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Appraiser Fools Day is Coming, Fun with Mr. Yun!

March 1st, 2011 by Bill Collins Leave a reply »


Reader Comments About Our Recent Issue; "Doom and Gloom"

“It appears that Mr. Garrett would be singing Hail To The Chief or Happy Days Are Here Again standing on the deck of the Titanic! If he likes the half-full spin he should read Realtor.com’s chief economic spin doctor’s opinions, he’s just what Mr. Garrett’s looking for. I believe your newsletter is top shelf and on the mark when it comes to reporting the ugly truth, we’re all standing knee deep in some serious dodo! It’s amazing to me that the greed of Wall Street and the likes of Countrywide have effectively ruined a perfectly great profession, and not one damn thing has really been done about it from a Rule of Law standpoint.”
David G. Markham,
Certified Residential Appraiser, Franklin County, Virginia

"Thanks for some “glass half-FULL” news!  It is very much appreciated.  I echo Vernon Garrett’s views.  I’m pretty sure I read more articles in your newsletter this go around because there was some positive news.
Boy, do we NEED cheerleaders!"
Daniela DelValle,
California Certified Residential Appraiser

“You can’t be a cheer leader when there is nothing to cheer about…your job is to report the news and help the people in the industry deal with reality! I just wanted you to let you know that someone appreciates what you do…and thank you for doing it!” SuAnne Sharef,
Certified Residential Appraiser, Pleasant Ridge, Michigan

“I agree with your reader comments.   No offense, but the last year your publication has been reporting negative, negative, negative.   I haven’t been reading your emails and delete them because they’re so negative….
Please understand that I understand what appraisers are up against…I’ve been hearing about the demise of the appraisal biz since I got into it in 1991 and I have a really good name/reputation and constantly have a good flow of work.   So, I’m not sure what to make of all of this”  Bill Cobb, Certified General Appraiser, Louisiana

“I guess I missed the phone call from Vernon when he discovered that "everyone" wants to hear good news. Maybe I’m alone here (I think not), but I prefer, actually I depend on, honest, forthright coverage of the real estate news that affects my market and my business. So please, leave the sugar coated shallow coverage of the topics to the newspapers and keep sending me the in depth, credible Appraiser News."
Michael Manley, Certified Residential Appraiser, Littleton, Colorado

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National Association of Realtors Chief Economist Lawrence Yun Explains His New, Fun Math

You can’t make this stuff up (or maybe you can!).  Nick Timiraos in the Wall Street Journal on February 22nd reported that CoreLogic, a Santa Ana, California based real estate analytics firm, estimated that the actual number of homes sold in 2010 was just 3.6 million, a decline of 12% from 4.1 million in 2009.  The article noted that the NAR reported sales of 4.9 million homes in 2010, a 5% decline from their estimate of 5.2 million in 2009.

Mr. Timiraos reported that a number of economists, including some from the Mortgage Bankers Association, have raised concern about NAR’s data and believe that their reports may have overstated sales by as much as 20%.  Mr. Timiraos reported that the NAR is examining the possibility that this over-counting may have gone back as far as 2007. Thomas Lawler, an independent housing economist is quoted in the Journal articles as having said that ‘this horrific downturn in the housing market has been even more pronounced than what people thought, and people already thought it was pretty bad."

On February 23rd, CNBC real estate reporter Diana Olick described the scene at a NAR press conference.  She reported that Lawrence Yun opened the press conference by saying that “This is going to be a fun press conference.”  Ms. Olick noted that after Mr. Yun detailed the most recent monthly report he acknowledged “…a nearly 33 percentage point seasonal adjustment in sales numbers (!)"  Ms. Olick went on to say that:
“In an interview after the presser, I pressed Yun on whether or not we should believe any of the NAR’s numbers. Prices, he said, were solid, no question. As for sales: "Right now I don’t know what the level of revision will be, whether it will be in single digits or whether it will be in double digits, but the measurements have been fairly accurate, but it remains to be seen…”
A link to the entire CNBC report is found here: Realtors Seek Data Help

