Appraisal News For Real Estate Professionals

I've MOVED . . . Get THE SCOOP!

2006-08-05T11:34:00.000-05:00

Blogger.com has been GREAT as a learning experience for a "Newbie Blogger" but it's time to MOVE ON! Just click the graphic above to be taken to our NEW "TypePad" platform. I'm currently migrating MANY of the more popular topics from Apprasal News For Real Estate Professionals over to Appraisal Scoop. Our new platform allows me to catagorize blog posts so that visitors can quickly find groups of posts that are of interest to them. Also, one of the BIG reasons for the change was to allow me to invited other Guest Authors to collaborate with me on the Appraisal Scoop. I'm in the "Alpha Testing" process right now, with only one guest blogger. Once that shakeout process is complete, I'll be inviting other Guest Authors from around the country to add their thoughts and perspectives on the real estate appraisal profession and industry.

Hopefully we'll get lenders, software developer, clients, and residential and commercial appraiser to contribute?

COME JOIN US!!! . . .and THE SCOOP

Pros and Cons to Calculating Your Home's Value Online

2006-07-14T07:25:00.000-05:00

More homeowners are turning to free or nominally priced online tools to follow the possible changes in the value of their properties. The Wall Street Journal staff put four Web sites (and a professional appraiser) to the test. WSJ hired Richard Hagar, an appraiser with American Home Appraisals of Mercer Island, Wash., to price the home. He calculated different numbers based on a "desktop" appraisal (using local real estate and other computerized data), a drive-by, and an extensive on-site appraisal. Link: RealEstateJournal Pros and Cons to Calculating Your Home's Value Online. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Technology

FDIC State Profiles Highlight Generally Positive Economic Picture Amid Signs of Housing Slowdown

2006-07-06T08:53:00.000-05:00

Job market conditions remained generally positive in most of the U.S. through the first quarter of 2006, with some pockets of weakness along the Louisiana Gulf Coast and the auto-dependent upper Midwest. FDIC-insured institutions also continue to record strong earnings, supported by low credit losses and growth in both real estate and commercial lending. However, many states show signs of an emerging slowdown in housing market activity. These and other state-level economic and banking trends are summarized in the Summer 2006 edition of FDIC State Profiles released today.

"Most regions are seeing solid job growth and strong economic activity, which are helping to support loan demand," said FDIC Chief Economist Richard A. Brown. "We also see housing market activity slowing in a number of regions, as affordability continues to be a challenge. It appears that housing will probably not be a leading sector for the U.S. economy in the second half of the year."

Home sales activity appears to be slowing across many areas of the country, and inventories of unsold homes are increasing. FDIC regional analysts note that affordability continues to be a challenge for homebuyers, particularly in the Middle Atlantic and Western states. Recent data show that rates of home price appreciation have recently decelerated in many states, although prices have declined outright in only a few metropolitan areas. Meanwhile, rising energy costs continue to pressure consumer finances, particularly among lower-income households. The banking industry reported a fifth consecutive year of record earnings in 2005, and this strong financial performance has continued into 2006. However, rising short-term interest rates, a flattened yield curve, and growing dependence on non-core funding sources are pressuring net interest margins, particularly among mortgage lending specialists. FDIC analysts note that margin compression has been offset to some extent by strong loan growth, notably in the construction and development (C&D) segment of the commercial real estate (CRE) portfolio. Concentrations of C&D and CRE loans are rising, particularly among institutions in states in the Mid-Atlantic, Southeast, and West. Loan performance currently remains favorable across all loan categories, including farm-related credits held by agricultural banks. FDIC - 6, 2006 Media Contact:David Barr (202) 898-6992 dbarr@fdic.gov If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate

USPAP 2006 Revisions - Office of the Comptroller of the Currency - OCC 2006-27

2006-07-04T10:00:00.000-05:00

The 2006 Revisions to Uniform Standards of Professional Appraisal Practice [USPAP] - June 22, 2006 - OCC 2006-27 Purpose : The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), and National Credit Union Administration (NCUA) (collectively, the agencies) are issuing this statement to notify regulated institutions that the Appraisal Standards Board (ASB) has issued the 2006 version of the Uniform Standards of Professional Appraisal Practice (USPAP) and the attached 2006 USPAP and Scope of Work document. The 2006 USPAP, effective on July 1, 2006, replaces the 2005 USPAP and incorporates extensive revisions to appraisal standards. A regulated institution must ensure that appraisals supporting federally related transactions adhere to USPAP as well as the other minimum appraisal standards contained in the agencies’ appraisal regulations. Therefore, regulated institutions should be familiar with the 2006 USPAP and consider the ramifications of the revisions to their appraisal practices. Revisions to USPAP : The 2006 USPAP incorporates certain prominent revisions. These revisions include a new Scope of Work Rule and the deletion of the Departure Rule and associated terminology, such as "binding" and "specific" requirements and "complete" and "limited" appraisals. The Scope of Work Rule clarifies the standards for the type and extent of research and analysis performed by the appraiser in an appraisal assignment. In adopting the 2006 revisions, the ASB has indicated that the appraisal process has not changed and that the concepts in the Scope of Work Rule are not new to USPAP. However, there is greater emphasis on the appraiser’s process of problem identification and development of an appropriate scope of work. 1 The 2006 USPAP and other ASB documents are available on the Appraisal Foundation Web site at : Appraisal Foundation 2 Under the agencies’ appraisal regulations, a federally related transaction includes any real estate-related financial transaction that an agency or any regulated institution engages in or contracts for and that requires the services of an appraiser. Refer to OCC: 12 CFR 34, C; FRB: 12 CFR 225.61-67; FDIC: 12 CFR 323; OTS: 12 CFR 564; and NCUA: 12 CFR 722. Page 1 of 2 OCC 2006-27 Attachment Page 2 of 2 Consistent with the 2006 USPAP, an appraiser must determine an appropriate scope of work that should be performed to produce "credible assignment results." According to the USPAP Advisory Opinion 29, credible assignment results depend on the scope of work meeting or exceeding both

the expectations of parties who are regularly intended users for similar assignments; and
what an appraiser’s peers’ actions would be in performing the same or a similar assignment.

Further, the appraisal report must contain sufficient disclosure to allow intended users to understand the scope of work performed. Since the 2006 USPAP reporting options remain unchanged, appraisers may continue to label appraisal reports as self-contained, summary, or restricted use.

Compliance with Appraisal Regulations : While an appraiser is responsible for establishing the scope of work under the 2006 USPAP, regulated institutions are responsible for complying with the agencies’ appraisal regulations. Besides conforming to USPAP, the agencies’ appraisal regulations require that appraisals supporting federally related transactions must:

Be written and contain sufficient information and analysis to support the regulated institution’s decision to engage in the transaction.
Analyze and report appropriate deductions and discounts for proposed construction or renovation, partially leased buildings, non-market lease terms, and tract developments with unsold units.
Be based upon the definition of market value in the regulation.
Be performed by a state licensed or certified appraiser in accordance with the regulatory requirements.

From the appraiser’s perspective, these regulatory appraisal requirements are "supplemental standards" to USPAP. If an appraiser knowingly fails to comply with supplemental standards, the appraiser is in violation of the USPAP Ethics Rule.

When ordering appraisals, a regulated institution should convey to an appraiser that these supplemental standards remain applicable. The agencies also continue to encourage regulated institutions to use an engagement letter in ordering an appraisal to facilitate communications with the appraiser and to document the expectations of each party to the appraisal assignment.

To determine an appraisal’s acceptability, a regulated institution should review the report to assess the adequacy of the appraiser’s scope of work given the intended use of the appraisal. In accepting an appraisal report, the regulated institution must determine that the appraisal report contains sufficient information and analysis to support the credit decision.

Regulated institutions are reminded to consider an appraiser’s competency for a given appraisal assignment. Further, regulated institutions should not allow lower cost or reduced delivery time to compromise the determination of an appropriate scope of work for appraisals supporting federally related transactions.

Attachment: 2006 USPAP and Scope of Work If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , Regulation , Scope of Work

How do appraisers establish value when there are no comparable sales?

2006-07-03T06:16:00.000-05:00

Unusual properties pose valuation challenges. So how DO appraisers establish value when there are no comparable sales? Full article from Inman News -By Dian Hymer Inman News It's relatively easy to establish the market value of a property located in a neighborhood where the houses are created in the mirror image of one another. Figuring out the valuation of an unusual property is another story. Appraisers determine market value [opinions] by comparing the property in question with [at least] three similar properties in the neighborhood that have sold and closed within the last six months. In recent years, there has been plenty of sales activity, so finding comparable sales in most neighborhoods hasn't been a problem. However, in certain low turnover markets finding comparables can be challenging. Even more taxing is finding comparables for a truly unique property. Recently, a one-of-a-kind listing came on the market in the desirable Crocker Highlands neighborhood in Oakland, Calif. What made this property unique was its impressive architecture and size. It was a 4,500-square-foot home in a neighborhood where a 3,500-square-foot house is considered big. The lot size was big and the yard included a swimming pool -- also uncommon for the neighborhood. The special nature of this listing attracted a lot of attention from multiple buyers who wanted to make offers. The trick was figuring out what it was worth. There was not a single house in the neighborhood that could be called comparable to this one. HOUSE HUNTING TIP: Appraisers who are faced with this predicament look to other neighborhoods that could be considered somewhat comparable in order to help determine [their] market value [opinion]. In the above example, expanding the geographic boundary to neighboring Upper Rockridge and Berkeley yielded valuable insights into the probable market price for the property. The winning buyer in this particular situation paid all cash. The purchase was not financed with a mortgage, so the property wasn't put through the scrutiny of a lender's appraiser. However, if the buyer had included an appraisal contingency as a condition of the purchase contract, an appraiser would have used the same approach. Last year, a unique property was sold in the Rockridge area where most homes are on postage stamp lots. This special property had one level acre of land with a tennis court and a recently restored Mediterranean-style home built in the 1920's. There was literally nothing like it in the neighborhood. This time, the buyer needed a mortgage to finance the purchase. The appraiser for the buyer's lender appropriately considered the property an estate. He looked to Piedmont for comparable sales -- a nearby affluent community with many estate properties. Piedmont's claim to fame is a fabulous school district. Oakland's schools, while improving, aren't considered on par. Appraisers make adjustments to account for the value-added benefits that one comparable property might have over another to derive a justifiable market value [opinion] for the subject property. Even if a listing isn't unique, there are times when there's little comparable sales data, especially when sales activity drops. Although this hasn't been a big concern during the last few years of robust home sale activity, it has been a problem in the past. In this case, appraisers look for similar listings that sold longer ago than the generally accepted six-month cut off date. Valuation adjustments are made for market changes during the intervening period. We've been in a market of rapidly increasing home prices for several years. During this time, buyers have often waived their right to have the property appraised. Going forward, it might be wise to rethink this strategy. THE CLOSING: Depending on how an appraisal contingency is written, you may be able to withdraw from the contract without penalty if the property appraises for less than the price you've agreed to pay. Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers," and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

ILLINOIS - May Home Sales

2006-06-28T07:43:00.000-05:00

May home sales remain strong in Illinois. According to IAR's latest release, total home sales (single-family and condos) were down just 2.2 percent to 17,442 homes sold, compared to the previous record for the month of 17,840 homes sold in May 2005. The median home price in May was $206,000, up 3.1 percent from a year ago. “Residential housing markets are doing very well in Illinois as the market transitions to a more normal pace of buying and selling,” said IAR President Stan Sieron, CRS, GRI. Read the IAR release. Nationwide, NAR also reports a minor decline in May sales. See the NAR report. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Bloomington , McLean , Illinois , Realtor

LOCAL - Bloomington - Downtown Hotel

2006-06-27T09:29:00.000-05:00

Need for downtown hotel resurfaces (Pantagraph) By M.K. Guetersloh mkguetersloh@pantagraph.com BLOOMINGTON - As the U.S. Cellular Coliseum gets ready for 6,000 Jehovah's Witnesses, city and tourism officials alike know the Coliseum is limited at being a true convention destination without a nearby hotel. Discussions for bringing a hotel to downtown as a tool for revitalization started in the late 1990s, well before plans for the Coliseum were drawn. In recent years, those discussions were pushed aside as the city focused on building and opening the Coliseum. With the Coliseum's first convention just days away, those discussions are resurfacing. Because the Coliseum lacks a nearby hotel, Bloomington-Normal Area Convention and Visitors Bureau Director Crystal Howard said they can market the city-owned building as a convention venue to limited groups. For now those are religious and sports groups. "They don't necessarily need a headquarters hotel and the Coliseum fits their needs for exhibit and meeting space," Howard said. "If we are going to position ourselves as a meeting destination, a hotel near the Coliseum with additional meeting space will give us the versatility to market ourselves to associations." Those planning conventions and officers of association boards need a place close by to stay, too, Howard said. Ideally, she said the hotel would need 200 or more rooms and additional meeting space. Without a developer to step forward, however, the hotel remains just an idea. City Manager Tom Hamilton said he is willing to look at any proposals and the council is still interested in seeing a hotel built. But Hamilton emphasized the hotel would be privately owned and operated. "The city may offer some enticements or incentives to help attract a hotel to downtown, but we would keep it as low as possible," Hamilton said. A timeline for further discussion by the City Council has not been set. The one and only proposal the city received on a downtown hotel came in August 2004 from Twin City developer Larry Hundman. That prompted the city to seek other proposals and about 30 developers nationwide received the specifications for a hotel. Of the 30, no proposals were submitted. Eventually, Hundman withdrew his proposal after the City Council approved a contract with Central Illinois Arena Management instead of Hundman's Bloomington-Normal Arena Management to operate the Coliseum. Real Estate , Bloomington , McLean , Illinois

LOCAL - Census - Bloomington Grows by 10,000

2006-06-27T09:16:00.000-05:00

Bloomington grows by 10,000 (Pantagraph) By M.K. Guetersloh mkguetersloh@pantagraph.com BLOOMINGTON — About 10,000 people changed their address to one in Bloomington during the past five years.The U.S. Census Bureau announced Friday the city has added 10,167 more people since the 2000 Census. That brings the city’s population up to 74,975. In February, the census bureau conducted the special census for a cost of about $133,000 to the city. And Bloomington isn’t the only community growing. A special census conducted last year in Normal showed the town grew by 5,100 raising its population to 50,485. Bloomington Deputy City Manager Barb Adkins said the rate people are moving into the city speaks to the educational, employment and quality of life opportunities in the Twin Cities. "People want to move here," Adkins said.The increase in population is more than what city officials expected when they first planned for the special census. Initially, city officials believed the population grew by about 7,000. "We knew based on building permits our count was up even before the census was finished in 2000," Adkins said. "This just confirms it, but we didn’t realize we were growing quite this fast." The additional people will mean additional money in the city’s coffers.Certain types of state and federal money are given to communities based on population. That rate is about $111 per person and that could mean and addition $1.1 million a year for the city. However, Adkins said the actual amount for the city has not been calculated.The additional people also will mean additional demand on city services. Adkins said city departments frequently review whether there is enough staff to meet those needs.The city currently employs roughly 680 people. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Illinois , Realtor

LOCAL - Heyworth - Praire Meadows Subdivision Breaks Ground

2006-06-27T09:12:00.000-05:00

Heyworth to break ground on new subdivision (Pantagraph) By Troy Semple heyworthstar@verizon.net HEYWORTH -- The developers of Prairie Meadows, a $75 million master-planned community on Heyworth’s southwest edge, officially will begin construction when organizers break ground at 6 p.m. Monday. Mark Shader, Prairie Meadows project manager for Missouri-based Bridge Real Estate LLC, and Mayor Steve Crum will preside over the ceremonies. The development is at the southeast corner of U.S. highways 51 and 136. Parking will be available at Heyworth Junior-Senior High School."We’re excited to begin the development of Prairie Meadows," said Shader. "A great deal of planning and collaboration with the Heyworth community has resulted in a project that is attracting strong interest and commitments from homebuyers, local homebuilders and commercial businesses. "Now we can deliver this unique product to the Bloomington-Normal marketplace. There is nothing else quite like it in this area in such an affordable price range." Prairie Meadows’ site design has large lots, lakes, green space, walking trails and common areas, said Shader, and will have single-family homes, maintenance-provided town homes and detached villas, and multi-family homes. The single-family houses will range from $160,000 to $250,000 and up, and the town homes and villas will start between $120,000 and $130,000.A neighborhood business village will contain highway commercial businesses, convenient food and retail services, and professional office locations. If you enjoyed this post, subscribe and get FREE updates! Appraisl , Real Estate , Appraiser , Bloomington , McLean , Marketing ,Illinois , Realtor

LOCAL - McLean Co. Wind Farm Questioned By Residents

2006-06-27T09:06:00.000-05:00

Residents question Benson wind farm (Pantagraph) By Cheryl Wolfecwolfe@mtco.com BENSON — A proposed 80-turbine wind farm near Benson has generated concerns among some local residents about the value of the project.A group of about 150 people attended a meeting of the finance and development committee of the Woodford County Board this week in the Roanoke-Benson Junior High gym. Representatives of Navitas Energy, the Minneapolis-based company developing the project, answered questions posed by residents. Chief among their concerns were the effects on health, property values, and what would happen if the wind farm is eventually abandoned. "We’re serious about building this project," Navitas engineer Paul Eberth said. "It’s a big project. It has a big impact on the area." Eberth said the company has already leased land, acquired necessary utility easements and purchased land for a substation near Benson. Eberth said no studies have been done that show ill effects to the health of people living near the turbines. While economic benefit issues will be addressed further at meetings of the county zoning board, Eberth said the turbines will generate additional real estate taxes for local governing bodies. Energy generated will be purchase by Commonwealth Edison, but most likely will be sold to the Chicago area. Eberth said Navitas is putting financial safeguards in place in case the wind farm ever needs to be disassembled. "We are in this for the long haul," Eberth said. "If we have to take the project down someday, we would work with the county and have a financial guarantee in place that can be accessed for that purpose." Moore said the Benson project has not been affected by federal stopgaps citing interference of wind turbines with certain types of radar. Navitas will now begin the permitting process, which will need to be approved through the zoning and full county boards. It hopes to have permits in place no later than November with construction slated to begin in April 2007. Navitas hopes to have the wind farm in operation by December 2007. The company also developed the Mendota Hills wind farm visible from Interstate 39 near Paw Paw.The Benson project is among several wind farms planned for the Central Illinois area, with others slated for Saybrook, Hudson, Delavan, northern Livingston County and Lee County. If you enjoyed this post, subscribe and get FREE updates! Real Estate , Bloomington , McLean

Calling All Appraisers! Take The 2006 National Appraiser Survey!

