A professionally landscaped property is a sure ticket to resale. It gives a home curb appeal, an outdoor living area, and value. "It's the first thing you see," says Don at Pine Lake nursery and Landscaping, a nursery and landscaping company serving Charlotte, NC and the surrounding areas.

That was two years ago. As an appraiser, I ride through many neighborhoods day in and day out. I am starting to see in this down market the extra landscaping home owners are putting into their yards in order to add curb appeal. The question is why? So I went back to my favorite landscaper and questioned him on why this is happening. Was it for personal preferences? To add value? Or in high hopes of selling the property faster?

Pine Lake Nursery and Landscaping says that a year ago when the market was still in decent shape; although we had another problem, the drought. After the drought ended, we got extremely busy replacing dead trees and plants that could not tolerate the dry conditions. Now were seeing home sellers calling us up for what he calls a "I need to sell my home landscape package". This may consist of plants, flowers, and trees that are drought resistant, and low maintenance. Homeowners need something that makes the yard look good, and will add curb appeal, and hopefully move the home faster. Were even seeing some home owners and bank owned property owners "painting their yards". We do not do it, but we know of a company that does. He says that this is nothing new, but it is new to the residential side. He explained that golf courses, football Fields, etc. all do it. How do you think it gets perfectly green?

How times have changed. Home owners went from installing landscaping for mainly personal preferences, to a must do to sell their homes. The owner of Pine Lake Nursery and Landscaping doesn't mind one bit, he's busier than ever. www.pinelakenursery.com www.appraisercharlottenc.com

Are you a professional? Do you hold a state license in the State of North Carolina? I recently attended an appraiser convention, and a state legislator said that a draft was being prepared that would make every person holding a "professional license" to have a office that is not located in their home. This would affect appraisers, RE brokers, mortgage brokers, home inspectors, land surveyors, etc.

If you are not located in North Carolina, is your state planning something to this effect? Get informed.

Below are two letters from State Officials in North Carolina:

"Mr. Brubaker did state that one of the buzz topics at the legislative building was the requirement that real estate appraisers and other professionals have a public office and not be allowed to have home offices. I do not recall him stating a minimum required number of hours that an office must be open. I have not personally heard this until Mr. Brubaker brought this topic up at this meeting. He did encourage everyone to know who represented them in the house and senate and to contact these representatives on all issues that are of concern to you. He also encouraged everyone to get involved in the campaign of their representatives."

 "I spoke to Harold Brubaker yesterday. The rumors you heard are true. Legislative staff members are preparing draft legislation that would require anyone who holds a "professional license" in the State of North Carolina to have a "brick & mortar" store front office that must be manned a minimum of 30 hours per week. It will apply to real estate appraisers, mortgage brokers, real estate brokers and I would assume attorneys, psychologists and anybody else who is required to have a "professional license". I'm not sure the definition of "professional license" has been hashed out yet, but I was told it would include real estate appraisers. The logic behind it appears to be if you work out of your home, you are not professional and you will work for lower fees which hurts the industry. I don't follow the logic, nor do I see how they will ever enforce such a rule. The Appraisal Board does not have enough staff to enforce the rules on the books now, I can't see them going around the state verifying that somebody has an office that is open 30 hours a week. The residential appraisers around here who have store front offices don't spend 30 hours a week in the office. Most of them do their reports from their home offices. You can't make any money in the appraisal business sitting in your office unless all you do is commercial property. A residential appraiser has to be out looking at houses to make any money. This is going to come up so you better make your feelings known to your elected representatives. This is just the kind of help and support we need to get the appraisal business back on it's feet."

Real estate appraiser Charlotte NC

As the mortgage meltdown continues, I am seeing more and more loans going through HUD/FHA. Furthermore, with all of the bank owned properties on the market, I'm noticing a lot of MLS listings that state: "will not qualify for FHA financing". On top of that, FHA requirements are new to many in the mortgage market.

In September 2005, the FHA issued Mortgage letter 2005-34. FHA adopted Fannie Mae's appraisal forms, and revised Appendix D of Handbook 4150.2. This mortgage letter provides some guidance regarding FHA's repair and inspection requirements for existing properties, and how to use Fannie Mae's forms.

This was done in an effort to reform and standardize its appraisal requirements. According to FHA, they have shifted from its historical emphasis on repair of minor property deficiencies and now only requires repairs for those property conditions that rise above the level of cosmetic defects, minor defects or normal wear and tear.

FHA appraisers are still required to report on the actual observed condition of the property, and any adverse conditions.

So what are these three S's?

To be eligible for FHA financing, the property must meet the MPR (minimal property requirements) and the MPS (minimal property standards). These are:

1. Safety. Protect the health and safety of the occupants.

2. Security. Protect the security of the property.

3. Soundness. Physical deficiencies or conditions affecting the structural integrity of the property.

If the property fails to meet any of the above, the conditions or repairs will have to be made before it can be eligible for FHA financing.

So what are some examples of minor property conditions that are no longer required to be repaired?

1. Missing hand rails. (I know, use common since on this one. Think safety: 2ft high front porch, or 10ft high second level staircase?)

2. Cracked or damaged exit doors that are otherwise operable.

3. Minor plumbing leaks (leaking faucets, not leaking waste lines)

4. Defective floor finishes or coverings (worn through the finish, badly soiled carpeting).

The appraisal process is the lender's tool for determining if a property meets the minimum requirements and eligibility for an FHA insured mortgage.

