SOUTH FLORIDA:
Home Sellers Say New Appraisal Rules Make Deals Harder

Real estate agents, mortgage brokers and buyers, as well as homeowners who want to refinance their loans, are feeling the effects of rules designed to prevent inflationary appraisals that helped fuel the housing boom. Real estate professionals and their clients say the rules contribute to low appraisals, which jeopardize home sales and refinancing applications. They're worried that the recent uptick in sales could slow as a result. [Source: Sun-Sentinel]

 

This is my follow up on the above Sun-Sentinel story "Home sellers say new appraisal rules make deals harder".  I am a Florida State Certified Real Estate Appraiser and practice in SW Florida.

The article focused on the low values received from Appraisers being assigned by Appraisal Management Companies (AMC).  It mentioned two AMC's in the article. I would like to bring your attention to what Appraisers have to say about the two mentioned.

Elite Appraisal Management
http://appraisersforum.com/showthread.php?t=135572&highlight=elite
http://appraisersforum.com/showthread.php?t=145447&highlight=elite

Valuation Logistics
http://appraisersforum.com/showthread.php?t=150963&highlight=logistics
http://appraisersforum.com/showthread.php?t=154352&highlight=logistics
http://appraisersforum.com/showthread.php?t=149049&highlight=logistics

 and most damming of all a VL rep tried to respond
http://appraisersforum.com/showthread.php?t=146234&highlight=logistics

I currently only work for one Appraisal management company and have been hesitant to take on much work from them.  Appraisal Management companies have been around for decades.  They initially started the Appraisal Management divisions as a loss leader to attract lucrative Title Work.  These companies took a small portion of the fee and passed on the balance on to the Appraiser.  In the day, the Appraiser could make it up on volume by working a smaller territory.   The Appraisal Management Company (AMC) saved the lender money replacing their in-house staff necessary for the ordering process.

As competition expanded in the AMC business, there was a downward pressure for lower and lower fees and turn times.

Roll forward to today.  When the typical AMC calls the only thing they ask the Appraiser is, "What is your fee and turn time?" with no question if the Appraiser is located in the area or competent to do the work.  In the past many low fee appraisals could be completed within small geographic areas and keep the Appraiser happy.  But things have changed. Reports that could have been completed in a couple of hours are now taking 6+ due to new reporting and client requirements.

Also gun-shy lenders are taking the stance that unless the sale is within one mile, closed in the past 90 days and a model match to the subject property then they want more data, more comparables, more added listings.  Beginning in March the Appraiser must also complete an additional addendum the 1004MC.  Depending on the marketplace this process can take from 10minutes to several hours.

In the mean time the AMC's have continued to put downward pressure on fees and turn times for markets where there a plenty of competing Appraisers.  Good 'ol supply and demand, right?  But just like the Boeing jet you ride in, the drywall you use in your home do you really want your valuation needs completed by the lowest bidder.  How does the lowest paid individual make a profit at low fees?  How did the drywall industry do it?  Cut corners of course. 

Most experienced Appraisers, myself included, refuse the AMC work for this very reason.  A credible Appraisal Report takes much analysis to do properly, and very little to do poorly.  And that is what I think you are seeing.  Those reports where very little was done.  It's easy to pull three recent closed sales, plunk them in a report and go on to the next.  Just go to Zillow.com and type in your address.  Unless you live in a very stable and homogenous community I bet you will be surprised just how far off the value is. 

Why you ask would an Appraiser go 100+ miles out of their territory to complete an assignment for the AMC for 1/2 or less of the fee the borrower is paying?  Frankly I don't know.  I can only speculate. The report may be written by a clerk or typist at the office the 'Appraiser' will never actually see the final report.  That the Appraiser uses vanilla language and boiler plate comments without offering any meaningful information.  Use adjustments that kinda look right without any attempt to come up with market derived adjustments. Cost approach? Just make it up. (Yes, don't get me started here.  But if your lender insists on using these figures to value your home for insurance purposes RUN!)  They do not subscribe to any MLS or data services and beg borrow or steal the data from others. I pay $1,600 a year for access to MLS which is required by our Certification that I have it.  They do not drive by comparable sales to see if they are truly comparable to the subject.