2006-06-14T17:41:00.000-05:00

As a follow up to the RESPA News 2003 National Appraisal Survey, October Research, the publisher of Valuation Review, is again asking for feedback to quantify the key issues affecting the real estate appraisal industry. As a professional appraiser, your feedback will help improve awareness of the issues affecting the residential property valuation process. All responses will be combined and tabulated as overall survey results. RESPA News will also segment results based on geographic U.S. census regions, Northeast, Midwest, South and West. Your individual answers are confidential. Every survey participant will receive his/her choice of a free 30-day subscription to Valuation Review or RESPAnews.com. In addition, two lucky survey participants will each win an iPod shuffle from a random drawing of all survey participants! Click HERE to take the survey! If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , RESPA

FHA Finalizes “Anti-flipping Fraud” Rules - 6/8/2006

2006-06-12T06:02:00.000-05:00

According to the article, FHA Finalizes “Anti-flipping Fraud” Rules by Kenneth R. Harney in today's Realty Times: The Federal Housing Administration issued long-awaited final regulations on property flips last Wednesday. The rules take effect nationwide July 7

Flipping involves resales of houses or other real estate shortly after acquisition, typically at a substantial price markup. Say you buy a rundown rowhouse at a bargain price, do cosmetic fixups, and then sell it a month later for twice what you paid for it.

Sounds like a high payoff short-term investment, right? It is. But the FHA found that too many property flips using its insured mortgage program involved outright fraud -- hyped appraisals, shell games where property flippers never actually took legal title to the house before selling it for huge profits, sometimes overnight. Often the end purchaser of the flipped property was not financially qualified, and used fraudulent income, employment and assets information to obtain the FHA loan. Then the buyer quickly defaulted, leaving FHA with insurance losses and a house that was worth nowhere near its appraisal valuation. The flipper, meanwhile, pocketed all the sales proceeds financed with the FHA mortgage. To rein in such practices, FHA proposed -- and last week adopted in final form -- new restrictions. Specifically, FHA will now require that:

Only owners of record -- listed as such in the local court house real estate recordations -- may sell properties that will be financed using FHA insured loans. Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing.
For resales that occur between 91 and 180 days where the new sales price exceeds the previous sale price by 100 percent or more, FHA will require additional documentation of the property's true value before insuring the mortgage.
The agency may also require additional evidence of the accuracy of appraisals whenever properties are re-sold at high price gains within 12 months.

The FHA 90-day no-flip time restrictions will be waived when the sellers of properties to be financed are:

HUD itself, disposing of its REO (real estate owned) acquired property portfolio.
Sales of properties that were acquired by the sellers through an inheritance.
Fannie Mae, Freddie Mac or other federally-chartered financial institutions disposing of REO.
Local or state housing agencies.
Nonprofit organizations that have previous approvals to purchase HUD REO properties at a discount.
Properties located in a presidentially-declared disaster area, provided FHA has issued a formal announcement of eligibility for a specific disaster area.

Real estate investors, particularly those who specialize in rehabilitations of rundown structures in central city areas, had complained to HUD about possible negative impacts on their business activities stemming from the new rules. But HUD decided that banning most 90-day or under flips, and by scrutinizing flips between 91 and 180 days of acquisition where the price markup exceeded 100 percent, FHA should be able to protect itself against the worst abuses.

Investors with questions about the new regulations can call 1-800-CALL FHA for guidance. The rules are contained in HUD Mortgagee Letter 2006-14, issued June 8.

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Paperless Appraisal Office - A Small Firm's Approach - The Workfile

2006-06-09T09:58:00.000-05:00

In the article "Paper Cuts – Do they HAVE to hurt?" I talked about the small business love affair with paper and two of the basic tools that I use to ease the pain of breaking up! In this article I want to gets hands-on! We'll see how I've combined an inexpensive sheet fed scanner and PDF creation software to develop a "less-paper" protocol for my small appraisal office. If you're like me, there's just no getting away from creating some paper in the course of developing a real estate appraisal. Maybe it's:

Field Notes
Property Sketches
Phone messages / emails
Data verification on MLS listing sheets
Assessment / Recorder's Office printouts

Much of this will be incorporated into the actual appraisal report, but much of it may not! A year or two down the road, when asked about my "development process", if I don't keep some of that extraneous data, I may not be able to document all of the steps that I took in my Scope of Work.

So how do I efficiently handle that paper and store it in a Paperless Workfile?

To start, I developed a basic plan that my "one-man" office could work with on a day-to-day basis over the long term.

The first step was to replace my individual fax machine, scanner, copier and card reader, with a single 4-in-1 one multi-function device that was network ready and had sheet-feed capability. I still have my "production" B&W laser printer and ink-jet color printer for the occasional printed appraisal, so my low-end Brother 420-CN unit gets very little use as a printer/copier.
The next step was to install the PaperPort software that came with the 4-in-1 device, and upgrade it to the full version. The PaperPort standard or professional versions include an excellent PDF writer and editor. PaperPort is also integral to organizing paperless files.
Finally, I made a few decisions on how I would implement the hardware and software technologies into my existing workflow. I had to decide if I would keep some paper? How would I do backups? At what point do I create a transitional or permanent workfile of individual appraisals? etc.

Here's How I Do It!

Eliminate paper at the source: For each new assignment, I create a folder on my Windows desktop to temporarily hold files that will be created in the process of developing the appraisal. By default, I print everything to PDF so that I resist the temptation to print to paper first. If I need a paper copy, I'll print it from the pdf. That simple step eliminates the need to later scan all that stuff. The pdf's are all saved to their respective temporary folder on the desktop. ALSO: emails, fax tif files, voicemail files, screen shots, maps, etc. are saved to that same folder.
Going from paper to pdf: As soon as my assignment is complete and delivered, I purge my existing paper workfile of all extraneous and duplicate documents that may have been printed throughout the assignment. For example: If a map is IN the appraisal, there's no need for me to also save it to a workfile. Most commonly the remaining paper will be field notes, sketches, and data confirmation sheets. My sheet-fed scanner is set to scan documents using PaperPort's PDF creator and save to the Appraisal folder in My Documents. Everything will be scanned to a single multi-page PDF
Bringing it all together: At this point I have data in two separate folders and we really only want to have it in one place. A simple solution would be to drag the "temporary" desktop folder into PaperPort and then add the scanned pdf to it. PaperPort will then allow you to add search criteria and keywords so that you can find it again. In my case, my appraisal software has the ability to add [drag and drop] workfile documents directly to the appraisal's digital workfile. I open up the appraisal's workfile and then the temporary folder. I do a [select all] and drag all of the previously created files right into my appraisal report file.
Backup! Backup! Backup!: We all know that we have to keep our appraisal files and workfile for a MINIMUM of five years! That means that we need to have some plan for storing those electronic files. Discussing all the various file backup solutions are beyond the scope of this article, but suffice it to say that only keeping them on your computer's hard drive is NOT the best plan. You should have redundant backups and you should have some means of storing files off-site in case of disaster or theft. In my case, I save files to CD, to a networked PC in my office, and to a software integrated service called The Vault. Because I added all of my workfiles into my appraisal report, each time I save a back-up of my appraisal, I'm also saving my workfile as well.
What to do with all that paper? But . . We're now PAPERLESS! Right? Well not yet. We've scanned the paper but now what? Do we just throw it out? Shred it? Save it? My plan is to save the remaining paper for one year or until my lateral file drawer is full. That drawer is for temporary file storage and fast retrieval of relatively current report workfiles [*note - I have NOT printed paper "True Copies" of appraisal reports for years]. I used to move those files into long-term storage boxes for the balance of the five-year retention period. Having implemented my 4-step program above, I feel confident that I can retrieve all files and workfiles electronically.

I feel that this is a simple protocol and requires a minimum amount of change in my normal "paper-based" workflow developed over the years. Each year I find that my reliance on paper is diminished due to advancing technology. The use of dual-monitors is one the the biggest paper-savers that I've incorporated lately. Electronic data collection devices and software have been improving year after year and with the advent of the UMPC, combined with new sketching applications, we may be rapidly approaching the ultimate paperless solution for appraisers!

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Pre-Inspected & Pre-Appraised : Value-Priced Property Program

2006-06-09T07:24:00.000-05:00

According to the Inman News Blog, Prudential Palms Realty, based in Sarasota, Fla., has launched a "Value-Priced Property Program" that is an attempt to substantiate a list price "through appraisals and home inspections prepared before the listing is taken," the company announced today. The program is voluntary for sellers. "Pricing will be at or below the appraisal price," according to the announcement. Participating sellers agree to provide a home warranty with the home. "In return, these listings will benefit from Value-Priced Property rider signs, special agent tours, e-mail blasts and special promotions to real estate agents and prospective buyers."Scott Sosso, president of Prudential Palms Realty, said in a statement, “With certified appraisals and inspections in hand, both sellers and buyers will feel confident about the value of the home." If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser ,Blog , Marketing , Realtor , Home Inspection

Mortgage Fraud "Universal Truths" - Part 3 - Identity Fraud

2006-06-09T05:15:00.000-05:00

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, “Universal Truths of Mortgage Fraud”. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these "Universal Truths" of mortgage fraud. • Appraiser Fraud • SSN / Identity Fraud • Fraudulent Credit Reports / Letters of Explanation • Fraudulent Ernest Money & Closing Costs • Fraudulent Verification of Employment • Fraudulent Verification of Bank Statement (Deposits) • Fraudulent Verification of Landord In Mortgage Fraud "Universal Truths" - Part 2 I examined some of the issues with the first of these items - Appraiser Fraud. In this post we'll take a look at the next item - Identify Fraud. According to a recent NAR article on Identity Theft (click here) "Current estimates by the Federal Trade Commission indicate that there may be as many as 10 million victims of identity theft each year." "Studies estimate that victims of identity theft spend $5 billion to undo its harm, while businesses lose nearly $50 billion in revenue annually. The FTC has received thousands of real estate-related identity theft complaints."

"Many consumers first learn they are victims of identity theft when they are in the process of renting or buying a home, derailing their real estate dreams while they work to rebuild their good name and destroyed credit. Identity thieves may also rent or purchase a home fraudulently. Clearly, identity theft is an important issue impacting both home buyers and real estate professionals across the nation."

Appraiser identity theft usually develops under three main scenarios :

First, is the appraiser-trainee who decides to forge their mentor’s name and license number to reports without their mentor’s knowledge or permission.
Second, there are unlicensed appraisers (trainees) who go phishing for license numbers and state licenses of certified appraisers.
The third and most disturbing trend involves persons who never were licensed appraisers and prepare bogus reports.

Some steps that appraisers can take to prevent identity theft can be found here The National Association of Realtors is working with the FTC on a new nationwide campaign to educate consumers on how to minimize risk of identity theft and quickly fight back if they become a victim: AvoID Theft: Deter, Detect, Defend . Click here: http://tinyurl.com/eg9qt Deter Identity Theft : Consumers can deter identity thieves by safeguarding their personal information. Read more > Detect Identity Theft: Consumers can detect suspicious activity by routinely monitoring their financial accounts and billing statements. Many consumers learn that their identity has been stolen after the damage has been done. The faster consumers detect the theft, the more they can limit the damage. Read more > Defend Against Identity Theft: Consumers should defend against identity theft as soon as they suspect a problem. It’s important to act quickly to minimize the damage. Read more >

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Mortgage Fraud "Universal Truths" - Part 2 - Appraiser Fraud

2006-06-07T10:11:00.000-05:00

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, Assistant Special Agent in Charge from HUD - Chicago, OIG Universal Truths of Mortgage Fraud listed below. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these items."

Appraiser Fraud
SSN / Identity Fraud
Credit Reports / Letters of Explanation
Ernest Money & Closing Costs
Verification of Employment
Verification of Bank Statement (Deposits)
Verification of LandordIn a recent blog post

Today's Realty Times article "Appraisals Part of All Fraud Loans" by Lew Sichelman takes the "Universal Truth" statement above a step further and says . . .:

"A faulty or even fake appraisal is said to be at the basis of every fraudulent mortgage transaction. But not every appraiser is at fault, or at least willingly so."

The article points out some of the ways an appraiser can "fudge a valuation":

appraisers can ignore the best comparables,
appraisers can use properties in better neighborhoods as comps
appraisers can mis-describe a property.
appraisers can fail to mention physical problems.

The article also points out that appraisers aren't the only ones who commit such flagrant fouls.

Loan brokers have been known to

alter values by changing the values (adjustments) of each comparable
delete noted physical issues or other undesirable influencesin the appraisal
or even forging their own appraisal reports.

Make fraud cost, not pay - A Countrywide spoksman was quoted as suggesting the installation of "an independent hotline so appraisers can report pressure and keeping an internal "Do Not Use" list of suspected bad actors."

Emblematic of the scope of the mortgage fraud problem throughout the country is what's going on in Illinois, where three out of ten appraisals are found to be forged, according to Robert Gorman, an East Hazel Crest, Ill., appraiser. "That's a significant number," he told the meeting. "And that's only the ones we know of. Who knows what we don't know?"

For the complete Realty Times article : Published: June 7, 2006 - Click here. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

Illinois Assoc. of REALTORS Sues IL Officials

2006-06-06T16:29:00.000-05:00

IAR sues over funds taken from the Real Estate License Act to balance the state budget. On June 2, the Illinois Association of REALTORS filed a lawsuit in the Circuit Court, Seventh Judicial Circuit, Sangamon County, Ill., against six officials of the State of Illinois. The action challenges the constitutionality of the Fiscal Year 2007 Budget Implementation Act to the extent the Act authorizes removing moneys from the Real Estate License Administration Fund and transferring it into the General Revenue Fund. Read IAR legal counsel's talking points on the lawsuit. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Illinois , Realtor

Home Improvements to Avoid When Selling Your House - 7 Deadly Sins

2006-06-06T07:21:00.000-05:00

According to the article "Home Improvements to Avoid When Selling Your House" by Amy Hoak From The Wall Street Journal Online - Click here for full article : "Homeowners hear a lot about improvements that might add value to houses. But less attention is paid to what to avoid." Steer clear of renovations that will cost you money at resale time. Avoid these seven deadly sins of remodeling if you want an edge over other home sellers in an iffy market. 1. Overexpanding : Trying to keep up with the Joneses is fine, but don't keep outdoing neighbors with additions unless you plan to stay put a long time. A home that becomes conspicuously larger -- and more expensive -- than those around it will risk becoming hard to sell, Mrs. Slaughter says. 2. Making your home into something it's not : Don't change the general architecture of the home, and make sure that renovations match. Changes that are obviously inconsistent with the home's style will limit the number of people interested in buying it, says Michael Nagel, vice chairman of the National Association of Home Builders' Remodelors Council. 3. Changing a room's function: Completely altering the purpose of a room is risky. Keep kitchens as kitchens, and bathrooms as bathrooms. They were built that way for a reason. "We all expect basic functionality," Mrs. Slaughter says. "If you start changing the basic items that you expect out of your home, you're really customizing it for yourself." 4. Doing it yourself -- when you shouldn't : Be extremely confident you're capable of taking on a project before trying to do it yourself. "I wouldn't try and fix my own car; why would someone want to fix their own house?" says Mr. Nagel, who often sees sloppy tile jobs done by amateurs. 5. Underbudgeting: Don't underestimate how much projects will cost. Expenses usually are added, not subtracted. Homeowners routinely go 20% to 30% over budget, Mrs. Slaughter says. "People not only underbudget from a monetary point, but they also underbudget time," she says. A prospective buyer walking through a home isn't going to see the glass as half full when a project is half done. 6. Making unneeded renovations: When remodeling for resale, don't waste time with renovations that won't pay off. Proceed first with projects that are going to have the highest rate of return, experts advise. In the last four annual editions, the National Association of Realtors/ Remodeling magazine study has identified four renovations that show the greatest return at resale: improvements to siding, windows, kitchens and bathrooms. 7. Neglecting maintenance: Proper maintenance and annual upkeep may be the most important improvements of all. Clean the gutters to protect the exterior from water damage. Trim shrubs. Check for termites. Keep track of annual checkups -- and use that as a selling point. Annual maintenance pays back handsomely when you sell. And before the house goes up for sale, experts recommend a fresh coat of paint. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Marketing

Undercover Operation Nets Two Arrests in Appraisal Scam - Applied Universal Mortgage Fraud Truths 101

2006-06-05T13:23:00.000-05:00

In my recent blog post - Mortgage Fraud - "Universal Truths" - Part 1 - I listed Brad Geary's, Assistant Special Agent in Charge from HUD - Chicago, OIG Universal Truths of Mortgage Fraud listed below. According to Mr. Geary "Virtually all mortgage fraud combines at least two of these items."

