Freedom is an awesome thing. Men and women have given their lives so that I can have an office, run a business, and walk down the street without the fear of getting shot (unless I run into someone that didn't get their loan because of me.) We have the richest
poor people in the world. You and I (the average Joes in America) are among the top 1% of the wealthiest in the world. It's no wonder people are emmigrating here in droves.
I am grateful to all who serve and have served in the military - Army, Navy, Coast Guard, Air Force and Marines. Fathers, mothers, brothers, sisters, sons and daughters have given the ultimate sacrifice for our freedom. I don't take this for granted. My
wife and my family can all have a relatively safe existence in this land.
Let us be grateful together, and celebrate this July 4th with joy, reverence, and with a deep sense of gratitude.
God Bless America!
As a Cub Scout, my 8 year old son repeats the Cub Scout Motto, "Do your Best" at the cub scout meetings As a Cub Scout dad, I help him with certain projects and activities, but try to let him do a lot of the work, even if it isn't perfect. Every once in
a while, he will get frustrated when he messes up. Sometimes he sees his best as imperfect and not good enough. I remind him that it doesn't need to be perfect, and encourage him to keep trying. He should do the best he can, and not give up.
"Do your best" doesn't mean perfection, but it does mean learning from errors and mistakes, and improving on them. This is a motto that we all can live by in our personal lives and in our careers. One of the hardest things to do is to admit when you have
erred, because in our minds we try to hold ourselves up as competant fathers, mothers, spouses, siblings, business people, or human beings. We erronously equate competency with perfection, and try to live by these standards. When we do this, it can become
a big let down when we are faced with our own faults.
"Do your best" also doesn't mean that I just let myself off the hook every time I mess up. It means I will do the VERY best I can to do better, not 90%, or 95%, but 100% effort. It means work. This is a challenge, but not impossible. I don't need to be perfect,
but I need to try, try, try again.
Its been a while since my last post - but we have been really, really busy. We have had a really, really, really good year, and I don't know why. I'd like to think that it was because of the really, really, really, good quality work we do here. Or it could
just be that everyone else is really, really, really busy and we are just the one drop in the ocean that sways with the tides of commerce.
Regardless of the reason, I am really, really grateful for all of the wonderful work we have received from our clients.
Ever heard of the saying "One bad apple spoils the bunch"? Well that is not the case with home sales - the bad apple in this case meaning a foreclosed home that has sold under typical market values. Home appraisals are not just based on 1 sale in your area.
In fact, all of the home sales in the area are considered to take in the BIG PICTURE of your particular market area. Certain questions should be answered - What is the typical sale price for the area, what is the typical size / age / design of the homes, how
many are currently listed, how many have sold in the last 6 months and has the number of home sales decreased or increased in relation to listings. These are just some of the general questions that should be answered. Another big question is - How many of
the home sales are foreclosed properties in relation to non-foreclosed properties. I have seen market areas with 90% REO sale activity - now that is a lot of "bad apples". If your market is having increased number of foreclosed sales, then there is a greater
possibility that the market values start to become DEFINED by foreclosure sales. When this starts to happen, the appraiser MUST take this into account when determining the opinion of value.
I did an appraisal on a home a few weeks ago where every single home sale that was comparable to the subject in that market in the last 12 months were foreclosure homes. Although there were non-foreclosed homes LISTED for sale, all of the sales were foreclosed.
The non-foreclosed homes weren't selling. I had to use all foreclosed properties to value that home. Why? Because those properties have defined the market. As a result, I had to utilize those sales to form my opinion of value, which came in under the sales
price. Suffice it to say, the seller, buyer, real estate agents, and mortgage broker wanted my head on a plate. I just killed the deal. I shouldn't be allowed to do appraisals in the state, the whole country, and even on the planet earth.
But after all the persecution I have to endure, I will tell you one thing - the LENDERS, who are my clients, LIKE the appraisals I complete. How do I know this? They keep giving me assignments. Plain and simple. After all, they are the ones lending the
big bucks. Many of them were the big losers when the bottom fell out of the market a few years back. They now have a huge inventory of homes that they can't get off of their books, many due to inflated appraised values by appraiser that "cherry picked" the
highest sales to arrive at an unrealistiic value. These days, more and more lenders are interested in REAL numbers, not IMAGINARY numbers.
Don't get me wrong, I am not an advocate for the value that my client may or may not want, but I am an advocate for my appraisal and my opinion of value which is based on market data. And that, my friends is what EVERY appraiser should have in their best
interest. If there is a client that doesn't respect that - Drop them. Sooner or later, they will join the other IMAGINARY numbers of defunct financial institutions in the industry.
The days of cherry picking sales are over (or at least I hope it is), and lenders are now asking for statistical data as well as the traditional "3 comps". I try to use 4 or 5 comparable sale in my reports as well as 2 listings. Also, more narrative about
market trends are also required in the report.
So, if you are unfotunate enough to be in a market with a large number of bad apples, my heart goes out to you. But remember not to shoot the messenger, for that is in part what an appraiser is.
Well it could be the description of my teenager's room at the current time.
