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Let the games begin!

Let the games begin! Ok, so I just received a call today. I’ve kind of been expecting it but was hoping it wouldn’t come for a while. The call I received was from an Appraiser. Now, since I sell a lot of properties in my market, I get one of these about every week, asking me about a recent sale, so they can use it in their appraisal. I always try to answer any of their questions and try to be as helpful as I can. Why? Because I want to be the “go to guy” in my market. Also, Appraisers buy and sell houses. I usually get a couple of listings a year from Appraisers wanting to sell in my market area, Poinciana Fl. So having them call me is a good thing.

Today was different. Today, he was asking me about one of my pending listings. He had plenty of sold comparables but the few he had, that were pending, were listed for about 10% below recent comparable sales. I spoke to him for a few minutes and he explained to me that he was making downward adjustments based on current market conditions. Did you catch that? Downward adjustments. As in, discounting the value of the sold comparables. Folks, this is not a good thing. This means lenders are checking and double checking house values and are wanting to see “true” market conditions as opposed to just recent sales. It also means values in Poinciana Fl are coming down. I already knew this but was hoping I was wrong.

Poinciana is one of those Florida markets where you can still find affordable housing. Most homes are in the $185,000 to $250,000 range. What happened over the last couple of years, was that, all the “investors” from S. Florida and NY were feasting on Poinciana real estate. They were here by the hundreds and purchasing vacant lots and new construction like crazy. Because of this, houses that were selling for $100,000 in 2004 were selling for $225,000 by mid 2005. Lots that could be bought for $10,000 in 2004 skyrocketed to $60,000 to $70,000 by early 2005. Fortunes were made in Poinciana during 2005. But, and this is a big BUT, if you didn’t get out of the investor market by December 2005, you are now stuck. As of this morning, there are 1,500 houses on the market in Poinciana. 800 of these are less than 18 months old and most of them are vacant investor owned properties. They are flips that have flopped. Not only that, but builders have pre-sold hundreds of houses that they have just now started building. These houses were sold at 2005 prices.

This, my friends, is a recipe for disaster. Property values are plummeting. Poinciana is in trouble. My Sellers know this. I have told them we must sell and we must sell now. It is going to get worse before it gets better. Our peaceful little town has been raped by over zealous builders and fly by night investors. And frankly, it *&^%* me off! But what do you do? It is what it is and I have to deal with it. My strategy is to become the short sale and foreclosure expert in my area. I want to be the “go to guy” if you are in a distressed situation. I can’t change the market but I can try to position myself to help as many people as I can to get through this and hopefully still have a shirt on their back.

I expect to be very busy. I expect to make a lot of money. I expect it to be a “bitter sweet” success. Let the games begin!

Clip art courtesy of madlattern.com(madlattern art)

Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 10/16/2006 05:56 PM

Comments (85)

short sale, foreclosure, market conditions, market data, poinciana fl

Originally posted at: Central Florida Short Sales: Let the games begin!

This post has been included in Florida Information Polk County, FL Information Poinciana, FL Information

85 Comments on Let the games begin!

OCT

2006

"Hubby=Broker Bryant"

Very Nice...I like that...Let The Games Begin!

Ahhhh...Bitter Sweet Success!

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

I hope it wont get that bad but time will tell.

Me too Teri, But I can feel it in the air. I've been in Poinciana a long time and can already tell we are teetering.

Bryant,

I think that your analysis of the market is accurate. And, it will probably take about 4 or 5 years for the market to come out of it.

Probably going to be a good time to buy in the next year; terrible time to sell.

We have noticed that same issue in our "town" - new build mania -> -> Now our investor market is crumbling and homeowners are nervous.

So, now you will have to to rival us, (as the games ARE about to begin... :) ) as we are the Foreclosure Capital of the US.

We wish you luck~

Oh- and how do you pronounce Poinciana? Poyn-See-Anna? Poe-In-See-Ahna? Poyn-Key-Ahana? Poe-In-Key-Anna? Thanks!

Want to see this updated maybe quarterly if you can find the time. Interesting to know. Good write!

I don't know if it means much, but there are a lot of "pending" sales in my area lately. For awhile, homes were on the market for a long time and lots expired. Now it actually appears to be picking up in some areas. (rehabs and investor type homes especially)

The high end homes are stagnating. And the first time homes are also still very slow. So I'm guessing the majority of buyers now are investors hoping to get a deal. I definitely feel that this market will go down before it goes up. And we all have to reposition ourselves for the "new" buyers and sellers.