If you have general questions about HUD or its programs in Charlotte, North Carolina, please call 336-547-4000. In my next Blog, I will go in greater detail about the new requirements, and how and where to get information on the FHA, and their requirement's.

HUD press release

"The Bush Administration today announced additional mortgage assistance for subprime borrowers who are at risk of foreclosure. The plan, which is designed to help address the adverse economic conditions affecting many communities across America, will help break the cycle of house price depreciation that is being caused by an increasing number of foreclosures and the overall contraction in the credit market. Under the new plan, HUD's Federal Housing Administration (FHA) would have the added flexibility to insure more mortgages, including those for borrowers who were late on a few payments and/or received a voluntary mortgage principal write-down from their lender."

"FHA will also encourage lenders to make other arrangements, such as subordinate financing, to "fill the gap" between the existing loan balances and the FHA-insurable loan amount. The refinanced loan amount backed by the FHA would be based upon a new appraisal, performed by an FHA-approved appraiser."

Here is the latest update from HUD/FHA:

"WASHINGTON - U.S. Housing and Urban Development Secretary Alphonso Jackson today announced that HUD's FHASecure product has helped 100,000 homeowners refinance their mortgages and avoid foreclosure.  Since September 2007, FHASecure has enabled tens of thousands of families - who are current on their home loans or past due because their teaser rates reset - to close on loans refinanced through HUD's Federal Housing Administration (FHA), which is backed by the full faith and credit of the government. "

Full article

www.valuation-expert.com

In a recent HUD press release, revealed some promising news for home-buyers, and homes owners. The 2009 budget hopes to bring HUD around $38.5 billion dollars, to help protect families facing foreclosure, help with more affordable housing, and to promote local affordable housing developments.

With all of the creative financing going away, and now the mortgage insurer's are tightening up their guidelines, the FHA loans will now become more popular than ever, and will benefit many around the country.

HUD Press Release

 Valuation Experts

www.charlotte-appraiser.net

A homeowner has a question about short sales:

 "Short sales also require some sophistication, skill and patience on the part of a real estate agent, so keep that in mind if you decide to bid on this house. If the agent you've been using doesn't want to get involved, ask him or her to refer you to someone who specializes in this sort of work. You also need to hire an attorney experienced in this"

"A short sale usually occurs when a seller can't make his loan payments because of death, divorce, job loss or other hardship. When homes are rising in value, owners can sell the house and pay back the lender. But when home values are dropping, like they are in many places today, and the owner hasn't built up much equity, that's not an option. So some lenders will accept less than the amount owed to avoid the hassle and expense of auctioning the house, providing the owner proves that he doesn't have other assets to make up what he owes."

For the full story

Highest and Best Use is a term of art in the appraisal process. It is a process to determine the use of the property which produces the highest value for the land, as if vacant. There are four steps to the process. First, the appraiser determines all uses which are legally permissible for the property. Second, of the uses which are legally permissible, which ones are physically possible. Of those, which ones are financially feasible (sometimes referred to as economically supported). Of those uses which are feasible, which one and only use is maximally productive for the site. In a simple context, the appraiser must do this twice, comparing the results -- as if the land is vacant and in the as-is-improved state, taking into account the costs of demolishing any existing improvements. The outcome of this process is the highest and best use for the site. An appraisal of market value must explicitly assume that the owner or buyer would employ the property in its highest and best use, and therefore value the site accordingly.

In more complex appraisal assignments (e.g. -- contract disputes, litigation, brownfield or contaminated property valuation), the determination of highest and best use may be much more complex, and may need to take into account the various intermediate or temporary uses of the site, the contamination remediation process, and the timing of various legal issues.

Appraisal practice in the US is regulated by the various states. Prior to the 1990's, there were no commonly accepted standards either for appraisal quality or for appraiser licensure. In the 1980s, an ad-hoc committee representing various appraisal professional organizations in the U.S. and Canada met to codify the best practices into what became known as the Uniform Standards of Professional Appraisal Practice, or USPAP.

The Savings and Loan Crisis in the U.S. resulted in increased Federal regulation of the mortgage lending process via the Financial Institutions Reform, Recovery and Enforcement Act of 1991. A portion of this act required federal lending regulators to adopt appraisal standards. A not-for-profit organization, the Appraisal Foundation (TAF), was formed by the same organizations which had developed USPAP, and the copyright for USPAP was signed over to TAF.

Federal oversight of TAF is provided by the Appraisal Subcommittee, made up of representatives of various Federal lending regulators. TAF carries out its work through two boards: the Appraisal Standards Board promulgates and updates USPAP; the Appraisal Qualifications Board (AQB) promulgates minimum recommended standards for appraiser certification and licensure. During the 1990s, all of the states adopted USPAP as the governing standards within their states and developed licensure standards which met or exceeded the recommendations of TAF. Also, the various state and federal courts have adopted USPAP for real estate litigation and all of the federally lending regulators adopt USPAP for mortgage finance appraisal.

 Mass appraisal and automated valuation models

Automated valuation models (AVMs) are growing in acceptance. These rely on statistical models such as multiple regression analysis or geographic information systems. While AVMs can be quite accurate, particularly when used in a very homogeneous area, there is also evidence that AVMs are not accurate in other instances such as when they are used in rural areas, or when the appraised property does not conform well to the neighborhood.