But in the appraisal industry gross living area is the total continuous area that is considered to be typical living area for the market, excluding attached porches, patios, garages, etc.
The word continuous means that all areas are accessible to each other without having to go outside, through a porch, a garage, or any other means to get there. Therefore, if the handyman (or woman) of the family decides to add a 2nd floor to the garage so
that Cousin Billy can have a home away from home, that may not be considered in your living area when the appraiser comes to call, and therefore may not add real value to your home. Again, it depends on your market. If every other home on the block has an
above garage quarters, and there is proof that these homes are selling $5,000 more that a standard home without these quarters, you may be in luck. Usually, that doesn't happen, and you really are stuck spending more than what you're going to get back from
This also goes for detached (mother-in-law) quarters. Some market's show absolutely no market value for the little (or big) place you built for mom in your backyard.
Attached quarters also fall into this category. Remember, just because the walls are touching doesn't make the area part of your main gross living area. Most people don't want to sprint out in 10 degree weather to go to their attached bedroom, which is on
the other side of the garage. This is just not typical of most homes, and should not be considered gross living area.
Finished attics with insufficient head room can also be nixed. If you finish an attic, make sure that an adult can stand without bumping their head on the roof inclines. Not fun - and you will be dinged on the gross living area by the appraiser.
So when you're feeling like Bob Vila, and want to knock a few walls down to add on, make sure you consider the accessibility of all living areas.
Lately, I have been getting a lot of requests for RETRO appraisal reviews. For laymen, that means that a bank or financial institution dug up an old appraisal and dusted it off to look at the numbers again, usually because they just foreclosed on the home
in question and can't sell it for nearly what it was appraised for at the time of the loan.
So, they want another appraiser to review the the appraisal and look at the real estate market in the past to determine if the original appraisal was acceptable, and if not, to provide my opinion of what the value should have been.
This has led me down a walk into the past. I have done retrospective appraisals and reviews before, but usually I only have to
time travel a year or two. Lately, I have had to set my time machine back 5 to 6 years, which is kind of scary. I actually had to travel to the MLS office and root through the ancient MLS book to excavate comparable sales,
because I found out that all MLS data become extinct on internet after 5 years. Some useful data are lost forever, even from the MLS books, like withdrawn listings that never saw the light of day. I am also sometimes at the mercy of archaic realtor notes in
the MLS books that have to do with the condition of a property. I don't even attempt to call anyone - Can you imagine?
"Hello, I'm an appraiser doing a review and would like to ask you a question about a sale you listed 5 years ago." - silence - then - Click.
So I finish the review, agree or disagree, give my professional opinion with supporting data and return to the future.
When I finally finish the mission, I am drained. Traveling to the past is a tough journey. And I know I will be returning sometime soon.
I would much rather travel into the future, like Doc and Marty McFly. It would make appraising so much easier.
Many homeowners (and some realtors) don't realize that when doing an FHA appraisal inspection, the appraiser is required to check certain things that are not typically required for non-FHA transactions. Below are a list of basic things that you as a homeowner
or realtor can do to avoid delays and 2nd trips by the appraiser.
1. Electricity and water utilities must be turned on. (It is not the appraisers responsibility to deal with breaker boxes or water utility valves. These utilities should be up and running when the appraiser walks in)
2. Heating / Cooling must be functioning.
3. Plumbing and electrical fixtures should be functioning properly.
4. Attic must be accessed.
5. Security bars on all bedrooms should be removed, or emergency release latches installed.
Also, if there are any cracks in the foundation or any observable problems with the structure (foundation, roof, wall separation, etc.), it would be helpful to have documentation from a professional to identify and provide opinion on the needed remedy for
When all of these items are address beforehand, the possiblility of delay is greatly minimized.
It is amazing that some clients still put estimated values on the appraisal orders. One of the reasons HVCC went into effect and now FHA adopting some of HVCC standards, is to give appraiser's more independence and have greater objectivity in completing
If you are a financial institution and still doing this, please know that you are not "helping" the appraiser by giving us a value to "shoot for". Let us do our job objectively and ethically. Please let your loan officers know that HVCC and FHA strictly
forbids any communication about value or any other aspect of the appraisal with the appraiser. We are now told to report any of these incidents to the respective authorities. This may result in cancellation of the order and in extreme cases an investigation.
So, you're watering your lawn, and a notice a car drive by slowly, the driver looking at your house. Suddenly, he / she takes out a digital camera and snaps a photo of your home - and drives off quickly without a word.
What was that - a drive-by shooting?
If you ever witness this strange behavior, don't automatically run for the shotgun. It may be an appraiser just doing his job. Appraisers sometimes are required to take photos of homes that have sold recently to place in the appraisal report. Taking pictures
of homes from a public street is perfectly permissable, even if you are not an appraiser. It is understandable to be concerned, and by all means you have the right to investigate. If a property owner is visible when I am taking pictures, I usually get out
of my car and explain to them the situation, and they are more than happy to comply. One homeowner even wanted to pose in front of her house!
Many appraisers have a heavy workload and don't want to take the time to do this, which saves time but may result in a city wide chase scene. I prefer to take the time.