Bryant, I have not seen Appraisers doing that here, but then again I try to use one Appraiser most of the time. What this does for me, is when I have one that I need a little extra on, he makes it work. If he was to ever tell me that he was making a downward adjustment on one of my loans, based on listings in stead of using comps from recent sales, he would not be doing any more appraisals for me.

George,

I understand your point. But remember the appraiser works for the bank. If values are declining they must take that into consideration. "need a little extra" and "make it work" are not good things. An appraisal needs to be fair. Thats all I ever expect. In my market, appraisal reviews are becoming very regular. Creative appraisals cause future foreclosures. They are part of the problem.

The reason my market is going through this now is because of all the inflated appraisals that took place during the 2005 boom. Builders were selling houses at inflated prices, mortgage brokers were making deals work and over aggressive Realtors were selling customers homes they could not afford. The market was artificially inflated and my long time customers, that need to sell, are now paying for it.

I agree Bryant, I don't want to artificially inflate the price either, but at the same time I don't think it is the job of the Appraiser to dictate the direction of the market, let the market do that. His job is to base the appraisal on existing sales, and not where he thinks the sales are going. When I say I expect him to get me a little extra when it is need on one of my loan, is that I expect him to look at everything, including FSBO's. Some Appraisers take the lazy way out, others work real hard before they tell you no. I don't want them to lie, but I don't want them to base an appraisal on what has not happened yet either. We all lose if they lie and over inflate, but we also lose if they feel they have the right to artificially bring the market down, we all ready have the news media doing its best at that.

I feel the pinch in the A/C area, Bryant...work has slowed down a LOT.....

I am not talking about repairs or people buying new equipment...I am talking about NEW construction.

We have laid off MANY people at DEL-AIR.... they had over 40 applications last month from other seasoned A/C techs that needed work trying to come from other companies. Usually they get maybe 10 applications in a month from other experienced techs coming from other companies.....so this is a sign for the future in new construction...it is slowing down BIG TIME.....

I know you will serve your clients well...even though you may have to do it through clenched teeth.......they will remember you did the best you could for them and thank you for it, Bryant....

You are proving that the cheese has moved. And you are not interested in who moved it. You are just going to find it! Another good post!

www.HomeRome.com

Baltimore,Md

Ok Goerge, Gotcha. Thanks for clarifying.

But you know adjustments for market conditions are very common and expected. Last year it was normal to see an adjustment of 1% on a 30 day old sale. The point is, lenders are going to look very hard before lending money. Underwriters are tightening up. In my market, 100% financing is the norm. These loans are going to be much more difficult to get. Lenders know that values are steady if not declining. It is their job to protect their investors money.

Alex, I visited 15 builders last week in Poinciana trying to unload a few lots. 10 of these builders are selling out their remaining inventory and packing up. They are exiting Poinciana in mass.

Margaret, My cheese plate will be full, I'm sure. I've been doing this long enough to know when and how to make adjustments. The strong will survive! But you knew that:)

Not only are they checking and double checking,

Adjusting downward,

Questioning comps,

ordering AVM's

Ordering BPO's

Ordering review appraisals,

Now the underwriters are using the MLS and looking up their own comps...

Its going to get worse before it gets better...

I think we both just clarifyed something to each other, thank you Bryant, your blogs always leave me thinking, and that is something I don't do very well.

Bryant,

Good post. Appraisers have been placed between a rock & hard place for a while now. In 2004 & 2005 Realtors, Mortgage Brokers & buyers & sellers were mad because they were using solds instead of pendings because the market was going up so quickly, the solds were old news. But now, they are trying to use pendings & actives to see what the competition is like to attempt to predict the market.

They work for the lenders/banks & if they give them anything 'funny' it will get turned away & they probably won't use that appraiser anymore.

When the homes start going into foreclosure (and we know they will, crazy loans, over valued, etc) the banks will be looking to place blame too. Guess what, again the appraiser is in the hot seat.

Lenders are going to get stricter with the types of loans they'll write & also with the quality of appraisals they'll accept as well.

We need to be aware of this & let our buyers & sellers know what is going on & why.

George, This one of the things I enjoy most about AR. It stimulates our brains. I write stuff sometimes I didn't even know I knew!

Joshua, It ain't goin' to be pretty. But we knew it was coming. It's time. But you know this is a good thing for all the families that were priced out of the market in '04 and '05. Next year they will be able to buy a nice affordable house and in a few years we can start all over again:)

Real Estate is a journey and I love it!!!!!!!!