Appraiser Fraud
SSN / Identity Fraud
Credit Reports / Letters of Explanation
Ernest Money & Closing Costs
Verification of Employment
Verification of Bank Statement (Deposits)
Verification of Landord

In a recent blog post "Illinois Undercover Operation Nets Two Arrests in Appraisal Scam" (Article Source - Morgage Fraud Blog ) we get a case study in Applied Universal Mortgage Fraud Truths 101. Let's see how many of these we can find as THIS mortgage fraud scheme unfolds: The mortgage fraud scheme as described by Przybylek involved Przybylek making an offer to a homeowner to purchase the homeowner’s property at an inflated price. Once the homeowner agreed to sell, Przybylek would get an appraiser to value the property at an inflated price and then find a buyer who would agree to purchase at the appraised value. Przybylek would then keep the difference as profit. The buyer would make a couple payments and then disappear. The informant met with Przybylek to discuss the scheme and agreed to participate – all the while wearing a wire. Most of the subsequent conversations were also recorded. In July 2005, the Secret Service obtained the use of a piece of property (1054 N. Lorel Avenue, Chicago, Illinois) The property was in very poor condition and was valued at $105,000. It had last been sold in 2000 for $72,000 and HUD took the property after the owner defaulted on the mortgage.

"At the time the property was put to use in the sting operation, the front and back doors didn’t latch properly or lock, a few of the windows were broken, the kitchen was gutted, with missing or broker floor tiles, there were no appliances or fixtures, water and gas pipes were sticking out of the wall, one of the bathrooms did not have an installed sink, there was no electricity or water to the house, much of the wood floors were dated and in poor condition, the carpet was old and stained, the attic did not have internal walls or a ceiling and portions of the exterior siding were falling off. "

Przybylek told the agent that he would create a fraudulent construction invoice for work that was never done and would show the invoice to his appraiser friend. He estimated that the appraised value would be $180,000 to $200,000. Przybylek provided the agent with a partially completed sales contract reflecting a sales price of $257,800. Espe acted as the appraiser and met Przybylek and the agent at the house. Espe said he forgot his camera and would use the photo from the assessor’s office. According to the affidavit, Espe told the agent that his job was to “play with the paperwork,” Two mortgage applications were submitted to First NLC by Quotemearate.com, Houston, TX. The mortgage packages contained a verification of employment signed by Przybylek verifying the borrower’s employment with Professional Home Builders. Other information was also incorrect in the loan package. The package also contained an appraisal by E.R. Espe, Aaron Company, Wilmete Illinois, signed by Erwin R. Espe valuing the property at $257,800.

The appraisal stated “House now has new electrical, plumbing was upgraded, significant amount of dry wall was replaced. Hardwood floors on first and second floors were refinished. Kitchen has new ceramic floor, a new front door to be installed immediately prior to move in or closing, new insulated windows on first and second floors, new carpeting in third floor bdrm and study, new carpeting in the family room.”

A few weeks after the appraisal, the agent inspected the house and although a few windows were placed in the front and back of the house and new siding was affixed to a portion of the back of the house, no other work had been done. The affidavit further states that the closing attorney indicated that the lien for the construction work would not be recorded but that a check would be issued from closing for the payment with the remaining proceeds to the seller. OK! How many of the "Universal Truths" do YOU think were involved!? If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , RESPA , FHA , Illinois , Realtor

Mortgage Fraud - "Universal Truths" - Part 1

2006-06-05T08:38:00.000-05:00

I attended the Illinois Coalition of Appraisal Professionals (ICAP) sponsored 2006 Illinois Appraisers Update Seminar on 6/1/2006. Representatives from Fannie Mae, HUD, and the IL Appraisal Division of the Dept. of Professional Requlation spoke on a variety of topics including:

Common Appraisal Errors
Mortgage and Appraisal Fraud
Appraisal Forgery
Identity Theft

Brad Geary, Assistant Special Agent in Charge from HUD - Chicago, OIG - provided some insights from the perspective of a field agent. Mr. Geary, in his self-deprecating fashion, claims that he's only an expert in the "obvious"! He feels that most fraud becomes apparent once a pattern is recognized. To become aware, we have to understand the Universal Truths of Mortgage Fraud listed below:

Appraiser Fraud
SSN / Identity Fraud
Credit Reports / Letters of Explanation
Ernest Money & Closing Costs
Verification of Employment
Verification of Bank Statement (Deposits)
Verification of Landord

According to Mr. Geary, virtually all mortgage fraud combines at least two of the items above.

An example of this is the case of Wanda Morgan Tyler, 60, of Duluth, Georgia. She was sentenced June 2006 by U.S. District Judge Thrash on charges of mail fraud, relating to a scheme to defraud the Dept. Veterans’ Affairs (“VA”). Tyler was sentenced to 33 months in prison to be followed by 3 years of supervised release, and found liable for approximately $900,000 in criminal restitution.

In over a dozen cases, Tyler created and submitted to the VA false wage statements, bank records, and other financial documents in the names of the purchasers that she represented, often without the purchasers’ knowledge. She did this to mislead the VA as to the credit-worthiness of the purchasers, thereby ensuring that the transactions would be approved and that Tyler would receive substantial commissions.
In some cases, Tyler submitted bids under false identities that she created.
As part of her scheme, Tyler used several aliases and different companies, all to conceal from the VA that Tyler was behind the scheme.

The VA lost over $900,000 as a result. This includes over $180,000 that the VA paid to Tyler in commissions from these fraudulent transactions, as well as over $720,000 in foreclosure losses, as almost all of the purchasers or purported purchasers defaulted on their mortgages.

All of us know that the 3/2005 Fannie Mae appraisal forms (Eff. 11/2005) had significant changes in the amount of information that appraisers need to research and verify. Looking that the list above, it's clear to me that many of the items on the new forms are designed to address the list of "Mortgage Fraud Universal Truths" above.

In future blog posts, I'll provide some of the specific issues that effect appraisers. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , RESPA , FHA , Illinois

City planners are increasingly criticizing cul-de-sacs.

2006-06-05T07:23:00.000-05:00

Homeowners Love Cul-de-Sacs, Planners Say They're Perils by By Amir Efrati From The Wall Street Journal Online One of the most popular features of suburbia is under attack. For many families, cul-de-sac living represents the epitome of suburban bliss: a traffic-free play zone for children, a ready roster of neighbors with extra gas for the lawnmower and a communal gathering space for sharing gin and tonics. But thanks to a growing chorus of critics, ranging from city planners and traffic engineers to snowplow drivers, hundreds of local governments from San Luis Obispo, Calif., to Charlotte, N.C., have passed zoning ordinances to limit cul-de-sacs or even ban them in the future. While homes on cul-de-sacs are still being built in large numbers and continue to fetch premiums from buyers who prefer them, the opposition has only been growing. The most common complaint: traffic. Because most of the roads in a neighborhood of cul-de-sacs are dead ends, some traffic experts say the only way to navigate around the neighborhood is to take peripheral roads that are already cluttered with traffic. And because most cul-de-sacs aren't connected by sidewalks, the only way for people who live there to run errands is to get in their cars and join the traffic. Land-use planners trace the origin of the American version of the cul-de-sac, which means "bottom of the bag" in French, to a development in Radburn, N.J., in 1929. Land planner Ed Tombari of the National Association of Home Builders says the design became popular during the housing boom after World War II, when many families turned away from the congested grids of central cities to live on quiet cul-de-sacs with lawns and winding roads more reminiscent of the countryside. To ensure privacy, developers limited the number of roads leading in. Click here for the full story. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Marketing , Regulation , Illinois , Realtor

Sun Herald: State Farm refusing appraisal, despite its own policy language

2006-06-01T06:26:00.000-05:00

JAMES EDWARD BATES/SUN HERALD - State Farm refusing appraisal, despite its own policy language - Insurer is urging mediation instead by By ANITA LEE Hank Kuehn looks over damage from Hurricane Katrina in the kitchen of his Ocean Springs home on Thursday. State Farm Fire and Casualty Co., which insured his home, refuses to engage in the appraisal process to resolve his and other Hurricane Katrina claims, even though its own policy mandates appraisal on demand when the amount of an insured loss is in dispute. State Farm taped on appraisal OCEAN SPRINGS - State Farm Fire and Casualty Co. refuses to engage in the appraisal process to resolve Hurricane Katrina claims, even though its own policy mandates appraisal on demand when the amount of an insured loss is in dispute. Instead, records show, the company is urging policyholders to settle disputes through a mediation program sponsored by the Mississippi Department of Insurance and funded by insurers. The insurance company controls the final settlement offer in mediation. A professional mediator has no authority to tell an insurance company how much money it owes a policyholder, instead serving as an impartial facilitator during negotiations. In appraisal, an appointed umpire can side with either party, resulting in a decision that is final and binding. Appraisal can be used only when a settlement is in dispute. It would not apply in cases where coverage has been denied. Insurance Commissioner George Dale also has urged policyholders to try mediation. He says the program works and that policyholders retain the right to pursue other avenues when it doesn't. There's nothing to lose, he says. But attorneys and homeowners dissatisfied with mediation contend the process is humiliating. Also, mediation reveals the homeowner's case for damages, attorneys say, which gives the insurance company an advantage should the parties wind up in court. With Dale and insurance companies promoting mediation, more than 2,000 insured residents have signed on.

"Because policyholders are often unfamiliar with the terms of their policies, many are unaware the appraisal process exists. But advocates say appraisal is faster and less painful than a lawsuit, and more likely than mediation to result in a fair settlement."

That is, if insurance companies cooperate. Click here for the full article. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

Speakers at Fraud Conference Name Appraisers as Root of Problem; AI Members Defend Role

2006-06-01T06:02:00.000-05:00

The June 2006 Appraisal Institute's Appraiser News Online reports on appraisal fraud topics from the recent MBA conference in Chicago. Mortgage fraud has grown more sophisticated and dangerous, "but its basis always is a fraudulent property appraisal," David McLaughlin, assistant attorney general of Georgia, said at a recent Mortgage Bankers Association of America conference, which took place in Chicago May 15-16. By pegging values higher than warranted, McLaughlin said, "the fraudsters pocket the extra cash." However, a couple of speakers reminded the conference that the Appraisal Institute has long sought more governance of, and legal independence from, the loan originators who typically hire them, said appraiser James R. Blaydes, SRA, of Peru, Ill., who was in attendance. Additionally, Robert C. Gorman, MAI, an appraiser in East Hazel Crest, Ill., who serves on the Illinois Real Estate Appraisal Division board, told bankers, "You need to know a little bit more about who you're hiring than a phone call to someone on a list of qualified appraisers. If you'd just check where you're sending checks, that could solve a lot of problems." Other tips suggested by the two appraisers included scrutinizing the details of real estate transactions – including the reputations of the professionals involved – and not allowing loan originators or underwriters to choose the appraiser for their property deal. McLaughlin’s comments weighed heavily at the conference due to his state’s recent Residential Mortgage Fraud Act, which has become a model for other state laws nationwide. The act came on the heels of Georgia being named the top mortgage fraud hot spot in the nation for three straight years. The Georgia Residential Mortgage Fraud Act makes it a felony, punishable by one to 10 years in prison, to misstate, misrepresent or omit facts in a real estate transaction, with intent to defraud, he said. The law also provides for fines of up to $100,000 an offense if a pattern of illegality is proved, he said. "It's getting people's attention," said Baker, whose office has more than 100 cases underway. "Most importantly, we don't have to wait until money is actually taken. We can intervene as soon as a proposal for fraud has been made. That's allowed us to get to the core – the deceit – before the lending institution has been bilked of millions, and a neighborhood has literally been destroyed." Georgia's law won praise from conference speakers but not all audience members. One possible reason: it makes lenders criminally liable for fraudulent loans. "You could be a defendant. Please bear that in mind," said mortgage-law specialist Michael J.M. Brook, an attorney with Lanahan & Reilley LLP in Santa Rosa, Calif. For more information about mortgage fraud, visit www.fbi.gov or www.usdoj.gov (type mortgage fraud in search box) or the trade group Web sites, www.mortgagebankers.org (see consumer section) and www.appraisalinstitute.org (type mortgage fraud in search box).

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The Cost Approach: To Do or Not To Do

2006-05-31T19:25:00.000-05:00

The following is from a Liability Insurance Administrators' Claim Alert (May 2006): The growing pains of using the new Fannie Mae forms are continuing; an issue that has developed is whether appraisers should continue to complete the Cost Approach to Value, even in circumstances where it may not be reliable. The Cost Approach section is optional on the new Fannie Mae and Freddy Mac forms, while USPAP directs the appraiser to comment on all approaches to value – whether or not completed. Our national claims counsel suggests that you remind your lenders/clients about the intended use and intended user as defined in your appraisals. A particular concern is that your potential liability exposure may increase if the cost approach analysis contained in your appraisal is used for the purpose of obtaining insurance coverage or determining insurable value. An appraisal completed for a lender/client in connection with mortgage lending should not be used or relied on for insurance purposes. To address these issues and to complete the report in a manner that is not misleading, the following scenarios have been developed, with corresponding suggested language to add to your reports. 1. Appraiser believes the cost approach is applicable

The cost approach has only been developed by the appraiser as an analysis to support their opinion of the property`s market value. Use of this data, in whole or part, for other purposes is not intended by the appraiser. Nothing set forth in the appraisal should be relied upon for the purpose of determining the amount or type of insurance coverage to be placed on the subject property. The appraiser assumes no liability for and does not guarantee that any insurable value estimate inferred from this report will result in the subject property being fully insured for any loss that may be sustained. Further, the cost approach may not be a reliable indication of replacement or reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and due to changing building codes and governmental regulations and requirements.

2. Cost approach required by client but appraiser does not consider it meaningful

At the request of the client, development of the cost approach has been attempted by the appraiser as an analysis to support their opinion of the property`s market value. Because there is insufficient market evidence to credibly support the (site value/ derivation of total appreciation), the cost approach is not given any consideration in the appraiser`s final analysis. Use of this data, in whole or in part, for other purposes is not intended by the appraiser. Nothing set forth in the appraisal should be relied upon for the purpose of determining the amount or type of insurance coverage to be placed on the subject property. The appraiser assumes no liability for and does not guarantee that any insurable value estimate inferred from this report will result in the subject property being fully insured for any loss that may be sustained. The appraiser recommends that an insurance professional be consulted. Further, the cost approach may not be a reliable indication of replacement or reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and due to changing building codes and governmental regulations and requirements.

3. When client requires an Insurable Value Worksheet be completed by appraiser

Provision of an Insurable Value by the appraiser does not change the intended user or the intended purpose of the appraisal. The appraiser assumes no liability for the Insurable Value estimate provided and does not guarantee that any estimate or opinion will result in the subject property being fully insured for any possible loss that may be sustained. The appraiser recommends that an insurance professional be consulted. The Insurable Value estimate may not be a reliable indication of replacement or reproduction cost for any date other than the effective date of this appraisal due to changing costs of labor and materials and due to changing building codes and governmental regulations and requirements.

