Let's first define good shall we? Good does NOT mean make the number work so the loan will close!
BEFORE you take out your next loan......do some checking into the BANK first, do they use appraisers whose fees have been cut in half? Do they use Appraisal Management Companies (they normally pay appraisers well less than their normal fee and charge the banks more than we would).
Appraisers sole mission in life is to protect the BANK's RISK where a loan is involved. We also protect buyers and sellers by analyzing and reporting the REAL market value so that you do not pay more than the home is worth or you do not under or overprice your home.
A big part of the housing crisis is due to faulty appraising. Many know that the BANKS, Realtors and Mortgage Brokers dictated TO the appraiser what the value should be on the appraisal report. This is 100% backwards and RISKY to say the least. Our housing crash is proof of this!
Thus the inception of the HVCC. Appraisers must be independent from all who have a vested interest in the property and get back to the real job of reporting the true market value for the subject property. Or to put it another way if YOU default on your loan, what can that home be sold for by the bank to get it off their books. Banks have a bloodshed on their hands as the appraised value in many cases was inflated. Why? Because appraisers were backing into the number since the lenders would give them the ESTIMATED VALUE right on the appraisal request form and expect them to come up to that number! I am NOT saying all appraisers played that game, but trust me many did!
Now appraisers have to do what I call BLIND Appraising. They have no numbers to work toward, which is a GOOD thing, they must actually use their appraisal skills and report the market in an accurate way to come up with their opinion of value. Remember we do not determine value, we report it to the client after we conduct a thorough analysis of the market. The MARKET determines value not the appraiser.
So my question to all END USERSof appraisals, don't you think it is worth the FEE appraisers charge to produce a credible, meaningful report? I think so because a faulty appraisal report on either side of the value equation can have significant financial negative impact.
Just as an example: If you live on Lake Lanier and you have an appraiser from Atlanta who does not cover this lake with any regularity appraise your lakefront home, chances are very HIGH that the appraised value will be off and I mean WAY off. SAME thing holds true for any appraisal in any given neighborhood. If an appraiser for example does not know that people pay more or less for a home in a given SCHOOL district for example, the appraised value will be off.
Therefore it is imperative that the appraiser know the market in which they appraiser and better yet LIVE in that same market area.
So you do have control buyers and sellers and homeowners. Do not use banks that feel cheapest is the best, because in this world you get what you pay for and in this case it could financially hurt you BIG time!
A few extra dollars to get an accurate appraisal report is WELL worth it in the end.
HUD has stated that in addition to adopting HVCC language, that appraisers should be paid their normal market fees for FHA appraisal products.
Well after my discussion with a well known. long standing Appraisal Management Company who most appraisers know as they have been around forever, here are their exact words to me as of yesterday "
"The new national debate will be over exactly what is "normal", and as I understand it, that is a question that will be answered market by market. "
This same Company also tells all appraisers that Appraisers set their own fees, they have control over their fees the AMC does not......That language sticks in my craw BIG time. Why? Because if Appraisers set their normal market fees they will NEVER get work from AMC's. AMC's DO set the appraisers fees as the appraiser is forced to reduce their fees in order to get work from them. I know this because I do NOT get work from them because I refuse to work for 1/2 my NORMAL Fee. I complete a very thorough report and I know the value of my work.
BUT here is the issue.....If HUD asks AMC's what is the normal fee for FHA appraisals in their given market, that NORMAL is reduced by anywhere from $100-$150.00 per report because that is where they set their FHA fees in order to get work from AMC's. So HUD may in error think that this is the true NORMAL fee, when in reality it is not. If they were to call an appraiser and ask what is your normal fee for FHA appraisals they would give you a totally different number than if they were to ask what is your fee for an AMC..
So Realtors, Buyers, Sellers and BANKS need to know the value of a good appraisal and that one has to pay the fee for a truly accurate and meaningful report.
Please see my other post below about what you can do to help with this problem:
Our mission in life is to protect the BANKS risks, this is HUGE...Let me repeat Appraisers exist in this world to protect the Banks Risks, by analyzing and reporting their findings. WE DO NOT DETERMINE VALUES. This being said would you want an appraiser whose fee has been cut in half doing apprasials for YOUR BANK? I think not!