Since the implementation of the HVCC I am hearing reports of Appraisers traveling 100's of miles to complete and inspection, then calling the local Appraiser for help with comparable sales, maps, etc.  They use sales that are from inferior or in some cases superior neighborhoods because they don't know the market well enough to know better.

I get offers for doing a full appraisal for $125.00  It may take me 8 hours to complete, less my costs for software $1,500/yr, MLS $1,600/yr, E&O Insurance $700/yr.  You can see it does not pay for a PROFESSIONAL to take on this kind of work.  If Professionals are not doing them, then who is?  I have better clients than this, but then most of those clients do not handle Mortgage Origination loans.  It is the Mortgage Originators who are required to utilize the AMC's and their Appraisers.  That is what you are seeing, a retraction of the Professionals from valuation services for Mortgage transactions.

I will also suggest that these very same Professionals were not the ones that were succumbing to lender pressure that caused this whole mess to begin with.  Remember Andrew Cuomo drafted the HVCC when he brought a case against Washington Mutual and eAppraisIT and AMC for pressuring Appraisers for value!  So the AMC's were sued for pressuring Appraisers and as a result all the Appraisals must now be handled through AMC's.  Defies logic!

For professional objective valuation services call me.

Kathleen "Kat" Bryce
State Certified Residential Real Estate Appraiser RD-4424
Fort Myers, FL
leecountyappraisals.com
Email: appraiserkat@earthlink.net
Phone: 239-940-2225
Fax 239-275-4130

Sadly I fear that I was right.  The stories are just beginning.  Many Condo Associations are teetering on Bankrupcy and the same is for many HOA's. 

The following article was published in the local news Paper.

Foreclosures burden owners at Coral Lakes

Home and condo owners at the Cape Coral gated community Coral Lakes may have to pay $650 by year's end to offset expenses the association owes because of the number of foreclosed homes.

A meeting to decide if homeowners would have to pay the assessment ended without a decision Tuesday when the head of the association's board declared the meeting adjourned.

"Everybody here wants to point the finger at the developer tonight," said Jay Coughlin, who works for the developer Engle Homes, during the meeting when shouts from homeowners frequently interrupted his answers. "But look at your neighbor who owes $220,000."

Read the rest of the article...

Realtor's you owe it to your client to place them in communities that are healthy!

Kathleen Bryce
St.Cert.Res. REA RD4424
http://www.leecountyappraisals.com

Sadly I fear that I was right.  The stories are just beginning.  Many Condo Associations are teetering on Bankrupcy and the same is for many HOA's. 

The following article was published in the local news Paper.

Foreclosures burden owners at Coral Lakes

Home and condo owners at the Cape Coral gated community Coral Lakes may have to pay $650 by year's end to offset expenses the association owes because of the number of foreclosed homes.

A meeting to decide if homeowners would have to pay the assessment ended without a decision Tuesday when the head of the association's board declared the meeting adjourned.

"Everybody here wants to point the finger at the developer tonight," said Jay Coughlin, who works for the developer Engle Homes, during the meeting when shouts from homeowners frequently interrupted his answers. "But look at your neighbor who owes $220,000."

Read the rest of the article...

Realtor's you owe it to your client to place them in communities that are healthy!

Kathleen Bryce
St.Cert.Res. REA RD4424
http://www.leecountyappraisals.com

 One thing for sure, economically we may be in a recession and virtually everyone in South West Florida has been affected in some way.  But what I am seeing more and more a overall physical malaise overtaking our beautiful area.

Sure the economy is in the tank, that is given.  Our Real Estate markets are playing Filene's basement.  And the cure for this is going to be a long and bumpy road.  So what can you do you may ask?

Well you may not be able to fix the economy, solely on your own.  But you can work on fixing your own personal depression.  Here are a few tips to help you keep your chin up and stress levels down. Whether you are unemployed or not here are a few things that will help you get out of the doldrums.