If your lender/client or an insurance company or agent would like to retain you to prepare an insurable value report, the company should specifically retain you for that purpose, and, of course, you should only accept such an assignment if you are comfortable preparing an insurable value report. An issue that may present itself is whether your client will reject inclusion of the above additional language in your report. Because Fannie Mae does not require the “Cost Approach to Value,” your client may not object to the language. However, if this dilemma presents itself, you may have to make a business decision to either decline the assignment or accept the additional exposure in order to maintain the client relationship. Copyright 2005. Liability Insurance Administrators. All rights reserved. Additional Resources:

Liability Insurance Administrators Claim Alert Bulletins
The Cost Approach - Appraiser Compliance Issues If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Scope of Work

The Cost Approach - Appraiser Compliance Issues

2006-05-31T18:50:00.000-05:00

Guest Blogger, Bert Craytor, Certified Residential Appraiser http://www.PacificVistaNet.com addresses some of the issues of providing the Cost Approach to lenders, in residential appraisal reports, where it's known that the intended use is to support an estimate of insurable value: "Insurable Value" is defined by the respective insurance company and is probably outside the domain of many real estate appraisers; i.e. the typical appraiser should not be concerned with estimating "insurable value". However, insurable value is often BASED on "replacement cost" or reproduction cost". And if the client's definition of "replacement value" or, as the case may be, "reproduction cost" matches that of the appraisal profession, then the client should certainly expect a credible value from the appraiser. I think therefore, that if an appraiser loses a suit with respect to insurable value, then it is probably because his method of calculating replacement or reproduction cost according to accepted appraisal standards is faulty. In this regard, page 162 of Eaton's "Real Estate Valuation in Litigation" sheds some light on the problems involved: "Appraisers must avoid representing themselves to the trier of fact as both 'expert appraisers' and 'expert cost estimators'. In a Rhode Island case an appraiser was precluded from testifying to the cost of replacing a portion of a fence taken in an eminent domain action when the court ruled that being an expert appraiser does not necessarily qualify the appraiser as an expert fence builder." (Palazzolo v Rayhill, 394 A.2d 690, R.I. 1978)." "...If the Cost Approach is important to the appraiser's value conclusion, the appraiser is well advised to obtain a reproduction or replacement cost estimate from at least one contractor. To supplement the contractor's cost estimate, the appraiser should develop at least one other cost estimate or use one developed by a cost service. If the appraiser adopts the contractor's estimate with no other evidence, the estimate is not the opinion of the appraiser, but of the contractor. In such a circumstance, the appraiser could be excluded from testifying in regard to the cost of the improvements because the estimate is not the appraiser's opinion and therefore, hearsay evidence. ..." "The problem of hearsay can also arise if an appraiser uses a published cost service as the sole source of data. Aside from the hearsay rule, using a cost service as the sole source of data in estimating reproduction cost has been viewed with skepticism by some courts." It would certainly be advisable to give a clear definition of "replacement cost" and "reproduction cost" in the Cost Approach. Also, as part of the Scope of Work, the appraiser should make an attempt to get the client's definition of replacement/reproduction cost - if the client requests the Cost Approach. Of course, that might create some problems. Bert Craytor Certified Residential Appraiser http://www.PacificVistaNet.com Additional Resources:

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LOCAL - B-N Twin Cities are number 50 on Forbes list

2006-05-31T17:26:00.000-05:00

Twin Cities No. 50 on Forbes list : Pantagraph Article by Scott Miller scottmiller@pantagraph.com BLOOMINGTON -- Educational attainment boosted the Twin Cities’ ranking in a recent list of best small metros for business by Forbes magazine. Bloomington-Normal is the ninth most educated small metro in the country, according to Forbes, but slowed job growth and a higher cost of doing business pulled the cities down to No. 50 on the list of best small cities to do business. In many cases, the cost of doing business in Bloomington-Normal was higher than other Illinois towns. Property taxes, housing availability, transportation costs and other general cost-of-living factors vary throughout Illinois, said Mike Malone, executive director of the McLean County Chamber of Commerce. "Our cost of living surveys show that we run just about average," he said. A tight labor force, as well as an educated labor force, meanwhile, increases manpower costs, he added. According to the Illinois Department of Employment Security, McLean County has the third lowest unemployment rate in the state at 3.8 percent. "If you have a tight labor force, you’re cost of doing business is going to be higher," Malone said. The Twin Cities ranked No. 107 on Forbes’ list for the cost of doing business. Comparing business costs across the nation, Illinois cities are at a disadvantage as the state continues to increase business fees and taxes to plug holes in its budget, said state Rep. Dan Brady, R-Bloomington. "It’s hard to attract businesses when we’ve got a history and a reputation of taxing businesses harder than other states. That’s got to change," Brady said. "Just look at the states around us. They’re doing a better job of retaining jobs and attracting new jobs than we are. "According to Forbes, Bloomington-Normal ranked No. 128 in job growth. According to figures from the Illinois Department of Employment Security, small businesses in McLean County have expanded. More lawyers, architects and other professional services employees work here, for example. The service sector is also growing, according to the IDES. But much of Bloomington-Normal’s past job growth is attributable to the booming 1990s at State Farm Insurance Cos, which has since slowed growth. Meanwhile, McLean County has lost manufacturing jobs, according to the IDES. Still, No. 50 on Forbes’ list of top small metros to do business is a good place to be, Malone said."We have a strong quality of life, a good infrastructure that connects us to major markets (like Chicago and St. Louis) and a good labor-management relationship that you don’t find in other places," Malone said. "Those things make Bloomington-Normal an attractive place for business." If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Illinois

LOCAL - Medici Restaurant Planned For Downtown Normal, IL

2006-05-31T17:22:00.000-05:00

Work to begin on Normal restaurant in July - Pantagraph article by By Mary Ann Ford: NORMAL -- Work is expected to begin on the 250-seat Medici restaurant planned in downtown Normal by July 1. Co-owner Hans Morsbach, who also owns the popular Medici on 57th St. in Chicago, said the 20,000-square-foot restaurant and accompanying bakery should be open by spring 2007. The restaurant will be built on the former site of Other Ports, 120 W. North St. Other Ports owner Bob Steinman is a partner in the Medici project. The bakery will be next door in the former Village Realty building at 122 W. North St., purchased by Morsbach and Steinman late last year. John Meek, president of general contractors Felmley Dickerson, said the restaurant will bring design concepts residents haven’t seen in the Twin Cities before. "We are doing things that are probably unusual and hopefully exciting," said designer Josh Behr of Behr Design Studio in Chicago and Louisville, Ky. "It will be a special place in town. The inside it will be eclectic, funky, yet sophisticated." Trees will play a major role in the 2 1/2-story restaurant and come from Morsbach’s tree farm in Wisconsin. Behr said Amish workers at the tree farm’s accompanying workshop will create all the wood pieces. "There will be dozens of tables and everyone will be different," he said. The tabletops will include the round end cuts from a variety of trees including hickory, walnut, cherry and oak. A large bar on the first floor will be created from large slabs of wood from the Wisconsin trees. "I believe in the end, it will be a bar that no one has ever seen before," said Behr. Slick lighting created by Ben Spicer, a former lighting designer for Oprah Winfrey, will complement the rough wood. "It will be very high tech and unusual lighting," Behr said. There will be two dining rooms on the first floor — one at the front of the restaurant facing North Street and the other in the atrium. The menu will mirror the Chicago restaurant and include pizza, hamburgers, fish, steak, beef stroganoff and quesadillas. A "grand staircase" under a large curved steel beam will take customers to the second story. The staircase will split two ways at the top — one set going to a dining area at the back, the second to a terrace at the front of the building. Behr said the large terrace will have a hydroponic garden, growing plants without soil, a grill and a second bar that straddles the inside and outside. "There will be one to two dozen beers on tap," Behr said. Morsbach’s son, Paul, who also is a partner in the project, brews beer. The other dining room upstairs will include a projection screen that could be used for conferences or perhaps a restaurant-sponsored Super Bowl party, he said. The upstairs area also could be rented out for parties or even a wedding reception. "We’ve built in a tremendous amount of flexibility," Behr said.But the inside isn’t the only place receiving attention. Behr said the front of the restaurant will be "as honest a reproduction of the original 1900 façade" as it can be. The accompanying bakery building façade also will be returned to its original look. Work to begin on Normal restaurant in July By Mary Ann Ford mailto:Fordmford@pantagraph.com If you enjoyed this post, subscribe and get FREE updates! Appraisal , Bloomington , McLean , Illinois

LOCAL - Cedar Ridge Subdivision, Bloomington, IL

2006-05-31T17:16:00.000-05:00

Saturday, May 27, 2006 - Developer reserves land for school, park - Pantagraph article by Michele Steinbachermsteinbacher@pantagraph.com NORMAL -- Unit 5 has accepted a Bloomington developer’s proposal to set aside 18 acres for a possible school and park. The agreement sets aside 10 acres for a school in the proposed Cedar Ridge subdivision in southwest Bloomington. An additional 8 acres, adjacent to the school area, would be reserved as a city park. “This agreement gives the option, but not the obligation,” to build a school at the site, said Scott Lay, school board president. Although the town of Normal has an ordinance requiring developers to set aside land for future schools, Bloomington does not. The McLean County Regional Planning Commission OK’d a preliminary plan Wednesday for the subdivision to be located east of Brigham Elementary School on the opposite side of U.S. 51. The subdivision plan must be approved by the Bloomington City Council. If Unit 5 decides to pursue the idea of building a school at the Cedar Ridge site, a referendum would need to pass, said Lay. Under to the agreement approved Wednesday by the school board, the developer, Snyder Corp., could cancel the agreement if a referendum doesn’t pass by July 1, 2008. Earlier this year, Unit 5 set up a similar agreement with developers of the Grove at Kickapoo Creek subdivision. In a separate matter, the school board also authorized the final paperwork for a 1.1-acre land swap proposed about a year ago. The land trade, near Prairieland Elementary School on Raab Road, was proposed to square up land parcels, said Lay. It involves Unit 5, the town of Normal and Twin City developers Jim Shirk and Bill Johnston. The pieces of land were on a small sliver of parkland owned by Normal and used by Prairieland students and another piece in Johnston and Shirk’s development Wintergreen East. Saturday, May 27, 2006 - Developer reserves land for school, park - Pantagraph article by Michele Steinbacher msteinbacher@pantagraph.com If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Illinois

LOCAL - New extended-stay hotel planned for Normal, IL

2006-05-31T17:12:00.000-05:00

New extended-stay hotel planned - Pantagraph Article by Mary Ann Ford NORMAL — Workers in the Twin Cities for a few weeks, a month or even a year will have another housing option by next spring. Ehrhardt Hospitality of Hannibal, Mo., expects to start building a four-story, 110-unit Candlewood Suites at 203 Susan Drive this week. The property is on the northwest corner of land behind the strip mall that is home to Borders Books, Dick’s Sporting Goods and World Market. Franchise owner Spike Ehrhardt said construction should be completed by March."It’s designed for the business traveler who needs (housing) for a week, a month or anything under a year," Ehrhardt said. He said his company was attracted to the Twin Cities because so many companies, including State Farm Insurance Cos., Mitsubishi Motors North America and local hospitals, bring in workers for less than a year. Candlewood, a division of InterContinental Hotels, offers discounts for stays over three days, he said. The longer the stay, the bigger the discount. Ehrhardt said each of the 500-square-foot suites includes a kitchenette with appliances and dishes, a living room and a bedroom. The extended-stay hotel also has a convenience store called the Cupboard, which sells a variety of grocery items. "You can get a Coke for 25 cents," Ehrhardt said. "All items are reasonably priced." The hotel also will have an exercise room, a meeting room and a business center, he said. Ehrhardt said Candlewood Suites is a fairly new product of InterContinental Hotels, which has seven brands including InterContinental Hotels and Resorts, Holiday Inn, Holiday Inn Express, Crowne Plaza, Indigo and Staybridge Suites. Ehrhardt Hospitality, which includes Ehrhardt’s son, Scott, and son-in-law, Kevin Wiley, has built four Candlewood Suites in Missouri and Oklahoma.The hotel offers a priority club that gives rewards for frequent hotel guests, Ehrhardt said. He expects to hire about 15 workers, eight full-time and seven part-time. New extended-stay hotel planned - Pantagraph Article by Mary Ann Ford mford@pantagraph.com If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Bloomington , McLean , Illinois

Appraisers Make Mistakes - Soapbox Appraisal Blog

2006-05-31T12:48:00.000-05:00

Jonathan J. Miller of the Soapbox appraisal blog has also seen the recent Realtor Magazine Online article Oh No! It's Low! I love this comment from his post:

"A wise appraiser once told me: Everyone in the sales transaction is smarter than the appraiser because they already know the number. The real estate listing broker and selling broker, the mortgage broker, the lender and of course the buyer and seller all know the number. The appraiser is the last one to the party."

For the complete Soapbox post - click here. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Realtor

Oh no! It’s low! - What To Do When The Appraisal Is "Short"

2006-05-31T12:01:00.000-05:00

You’ve done everything right. You found your clients the perfect home. True, the property is at the high end of their price range. True, they offered almost full list price after having already lost out on two other homes. Now all your clients need is the mortgage, and the deal is done. But when the appraisal comes in, the valuation is low. What can you do legally and ethically to resolve the situation and not just watch your clients’ perfect home go to someone else? Francois K. Gregoire's article published in the June issue of Realtor Magazine Online : Oh no! It’s low! has some suggestions: You never want to demand or coerce an appraiser to revise the appraisal. There must be a reason for the appraiser to reconsider an opinion of value other than “This is what we need to get the deal through.” However, there are ways to approach a low-appraisal situation that are both legal and likely to produce results. Focus on the facts. Facts, not emotion, will pique an appraiser’s interest. If you have data not available to the appraiser through standard sources, such as the MLS or county tax rolls, you may be able to grab the appraiser’s attention and possibly affect a revision in the appraiser’s opinions or conclusions. Have the details ready. If there are issues you want to bring to an appraiser’s attention, they must be supported by facts, not anecdotes or rumors. An unsupported statement such as “prices have appreciated by 10 percent in this area over the past 60 days” isn’t likely to get an appraiser’s attention. . Present real comparables to support your arguments. Recent sales similar to the property under contract, that appeal to the same market segment, and that are in the same or a similar location are comparables. Other properties are merely sales. Also remember that an appraiser is required to make adjustments to a comp’s price based on differences with the subject property. Adjustments can occur because of changes in market demand, physical differences in properties, or a location’s desirability. You can assist the appraiser by providing all details about the sale and about comps that closely match the property. Remember who the appraiser is working for. An appraiser’s responsibility is to the lender—not to the borrower, the seller, the listing agent, or the selling agent. If your client has an issue with an appraisal, contact the appraiser’s client (the bank) to see if that client will authorize the appraiser to discuss aspects of the assignment. Continuous calls to the appraiser issuing overt or covert threats won’t advance your cause.

"Appraisers aren’t perfect, but they have everything to gain by being thorough, accurate, and honest. Encouraging an appraiser to engage in illegal activity in this era of widespread mortgage fraud could lead to a sanction against you and even to criminal prosecution for you and the appraiser. No transaction is worth that."

Gregoire, RAA, is president of Gregoire & Gregoire Inc. in St. Petersburg, Fla. He’s a past chair of the NATIONAL ASSOCIATION OF REALTORS® Appraisal Committee and chairman of the Florida Real Estate Appraisal Board. You can reach him at francois1@tampabay.rr.com The full article was published in Realtor Magazine Online on: 06/01/2006 by Francois K. Gregoire Oh no! It’s low! If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Realtor

California Breaks Record For Number of Licensed Appraisers

2006-05-31T11:02:00.000-05:00

RISMEDIA, May 31, 2006—The California Office of Real Estate Appraisers (OREA), the state department that issues licenses to California's Real Estate Appraisers, now licenses more appraisers than ever before.

"OREA is committed to ensuring that only qualified individuals are licensed to appraise real estate," OREA Acting Director Tony Majewski said. "It is critical that lenders and consumers have confidence that licensed appraisers are qualified and professional, complying with the strict standards of the industry."

Currently, there are nearly 20,000 licensed and certified real estate appraisers in the state. In 2005, the number of appraiser licensees rose to a record of more than 17,800. This year, the trend continues with the number of licensees climbing to 19,675 as of May 2006. OREA processed more than 5,000 applications for new licenses in FY 2004-05 within 90 days to meet the needs of the real estate industry during the recent U.S. housing boom. With an increased number of licensed and qualified appraisers, mortgage lenders and brokers have a broader selection of professionals to add to their list of approved appraisers in their market areas. For more information about the Office of Real Estate Appraisers and its programs visit www.orea.ca.gov. Click here for the complete RISMedia story! If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

Tell Illinois Governor Blagojevich to sign Eminent Domain Act!

2006-05-31T10:55:00.000-05:00

IAR thanks you for your key support in getting the eminent domain reform legislation to the Governor's desk. Now in the final stage to ensure enactment of this landmark legislation to strengthen private property rights in Illinois, please s end an e-mail to the Governor urging his approval of SB 3086. Get the latest legislative news of interest to REALTORS in Quorum Call. If you enjoyed this post, subscribe and get FREE updates! Real Estate , Appraiser , Bloomington , McLean , Illinois , Realtor

Appraisers In The Funny Papers? On TV? Why Not!

2006-05-31T08:48:00.000-05:00

At Gaxed.com, you can put your message on almost anything – snow, the sky, or a building. Images were provided under a Creative Commons license, and they're passing them on as such: feel free to share them. You can click the graphic below to see the full screen version.

Real Estate Market Crashed?

According to Gaxed, it was created in 2006 "'cause I'm having lots of fun with generators." You can email me with your feedback or visit my blog. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , Blog

Technology - Six Leading Anti-Virus Programs Reviewed

2006-05-31T07:31:00.000-05:00

Peter Butler, Senior Editor, CNET Download.com says, "Intrusive and aggressive spyware might be the most dangerous enemy you'll have to face on your personal PC (for now), but viruses are often the peskiest. See Jessica's blog post about World Cup worms for a current example. " Additionally, though spyware and adware have spawned a booming freeware community that offers powerful and free tools for eradicating malware, most of the quality virus protection comes with a price tag. To help you make some sense of the current batch of antivirus tools, CNET has assembled their antivirus product reviews for six of the leading antivirus programs in an easy-to-compare format. Learn which of the contenders scored the highest review and what differentiates one from another. If you enjoyed this post, subscribe and get FREE updates! Technology

House Reforms Would Revitalize the FHA

2006-05-30T18:14:00.000-05:00

The House Financial Services Committee on May 24 approved sweeping measures that would revitalize and reform the Federal Housing Administration's single-family mortgage insurance programs. H.R. 5121, the Expanding American Homeownership Act of 2006, includes several provisions supported by NAHB. The bill, which will be sent before the full House for further consideration, would:

Increase the limit for FHA-insured mortgages in high-cost areas
Grant the FHA flexibility to establish zero or reduced downpayment requirements for its single-family programs
Allow the FHA to establish a risk-based mortgage insurance premium pricing structure
Permit the FHA to extend the maximum loan maturity to 40 years
Authorize FHA to insure all of its single-family loan programs under the Mutual Mortgage Insurance Fund, which would clear the way for FHA to streamline the condo project approval requirements

NAHB Executive Vice President and CEO Jerry Howard testified in support of H.R. 5121 before the House Financial Services Committee’s Housing and Community Opportunity Subcommittee in early April.