The trend is to standardize all appraisal reports and automate them as much as possible, based upon software that will essentially produce reports with a great deal of numerical analysis, unbiased reporting and market based adjustments for variances in comparable sales vs. the subject property. BUT you cannot automate the entire process.
SOME AMC's want to automate and standardize our process as much as possible so that the time it takes to complete a report is cut in half and yes you guessed it keep our fees LOW. But when you appraise in an area like ours, you are not dealing with cookie cutter properties and you cannot automate the entire process. You still have to be adept at determining which neighborhoods are really comparable, which sales are really comparable and to do this you have to know your market WELL.
There is a shift toward using appraisers who live close to the subject property and who regularly appraise the area. I am all for that shift. When appraisers drive 30+ miles to homes they just do not know the ins and outs of that particular county and neighborhood, unless they work in the area on a daily basis. But it happens all the time as that is where the work is for many appraisers.
So my request of HUD is this, do not use AMC's fee data to determine what is normal market rate. It is far from normal. They essentially drive down and dictate our fees FOR us as they pit appraiser against appraiser for the best fees. We do not have control of our fees with AMC's. There are a very few AMC's that do pay FULL fee to apprasiers and I commend them for this. I hope most banks work with them. SOLIDIFI is one of them. www.solidifi.com They do not feel the need to dictate fees or dictate every step of the appraisal process to the appraiser and how it should be completed. They look for experienced, well seasoned appraisers to get the job done....as it should be!
It is very important that all parties understand the importance of good appraisal reporting See post below on this subject.. and YES..appraisers need to be paid for their expertise.
The housing industry will rise again or fall based upon the quality of a GOOD appraisal. BY good I do not mean make the number work, I mean to report the REAL value of the property in question. Remember we are protecting the Bank's RISK.
Realtors you have more control than you realize in this business or maybe you already know this....
With all the complaints about appraisals killing deals and coming in low and in turn keeping the real estate market depressed, here is ONE single thing you can do to try to make an impact in your business.
I know that many of you recommend mortgage brokers or Banks to your clients, well when you do, find out via the broker or directly from the BANK if they use AMC's (Appraisal Management Companies). There are still plenty of Lenders who do NOT use AMC's. A few of them are Guaranty Bank, Fairfield Mortgage, Fidelity Bank, Suntrust Bank, Shelter Mortgage and Guaranty Mortgage Services right here in Georgia and I believe these Banks originate loans in other states as well.
So do some checking around in your areas and see which Banks and Mortgage Brokers are NOT using AMC's. There are some good AMC's out there but most pit appraiser against appraiser and they will use the appraisers who charge the least amount of money, regardless of experience and quality reporting.
Remember even if these other large Banks like Bank of America and Wells Fargo who DO use AMC's have better rates for your clients, what difference does it make if the appraisal kills the deal for them. So they need to consider this fact when selecting a bank.
Realtors, you can have a huge impact on this problem by forcing the BANKS who DO use AMC's not to use them since you will not be sending your client their way any longer!
By using BANKS who do not use AMC's, chances are far greater that you will be getting a quality appraisal report and the appraisers will know the AREA in which they appraise. WHY? Because the Banks who do not use AMC's pay the appraisers their market fee and because most of these banks have hand selected the appraisers that they have worked with for years and they do not want to lose that relationship.
The HVCC still provides a wall of independence so that there is no pressure involved to HIT a number, which is a good thing so that people do not pay more than the home is worth, but at least the banks know that these appraisers have been around for years and they know they produce quality reports and thus the reason for hand picking them. This is also the reason they DO NOT take their chances with AMC's. They use a non production work force to order the appraisals within the bank. HVCC does not require banks to use AMC's like so many people thought.
So use the CLOUT you have as REALTORS and do some research. Tell your clients that you go beyond the call of duty by making sure that when the property is appraised it is by someone who knows the area and who has the experience to get the job done and who is NOT being paid cut rate fees to perform the job at hand. Trust me when I tell you appraisers who get paid 1/2 their rate will CUT corners, I know because I have reviewed their reports and they are scarry to say the least.
I know being a Realtor these days is ONE TOUGH JOB...but you CAN make a difference by exerting pressure or diverting business where it needs to be and your clients will thank you for it!
