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Appraisers Declare Victory?

May 10th, 2011 by Bill Collins Leave a reply »

  • Are Customary and Reasonable Fees Becoming Customary and Reasonable?
  • Clear Capital and Zillow Report Further Housing Declines
  • Does Anyone Have a Solution?
  • Who Wants to Catch a Falling Sword?
  • Is The American Dream of Homeownership Under Siege?
  • As The Residential Real Estate Market Goes, So Goes Commercial?
  • CoStar Group to Acquire LoopNet
  • How Many Appraisers Are Active and Licensed In The U.S.?
  • What Type of Software is Most Popular Amongst Residential Appraisers?
  • The Benefits of Belonging to a Professional Appraisal Organization
  • Rates & Dates
  • Ask Angie
  • Tell us what you think!
  • Closing Remarks
  • Are Customary and Reasonable Fees Becoming Customary and Reasonable?

    While the situation is still fluid, it appears as though many lenders and AMCs are feeling the pressure created by the Dodd-Frank Act along with regulatory guidelines which support C & R fees and selection of appraisers based on their abilities and not just favoring the quickest and cheapest.  Many appraisers have confronted AMCs when they observed violations of the new regulations with many filing complaints to the appropriate regulatory bodies (see past newsletters for links).

    Anecdotal evidence from many appraisers and our observations of the actions of lenders and AMCs lead us to the conclusion that the fees and working conditions for appraisers who perform mortgage appraisals will be improving.  It is also anticipated that this will create upward momentum on appraisal fees for commercial appraisal assignments and for private residential assignments, reversing the erosion in fees that we have witnessed over the past several years.

    A cautionary note: many long term trends make it clear that changes on the horizon will weed out those in our profession who do not continuously work on improving their skill sets, incorporating new technology and adapting to changing conditions and requirements.   In addition, appraisers need to proactively market their services to new types of clients and in new ways as the rapid pace of technological change presents opportunities to appraisers to connect with customers using the internet in different ways than in the past.   

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    Clear Capital and Zillow Report Further Housing Declines

    On May 5th, Clear Capital released their Home Data Index market report for April which reported national prices dropped 0.7% from their March 2009 prior lows.  The report showed a national quarterly price decline of 4.9% along with a year over year decline of 5.0%.  Quite strikingly, Clear Capital reported that prices declined by 11.5% during the past three quarters, a decline rate not seen since 2008.  The report included the following commentary that should be of concern to lawmakers and regulators if they decide to actually analyze the real estate market and take positive action rather than ignore facts and offer plans that might be cataclysmic:

    “As national home prices reached new lows this past winter, hopes remain for a spring revival. Markets have entered uncharted territory, however, as this current home buying season will be the first since 2008 without any tax credit incentive. A note of caution to those looking for a strong end to 2011: The last time no incentives were in place and distressed inventories were this high, home prices fell sharply.”

    The full report, including regional breakdowns, can be viewed by clicking on the following link: Market Report: Clear Capital Reports National Double Dip

    Yesterday, Zillow released equally pessimistic first quarter results including a 3% decline in the Zillow Home Value Index along with their finding that the number of underwater homeowners had increased to 28.4% of all single family homeowners with mortgages.  On ZillowBlog, author Katie Curnutte stated that “We now believe that a bottom will come in 2012, at the earliest”.  A link to the Zillow report is found here: First Quarter Brings More Dismal News for Housing Market

    CNBC summarized some of these negative findings in a video yesterday and offered varying perspectives from several commentators, a link to which is found here: Banks Blocking Housing Recovery

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    Does Anyone Have a Solution?

    Not that we’re advocating this, by the way, but how about a real discussion of ways to address the brewing crisis which look at a variety of approaches.  On May 5th, Bloomberg reporters Dan Levy and Nadja Brandt discussed several ideas put forth by Lewis Ranieri at a panel discussion the previous day at the Milken Institute Global Conference in Beverly Hills, California.  Mr. Ranieri is quoted as saying at the conference:

    “Qualified borrowers for the last 30 years don’t get underwritten today. First thing today is putting the government back to work to provide good loans to good borrowers. We can’t foreclose on all those that are delinquent. It would be economically and socially catastrophic.” A link to the entire Bloomberg report is found here: Banks Can Fix Crisis by Easing U.S. Homeowner Debt, Ranieri Says

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    Who Wants to Catch a Falling Sword?

    On May 6th, CNBC put out a video which attempted to summarize the week’s most important housing developments.  In this video, CNBC’s Diana Olick used the above quote to summarize the attitude of many prospective home purchasers and a link to this video is found here: Time to Buy Homes and Stocks?

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    Is The American Dream of Homeownership Under Siege?

    Writing in the Huffington Post on May 4th, Dedrick Muhammad and John A. Powell added their voices to the concerns of many economists and housing analysts regarding the proposed backward steps in Congress which could make homeownership the “impossible dream” and a link to this article is found here: Homeownership Should Not Become Impossible Dream 

    Similar concerns were expressed by Michael Collins (no relation) in an article on May 7th titled “Beyond Foreclosuregate-It Gets Uglier” and a link to this report is found here: Beyond Foreclosuregate – It Gets Uglier

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    As The Residential Real Estate Market Goes, So Goes Commercial?