He noted that these provisions would give the FHA a greater ability to respond to the needs of borrowers and enable more working families to become home owners. To read Howard's full testimony, click here. (Document is in PDF format.)

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Market Action Slips Away From Coasts

2006-05-30T18:11:00.000-05:00

Based on a statistical analysis of housing price cycles in 100 major metropolitan areas, Christopher Cagan, director of research and analytics for First American Real Estate Solutions in Santa Ana, Calif., concludes that . . .

" . . .significant real estate investment opportunities during the balance of the decade will be found in local markets where home prices typically plod along from year to year and where job growth is favorable and housing prices are moderate. "

Conditions for above-average price increases and home building will be particularly favorable in Texas, Colorado and the energy belt areas of the Southwest, he believes. Cagan says that Texas is the real beneficiary of the energy crunch. In addition, major heartland markets are nowhere near their home price growth limits and that, along with an attractive qualify of life, could spur population movements to them. For cyclical housing markets — including most of California from the San Francisco Bay area south, much of Florida, the Washington area, Baltimore, New York and much of New England — boom times have burned themselves out by pushing housing prices to unaffordable levels. (www.washingtonpost.com) Washington Post (5/27/06); Kenneth R. Harney If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser ,Marketing , Realtor

Everybody Wants a Whirlpool Tub, But Nobody Uses It

2006-05-30T18:09:00.000-05:00

While 62% of home owners polled by NAHB say they want whirlpool tubs, less than 6% say they actually use them. A linen closet is the most preferred amenity in the bathroom, identified by 91% of those responding to the survey, followed by an exhaust fan (88%) and a separate shower enclosure (78%). NAHB researchers were surprised to see that 76% of respondents listed water temperature controls among their top-five favorite bathroom features. Sixty-three percent of those polled indicated that high-quality products and amenities were more important than space, and 57% prefer these products to be included in the base price of the home rather than as extra-cost options. Over the next five years, NAHB researchers predict growing popularity for low-maintenance, natural materials; synthetic stucco; energy efficiency; and external security. Inside the home, open space, quality features, technology and special-purpose rooms are on the upswing. (www.ntxe-news.com) If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser

April Illinois Home Sales Ease Off Record Pace.

2006-05-30T17:39:00.000-05:00

April Illinois home sales ease off record pace. Total homes sales (single-family and condos) were down 8.4 percent to 14,569 homes sold in Illinois, compared to the previous record for the month of 15,897 homes sold in April 2005. Statewide median price is $203,500. Read IAR's full report in Market Stats. April sales are down 7.17 percent nationwide, according to the NAR release. If you enjoyed this post, subscribe and get FREE updates! Appraisal ,Real Estate , Appraiser , Bloomington , McLean , Marketing , Illinois , Realtor

Can you check comps for me? I want to know if I should order an appraisal!

2006-05-30T15:59:00.000-05:00

"Can you check comps for me? I want to know if I should order an appraisal!" That's a common question that is asked of appraisers every day. Lenders and borrowers don't want to waste their time and money on loans that won't "Appraise Out". The Appraisal Foundation, in its May 2006 Q&A Newsletter, has addressed this nagging issue of Appraisers “Providing Comps” to clients and what constitutes an appraisal. Question: I have a client that just wants me to “provide comps” from a neighborhood. Are there any USPAP requirements I must comply with to perform this task? Response: To answer this question, it is important to identify exactly what the appraiser is being asked to do. If the appraiser is asked to “provide comps,” that would typically mean the appraiser would be exercising his or her own judgment to determine which sales are most “comparable” to the subject property. The appraiser may choose to include only those sales that he or she deems are most similar to the subject in size, location, quality, etc., which could mean that certain sales may be omitted. In this case, the resulting data would have been “filtered” by the appraiser’s judgment, which would have the net effect of providing a range of value to the client. This range of value is defined as an appraisal under USPAP; therefore, the appraiser would be obligated to comply with STANDARDS 1 and 2. This should be contrasted to a request for an appraiser to simply provide data. For example, an appraiser asked by a client to provide “sales data of all homes located within a one mile radius” of a specific address could comply with the client’s request without complying with STANDARDS 1 and 2, as the appraiser would just be providing sales data pursuant to the client’s defined parameters. In this example, the appraiser must be careful not to communicate any opinions or conclusions regarding the data provided. For related guidance on this topic, please refer to Advisory Opinion 19, Unacceptable Assignment Conditions in Real Property Appraisal Assignments and Illustration #4 “Appraisal and Market Information” in Advisory Opinion 21, USPAP Compliance. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , Regulation

The Four-Day Week Challenge - Work Smart, Not Long!

2006-05-30T15:07:00.000-05:00

Thanks to Brooke Long at Cataluna for the tip on a great article from A List Apart called The Four-Day Week Challenge by Ryan Carson The problem, according to Ryan is: "If you’re like most people, you’ve got too much to do and not enough time to do it. The e-mail inbox is always overflowing and the list of to-dos never ends. You always feel that twinge of guilt because you’re never spending quite enough time on what you should be. What’s even more frustrating is that the more you work, the more it seems there is to do. Argh!" The article discusses the issues and solutions for both employed and self-employed folks. I'm betting that a LOT of real estate professionals will recognize themselves as they read the full article: - Click here. Here are some tips to help you out

Avoid using instant messaging: It’s a constant source of distraction.
Only check your e-mail twice a day: The surest way to waste time is the ol’ Send and Receive button.
Stick to what matters: Take care of the most important stuff first. Don’t waste time on low-priority stuff. (In fact, delete the low priority stuff from your to-do list. It’s not going to get done anyway!).
Ask for alone time: If you need uninterrupted time to get something done, politely notify your co-workers that you’ll be unavailable for a couple of hours.
Limit blog-reading time: Set a time limit on your blog reading. If you don’t get through all your blogs in that amount of time, hit the trusty “Mark All As Read” button and move on.
Make lists: Write a “to do” list for each day (on paper if you can bear to tear yourself away from Outlook). Put the time-sensitive stuff at the top and be realistic.
Choose three time-intensive things to do and five quick things to do. Make sure you finish all of them before you leave in the evening.
Restrict meetings: If you can, restrict the amount of meetings you call, or are involved in. Meetings drag on and can eat into your day. Instead aim for one or two meetings per week and plan them carefully to ensure you cover all important topics and keep on track.

Other resources: If you want some great ideas about maximizing your effectiveness and time management, I’d definitely recommend checking out the following:

Getting Things Done by David Allen
How to Shut Up and Get to Work! by Jason Fried
Lifehacker
Ta-Da Lists

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Why Isn't My House Selling For What It's Appraised For?

2006-05-30T11:11:00.000-05:00

Ilyce R. Glink of Inman News recently tackled a seller's question regarding the differences between appraised and market values. Click here for full article.

Q: I tried to sell a house for the appraised price and was unable to sell at that price. I understand that property will not sell when it is priced too high but the offers I received were $5,000 to $8,000 less than the appraisal. I was under the impression that if I advertised the property for the appraised price, it would move quickly. I told one real estate agent when she made me an offer from a client that I was going to have the house appraised again and that I would provide the appraised price to the potential buyer so he could adjust his bid. The agent didn't go for that at all. Can you give me some suggestions as to what I did wrong? When I couldn't sell the house, I finally rented it.

Ms. Glick responded: "I think you made a few basic mistakes. First, the appraised value is not necessarily the same thing as the market value. The appraised value of the home is what an appraiser thinks the home is worth based on the sales of other similar homes in the area. The market value is what someone will actually pay for the house. " It's true that an appraised value may not be the same thing as market value, but not for the reason that Ms. Glick implies above. There are different types of appraisals, such as a "quick sale value," "as-is condition," "future renovated valuation," "employee relocation," and many others. Ms. Glick says: "The market value is what someone will actually pay for the house." If she is correct , when a buyer under-pays or over-pays for a house, that must be market value? I don't think so! Price may not equate to Value. An everyday example of this is shopping for Levi's online, or a discount store, or a department store (market). The price for the identical product may vary from $12.00 to $20.00 but the value of the jeans will remain the same. If there were "Levi Appraisers" they would report the most probable value that a knowledgeable buyer would be willing to pay. Ms. Glick concludes: "In your case, either because of the condition or location of the home, the market is telling you that your home isn't worth what the appraiser thinks it should be worth--it's worth $5,000 to $8,000 less. Getting a new appraisal doesn't change what someone will pay for the home. You'd be better off buying some cans of white paint and repainting the interior of the property. Then, you might get more money for it." The author has jumped to the conclusion that the appraiser has "over-valued" the property because he or she did not correctly adjust for adverse condition or location factors. While that is possible, there's no evidence to support that conclusion. What are some reasons a property may not sell for the appraised value?

The Intended Use of the appraisal has changed. It's possible that the owner is using an appraisal optained for a cash-out refinance. NOW she wants to use for as a pre-listing guide. There is almost always a range of reasonable values for any property. The upper-end of the value range may have been appropriate of the original use (refinance) but it may not be appropriate to then use it to support a negotiated sale price.
The market has changed. Have interest rates gone up? Seasonal demand changed? Appraisals are a snapshot in time.
Inadequate marketing efforts or unrealistic marketing timeframe. Appraisals assume that the property will be exposed to the open market for a reasonable period of time. If the seller was expecting a "quick turn", and the appraiser was unaware of of this, they may not have properly discounted the prevailing market values.
Value Point vs Range of Value. In lending work its SOP (Standard Operating Procedure) to reconcile the indicated market value range to a single "value point". For pre-listing assignments I feel that it is more appropriate to express the market value as a "range of value". Real Estate Appraisers are about the only class of appraisers where a point value is expected. In fact, there is NO single market value point for a given property. Don't believe me? Put your property up for sale and see how many different opinions you'll get from appraisers, sales agents, family members, friends, and potential buyers. Then run an Internet on-line home value (AVM) product.
Opinion or Fact? An appraisal, simply stated, is an opinion of value supported by adjusted market sales. As mentioned above, there is no "single" market value. Professional appraisers strive for a 5% margin of error when comparing appraised values and ultimate sales prices. If a home is appraised for $100,000 and utimately sells for $95,000 to $105,000 ($10,000 spread) the appraiser has met industry standards and outperformed the best of the online valuation products.

Original Article: "Seller learns difference between appraised and market value" - Thursday, May 25, 2006 By Ilyce R. Glink

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Getting The "Best" Real Estate Appraisal

2006-05-30T06:06:00.000-05:00

According to Bob Bruss' article "How to get the best appraisal for your house or condo" Here’s a summary of what Mr. Bruss thinks will make sure that you get an accurate appraisal of a residential property.

Put the home in model home condition before the appraiser arrives.
Hand the appraiser a list of the home’s special features, especially those that add market value. Also, provide the appraiser with suitable comparable properties.
Always accompany the appraiser to facilitate the inspection and answer the appraiser’s questions. Don’t hesitate to point out special features.
Insist that the lender provide the borrower with an appraisal copy, although technically the appraisal belongs to the mortgage lender who hired the appraiser.
If the appraisal comes in low, promptly request a review appraisal by another appraiser (to be paid for by the lender).

On the face of things, his suggestions might seem to make sense? AND, in fact I can actually agree with most of what he said above (topic headers). My issues are with his "explanations" of why those are important. As a form of rebuttal, I'd like to address some "quotes" from his article. Mr. Bruss starts off his article with an explanation of "What Is An Appraisal"? His brief explanation of a "market value" appraisal left me more confused than enlighted. A more complete (and accurate) description of what a market value appraisal is can be found in the Wikipedia section: Market Value definitions in the US.

Although computers have changed real estate appraisals, there is no substitute for the experience of a realty appraiser to interpret the recent sales prices of comparable nearby houses and condos, which determine the market value of a specific home.

But having said that, Mr. Bruss goes on to imply that AVMs are the "scientific" way of valuing homes and that appraisers are necessary to "verify facts". Apparently he hasn't read the recent study by MSNBC that said: " . . . even the BEST of the online AVMs only had a 50% chance of being within 5% of the likely sales price. So traditional appraisals may not meet Mr. Bruss' definition of "scientific", but isn't "accurate" more important? I agree with Bob when he suggests that homeowners get their property in good shape prior to the arrival of the appraiser. "Clean Sells!" But getting the property into "Open House" condition is not mission critical to obtaining an accurate valuation.

Real estate appraisers see hundreds of homes each year and are experienced at looking at the "real estate" that is their job to appraise. Still, poor housekeeping can be an indication of sloppy maintenance and puts the appraiser on the alert. I have to chuckle when Mr. Bruss suggests that appraisers "can't possibly remember each home's special features" if they see 2 or 3 properties a day! He thinks we'll do a better job if we have a sales agent or the homeowner yakking our ears off while we're WORKING!! Doesn't everyone work better that way? Hey Bob! Watch an appraiser while they're at work sometime. Armed with laser measuring devices, digital camera, PDAs and UMPCs, and wireless Internet connections, appraisers have a wide variety of tools in the field to take notes and "memory jog" photos. Many technologically advanced appraisers are capable of entering the property data and detailed sketches directly into their appraisal software while at the property. Several quotes in his article were from " . . . A Realtor friend of mine . .". Wouldn't you think when an article is about getting the "best" (or most accurate) appraisal, that he'd talk to an appraiser!? Other Resources:

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The Greatest Real Estate Generation? - Boomers' Housing Habits Study

2006-05-26T11:06:00.000-05:00

Before David Lereah took the podium at the Wardman Park Hotel at 2 PM Thursday to announce the findings of the largest study ever conducted of baby boomers’ housing habits, some 17 national media outlets already were eager for the story. What story? - Report from the Midyear Meetings: The Greatest Real Estate Generation? © Copyright NATIONAL ASSOCIATION of REALTORS® If you enjoyed this post, subscribe and get FREE updates! Real Estate , Realtor

Gramm-Leach-Bliley (GLB):Time for the appraisal industry to get compliant

2006-05-26T09:05:00.000-05:00

What do the words Gramm-Leach-Bliley mean to you? According to a la mode's most recent newsletter: "If you're like many appraisers, you're vaguely aware that GLB (as we'll call it) is a law that deals with financial privacy. You may have heard something about it being applicable to appraisers, but no one's ever really pressed the issue, so like the vast majority of your colleagues, you've never really done anything about it. " No one ever really pressed the issue to title companies either. That's changed now that Kansas-based Nations Title Agency Inc. has settled Federal Trade Commission (FTC) charges that it was careless with consumer information. (Kansas City Business Journal account) A Kansas City TV station found discarded mortgage loan applications in an open, unsecured dumpster on Nations Title property. That prompted the FTC, the agency that enforces GLB, to investigate. The FTC found in addition that Nations Title had failed to secure its digitally-stored consumer information and it had been accessed by a hacker. The settlement agreement, which you can see at this link (PDF), should be read as a cautionary tale by anyone who doesn't take GLB seriously. Then there's the Department of Veterans Affairs data analyst who lost 26.5 million veterans' personal information when his home was burglarized had often taken such data, including Social Security numbers home with him for years, VA Inspector General George J. Opfer said. A $50,000 reward for information leading to the recovery of the laptop stolen from the employee's home was announced. Consumers, brokers and loan officers can't sue you under GLB, but can certainly report you to the FTC. They may do it because you've been careless with personal information, or they might do it for some other reason. If it happens, your t's had better be crossed and your i's dotted. Appraisers are subject to the rules Appraisers are subject to GLB's Safeguards Rule and Privacy Rule. Lenders requested waivers during the development of the FTC's rules for its vendors, including appraisers, and the request was rejected. The FTC has time and again clarified publicly that appraisers must comply. See for example 16 CFR 313.3 (text search for "appraiser"). The size of your company or practice doesn't matter. It also doesn't matter if a particular transaction is "federally related" or not as FIRREA contemplates. The rules are applicable to you or your company overall, not specific assignments. The "non-public personal information" (NPI) the law seeks to protect need not come directly from a consumer. You are responsible for securing NPI you get from a client while it is in your possession. You are responsible for determining whether information is "non-public." It would be a mistake to assume a phone number or e-mail address — two kinds of NPI — is publicly listed. It is best to assume none of it is. GLB and its rules trump state law. You can't simply comply with your state's privacy security laws and hope that squares you with federal law, too. What you need to do All appraisers must, at minimum, do the following:

Secure the transmission, receipt, and storage of data relating to consumer NPI at all times, via passwords, encryption, and physical protection, backed by a written information security plan
Provide easily understood privacy statements to any consumers who engage you directly, disclosing the gathering, sharing, and security of NPI data, as well as the methods the consumer may use to opt-out of sharing of the data with others.
Note that a privacy statement and opt-out procedure are only necessary when a consumer engages you directly. The information safeguards required when you're in possession of NPI are applicable at all times.

A detailed Best Practices document discussing these issues in depth is available from a la mode's resources page at this link. The Best Practices document includes a discussion of the applicability of the rules to all appraisers and how generally to respond. The second half is advice specifically for a la mode customers regarding how to use our tools to help you comply.