I am a true believer in the "You get what you pay for" philosophy and in this case the poor appraisals many times are due to the cut rate fees the AMC's are paying the appraisers and sending appraisers to uncharted territories because they have the lowest rate for that county.
Is it okay? Can I toot my own horn please??? Airing tonight 10/21/09 on Their Evening Edition. Tune in if you wish!
Marina at full pool! What a difference, beaches and sand bars could be seen from this location last year!
Last October I was interveiwed by The Weather Channel due to our severe drought and how that would impact Real Estate Values. It was not a pretty picture as we were 18 feet below full pool at that time.
I contacted The Weather Channel last week when we hit full pool to tell them the good news (we rose 18 feet in one year) and that they should do another story about Lake Lanier hitting full pool and what good news that is for all concerned. Well, they contacted me and today at Aqualand they are conducting an interview with myself and Len Jernigan of Aqualand Marina , to talk about Real Estate now and Business now with the lake being full. Should be a much happier story!
The only bad news is the average Lake Home Sales price declined 25% from 7/08 - 10/08 as compared to the same time this year. But the GOOD news is that we have seen 2 times, yes double the number of sales in this same period on Lake Lanier and we have 19 homes pending, of which 30% went under contract in October and 80% went under contract in the months of September and October combined.
I plan to tell them that we have 3 things in our favor, dock permits being gone by the end of October, water levelsabove full pool and the market seems to be stabilizing.
I also plan to tell them that Lake Levels seem to be tied to the DOW interestingly enough, whether that little tidbit will make the cut, who knows!
So I will let you know how it all turned out and when they plan to air the show.
Have a great day everyone. Remember if you need a current value on your Lake Lanier home you know who to call.
Since the inception of the HVCC in May, one thing has become clear, AMC's (Appraisal Management Companies and Banks are starting to require expertise, experience and closer proximity to the subject property being appraised.
Why? Because Realtors, Buyers, Sellers and Mortgage Brokers are demanding this! So if you are an appraiser who specializes in Lake or Waterfront Property Appraisals, capitalize on your expertise by getting listed where Banks and AMC's WILL find you from across the Country... www.lakefrontappraiser.com REALTORS welcome here too. www.lakefrontpros.com
I know what you appraisers are thinking.....because I too am getting emails every day practically to join a new appraiser directory, they are a dime a dozen and they are coming out of the woodwork, but there is NO directory like this one out there period!
This is a specialty directory that GUARANTEES appraisers will come up in Google search (first page) within the first 3 returns under a search for your Lake within 30 DAYS of being listed on www.lakefrontappraiser.com PLUS this directory offer something NO other directory does....NETWORKING as not just appraisers are listed, ALL Lakefront PROS are listed. A unique but very successful model in the directory business.
** Don't believe me well just go to Google now and type in Lake of the Pines Appraiser, Lake Fenton Appraiser and Lake Lanier Appraiser (yours truly) and see that either LakefrontPros or Lakefront Appraiser (same site) comes up on the first page of your searches because these appraisers are currently listed in this directory!
I get a SIGNIFICANT amount of business because of My Lake Lanier experience, I have basically cornered the market in this area, so can YOU if you specialize in lake or waterfront property.
So get listed, and use LAKEFRONTPROS in your sign up email to us and you will get a 20% discount from now until the end of the year! Anyone referred to the site via Active Rain will also get 20% off.
To all other Lakefront Pros, ie: Realtors, Mortgage Brokers, Retailers, you also should be listed and you too will get a 20% discount. www.lakefrontpros.com
Have a great day and start taking advantage of your expertise TODAY!
As an appraiser, I really get mad when a Loan Officer, Realtor, Buyer or Seller calls and says, hey can you just run some numbers and see how much a home is worth cause I don't want to have to pay for an appraisal if the deal wont work!! In other words....I want YOU to work for:
Well finding out what your home is worth....is WORTH something! Your deal may not work, but now you know the current value of your home and can move forward from there. In order to have this valuable information, YES, you have to pay for an appraisal. No professional should have to work for FREE. Appraisals, especially in today's market are not as easy as one might think, plus we put our LICENSE on the line every time we sign an appraisal report.