Also in a video on February 23rd, CNBC’s Diana Olick and several others (including Mr. Yun) analyzed the “mixed messages” that recent real estate reports have given with some increase in sales activity at the same time prices were declining.  Discussion of the current “bifurcated market,” spring selling season and impact of the “shadow inventory” are all included in this interesting video, a link to which is found here: Home Sales Jump

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Some Recent Half Empty Headlines

Bloomberg reporter Kathleen M. Howley wrote on February 17th that a record percentage of U.S. homes were in foreclosure at the end of 2010 and a link to this report is found here: U.S. Loans in Foreclosure Tie Record as Lenders Delay Seizures

Also writing for Bloomberg, on February 20th Bob Willis discussed the divergent directions that the overall economy was taking (up) in comparison with the real estate market (down) and a link to this report is found here: Home Sales Probably Fell, Durables Rose: U.S. Economy Preview

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Political Turmoil in Middle East Resulting in Lower U.S. Mortgage Rates

Mortgage rates dropped significantly this week (see “Rates & Dates” section below) and several reports cited the uprisings in the Middle East as a leading factor.  Writing for Bankrate.com, Marcie Geffner noted that this was resulting in increased mortgage applications (also, see “Rates & Dates” section) and quoted a loan officer as saying that the increase was due to the anxiety borrowers have about not seeing “four percent rates” again.  A link to this report is found here:  Middle East Fuels a Drop in Mortgage Rates

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Congressional Regulators Battle Over Government Support of Housing Market

In a debate which largely broke down along party lines, a February 16th hearing of the House Financial Services Subcommittee focused on the issue of the extent of the government’s support of the housing industry with Republicans criticizing the Obama Administration’s loan modification programs and larger scope of Fannie Mae and Freddie Mac while Democrats warned of the dangers of a sudden withdrawal of government support for housing.

An interesting thought: Is it possible that the over-stated reports of housing sales along with a false optimism by many (which ignored all of the available evidence) not only resulted in a lack of Congressional support for measures that might attempt to tackle the problem but fostered a climate in which radical proposals to withdraw needed support were encouraged?
Just thought I would ask the question…

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Will April 1st Be Appraiser Fools Day, or Will "Customary & Reasonable Fees" and "Appraiser Independence" Be Implemented?

It is exactly one month from the scheduled implementation of these two measures that are paramount on the minds of appraisers and the jury is still out.  We are hopeful that these measures will be implemented in the letter and spirit of the original bill and not watered down by those representing the powerful interests that are in opposition.

As of March 1st, however, the declining mortgage appraisal volume in combination with the lower fees that appraisers are still receiving from AMCs has made for difficult business conditions for many appraisers throughout the country.  As we have suggested last week and on so many other occasions, uncertainties related to the future of the mortgage market and the mortgage appraisal business (i.e. changes at Fannie Mae and Freddie Mac, implementation of the Uniform Appraisal Dataset (UAD), concerns over data mining and increased usage of Automated Valuation Models (AVMs), possible expansions in the use of BPOs, etc.) make it mandatory for appraisers to diversify their appraisal practices into areas outside of the mortgage appraisal arena

Gary Crabtree, a Certified General Appraiser with Affiliated Appraisers in Bakersfield, California recently addressed some of these issues in an e-mail to us:
“All is not well for the experienced fee appraiser. I can’t do $400 appraisals for $250 and most AMC’s have taken me off their list or won’t put me on.  The market is extremely slow in this "neck of the woods" and my analysis indicates we are headed for a ‘double dip’…

To me, C&R fees is the least of our worries.  With Fannie issuing the UAD and changing its forms, they are preparing for a huge data mining venture to be allegedly used in their AVM to review appraisals, but it wouldn’t surprise me that instead, they use it for loan origination and back it up with a property inspection via a BPO for $45-$60 for properties under the $250,000 threshold.  Appraisers are dropping off the licensing rolls at an alarming rate.  California is down to 14,000 from 21,000 and what’s more alarming is, it’s the experienced appraiser that’s going out of business and there will be no one to take their place.  California once had over 4,000 trainees. It’s now down to 1,352. 

There is also a state by state campaign underway to allow BPO’s to be used for valuations.  Nebraska was the first and legislation is pending in several others."