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NAR: FHA Reforms Would Open Doors to Homeownership - 40 Year Terms

2006-05-26T05:52:00.000-05:00

NAR: FHA Reforms bill would raise FHA loan limits and extend possible terms from 30 to 40 years RISMedia, May 26, 2006 — The National Association of Realtors(R) strongly supports the passage of the Federal Housing Administration reform package approved yesterday in a mark-up vote by the House Financial Services Committee led by Congressman Bob Ney (R- Ohio) and Congresswoman Maxine Waters (D-Calif.). H.R. 5121, the Expanding American Homeownership Act of 2006, would raise FHA loan limits, eliminate restrictive down payment requirements, provide risk based mortgage insurance premium flexibility, and extend the possible terms of FHA loans from 30 years to 40 years. All of these changes will help make homeownership more attainable. Click here for the full story. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Realtor

Appraiser Supervisor or Mentor - What's The Difference?

2006-05-25T19:29:00.000-05:00

In an earlier post I published "Becoming A Licensed Appraiser" by Coleen C. Morrison, IFA, GAA. Much of Coleen's article dealt with finding a certified appraiser to supervise and mentor the newly licensed appraiser.

But just exactly what's the difference between being a supervisor and being a mentor? Today I stumbled across a great [unsigned] article on the Iowa Professional Licensing web site that tackles that topic head on! Here are some exerpts:

Within our industry, we have typically assigned the word “supervisor” in lieu of the word mentor. I would simply caution that if you are a trainee, while technically, you need a “supervising appraiser”; you need to carefully consider what the difference between these two roles can be and actively seek a mentor, regardless of the term used in the signing of the report. A supervisor, by definition is a person who manages, or directs. A mentor however is defined more aptly as an advisor. An advisor, by title, implies that the giver of the advice has knowledge or experience. It is the knowledge and the experience that is the invaluable aspect of the training/experience gathering process towards licensure. If a trainee is simply being “supervised”, then there could be cause for concern when actual demonstration of competency for credit of the experience is requested.

Signs that you are being “supervised” versus “mentored”:

A supervisor will inspect only a handful of properties with you before “setting you loose”.
A supervisor will give you technical pointers and verbiage for the structure (double-hung windows; poured concrete foundation; vinyl siding, etc).
A supervisor will instruct you to “fill out the form”.
A supervisor will show you how to develop the cost approach.
A supervisor will tell you to find three comparable properties and “grid” them.
A supervisor will tell you what adjustments should be made.
A supervisor will have you select a number from the indicated range, for a final value.
A supervisor will have you add boilerplate addenda for legal purposes.

Find out what a Mentor can bring to the table - click here!

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Appraisal Advocacy Coalition Survey

2006-05-25T16:48:00.000-05:00

The Appraisal Advocacy Coalition (AAC) has developed a short Web-based questionnaire for appraisers who have expressed an interest in the AAC. The questions touch on which issues are most important to appraisers, support for possible initiatives, and satisfaction with current advocacy efforts in the industry. Since the AAC wants as much and as broad a range of feedback as possible, we're inviting and asking you to take part as well. If you have just about five minutes, please click this link to answer a few short questions. Responses are anonymous, and will help the AAC focus its initial efforts and plan membership recruitment efforts. If you have any questions or would like more information about the AAC, click this link or contact Ben Harris at ben.harris@appraisaladvocacy.org. Thanks for your help. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , Regulation

Who You Gonna Call? - Do Home Stigmas Effect Value?

2006-05-25T09:32:00.000-05:00

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.

Today, a home associated with a murder or suicide can become what some brokers call a stigmatized property. So can homes reputed to have a resident ghost. Although they are free of physical defects like leaky roofs or lead paint, such properties can so spook potential buyers that they linger on the market and command less than market value. Or, the discovery of the death can prompt a sudden change of course.

According to the article: "Many buyers are more concerned about square footage than about who is six feet under, especially in Manhattan, where stigma begins to fade away with the arrival of the next day's tabloid. People continue to live at 14 West 10th Street, which, while being the former home of Mark Twain, is also where Joel Steinberg beat to death his illegally adopted daughter, Lisa. (The building is reputedly haunted, to boot.)"

To read the full article- click here.

Some Buyers Regret Not Asking: Anyone Die Here? by Stephanie Rosenbloom

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Appraisal License Reciprocity - State Reciprocity Chart

2006-05-25T09:15:00.000-05:00

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. If you enjoyed this post, subscribe and get FREE updates! Appraisal , Real Estate , Appraiser , USPAP , Regulation , Illinois

Local - Beich Plant Fire Site To Become 23-Home Subdivision

2006-05-25T07:54:00.000-05:00

Chunks of brick scattered among dirt and grass are some of the few remains of the 170,000-square-foot building that burned one year ago on the 5-acre lot at Lumber and Grove streets. Today is the first anniversary of the fire that destroyed the former Paul F. Beich Co. candy factory at 101 Lumber St. The vacant four-story building produced candy until 1973. The site is now planned to become a 23-home subdivision. John Burrill, executive director of the nonprofit Mid Central Community Action, which owns the site, said most cleanup was finished last month and the redevelopment is on schedule.

"My schedule may be optimistic, but I'm hoping that we can get some of the infrastructure construction started later this year and maybe get started on the first of the homes in 2007," Burrill said.

Burrill said the planned subdivision has decreased from 24 to 23 houses because of difficulty fitting 24 on the land. The city of Bloomington and State Farm Bank are funding equal shares of a $400,000 grant to Community Action for the demolition and redevelopment of the factory site. Burrill said demolition and cleanup likely will total about $220,000, and infrastructure and house construction could cost about $3.5 million." I personally and we as an agency feel really good about the project," Burrill said. "We feel that we are building nice homes that the neighborhood can be proud of and the families can be a proud of." Click here to read the full Pantagraph story. A year later, little remains of Beich plant By Greg Cima gcima@pantagraph.com Appraisal , Real Estate , Bloomington , McLean , Illinois

Realty Blogging Adds Appraiser To List Of Contributors

2006-05-25T06:37:00.000-05:00

This post fall under the "Shamless Self-Promotion" category! It seems like ages ago, but Appraisal News for Real Estate Professionals only started in mid-March and already has a steady following. One of my earliest posts was Blog Marketing for Appraisers 101. At that point I had no clue where this *new* (to me) technology would lead. My main goal was just to shine a more "positive light" on appraisers and the appraisal profession. I got sick and tired that the only news articles and blog posts were about appraisers involved in fraud or being indicted for one thing or another.

But along the way, I discovered something else. I found that there were thousands of others that were interested in the same things that I was. I found out that there was an entire blogosphere of other real estate professionals posting about their thoughts and interests too.

One of the first of the "old-timers" in real estate blogging to recognize my efforts was Chris Bubny, Director of Community Management for Blogging Systems. He was encouraging and his blog(s) was a good roll model for me.

Yesterday, Chris contacted me to see if I'd be interested in being a regular contributor (Panel Member) for Realty Blogging. I said yes! Chris is one of the leaders in real estate blogging that recognizes the power of "collaboration" with other blogging professionals to create a constant stream of current information.

Here's the introductory post on the Realty Blogging blog: Realty Blogging has three great new additions to our panel. I'm very excited to announce that Jason Ungos, Marlow Harris, and Brian Davis have joined our effort to educate real estate bloggers on effective blogging methods and for once we didn't have to use force!

The networking value of blogs is absolutely evident and completely embraced in this post. In the past, could it have been this easy to bring together these three individuals, all from different parts of the country and whose talents lie in completely different areas of the real estate industry? I think not!

If you're an established real estate blogger who feels they can contribute meaningful content on the topic of effective blogging methods and would like to become a member of our 'expert panel' please comment to this post or email me cbubny@bloggingsystems.com for consideration. Please be aware that in order to contribute as an 'expert panel' member you must meet certain criteria. If you're not accepted as a panel member there's still an opportunity to share your thoughts on effective blogging with our readers on a single post basis! So please, let us know if you're interested. Chris Bubny is the Director of Community Management for Blogging Systems. He has over five years in the real estate, real estate finance and technology industries. Chris focuses his time on implementing best practices that benefit the blogging community. Appraisal , Real Estate , Appraiser , Blog , Technology , Marketing

Local - Front 'N Center getting a face-lift - Downtown Bloomington, IL

2006-05-24T18:44:00.000-05:00

BLOOMINGTON -- Several tenants in downtown’s Front ’N Center Building are being evicted and the building’s owner says he intends to redevelop the property. Four tenants, including the Bloomington Antique Mall and an attorney’s office, are being asked to leave the building at 102 N. Center St. by July 1. Building owner Merle Huff, a Peoria-area developer, said he wants to redevelop the building into “high quality” restaurants. Illinois Brewing Co. and the U.S. Post Office will remain in the building as will those renting apartments on the third and fourth floors, Huff said. “I was not making enough in rent to pay the utilities,” Huff said. “And these tenants (who were asked to move) were in places where we couldn’t work around them.” Plans to redevelop the building include Ben Slotky’s proposed restaurant, Your Mother’s. Slotky, the owner of the downtown Castle Theater, received a restaurant liquor license for the property from the city earlier this month. Huff once owned the Castle, 209 E. Washington St., and his children sold the building to Slotky. Huff purchased the Ensenberger building, 212 N. Center St., in 1997. It is currently being renovated into about 28 condominiums with first-floor retail space as part of a $9 million project developed by Ward Waller. The Front ’N Center Building is collateral for the $2.2 million the city is providing in redevelopment money for the Ensenberger project. The rest of the Ensenberger project is being financed through loans Huff has co-signed with Waller. City Manager Tom Hamilton said Huff’s plans to evict tenants and redevelop the Front ’N Center Building do not change the Front ’N Center Building’s status as collateral.“We are in it for the value of the building,” Hamilton said. Huff said he would like to see such eateries as a grill-your-own-steak restaurant in addition to Slotky’s planned family bar and grill. Front 'N Center getting a face-lift - Click here for full story. By M.K. Gueterslohmkguetersloh@pantagraph.com Appraisal , Real Estate , Bloomington , McLean , Illinois

Local - Royal Links Subdivision Flush With Homes - Bloomington, IL

2006-05-24T18:39:00.000-05:00

BLOOMINGTON -- It’s been more than two years since Bloomington lost the Royal Links golf course to residential development. The par 3, nine-hole golf course on the city’s northeast side once was a place for moms and dads to take their children out for a few lessons and a little family time. Now, family time is being spent in the backyards of some of the newly-built homes. Much of the infrastructure, including street lights, sidewalks and water and sewer lines, has been installed and more than 20 homes have been built, or are under construction, said Twin City developer Bill Johnston. First proposed in 2003, a few changes were made to the plans for Royal Links subdivision, including reducing the number of single-family houses from 128 units to 99, and a tripling of the size of the retention pond. Johnston said cutting down on the number of houses has increased the size of the lots in the roughly 50-acre development. When first proposed, the pond was going to be two acres. But that was increased to a six-acre lake to accommodate the water drainage for the subdivision and about 150 acres around the housing development. "And instead of having a hole in the ground we turned it into an amenity," Johnston said. The area around the lake has been planted and a fountain installed. The project also incudes 28 condominiums, called the Villas at Royal Links. Johnston said construction of those units could start in 30 to 60 days. Article : Royal Links flush with homes - By M.K. Gueterslohmkguetersloh@pantagraph.com Appraisal , Real Estate , Bloomington , McLean , Realtor

Local - Home Depot opens Friday - Normal, IL

2006-05-24T18:35:00.000-05:00

The Home Depot opens in Normal, IL at 6 a.m. Friday, about a week ahead of schedule. The world’s largest home improvement chain bought 24 acres of land from Bridgestone/Firestone at Fort Jesse Road and Veterans Parkway to build the $8 million, 102,513-square-foot store and 28,086-square-foot garden center. Construction began last fall. Click here for the full Pantagraph story by Scott Miller. Appraisal , Real Estate , Bloomington , McLean , Illinois

AVM - Putting Home-Value Tools To The Test

2006-05-24T16:42:00.000-05:00

Playing with online home-appraisal sites like Zillow is a great game. Simply plug in your address to find what the site says your house is worth. The real fun is checking on your friends' homes -- and your neighbors’. But are these electronic wizards -- called automated valuation models (AVMs) in real-estate lingo -- real The market value of a house is what a buyer will pay for it. An accurate estimate comes as close as possible to the market price. As is turns out, even the BEST of the online AVMs only had a 50% chance of being within 5% of the likely sales price.

Being right just half the time might get a human appraiser fired. Yet, in the world of online AVMs, this is top performance.

Here’s how six popular online home-valuation AVMs compare: Click here for the full story (MSNBC) Appraisal , Real Estate , Appraiser , Technology

It's Just A Matter Of Time! - Blog Marketing

2006-05-24T08:46:00.000-05:00

Kudos to the Future of Real Estate Marketing blog for their article: It’s just a matter of time… and the RealBlogging site for their original synopsis of the NAR study! Here's the article . . . Great post over at Realblogging today by Richard Nacht where he asks the right question in response to a new report from NAR on Realtors and their use of the Internet. Richard asks, "Where are da blogs?" My response would be, just wait. Give it another year, or two at the latest.

For those of us on board the Cluetrain, it may seem obvious that blogs make a complementary tool for real estate professionals. But the reality is that most people haven't figured out Web 2.0 yet.

Everett Rogers' 1962 diffusion of innovations theory brilliantly states that the adoption of any new idea can be characterized by a bell curve of innovators, early adopters, early majority, late majority and laggards.

This theory was further expanded by Geoffrey A. Moore in his 1991 classic high tech marketing book, Crossing the Chasm - where he argues that there exists a "chasm" between the visionaries (innovators and early adopters) and pragmatists (the rest). Every new technology struggles with how to bridge this chasm. Many don't make it.

I would argue that Web 2.0 (blogs, podcasts, wikis etc.) is teetering on the edge of this chasm right now. But we'll find the bridge soon.

Microsoft's next operating system Vista is slated to come out in Q1 2007. The next version of Internet Explorer, which is included, has RSS feed handling built right in. I believe this, along with other factors, is going to throw open the door to the masses and help propel across the chasm. This shake up going to have a huge impact on any professional who is not looking to Web 2.0 to help their business.

Those of us who "get it" will have a huge headstart when this all plays out. Those who don't are going to be running to catch up. Mark my words.

Article Source: Future of Real Estate Marketing : It’s just a matter of time…

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New Tech Standard Offers Broader Access To MLS By Brokers and Vendors

2006-05-23T18:51:00.000-05:00

Wednesday, May 17, 2006 - National Realty News - click here. A new real estate information technology standard that enables brokers and vendors to use one program instead of many different ones to access multiple MLSs was unveiled at the National Association of Realtors® Midyear Legislative Meetings & Trade Expo. The Real Estate Transaction Standard (RETS) Version 2 Web Service addresses a need in the industry to use open standards to exchange information, improve tool support, lower development costs and improve security, while accommodating new technological developments, like transaction management. RETS is the open standard for exchanging real estate transaction information and is being implemented by many real estate industry leaders in their next generation of real estate information systems. The new RETS was adopted last month by the RETS Workgroup, composed of NAR representatives, MLS officials and other industry leaders. Myron Adams, NAR vice president of information technology, called the adoption of the new RETS Version 2 a significant step that will guarantee the future value of using RETS in real estate transaction. “MLSs and brokers and anybody else who wants to extract listing information will benefit from this new standard,” said Adams. “Before, brokers who belonged to multiple MLSs needed different programs to access each MLS; but now, they will be able to use one program to access all. That’s a great savings in time, energy and money.” More information on RETS 2 can be found at http://www.rets.org. Frequently-asked questions Appraisal , Real Estate , Appraiser , Technology , Realtor

Tips On Becoming A Certified Appraiser

2006-05-23T15:17:00.000-05:00

Becoming A Licensed Appraiser

By: Coleen C. Morrison, IFA, GAA

In an attempt to regulate appraisers, and create a more professional enterprise, becoming an appraiser has become a far more difficult accomplishment. As a licensed [certified] appraiser with the responsibility of maintaining a high level of public trust inherent in the professional appraisal practice, the qualifications necessary to ensure this do not appear excessive. Under Title XI of the Financial Institution Reform, Recovery and Enforcement Act, [FIRREA] the Appraiser Qualification Board (AQB) establishes the minimum education, experience and examination requirements for state appraiser licensing. You can go to the web site for the Appraisal Foundation to get specific qualification requirements on each of the license levels (www.appraisalfoundation.org). In addition, there are also minimum requirements for a "Trainee or Apprentice" license classification. Basically you must complete 75 of the 90 minimum requirement hours (15 of which must be the USPAP requirement) and find a licensed [certified] appraiser who is in good standing, to become your mentor. [Download current Real Property Appraiser Qualification criteria - click here] This sounds simple, and the mechanics of it actually is. Trying to find a mentor to give you your 2000 hours of field experience (necessary to obtain a full license) becomes the problem.

Most appraisers work alone or in a small appraisal company and the work is not always plentiful; very much like real estate, it has its "ups and downs". For the most part, appraisers either don't have enough work to share with a new person, or have too much work to devote the time necessary to help the Trainee.

Most clients for whom the appraisers do work for require a licensed appraiser to sign the appraisal as "physically did inspect the property". This means your mentor must accompany you on each appraisal, and/or the licensed appraiser must also go to the property before completing the appraisal. This becomes double time, especially when the trainee starts to become more competent and should be able to accomplish this part of the job alone.