    One additional report by Diana Olick on May 4th noted the Trepp study released that day which reported that the delinquency rate for commercial mortgage backed securities (CMBS) reached 9.65% in April which Trepp indicated was the highest figure in history.  Ms. Olick noted that:
    “Just a year ago, the delinquency rate was just 8.02 percent. Multi-family, industrial and retail delinquencies are leading the way up, despite the fact that apartment rents and demand are soaring and retail is supposedly recovering. The trouble is these properties just aren’t worth what they were when the loans were made, and so they can’t be refinanced, which happens with commercial loans far more often than with residential loans. This is precisely the reason many in the industry don’t see a healthy recovery in commercial real estate, even as some of the top urban markets are faring quite well."
    A link to the entire report is found here: CNBC Realty Check – Commercial Real Estate Clouded by Delinquencies

    Some declines were found, however, by CoreLogic in the number of distressed properties in the top ten markets in their April study.  The study also indicated that an estimated $324 billion in commercial mortgages will mature in 2012 and need to be refinanced or sold.  A link to the CoreLogic report is found here: Commercial Market Monitor National Edition, April 2011

    The Wall Street Journal reported on April 27th that the owners of retail properties are finding that market conditions are still weak and require lower lease rates to maintain occupancy rates.  Kris Hudson, the author of the report, cited a survey by Colliers International which canvassed 233 of the 1,259 stores closed in 2008 by big-box retailers which found that 51% of these sites were still vacant.  This does not bode well for the shopping center industry with an upcoming wave of closing or shrinking retailers including Borders and Blockbuster.

    Silicon Valley office space, however, is booming as Anton Troianovski reported in the Journal on the same day.  He noted recent leases involving Hewlett-Packard and Motorola which involved more than 600,000 square feet and reported that Microsoft was close to signing a lease for as much as 300,000 square feet.  Expansion by tech firms here and in other centers around the country are a bright spot in these mostly difficult times.

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    CoStar Group to Acquire LoopNet

    On April 27th, GlobeNewswire.com distributed a news release from the CoStar Group, Inc. which announced CoStar’s acquisition of LoopNet.  This acquisition combines two of the giants in the areas of commercial real estate data and marketing.  TradingCharts.com broke the news on its web site that day and a link to the release is found here: CoStar Group to Acquire LoopNet

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    How Many Appraisers Are Active and Licensed in The U.S.?

    The Appraisal Subcommittee’s (ASC) National Registry indicates that 109,235 real estate appraisers are currently listed as maintaining “Active Appraiser Credentials,” a figure that includes many appraisers who are not full-time, along with some who are essentially inactive but wish to remain licensed.  The ASC reports that 35% of the total are Certified General Appraisers, 51% are Certified Residential Appraisers and 14% are Licensed or Transitional Appraisers.  If you would like to see how many appraisers are in your home state and what the breakdown is, just click on the following link: Active Appraiser Credentials – ASC – Appraisal Subcommittee

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    What Type of Software is Most Popular Amongst Residential Appraisers?

    AppraisalPort currently is conducting a poll and as of yesterday almost half of the 6,436 respondents to date used a la mode with approximately 1/3 using ACI and Bradford Technologies a distant third with less than 10%. A link to this poll is found here: AppraisalPort: Poll Results

    It is not clear whether this represents a representative sample of appraisers nationally or whether there are factors which overstate or understate software usage for a particular company.  I don’t think there is necessarily a connection with the quality of the software services provided but we welcome our reader’s comments.

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    The Benefits of Belonging to a Professional Appraisal Organization

    John Torvi of Landy Insurance, a sponsor of AppraiserNews.com, wrote an article for LiveValuation Magazine on April 28th titled “The Benefits of Belonging” and a link to this informative article is found here: The Benefits of Belonging

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    Rates & Dates

    Both Freddie Mac and the Mortgage Bankers Association (MBA) reported declines in interest rates in their most recent reports.

    Freddie Mac reported that rates for 30-year fixed-rate mortgages decreased to 4.71% for the week ending May 5th from the 4.78% rate reported on April 28th. 

    The MBA in its most recent Weekly Mortgage Applications Survey for the week ending April 29th also reported a drop in its average to 4.76% from the previous week’s rate of 4.80%.   
    In their press release of May 4th, the MBA also reported a 4.0% increase in mortgage applications during this most recent week and they went on to say that:
    “…On an unadjusted basis, the Index increased 4.1 percent compared with the previous week. The Refinance Index increased 6.0 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 1.1 percent compared with the previous week and was 36.9 percent lower than the same week one year ago.”

    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: Craig A. Leonard, a Certified Residential Appraiser with C. Leonard Residential Appraisals of Davenport, Iowa. Craig has been an appraiser in eastern Iowa for approximately 27 years.  He was the first to accurately answer that Gary Snyder was the author of the quote “The rising hills, the slopes, of statistics lie before us. The steep climb of everything, going up, up, as we all go down…,” Benjamin Franklin preached  “Drive thy business, let not that drive thee ” and that Ralph Waldo Emerson said “I hate quotations. Tell me what you know."

    Today’s questions:

    1. Who said: "All women become like their mothers. That is their tragedy. No man does. That’s his."

    a) George Bush
    b) Bristol Palin
    c) Oprah Winfrey
    d) Oscar Wilde
    e) None of the above

    2. Who said: "Americans can always be counted on to do the right things after they have exhausted all possibilities."

    a) Barack Obama
    b) Nancy Pelosi
    c) Winston Churchill
    d) Prince William
    e) Abraham Lincoln

    3. Who said: "Many of life’s failures are people who had not realized how close they were to success when they gave up."

    a) Benjamin Franklin
    b) Thomas Edison
    c) Richard Nixon
    d) Al Gore
    e) The Winklevoss Twins

    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 12/10 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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