Did you know that if an appraiser gives you a VERBAL value, they are still bound by USPAP, they are still providing an appraisal service, so when you ask them for a simple verbal, it is NOT that simple! You are asking more than you should of your appraiser.
One of the nice things about the HVCC is that people are not supposed to call the appraiser any longer and have this kind of conversation.....however it still happens. I just got this call a few days ago from an out of state lender.
All appraisers know that doing what we "lovingly" call a "comp check"on the chance that it will result in an appraisal order is against USPAP...however appraisers did this little favor for many years and that is why people feel they can call and get this information from us.
So please I ask of you, let's appreciate what an appraisal really is and realize that you are not respecting an appraiser if you call them and ask for FREE valuation services. It is just not proper business practice.
As a fellow Chicagoan transplanted to Georgia I am bummed that the 2016 Olympics will not be hosted by Chicago. Would have been a good reason to go back home for vacation that summer. But hey Chi Town cannot compete with RIO when it comes to BEAUTY!!!
Chicago was eliminated on the first round of votes! So Obama's pitch did not seem to do the trick. In one way I am glad of that, he might get a big head about somehow convincing the Olympic committee to do as he says. I mean he is pretty used to having things go his way after he makes an eloquent speech! But it was not to be this time around.
So maybe I will plan a trip to RIO in 2016.......Now that would be a real vacation!
Yes it is true, just yesterday, September 18th FHA sent out a Mortgagee Letter to all lenders that they are adopting HVCC in most of its current form.
By now most of you know about HVCC, if not please check my previous blogs on the subject. Fannie Mae adopted HVCC (Home Valuation Code of Conduct) on May 1st. as they wanted to insure appraiser independence. In short this means that mortgage brokers can no longer order appraisals from appraisers. It is now being handled by AMC's (Appraisal Management Companies) or the Banks directly. No production staff that is paid commission based upon a loan closing can order appraisals.
Due to this change, what was happening was FHA loans were on the rise BIG time as the brokers still had control over the appraisal process. That will end January 1st. FHA does not want to take on any more risk than they already have and FHA does not want and they are not asking the Federal Goverment to bail them out. They have enough in reserves to deal with any loses they have. So FHA must make sure that appraiser independence is guaranteed to minimize on this lending risk. I am not surprised at all, I really was expecting this from FHA.
What does this mean?
1. Good news for appraisers, the AMC's who normally pay CUT rate fees and who care less about quality appraisal reports and experienced appraisers and more about making money, must pay appraisers based upon normal market rates for completing FHA assignments. However the borrower will wind up paying more for FHA loans as the appraisal fees will be even higher....at least this is my take on the situation as the AMC's will jack up their prices to the banks to pay the appraisers what they should and to make profit for themselves as well.
2. Mortgage Brokers will no longer be ordering appraisal reports. So this repsonsibility will go to the Banks or the AMC's.
3. Appraisal reports will only be good for 4 months rather than 6 months.
4. Good NEWS: FHA will allow appraisal reports to be transferred to another lender rather than having another appraisal report completed.
5. The only way another appraisal report can be completed if someone does not agree with value is the report will have to be flawed in some way and it will have to be proved that flaws exist in the report
6. No one can talk to appraisers about value issues. REALTORS, you can still give Appraisers comparable sales data, that is NOT prohibited, you just cannot talk to them about value. The banks and AMC's can discuss particulars of the assignment, but no one can pressure an appraiser for value PERIOD!
7. As of October 1st onlyCERTIFIED Appraisers can complete FHA appraisal assignments.
8. FHA will require that the appraiser is knowledgeable in the area that they appraise. So if you find an appraiser coming from way out of the area to do an appraisal, this would be one reason to suspect the accuracy of the report. This has ALWAYS been required of appraisers as part of USPAP ( Competency RULE) but many appraisers would take the job no matter where it was and this is not good, if they have no clue about the area.
9. Banks will be liable for the loans they underwrite, not brokers, so there may be more FHA brokers coming from the picture.
To read more about it click here for the full story:
Lake Lanier Sales Statistics for 2009 First Half...We have hit bottom! September 15th, 2009 1:24 PM
Here are the long awaited Lake Lanier Sales Statistics for the first Half of 2009. These include only those homes that have individual boat docks or permits in place. They do not include community docks, shared or platform docks.