Alas, herein lies the stumbling block found by most of you who are trying to become appraisers, and ultimately becomes the toughest assignment the trainee will have. To help you in your endeavors, I want to provide you with some hints which may help get your foot in the door:

Cold call other appraisers to see if they have any room for a researcher, trainee, etc. Don't get discouraged, after all, every good actor was turned down many, many times before hitting the "big one".
Get involved in any local appraisal organizations which may be in your area. These gatherings are usually open to anyone who can pay for their dinner. "Mingle" with the crowd indicating you are an "eager, anxious individual" looking to become an appraiser. Sometimes seeing you at regular meetings and realizing your devotion to becoming involved, can spike someone's interest.
For a licensed [certified] appraiser to take on a trainee, it's not cost effective to the licensed [certified] appraiser, especially in the earlier stages. This is true for any new employee in any business; the training period costs the employer money and there are no guarantees the employee will be around after they're trained. For this reason, it may be to your advantage if you offer to make a commitment to the licensed appraiser once you become licensed, and/or sign a no-compete agreement so the mentor does not feel "uneasy" sharing his "secrets" with you. [See Compensation Plan]
Bring something to the table when seeking out a mentor. By this I mean, do you have any connections in this business already (i.e., real estate agents, lenders, banks, etc.), with whom you could possibly refer to the mentor for additional business. This is a real plus because a new client is not taking anything from the appraiser's current cash flow, etc.
Always keep in mind that you are a beginner in this business and your income will reflect this. Appraisers, and/or their companies, handle the "business" of a trainee differently and there are no set rules with respect to this. The only rule I can suggest is that you become an employee of your mentor because IRS frowns upon independent contractors being given instruction or training. As long as you are a trainee, you should not be considered an independent contractor.
Realize money is not the main goal in the beginning. Try to barter services. Are you a good researcher? Can you type? Do you know computers well? Can you help in advancing the mentor out of the "dark ages" with computer technology? All of these things are great assets to an individual appraiser.
How hard are you willing to work? An important thought to a mentor is "how long will it take for you to get your 2000 hours?" This question encompasses a lot of issues, i.e., will you be training part time or will the mentor's work load hinge on this question as well?
Remember the sooner you accomplish your goal (2000 hours), the sooner both you and your mentor can "get busy". Be sure you have the answer to this question when approaching a "hopeful mentor".
Be ready to learn anything and everything. Perhaps a commercial appraiser has more work, or time, to help train you. You can get experience working for a commercial appraiser too. Don't limit what you're willing to learn.
If you are taking classes, or have taken classes, perhaps your instructor may be a good person to talk to. They may have some connections, referrals, or sage advice for you. Don't be bashful.
Talk to some of your local banks or savings and loans. In many cases these companies have an appraisal department in which they may have a trainee opening.
Get on the internet and look for anything about appraising or appraisers. You may get a hit on something which could lead you to an opportunity. There are also many website chat rooms which can be very helpful with questions or thoughts you may have.

The appraisal profession is very important to me and I would like to retire some day. I'm sure that I'm not the only licensed appraiser who feels this way. For this reason, it is important that you keep an open mind, be persistent and stay focused, in order to find the appraiser out there who understands we need to have an open door for "newcomers". No profession should close the doors to the future, and you are our future. Good luck and keep your spirits up.

Other Resources:

Becoming A Licensed Appraiser (reprinted with permission) Coleen C. Morrison, IFA, GAA Total Real Estate Services, Inc.

mailto:coleen@totalrealestate.com Appraisal , Real Estate

Fitch Ratings Reviews AVM Policies

2006-05-23T06:10:00.000-05:00

Blog Source: More on AVMs by Fitch by AI Podcasts. As I noted in an earlier post on a similar topic, alternative valuation methods such as automated valuation models (AVMs), drive-by appraisals, and broker price opinions (BPOs) for newly originated first lien mortgages will no longer be subject to a reduced property valuation based on the location of the property according to Fitch Ratings in the latest edition of ‘Mortgage Principles and Interest’. The use of automated valuation models to assess the value of a home may no longer result in property value penalties, according to a new criteria report by Fitch Ratings. Fitch addressed the use of automated valuation models (AVMs) in U.S. residential mortgage properties in 2004, differentiating the risk of AVM’s by region. Fitch said it would discount property values derived from an AVM assessment from 10%-15% in regional markets deemed ‘weak’ or ’soft’. In Fitch’s revised criteria, the focus has now shifted from the region directly to a lender’s process and controls for using AVMs, according to Senior Director Suzanne Mistretta. Fitch will apply new guidelines to evaluate each originator’s program and process for using an AVM or other non-full appraisal method. ‘Property valuation is critical in determining losses on residential mortgage loans since their quality can significantly affect RMBS performance,’ said Mistretta.

‘Therefore, Fitch will discount property values by 5% or more if either a lenders usage processes and controls do not adequately mitigate overvaluation risk, or if a lender’s processes are not disclosed to Fitch.’

The usage of non-full appraisals does have benefits, which is why Fitch has developed guidelines for reviewing an originator’s use of AVMs, drive-by appraisals and broker price opinions (BPOs) as a sole valuation tool for first lien originations. ‘Comprehensive program business rules, reasonable tolerance levels, photos of the subject properties and use of confidence scores are all ways that a lender can mitigate overvaluation risk,’ said Mistretta. New Treatment of AVMs in RMBS is available on the Fitch Ratings web site at www.fitchratings.com (requires free log-in). Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from the site, at all times. Tags: AVM's, AVM, AVM rating, Fitch, Appraisal , Real Estate ,Technology

The Real Estate Blog List

2006-05-20T07:36:00.000-05:00

Richard Nacht a contributing editor of RealBlogging posted back in February that Blogging Systems was accepted as the editor of PubSub's Real Estate and Real Estate Finance Community Lists. We're happy to announce that "The Real Estate List" is live, so check it out and let us know what you think! With new real estate blogs being created each day, it's estimated that there are thousands of real estate blogs currently in the blogosphere. The list we amassed consists of real estate industry blogs that have attained a meaningful degree of influence and authority, amongst our peers, the industry and in several cases, the public. [Appraisal News for Real Estate Professionals is proud to be included in that list] The Real Estate List is part of PubSub's Community Lists: "The Syndicated Web is filled with communities on just about every subject. Whatever the topic, odds are there's a community of experts and enthusiasts that are already talking about it. But unless you're already famililar with the community, you may not know where to find it. PubSub's Community Lists are miniature roadmaps to those influential sites. They combine human expertise with LinkRanks, PubSub's method of comparing sites to one another by scrutinizing their links. A Community List tells you which sites to keep an eye on and which sites are leading the conversation from one day to the next." "LinkRanks is PubSub's method of measuring the strength, persistence, and vitality of links appearing in over 23 million sources that PubSub monitors." Thanks to Chris Bubny editor, Realty Blogging for compiling and maintaining this list! Blog Source - click here. Appraisal ,Real Estate , Appraiser , Blog , Technology

Local - McLean County GIS Map Server "Open For Business!"

2006-05-19T09:21:00.000-05:00

The McLean County GIS has just released the "beta" on-line mapping application that will provide citizens of the McLean County access to geographic data and mapping capabilities, that to this point has only been available to governmental bodies. According to Mike Ireland, City of Bloomington Township Assessor - The McLean County GIS consortium's public web site has the most up-to-date mapping information available for McLean County, and the good news is it's FREE!
The McLean County GIS Internet Map Server site (click here) will allow you to look at spatially referenced data. When using it, you can click on layers such as streets, buildings, and subdivision boundaries, to name a few. Some map features display automatically and will turn on and off depending on how far you are zoomed in or out on the map. According to Mike Ireland's email, these are are some of the highlights and details;

A fully interactive interface that allows you the user to be in control of how your map will look.
Search by address or parcel number (with or without dashes)
Each parcel can be directly linked to a public record by using the "See Related" links in the upper right corner
Deeded acreage if available is displayed as DEED_AC. When not available COMPUTED FT can be used. COMPUTED FT is a computer generated calculation based on drawn line work. COMPUTED FT should be considered to have an error of +/- 2%
By selecting the layer list, color aerial photos, building foot prints, and many other attributes can be displayed.
You will notice some layers come on or off just by using the zoom tool.
Printing maps to a PDF is a snap and they can even be emailed if required.

So what's the bad news? You will notice there are no lot dimensions on these maps.

The Good news is they will be appearing soon, ( 4-6 weeks).

For now, the McLean Co. GIS site is being hosted privately. This limits what data and tools we can offer.

The GIS consortium would like you to try the site "as is" and let us know you thoughts, what you like, and what you'd like to see improved. This is a work in progress but the basics are as you see them and use them.

By mid summer, the Consortium should be hosting the maps on our own server.

When we make the transition to an in-house hosted server more attributes and functionality can be added. Until then enjoy using this really powerful and wonderful tool.

If you have any questions feel free to contact: Michael Ireland, CAE Assessor , COBT 607 S Gridley, Ste A Bloomington, IL 61701 309-828-6016

How can I learn to use the maps? We recommend looking at the following prior to launching a map: Quick tutorial or help system (This and more help is also available within the application.) The McLean County Geographic Information System (McGIS) is a cooperative effort of a number of local government agencies with the common goal of providing better information with less duplication of effort. Through cooperative resource management McLean County GIS is developing a county-wide geographic information system to better serve the public and to aid in many local government decision making processes. Appraisal , Real Estate , Appraiser , Blog , Technology ,Bloomington , McLean , Regulation , Illinois , Realtor , Home Inspection , GPS

The Three Stages of Automation in the Real Estate Industry

2006-05-19T07:40:00.000-05:00

The Three Stages of Automation in the Real Estate Industry - by Greg Rand RISMEDIA, May 19, 2006 - Any customer-centric industry must empower the consumer, and, in the highly competitive real estate field, we can analyze our success by separating the buying process into three distinct stages. Stage One: The Real Estate Shopper The multiple listing service (MLS), originally shared only among brokers, has been accessed by buyers since the early 1990s. It lets potential customers view offerings online and is used by nearly every real estate firm in the nation. Thus, the front end of the purchasing process is totally automated. Stage Two: Converting the Shopper into a Buyer The second stage involves the conversion of the shopper into a buyer. Some brokers recommend a centralized customer service and managing e-mail leads through a central customer service desk. While I understand the benefits of controlling the process of transitioning an online prospect to an offline prospect, our experience has shown that the lack of product knowledge by a central operator gives the client an immediate response, but still unsatisfying experience. We prefer to decentralize this process to the branch office level. What we sacrifice in process standardization we gain in product knowledge and field-level responsiveness. Either way, a smooth transition from the cyber world to the real world using automation and customer service presents an opportunity to make an impact on the elusive third stage—transaction processing. Stage Three: Transaction Management The Holy Grail of real estate automation, which has yet to be widely adopted, if even attempted, is automated transaction management. Software has been available for 10 years that would help the practitioners of the real estate transaction in establishing a shared platform for Realtors, attorneys, lenders, inspectors, title companies, etc. This software has remained in the shrink-wrap for one main reason—the lack of a driving force that compels the stakeholders in the transaction to cooperate. No one disagrees that one common platform that facilitates the ordering, delivery, storage and details of a real estate transaction would dramatically improve the shared experience, but no one is forcing the issue. My hope is that, by connecting Stage One (Web shopping) with Stage Two (lead capture and customer service in the field), we have the client in the system, and that system could be enabled to facilitate Stage Three (transaction management). By harnessing the consumer’s demand for a better transaction experience, and leveraging our industry’s previous success with automating the initial stages, we could finally tame the real estate transaction to everyone’s benefit. There is reason to be optimistic. Greg Rand is the managing partner of Prudential Rand Realty, Inc., one of the largest real estate brokerages in the Greater Hudson Valley with 21 offices in Westchester, Rockland and Orange counties. For more information, please visit www.prudentialrand.com. Article Source: RESMedia Appraisal , Real Estate , Appraiser , Technology , Realtor , Home Inspection

Price Your Home Right To Help Speed a Sale

2006-05-19T07:28:00.000-05:00

The Wall Street Journal's Real Estate Journal published a somewhat simplistic but positive article [ Price Your Home RightTo Help Speed a Sale ] on the importance of getting one's home appraised by a professional appraiser prior to putting it on the market . . . . With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal. You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings. An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing. He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ. That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka. He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective. The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home. Homes are typically listed for sale at a price several percent above the appraised value. Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home. Some things to remember when looking for an appraiser:

Make sure the appraiser is licensed by your state.
Ask how long the business has been around,
what professional education the appraiser has had and
what organizations (snip) the appraiser belongs to.

Other related articles in Appraisal News for Real Estate Professionals:

ABO - Appraised By Owner: Tips For Pricing Your Own Home

Tips For Selling Your Home - FSBO

How Much Is My House Worth?

Overpricing Your Home Is The No. 1 Mistate By Home Sellers

Appraisal , Real Estate , Appraiser , Illinois , Realtor

The Coalition of Appraisers Against Fraud - California Appraisers Fight Back!

2006-05-18T16:00:00.000-05:00

I received an email yesterday from a member of the Inland CA Appraisers (California) Yahoo Group forum with a post from Dennis Jorgenson under the topic: Fraud/Appraiser Action. The thread was intesting because, as far as I know, this is the first time that a "Band of Brothers" has formed a coalition to fight back against pressure and coercion of unethical Lenders, Loan Officers, Brokers and Agents. They're also targeting unscrupulous and unethical appraisers that are willing to commit fraud or who have become susceptible to lender pressures.

Real-Life Examples:

Example 1: I’ve just had a talk with a close appraiser friend who has lost yet another customer because he mentioned in an appraisal that a 1,500 s/f addition was incomplete (permitted, but not finished); the report was written “Subject to completion as per plans and specifications”.

The broker found anotherappraiser (a trainee) that was willing to overlook the incomplete addition and the loan funded. Example 2: Recently, our company developed an appraisal for a property out in MorenoValley and found at least 30 comparables of similar properties in close proximity indicating a value of between 365k and 385k. We were told by the broker that the homeowner disagreed with our value so they found another appraiser wrote the value at 400k; the appraisal passed underwriting even though the comps were over 1mi. from the Subject. We haven’t received anorder from this broker since. Example 3: In another recent example, we were asked to review an appraisal that would potentially become a new order as the homeowner wished to refinance again. Comparable sales used in the appraisal obtained for review were $850k, $715k and $710k; The appraiser added over $150k in positive adjustments to each ofthe comparables including about $150/sf. lot size adjustments and $30k-50k due to “inferior condition” of each of the comparables; the appraiser arrived at a value of $925k. When we developed the appraisal, the value for the Subject came in around $780k and once again, we never received another order from this broker. These cases are becoming more and more commonplace. It appears to us now that following the rules and developing well supported opinions of value is bad for business. The trend in the real estate market now seems to favor the appraiser willing to commit fraud, to over-inflate, to ignore conditions and to create misleading opinions of value resulting from the poor selection or deliberate misuse of market data. In the past few weeks, our volumes have dropped as a direct result of losing customers more interested in “getting the deal done” as opposed to obtaining a well-supported opinion of value. We feel the appraiser industry is in jeopardy and to some, this means our livelihood. Enforcement of bad appraisers has been inadequate and efforts to prevent the coercion of Lenders, Loan Officers, Brokers and Agents have been non-existent. This is resulting in a shift of appraisal work to the unscrupulous, unethical appraisers that are willing to commit fraud or who have become susceptible to lender coercion. We’ve heard lenders state “If you can’t get a reliable value from an appraiser, we may as well take our chances on an equally unreliable value from an AVM.” While marketing ourservices, we’ve even been told by mortgage brokers “We push for inflated values here, so – if you don’t write the high-end, we’re not interested. ”It’s as though they are untouchable. Certainly, individuals such as this are operating above the law. We’ve had enough. We are currently in the process of forming a coalition of appraisers with the common objective to combat real-estate fraud in the State of California. Our GOAL is:

To identify,
To establish proof and
To prosecute lenders, loan officers, brokers, agents and appraisers that have been and are actively engaging in real-estate fraud.

We will seek sanctioning of our project with OREA and the CA Governor’s office and we have already established an appraisal review team which has already reported several appraisers to OREA for USPAP violations and have also reported several licensed real-estate agents to the DRE for ethics violations. Our current operational name is The Coalition of Appraisers Against Fraud. If you are a licensed appraiser and are interested in learning more or are interested in participating or becoming a member, please write to us at CAAF, 7375 Day Creek Blvd. Ste. 103-149, Rancho Cucamonga, CA 91739. The buck stops here or it will soon stop for all for us. Appraisal , Real Estate , Appraiser , Blog ,USPAP , RESPA , Regulation

Mind Your Business! - Online Marketing - If Customers Can't Find You . . You Aren't On The Internet

2006-05-18T11:02:00.000-05:00

Did you know that the first Motto of the United States was “Mind your Business?” That phrase was emblazoned on the Continental dollar back in the late 1700s. It wasn’t referring to keeping your nose out of other people’s business, but of keeping your head in your own business. We are entering another time when “Mind your Business” is becoming more relevant than ever. RISMedia's article, Mike Parker (click here) says:

There’s lots of rattling and shaking going on in the online marketing business, in the real estate business, and in business in general of late: If we were back in college or attending at a business school, we’d be hearing about “paradigm shifts” and “tectonic shifts” so often we’d wonder if we were in geology class or in business.

Microsoft, Cendant, Google, and Yahoo are ALL trying to make sure that they are not left sitting on the sidelines of the real estate browser and mapping services. What does this mean to us in the real estate industry and to you in your office in any town, U.S.A.? Simply this: Search is going to become even MORE dominant in the real estate business, as are all sorts of clever informational permutations to the way we do things.

The reason Search continues to become more and more vital is because if prospects can’t find you, you aren’t on the Internet—no matter how slick your Web site is, or how much money your company spends on technology.