 

 

 

• Exercise - after all we have the time to do it now.
• Go to the library - Amazing place, don't just go to the book shelves and leave.  Explore you will be astounded at what you may find
• Volunteer - Get involved with an organization that will appreciate your help.  Voluntarism goes a long way towards increasing the feel good chemicals in your brain.
• Increase your intake of Omega-3 fatty acids.  Fish oil or Flax seed supplements really help!
• No job to go too today, hop on the bus and go somewhere, anywhere.  Take the bus to the beach, or to the park downtown.  And just enjoy.
• Visit your friends or neighbors.  It is well documents that those who have close friendships live longer and happier.  Don't have any friends, maybe you should check out the self-help section at the Library.
• Get a Pet, if you can afford one.  It's hard to stay depressed when there is someone else there that needs feeding, walking and loving.
• Put candles on the dinner table tonight and dine, even if it is macaroni and cheese.

I'm sure I could go on and on.  But by working on our own selves we may help the overall malaise of the country and ultimately uplift our economy by feeling good again...

Kathleen "Kat" Bryce
State Certified Residential Real Estate Appraiser RD-4424
Fort Myers, FL
Email: appraiserkat@earthlink.net
Phone: 239-940-2225
Fax 239-275-4130

How important is the housing industry in Florida? And what impact will it have if the state makes a change in the way it taxes real estate? A 56-page report released by FAR has some answers. Researched by NAR, the report, "Effect of Policy Changes on Homeownership - Focus: Florida," provides an overview of housing's impact nationally and in Florida. It then analyzes possible changes the Florida Legislature could consider - transfer taxes, business receipt taxes, property taxes and general housing taxes - and how those changes could impact Floridians and the real estate industry.

 

To read the complete report, visit FAR's Web site, floridarealtors.org, at: http://www.floridarealtors.org/LegislativeCenter/Research/index.cfm

Kathleen "Kat" Bryce
St. Cert. Res. REA RD4424
http://www.leecountyappraisals.com

What is going to happen to the values of condominiums when the homeowners association goes bankrupt?  We hear about foreclosures, but those are just the tip of the iceberg.  As developers begin to walk away from unfinished communities, or refuse to continue to contribute to the HOA many condo owners are going to be facing enormous costs to continue to maintain their common elements.

Is your appraiser examining the condominium budgets or doing the research necessary to determine if there is any pending or ongoing litigation?  Make sure your buyers are getting a sound investment and look carefully at not only the condo, and it's market but the health of it's Association.

News-Press.com
Condos cause conundrum
By DICK HOGAN • dhogan@news-press.com • September 25, 2008

Unit owners resist paying extra expense 

Buzz up! The developer of half-built Prentiss Pointe at Winkler and Summerlin roads in south Fort Myers wants the 50 condo owners to pay for all the community's operating expenses. 

They're fighting back with protests to the state Division of Condominiums, saying that developer Prentiss Pointe Ltd. is obligated to pay its share of the expenses. 

Gary Howe, managing partner of Prentiss Pointe, couldn't be reached for comment but condo owner Marilyn Boyer - who has the only non-developer seat on the condo association board - said he's told residents he's broke and can't pay.  Click here for the rest of the story 

Kathleen M Bryce
St.Cert.Res.REA RD-4424
http://www.leecountyappraisals.com
appraiserkat@earthlink.net

It's been a long time since I've heard the jokes about people being sold Florida Swamp land.  But it sure was a popular theme not so many years ago...  Even Dinsney World was once know as a swamp.

Well I had a very interesting Date of Death Appraisasal that I completed for an estate.  The date of death was 3rd quarter of 2006.    This lot was located in the Middle of Fakahatchee Strand State Preserve.  If you  are not familiar with it Fakahatchee Strand was the setting for Susan Orlean's book "The Orchid Theif" and the movie based on it "Adaptation".  WE ARE TALKING SWAMP LAND FOLKS.

http://www.floridastateparks.org/fakahatcheestrand/  

http://www.friendsoffakahatchee.org/

Would you beleive that I had no trouble finding sales for this report, lots of sales many were flipped several times.  One party buying 4-5 of these lots!  The problem is they can't be used for anything.  You may camp on them but you may not Build any permenent structures, nor may you hunt in the strand.  Further, you need a permit from the state to hike there.

The inset in this picture shows the individual lots.  The white marks are 2006 sales.