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How Are the Rich Doing in Our Bifurcated Economy? What do Charlie Sheen and Christina Aguilera Have in Common?

Several interesting reports have surfaced recently as to how the wealthy have been making out during these economic times which are difficult for so many.

On February 24th, CNBC released a Reuter’s report which discussed Forbes investigation into the number of prominent individuals who were reportedly hit by the foreclosure crisis.  Included in this group is the former basketball star “Dr. J” (Julius Erving) and a link to this report is found here: Rich and Famous Also Face Foreclosures

Regarding Charlie Sheen and Christine Aguilera: CNBC.com and Zillow recently released a slideshow titled “Celebrity Homes with Prices Slashed.”  If you are interested in seeing Mr. Sheen’s (recently reduced in price) house along with Ms. Aguilera’s house (and a number of others), please click on the link below: Celebrity Homes With Prices Slashed

Before taking up a collection to help the above, however, please keep in mind that as a group the wealthiest amongst us are still faring quite well and another slideshow released last week by the above companies shows us the most popular “enclaves” where they are moving to: Where the Rich are Moving

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Rates & Dates

Freddie Mac reported that rates for 30-year fixed-rate mortgages declined to 4.95% for the week ending February 24th from the 5.00% rate reported on February 17th.

The Mortgage Bankers Association (MBA) in its most recent Weekly Mortgage Applications Survey for the week ending February 18th also reported a significant reduction in its average to 5.00% from the previous week’s rate of 5.12%. 

In a press release dated February 23rd, the MBA reported that mortgage applications jumped 13.2% on a seasonally adjusted basis for the week ending February 18th.  Refinance applications constituted 65.7% of mortgage activity in this most recent weekly report. Michael Fratantoni, the MBA’s Vice President of Research and Economics was quoted in the press release as saying that: “Ongoing turmoil in the Middle East brought interest rates lower last week.  Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week.”

Additional information from Freddie Mac can be found by going to: Primary Mortgage Market Survey PMMS – Freddie Mac

Additional information from the Mortgage Bankers Association can be found by going to their site at: Research and Forecasts – Mortgage Bankers Association

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Ask Angie

We want to congratulate our most recent winner: James J. Woodring, a Certified Residential Appraiser with Real Value Appraisals in Beltsville, Maryland. Real Value Appraisals covers Washington D.C. along with several suburban Maryland counties and James has been an appraiser here for 32 years.  James was the first to accurately report that the answers to last week’s questions were: The saying “It’s all good” is attributed to or found in All of the above, “He has all the virtues I dislike and none of the vices I admire” Is attributed to Sir Winston Churchill, “We are all a little weird and life’s a little weird, and when we find someone whose weirdness is compatible with ours, we join up with them and fall in mutual weirdness and call it love” was attributed to none of the choices, and “Just because something doesn’t do what you planned it to do doesn’t mean it’s useless” Is attributed to Thomas Edison. 

Today’s questions:

1. Who said: "If I have a thousand ideas and only one turns out to be good, I am satisfied."

a) Thomas Edison
b) Mark Zuckerberg
c) Alfred Nobel
d) Alexander Graham Bell
e) None of the above

2. Who said: “Dream as if you’ll live forever, live as if you’ll die today."

a) Jack Kerouac
b) Marilyn Monroe
c) James Dean
d) Elvis Presley
e) None of the above

3. The saying "Forget love-I’d rather fall in chocolate!" has been attributed to:

a) Marilyn Monroe
b) Lady Godiva
c) Milton Hershey
d) Sandra J. Dykes
e) None of the above

The first person to respond with the correct answers wins a choice of either:

One Free Regular Listing on AppraiserHelp.com

A Free Copy of the UPDATED Directory of Appraisal Management Companies (Available Now to Members of AppraiserHelp.com and FHAAppraisers.com FREE!)

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Tell us what you think!

We invite your responses to any of the issues raised in this newsletter. Please e-mail us at: bill@appraiserhelp.com with your thoughts!

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We really hope you find our newsletter to be informative!  If you have any input on future topics for discussion, please email me your questions and I will do my best to address them in the next issue.  If you want to look back at past issues you can see our archive at www.appraisernews.com

Regards,

Bill Collins, Appraiser Help Inc.

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