You’re going to be confronted with so many options in marketing that you might forget what you started out trying to do in the first place. It remains to be seen, however, just how many high-tech gadgets the consumer actually WANTS. The online mapping and actual pictures are great. Other features? Who knows? We do know that if you can’t stand out from all the clutter, all the tech features in the world aren’t going to do a thing for you. The well-run professional office with strong local knowledge and a modicum of savvy will not crumble to the advancing hordes armed with their Blackberry’s, tech features, and money. The nimble real estate pro who minds his or her business will survive. Stake out your little place on the Internet, make it so people can find you, treat your customers as only you can, and be thoroughly professional in everything you do. The Web giants may be undergoing a tectonic shift and feeling an earthquake of sudden violent changes, but in our business, we are feeling a paradigm shift—a shift in the way we DO business, but not IN our business.

Please write to info@CoracleInc.com with all your questions or to request a copy of “What Every Real Estate Professional Must Know” in either PDF format or hard copy. The booklet explains what we do to put you on the first page of the major search engines when people come looking to buy real estate in your area and why you need to be on the first page of the Search Engines organic results. There’s no bidding, no pay-per-click charges, no pay-per-click fraud and you’ll be on all 8 of the major search engines with a monthly report on your standing—not just one—for a single low-cost annual subscription. We guarantee results and you’ll be pleasantly surprised at what Coracle can do for your business. Please visit www.CoracleInc.com to learn more, to see success stories and find useable tools, or to talk about subscribing through a Search Professional.

Appraisal , Real Estate , Appraiser , Technology, Bloomington , McLean , Marketing , Illinois , Realtor

Stupid Investment of the Week! - 50 Year Mortgage

2006-05-18T08:28:00.000-05:00

Take the worst problems of one stupid investment and mix them with the biggest concerns of another and you wind up with a Stupid Investment of the Week to the second power. And that's precisely what you will get if you fall for a 50-year mortgage, a relatively new product that is starting to make inroads in the mortgage market, particularly in hot real estate markets like California.The 50-year deals were created in the aftermath of the government's decision to resume sales of 30-year Treasury bonds in early February. The new products are a direct shot fired by some savvy marketers to fit between two other mortgage products that are growing in popularity: the interest-only loan and the 40-year mortgage. Both are designed to help consumers get more house. Stretching out the time frame on a traditional fixed-rate mortgage to 40 years lowers payments, allowing the consumer to buy more house and then accrue equity in the house over the long haul. Interest-only deals also lower payments, but without the benefit of building equity during any time frame in which no principal payments are being made. The 50-year mortgages are not fixed-rate loans, but adjustable deals that carry their introductory rate for five or seven years, then fluctuate for decades to come. Anthony Hsieh, president of LendingTree.com, says he doesn't think 50-year mortgages will get much traction, in part because consumers might wake up to the idea that this is a deal born more out of desperation than sound financial thinking. "If a consumer looks at a 50-year mortgage as the only way to afford that home, to get into a hot real estate market or simply to afford the monthly payment in a refinance, they're really not looking at the potential problems," Hsieh says. "It's a very small portion of the consumers who could use this the right way." The "right way" would involve using the longer amortization schedule to drop initial payments, expecting that there will be a significant increase in income to cover any adjustment in mortgage rates or the costs of a refinance just a few years down the road. But even that plan could turn out horribly wrong.While the 50-year mortgage builds equity, unlike the interest-only deals, the pace of that growth makes a snail look like a race car. The equity appreciation for five years on a 50-year loan is less than 2 percent. And while the payment is lower, it's not necessarily creating a huge savings, because one trade-off consumers make when stretching out the length of the deal is that they pay a higher rate. Ultimately, that means the consumer might well be in the same financial boat in five or seven years, if the rate adjusts and gets ugly enough to make refinancing a smart move. Maintaining the exposure to interest rates, rather than locking in a fixed rate, counteracts the steps the consumer is taking to get an affordable payment now. Barring some sort of windfall, a big increase in income or tremendous price appreciation, the homeowner will still have a tough time affording a new mortgage. And if the value of homes in the area has shrunk during that period, the consumer easily could be underwater on the loan. "It might work to purchase a home with one of these instruments at a time when you expect property values to keep rising and interest rates to remain steady," says Stuart Gabriel, director of the Lusk Center for Real Estate at the University of Southern California. "But if you believe that the path of home prices might change, you probably want to be cautious in your behavior and stick with something more traditional." Hsieh was among several experts to note that there has been a shift in focus for homeowners and buyers in the last five years, to where the key question for many is, "What is my monthly payment, and what can I do to lower it so I can manage my cash flow better or spend more cash on other things?" While a 50-year deal might seem like the only way to buy into a great neighborhood or hot market, consumers need to remember that someday, somehow they will actually have to pay for the loan, and that failing that, they will add to the national statistics showing foreclosures on the rise. Says Gerri Detweiler, author of "The Ultimate Credit Handbook": "If you can't afford a 30-year fixed mortgage, maybe you should reconsider whether you're really living or buying in the right neighborhood. . . . You may not want to settle for something less, but that's all you can really afford." Article Source - Click here. Steer clear of 50-year trail on mortgages by Chuck Jaffe - Chicago Tribune 5/18/2006 Chuck Jaffe is senior columnist for MarketWatch. If you have a comment or a suggestion, you can reach him at jaffe@marketwatch.com, or Box 70, Cohasset, Mass. 02025-0070. Appraisal , Real Estate , Appraiser , RESPA , Bloomington , McLean, Marketing , Regulation , Illinois

The Appraisal Foundation Seeks Candidates for Vacancies on National Boards

2006-05-18T05:22:00.000-05:00

The Appraisal Foundation is currently in the midst of its annual search for qualified candidates to serve on the Board of Trustees, the Appraiser Qualifications Board and the Appraisal Standards Board. The deadline for submission of applications for service on one The Appraisal Foundation's three boards is August 15, 2006. There are four at-large Board of Trustees seats available this year, with two incumbents eligible for re-appointment. The Board of Trustees of The Appraisal Foundation is charged with funding the work of and appointing members to the AQB and ASB, as well as providing oversight of these two Boards. The Board of Trustees meets twice a year, in the Spring and Fall. The Board of Trustees is particularly interested in individuals who represent consumer interest groups. There are four vacancies on the ASB, with three incumbents eligible for re-appointment. The ASB is charged with developing, interpreting and amending the Uniform Standards of Professional Appraisal Practice. Familiarity with USPAP is a pre-requisite of service on the ASB, and a minimum of 10 years’ of appraisal experience is required. The ASB meets five times per year for approximately 15 days. There are three vacancies on the AQB, with two incumbents eligible for re-appointment. The AQB is responsible for setting minimum qualification criteria for state licensure and certification of real estate appraisers and has established voluntary qualification criteria for personal property appraisers. Familiarity with appraiser qualifications is a pre-requisite of service on the AQB, and a minimum of 10 years’ of appraisal experience is required. The AQB meets four times per year for approximately 10 days. Trustees are reimbursed for travel expenses and are not compensated for their time. Individuals serving on the ASB and AQB are compensated for their time and are reimbursed for travel expenses. Individuals selected will serve a term of up to three-years commencing January 1, 2007. The Appraisal Foundation is interested in expanding the diversity of all Boards by considering applications from business leaders with an interest in valuation or involved in various appraisal disciplines. Application packages for all positions outlined above are now available on-line at the Foundation Web site at www.appraisalfoundation.org/s_appraisal/sec.asp?CID=121&DID=167 For a hard copy of the application package, contact Anne Haynes at anne@appraisalfoundation.org. When doing so via e-mail, use the phrase "2006 Application Information" in the subject line, and please include your full name, mailing address and phone number. For more information, contact Paula Douglas at paula@appraisalfoundation.org Article Source: National Association of Realtors Appraisal , Real Estate , Appraiser , USPAP

Navigating USPAP 2006 - New Book

2006-05-17T14:06:00.000-05:00

WorkingRE Online – click here for full article: Effective July 1, 2006 the new USPAP takes effect. By all accounts the changes are some of the most significant ever as well as some of the most welcome. USPAP instructor and author Lee Hess takes you through a series of common questions and answers in his new book “Navigating (New) USPAP” - By Lee R. Hess, PhD For the past five years I have been answering questions about USPAP and how it applies to the everyday work of appraisers. Even veteran appraisers have questions about how USPAP affects their everyday appraising. Effective July 1, 2006, USPAP changes dramatically. The following is excerpted from Navigating USPAP, a new publication with hundreds of questions and answers about the new USPAP and what it means for appraisers (to order see below). What are the biggest changes that have occurred for 2006?

Conceptually: USPAP now identifies standards that apply in all appraisal assignments. Although the appraiser’s role in the development process has not changed, there are many other significant changes.

The new Scope of Work Rule (SOW) replaces the Departure Rule as one of the five rules (Ethics, Competency, Scope of Work, Jurisdictional Exceptions and Supplemental Standards).

The new SOW Rule continues to be based on what is required to produce credible assignment results. The term “credible” is also defined so appraisers understand exactly what they are attempting to achieve. Also, the term “appraiser’s peers” has been modified for clarity. Items Removed: The most important item removed is the Departure Rule. (Is that cheering I hear?) The result is that the Standards Rules no longer contain the terms complete and limited appraisals.

SMT 7 (Permitted Departures from Specific Rules) and AO 15, which deals with the same subject, were both retired.

According to the Appraisal Standards Board (ASB), these items were taken out to: resolve misunderstandings related to departure; enhance public trust in appraisal practice and to improve the clarity of USPAP. AO 8, which deals with fair value appraisals, was also retired as the Financial Accounting Standards Board changed its definition of fair value. Scope of Work Rule: The SOW Rule was added to emphasize the requirements of property identification. Also included are how to determine an appropriate SOW and how to disclose it.

New Advisory Opinions were also added.

AO 28 was added to give guidance on how to meet the requirements of the new SOW and how to disclose this decision. The ASB includes specific illustrations to clarify the application of these procedures.
AO 29 is added to discuss what an acceptable SOW looks like and how to apply SOW in specific assignments.

Extensive Rewrite: As you can imagine, Departure was mentioned throughout USPAP. Removing it has caused all of the Standard Rules to be revised. You can view all of the changes at The Appraisal Foundation website. (story continued below) Here are some Specific Questions (answers can be found in the full Working RE Online article) Mr. Hess addresses:

How do I use hypotheticals and extraordinary assumptions?
How far do I have to go in describing the property around a house that I am appraising?
I am having trouble understanding some of the terms used in USPAP. Can you define: cadastral, fractional interest, redaction and AVMs?
Additional Q&A on this blog Ordering: Navigating (the New) USPAP Navigating (the New) USPAP by Lee R. Hess, PhD. Navigating USPAP, which contains hundreds of everyday questions and answers, is available on CD from tom@lrhandassoc.com or by calling (760) 436-1584. The price is $29.95. If you cite this article, you will receive a 15 percent discount. About the Author Dr. Lee Hess is a nationally-certified USPAP instructor, expert witness and author of 15 books. He can be reached at lee@lrhandassoc.com or (760) 436-1584.

Appraisal , Real Estate , Appraiser , USPAP , Regulation , Illinois

Historians and Fans Are Racing To Save Homes Sold by Sears

2006-05-17T07:44:00.000-05:00

Marilyn Raschka spends many of her weekends driving around unfamiliar neighborhoods, knocking on doors and talking her way into strangers' basements. Once downstairs, she breaks out her flashlight and shines it along exposed beams, hunting for a letter and some numbers that are each no bigger than a thumbprint. The 61-year-old resident of Hartford, Wis., is part of a small cadre of historians and passionate amateurs on a mission to identify and protect homes made by Sears, Roebuck and Co. About 70,000 to 100,000 of them were sold through Sears catalogs from 1908 to 1940. Distressed that the houses are falling victim to the recent boom in teardowns and renovations, their fans are scouring neighborhoods across the country, snapping pictures and sometimes braving snakes and poison ivy to poke around basements and attics for the telltale stamps that mark the lumber in most of the catalog homes. Precut houses ordered from a Sears catalog were shipped by boxcar in 30,000 pieces -- including shingles, nails and paint -- and assembled by a local carpenter or by the buyers themselves. Styles ranged from the elaborate, nearly $6,000 Magnolia, to the three-room, no-bath Goldenrod, sold in 1925 for $445. (Outhouses sold separately.) One of the larger Sears models, constructed in Takoma Park, Md., sold last year for about $900,000, according to a local real-estate agent. The homes caught on as the U.S. population grew and Americans began to move away from crowded city centers. Their popularity also was driven by the rise of company towns. In Carlinville, Ill., for example, Standard Oil ordered homes for its mine workers, 152 of which are still standing. Sears also encouraged sales to families with steady wages but little in savings by financing up to 100% of some of the homes. But many homeowners were forced to default during the Depression, and sales came to an end in 1940. Like some of the die-hard hunters, Ms. Raschka herself lives in a Sears home, a 1928 Mitchell model. "My passion is to find my house's long-lost sisters and brothers," she says. Some Sears-home buffs are like bird-watchers, seeking a feeling of accomplishment from spotting a rare style and matching it to one of the hundreds of examples in old Sears catalogs. Nostalgia is a big part of it, too: Interest in the homes, many of which are bungalows and other modest styles, is partly a backlash against the wave of supersized subdivisions and the cropping up of so-called McMansions in many old neighborhoods. The mail-order houses, many of which had big porches and were made from high-quality materials like early-growth cypress, were less expensive than architect-designed houses at the time, and were often all working-class people could afford. Because they were typically a family's first home -- and because they were often a do-it-yourself project for buyers -- the houses, enthusiasts say, are emblematic of the American dream. Even if a house does match a picture in an old Sears catalog, it could be a later rip-off by a local builder -- or a popular style that Sears emulated in its designs. Inside the house, hints like Sears-labeled woodwork can also be misleading, because Sears sold such things separately. One way to tell: a stamp of a letter and a three-digit number on beams, which were marked to facilitate assembly. Measuring the space between studs, or support posts, can be another clue in verifying a Sears home, especially in an area with a lot of Sears imitations, according to Kathryn Holt Springston, a 53-year-old semiretired social historian with the Smithsonian Institution. The studs of older non-Sears houses in the Washington, D.C. area are often 22 to 24 inches apart, she says, compared with about 15 inches in Sears models. Article Source: Sara Schaefer Munoz From The Wall Street Journal Online - Click here for the full article. Appraisal , Real Estate , Appraiser , Illinois , Realtor , Home Inspection

Local - B-N Home Prices Up, Sales Dip - April 2006

2006-05-17T07:32:00.000-05:00

BLOOMINGTON -- New homes in Bloomington-Normal cost about 14 percent more than they did a year ago, according to information released recently by the Bloomington-Normal Association of Realtors. Twin City home sales, meanwhile, fell about 14 percent from March to April, mirroring a national cooling in the real estate market.“April is down a little but that doesn’t concern me,” said association President John Armstrong. “I know we’re still on record pace.” In April, 43 new homes and 173 existing homes were sold, compared to 46 and 205, respectively, in March. Pending sales should boost that total above March figures, Armstrong noted, and home sales for the year are up about 1 percent from 2005, when Bloomington-Normal tallied its fourth straight record year for home sales. Nationally, new home sales are expected to drop nearly 12 percent and existing home sales should fall around 6 percent, according to the National Association of Realtors. Home values, meanwhile, should wane to single-digit increases, said NAR President Thomas Stevens. Not locally, however. The average Twin City homebuyer spent $266,597 for a new home from January through April, up about 14 percent from $233,524 during the same period in 2005. Developers are constructing pricier homes, Armstrong said, but an influx of rebuilding in the Gulf Coast following last year’s hurricanes also has jacked up the cost of building materials. Existing homes, meanwhile, appreciated about 4 percent from last year, he said. Article Source - The Pantagraph by Scott Miller Appraisal , Real Estate , Appraiser , Bloomington , McLean , Illinois , Realtor

Federal Regulators Agree to Share Mortgage Fraud Information

2006-05-17T06:18:00.000-05:00

On the same day that the Mortgage Bankers Association kicked off it's inaugural National Fraud Issues Conference in Chicago, the regulator for Fannie Mae and Freddie Mac announced that it is now sharing mortgage fraud information with the Treasury Department's Financial Crimes Enforcement Network. According to a memorandum of understanding executed last Friday, the Office of Federal Housing Enterprise Oversight (OFHEO) and the Financial Crimes Enforcement Network (FinCEN) have reached an agreement to facilitate the sharing of information by OFHEO of its examination findings on actual or suspected mortgage fraud with the Financial Crimes Enforcement Network. FinCEN for its part will include OFHEO's information in its database of Bank Secrecy Act (BSA) information, which can then be queried by law enforcement officials. For those of you who did not know, the Financial Crimes Enforcement Network is a bureau within the U.S. Department of Treasury. It is tasked with administering the Bank Secrecy Act and maintaining a database that includes Currency Transaction Reports (CTRs), Suspicious Activity Reports (SARs), and other reports that financial institutions are required to file. FinCEN supports law enforcement and regulatory agencies through sharing and analysis of the BSA data. The inclusion of OFHEO's findings will be of significant value in the ongoing effort to combat the use of mortgage transactions as a vehicle for fraud. Article Source: RealBlogging 5/17/06 by Ralph Roberts Appraisal , Real Estate, Appraiser , USPAP , RESPA , Regulation , Illinois