George:

I guess Bryant doesn't care about this but his name is BRYANT & not BRYAN. At first I thought it was a typo but I see it's not from your other posts.

Thought you might like to know. I hate addressing people by the wrong name.

Its already pretty ugly here. We never had the speculation you had. At least not to that extent. I really shudder thinking about it. I am not so concerned about the speculators/investors. But the families who just bought at the wrong time because they needed a place to live,,, I am upset for them.

Thank you Susan for letting me know, I didn't realize I was spelling it wrong even though I was looking right at it. I will correct it and my apologies to Bryant for the miss spell. Feel free Bryant to drop the "e" off my name a few times to even things out.

Susan, I would think you and I are in the same boat. And you are right, I would hate to be an appraiser about now.

Maureen, it is all about the families and older people that are now paying the price. It breaks my heart every day. I am meeting with some of my older sellers on Friday to help them sort out what to do with their finances. Every dime they have is in their house and we can't sell it. What little they have is dissappearing and they have an ARM adjusting in February. If it adjust they can't afford the payment. If they refinance they lose more of their equity, what little bit they have. They are in their seventies and living on credit cards.

BB,

You are right on! I speak with Realtors every day that are singing the blues, many of them have never been through the market swing and were not prepared for it. You have the mental perspective solidly anchored. Don't accept adversity....create an advantage from it! You are on target with the investor new home purchases. I know of several instances where investors have walked away forfeiting big bucks as a "stop loss". One walked away leaving his $76,000 deposit for the "evil empire" to party on. I'll bet you can figure out the identity of this "evil empire."

Ron, I just heard this week that A....r is having a serious problem getting homes to appraise that they sold last year. The purchasers are not able to get financing. But guess what? The contracts are not contingent on appraisals. So A....r's answer. "Close it or we are keeping your deposit, it's not our fault the values went down and we are not reducing the price." Pretty good publicity wouldn't you say? I have not verified this but have heard it from a couple of people in the know. And it doesn't surprise me at all.

Ahhhh......nuts! You must have a crystal ball sitting there beside your PC. You heard correctly. I'll bet you the CFO/CEO's aren't losing any sleep over it either!

Nice piece as usual. I think the consensus will be the same wherever people are talking about. It sure is here in the investor capital of 2005, Phoenix metro. First all the CA investors hit Vegas. Then they hit the Phoenix area. Bulder's got wise and shut them out, but they devoured the resale market, and find ways around the system for the builders. A large amount of inventory on the market are vacant homes. The short sale and foreclosure specialist seems like a good idea

Every situation is a potential opportunity if you view it from the right set of glasses. You are viewing it right!

It is nice to be one of the goto guys and get sales from those you help. Also What about just holding out if you have an investment property untill prices come back up?

Rob, the problem with holding out for a lot of these investors, is they cannot afford the payments. They had the bright idea that they could close on it and flip it before the first payment was due. Too much late night TV. Rentals in my area max out at about $1,000 per month. Payments on these houses they bought with $5,000 down are $2,000+. We have as many for rent signs as we do for sale signs. Most properties have both! They've lost. New game now. The new players are the banks and foreclosure experts and REAL investors that will be getting some deals. I can't turn into a bank but I am definitely going to turn into the other two players.

Bryant: Now of only Zillow and its Zestimates could get the information on pending sales. That might lend some credibility to their valuations! Good blog. We are seeing much of the same in Southern California.

Another Super Post from Broker Bryant, and the follow up discussion is just as good! I agree that as Realtors we need to be versatile so we can stay in business no matter which way the market is going. I love the comment "Real Estate is a Journey and I love it!" I second that sentiment!

OCT

2006

Welcome to our world Broker Bryant:) We have been in this situation for almost a year now and the trouble is seller's dont believe you for awhile and the banks are impossible to deal with because they dont want to admit that they over encumbered a property and are still looking at lasts years values....10 times the work and the banks are cutting commissions to 4% total....

Evil Empire Cute. Shhhhhh....

There will be star agents & brokers in ANY type of market. Find your niche and rock on!!!

Alpharetta Real Estate

Bryant.... or Brian..... ;o) I agree with George that appraiser's shouldn't be adjusting downward. But what people fail to realize is that the lender in some cases, fair or not fair, trying to position themselves in the foreclosure market.

Think about it....with so many foreclosures, they are beating up appraisals within reason, because if this epidemic keeps escalating, they want to have some equity left in the house to bail them out. Now...this is just my opinion.... but I am sure some underwriters are instructed to look at this. And yes, appraisers are backed into a corner....some that don't want to get so called, "black balled", from a company.

