the White House....or DO YOU? How about historic value, well now you have to look at popular historic places that have sold to see how much historic value is worth? Would it be comparable to an Entertainment Moguls residence in Historic value? Maybe Donald Trumps house could be used as a comp? That one sold in the past year I do believe.
Who really owns the White House, WE DO, the taxpaying public!
How many acres are we talking about? "The White House sits on an 18-acre plot of land that, together with the Ellipse to the south (52 acres total), is called "President's Park." - The White House Museum
What if things went to hell in a hand basket and we had to sell the White House....Let's just hope that would never happen. Since WE the People own this property, we would all have to give our consent and you know that will never happen as we would NEVER have a 100% consensus of the hundreds of millions living here in the USA.
Well that is my fun, yet thought provoking thought for the day, would love to hear your input! Long live the White House and may it never decrease in value like so many other homes have.
Have a great week everyone!
Happy New Year everyone! Here is to a better 2009 on Lake Lanier and for real estate in general. If the last week of 2008 and the first week of 2009 is any indication it looks like a much better year.
We have been very busy with appraisal orders from lenders on Refinance deals and some sales. The rates are so low that many people are taking advantage of this situation while it lasts.
I will be putting together the year in review for Lake Lanier over the next week or 2 so be looking for that information and in the meantime our wish for you and your family is a very happy, safe, healthy and prosperous New Year.
We thank you for your business in 2008 and look forward to working with you in 2009.
Wow, what a year it has been here in North Georgia. The biggest news stories for us was the Lake Lanier drought, the Real Estate Market decline and the rising unemployment.
The good news is that Georgia was not hit as hard as Florida, Californis, Nevada and MIchigan. But we have seen declines up to 20% or more depending upon the area. Fulton County, in someAtlanta metro areas, have seen even heavier hits, primarily due to the rampant mortgage fraud in these areas.
Lake Lanier is at 19.0 feet below full summer pool, it rose 1 foot from the rains this last week from a record low of 20.0 feet below full pool. The 1071 (named after the full pool number for Lake Lanier) Coalition was formed, we met in December and they plan to put the pressure on the congress and other goverment officials so that we can provide SCIENTIFIC proof as to why we need the water more than Florida and Alabama. This has been a 20 year political battle, 2 states against 1 (Georgia). Now they want to ague the point scientifically!
The coalition will have a financial expert provide to the powers that be an impact study on how business, real estate, recreation and ecology is affected by our drought, so stay tuned. I will keep you posted. The coalition meets the first Tuesday of every month and it is open to the public, so go to their website www.1071coalition.org to find out exactly where the meetings are held (at Lake Lanier Islands in Buford) and join in if you are concerned about our drought.
The 7.0+% unemployment rate is a huge concern and and could keep climbing until things stabalize sometime in 2009. This impacts everything and everyone.
Real estate sales are very slow, the market is flooded with inventory and people are having to reduce their prices if they want to sell. Some indications are that the end or the bottom of the market is close at hand. My prediction for what it is worth is that we will see things start to get out of the toilet by mid 2009. So hang on tight, do what you can to stay in your home and if you are having any problems CALL you lender TODAY!!! Don't let foreclosure knock on your door, by then it is too late to negotiate with your lender.
May you all have a blessed holiday season and here is wishing and hoping for a better 2008. Thanks for stopping by subscibe to my blog and I promise some fun posts for you in 2009!
Welcome to my blog. I wanted to tell you about our new venture. We are still appraising but as you can imagine, things are SLOW, so we are offering a new service to buyers, sellers, Realtors and really anyone who wants to spotlight someone or something special. We are producing custom slide shows for home sellers to spotlight their homes for sale, for Realtors who want to spotlight their listings or enhance their website. www.customslideshowcreations.com
We also produce custom slide shows for Weddings, Engagements, Pets, Babies, Memorial Services, Reunions, Graduations, Website Enhancements, Businesses, etc.
Check out our new website and don't forget to click on our portfolio page to view some of our unique, fun and exciting shows. Then call us if you would like to have a show custom created just for you, your home, you loved ones, etc. This would make a FANTASTIC Christmas Present for someone you love.
www.customslideshowcreations.com
Do not forget to attend the first kick off meeting of the 1071 Coalition www.1071coalition.org on Tuesday, December 9th at 6:00 pm at the Legacy Lodge & Conference Center at Lake Lanier Island Resort.
You do not have to be a member or pay a price to get inside the gates at the Resort, just tell them you are here for the meeting. This is open to anyone and if you have a vested interest in where things are headed on Lake Lanier....I highly suggest that you BE THERE and BE HEARD.
Looking forward to seeing you there on Tuesday!
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