1/1/09-6/30/09: There are 479 current listings that range from a high of $4,875,000 to a low of $155,900. **Remember WAY back many years, when you could find a LAKE home under $200,000. Well there are some to be had again.....But not for LONG!
** Average listing price is $829,000 out of the 479 listed.
** Average list price last half of 2008 was $722,000 so we are up 13% there.
There are 24 pending or contingent sales of lake home sales that range from $169,000 to $1,799,000.
*Average pending price is $600,000. This is up 20% compared to last half of 2008 with average price of those pending at $477,000
1/1/09 - 6/30/09 - There was 48 sales that ranged from $309,000 to $1,265,000.
** Average sales price was $478,594. Average Days on Market was 162 (however this number is actually higher as many homes were listed and then re-listed at new prices and the counter for days on the market started over again) Many homes on the market for well over 6 months and many were on the market over 1 year.
** Compared to 2008 during the same time there were 145 sales from low of $150,000 to a high of $2,500,000 and the average sales price was $578,372.OUCH! That is an almost 18% decline in average sale price. Even worse when compared to the last half of 2008 with an average sales price of $671,000.
**Average list to sales price ratio for first half of 2009 was 14%. Average list to sales price ratio for first half of 2008 was 10%. So sellers are taking more of a hit off their list price to get their homes sold.
FORECLOSURE SALES: There were 16 foreclosures in the first half of 2009 compared to 8 foreclosures in the first half of 2008. This means 33.3% of the 2009 sales involved foreclosures. Only 5.5% of sales in first half of 2008 were foreclosures.
NOTE: These numbers could be a higher as the search was for Corporate or Foreclosures noted in the Special Circumstances field of FMLS.
What does all of this mean? Well it means that 2009 was one tough year on Lake Lanier! This is really no surprise to most of us when you consider the entire country had the worst year ever in 2009.
It also means people are willing to cut their loses, but not to a great degree. Fewer sales tell me 2 things. People are not buying AND people are not willing to sell at these rock bottom prices.
We have finally seen a rise in the lake up to 5.0 feet below full pool from 20 feet below in December, 2008. Recently it has dropped to almost 7.0 feet below summer pool. We are getting some much needed rain this entire week so we may just get that number back up to 5.0 feet by the end of this week, maybe even knocking on the 4.0 feet below full pool door!
In October, 2009, the last of the dock permits are planned to be issued. If the lake continues holding water, our deep recession (I really think we are in a depression) starts to ease a bit and the fact that we have more pending Lake sales than last year, I truly believe we have hit the bottom and there is nowhere to go but UP!
It is imperative that if you are thinking of selling or buying that you get your Lake Lanier Home appraised so you know what the CURRENT market is for the home and you do not make a huge mistake by either leaving money on the table as a seller or as a buyer, over paying for your new dream home!
If you have any questions, feel free to contact us.
I am wearing my Radio Show Host hat rather than my Appraiser Hat with this post.
The news is so depressing these days and aren't we all sick of the big companies with their hands out for government bucks that we are paying for in taxes, with NO thanks or appreciation of any kind?
Well, today I was really taken back by a large company right here on Lake Lanier paying it forward to us. www.lakelanier.com Steve Burge, the owner of this very successful online company is helping a budding radio show www.lakefrontradio.com with some needed sponsorship to keep is alive and well.
The hosts of the show are yours truly and my husband Chuck Thompson. We have been fortunate enough to interview some really interesting people, from Shark Divers, to a 73 year old female aerial pilot and photographer, to Lake Lanier Islands, Navy Pier out of Chicago, a Navy Captain, Treasure Hunting Diver - Mel Fisher's grandson, etc.
If you want to take advantage of the now HUGE exposure we will be getting on this show due to www.lakelanier.com sponsoring and placing our show on their website, you too can become a sponsor and I guarantee you it will be worth the ride along with us!
We want to sincerely Thanks Steve at www.lakelanier.com for placing his confidence, financial and moral support behind our Radio Show. It makes me feel good about Big Businesses who help the little guy.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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