This goes to show just how crazy the Real Estate Bubble got.  And that people still buy Florida Swamp land

Kat Bryce
http://www.leecountyappraisals.com

So did your taxes go down this year?  Why not?  It looks like it may be a long time before the Assessor catches up with all of the dirty sales that are on the books.  These frauds and flips are hitting all of us taxpayers right in our pocket book.  So the bad guys go to jail, nice but we're still going to pay for it out of our Pocket.  Kat...

Fraud cases still causing high property values
Naplesnews.com

By ELIZABETH WRIGHT (Contact)
7:33 p.m., Sunday, September 21, 2008

CAPE CORAL - In a wave of home sales that were based on phony appraisals, inflated sales prices and financing based on fraudulently prepared loan applications, some of the effects are now obvious.

Buyers were locked into mortgages they couldn't afford, paving the way for substantial losses for financial institutions and adding to the current boom in foreclosures.

But as a recent case of mortgage fraud in Cape Coral shows, this kind of financial crime can have more subtle consequences for others beyond the buyers and banks involved.

In some cases, local taxpayers have had their properties' values assessed based in part on fraudulently inflated sales prices.   Click for the whole Story

August 2008 Real Estate Market has shown continued price declines for Fort Myers, Florida.  Although there were a spike in 1st Quarter sales the ongoing sales volume remains low.   No attempt was made to verify the data for possible seller concessions or fraud.  These Market trends taken from Rapattoni MLS and includes all sales occurring in Fort Myers, FL from 8/1/2004 through 8/31/2008. 

 

This chart show the increase in market activity through 2nd Quarter 2005, followed by increasing values @$/Sq.Ft. of living space. With the collapse of sales volume 3rd Quarter 2005 the sales prices began trending downward. Currently sales levels are at or below average 2004 sales prices.
Increasing Days on Market are observed and are currently average 3-4 months.

Increase unemployment rates suggest that this picture may get worse before it gets better.  The good news is that prices are becoming affordable again for those who do have jobs.  Maybe the need for Affordable Housing programs will be a story from our distant past.

More information is available on request.

Kat...

Kathleen Bryce
State Certified Real Estate Appraiser RD-4424
Fort Myers, FL
http://www.leecountyappraisals.com
appraiserkat@earthlink.net

Phone: 239-940-2225
Fax: 239-275-4130

It seems very timely that Judge Roger W. Titus United States District Judge would publish a opinion in the case of Harold H Huggins Realty, Inc., et al. vs FNC, Inc. in advance of the deadline for Appraisers to agree to FNC's Appraisal Ports new user agreement which will become effective 9/13/2008. Click here to read the agreement in full. 

It has been brought to the forefront from others more versed in legal matter than I, that this new users agreement has language in it that will restrict you from participating in this or any lawsuit.  Yes, retroactively.   So if you log in after September 12,2008 you by default have agreed to their new "clickwrap"¹ user agreement.  Further, it would prevent you from suing them for any future grievances.  Oh! And if you and FNC are named in a lawsuit from a borrower for instance which is common practice to sue everyone that ever touched the file from builder to the lender, title agent, appraiser, web portal, on and on.  You agree to pay all of FNC's legal fees for that incident, which will not be covered by any insurance it will come from our "Bulging" pockets.

Judge Titus suggests that FNC shot themselves in their foot with their users agreements of the past.  With this new users agreement they are now attempting to close the barn doors.  Those on the inside may continue to feed at FNC troughs but will be chained to their stalls.  Those locked on the outside, by not agreeing to the new users agreement, will be prevented from feeding off of FNC but may still be able to kick the barn door down.   Read the "Titus Opinion of Motion"  

Kathleen M Bryce
State Certified Residential Appraiser DR-4424
http://www.leecountyappraisals.com    

¹ In introducing this term to the judicial lexicon in 1999, Judge David O. Carter provided a useful definition:

A "clickwrap agreement"allows the consumer to manifest its assent to the terms of a contract by "clicking" on an acceptance button on the website. If the consumer does not agree to the contract terms, the website will not accept the consumer's order. Such agreements are common on websites that sell or distribute software programs that the consumer downloads from the website. The term "clickwrap agreement" is borrowed from the idea of "shrinkwrap agreements," which are generally license agreements placed inside the cellophane "shrinkwrap" of computer software boxes that, by their terms, become effective once the "shrinkwrap" is opened.