And like Joshua said....they use all kinds of methods to double check the value. Unfortunatley, not all methods are as accurate than actually going out to the house.

Bryan, North of you in SE Georgia (St. Simons Island/Glynn County) we've seen some slowdown in the upper end housing and highend lots in pricey developments but our "Affordable range housing" ( 150-250K) is still going well. Lots are moving well in the 40 to 75K range and of coarse water front is always hot. Investor types on the island are continuing to buy but these investors are the real ones with money. Not the ones who were playing the interest only game of the past 3 or 4 years. Those guys have been bailing out and we've got a good many highend properties that these guys are going to take a bath on. I just did a short sale where the seller brought $43K to the table....

I think your plan in your market is a solid one... think short specialist and foreclosure specialist.... money to be made in both if you know what you're doing. Good Luck!

It's been happening in New York also.

I see the flips that flop from the "novice investors" of the last couple of years and believe they are still in "LALA land". They need to stew awhile... I'll still remain in touch with them until they feel they are ready to sell. When they do, I'll get an MAI Appraiser to help with my offers.

Bryant

There's another position you may want to consider. Hire a new agent who is just starting in the business (no bad habits yet) and groom him/her to work rentals and be your property manager. There will be a lot of investors who won't want to hose their credit through a short sale and can probably carry a fairly hefty negative cash flow. The market will eventually improve and guess who will want to finally cash out??? Guess who's first in line for the listings??

AN important characteristic to have in this business is that of adaptation. You will be fine after all every specific geographic market is cyclic.

Dave, Noooooooooo. No property management. Been there done that. I work alone and out of my house. This is the way I prefer it. Getting business is never an issue with me. I have so much, I give it away. My issue is being in a position to help these folks. So many were taken advantage of.

Lot of great comments on this post. Thanks to all.

Bryant/Dave:

I like Dave's idea about the property manager & helping to offset the mortgages of these 'investors'. I thought about it for a long time with a former co-worker & we discussed starting a property management company together, etc.

But alas I said NO. Why? I do have many sellers who would take a tenant on. I don't want the headache. And most of these houses now for sale have "for sale" or "for rent" signs so what's the difference? Compete for buyers or compete for renters? When you have to compete for renters you have to lower your rent down so far that how will you find a quality tenant?

For those who cannot afford to hold on I still think their best bet is to sell & get out. If someone can afford to hold out or wants to rent - it's still a great longer term investment.

OCT

2006

The key word that underwiters are looking at on appraisals are the comments by an appraiser that say "in a downward market". The appraisers put it on there to cover their butt and it is a tremendous deal killer. I've seen adjustments as high as 10% on review appraisals because of that four word phrase.

Who can blame the lenders? They're going to get whacked in 2007. The problem is that lendres react instead of proact.

BB,

I think that becoming an expert in "Short Sale" will prove to be a very wise decision and strategy based on where the market is at...but more importantly where I really believe that it is going!

If you desire, I may have something that I can make available to you that will help.

Also, if you have some breakfast or lunch time in Poinciana one day next week I would love to meet with you...my treat!

OCT

2006

"If he was to ever tell me that he was making a downward adjustment on one of my loans, based on listings in stead of using comps from recent sales, he would not be doing any more appraisals for me."
-If the appraiser is telling you about his report he is not doing his job correctly. the appr should not be discussing anything with you. period. and the appr does the work for the bank/mortgage company, no where in the report is your name mentioned as the realtor.

"I agree Bryan, I don't want to artificially inflate the price either, but at the same time I don't think it is the job of the Appraiser to dictate the direction of the market, let the market do that. His job is to base the appraisal on existing sales, and not where he thinks the sales are going." -The apprasier is analying data from the market. If the pendings are lower than closed sales a few months ago, then i hate to tell you that the market is headed downward. No one is talking about the future, but from the past to the present which is verifible by market data. Your (our) job as Realtors (r) is to price accordingly If your contract is too high compared to the market cause you do such a great job of selling, then make sure the buyers have extra cash on hand. Just because the apprasier 'does you a favor' it doesn't mean the bank is accepting it and doing the loan. They have review appraiser, field reviews, etc as mentioned ina post above. And common sense dictates that these will be more common in this dead market, until prices start to rise in a few years.

"I don't want them to base an appraisal on what has not happened yet either. We all lose if they lie and over inflate, but we also lose if they feel they have the right to artificially bring the market down, we all ready have the news media doing its best at that." -Again, No one is talking about the future, but from the past to the present which is verifible by market data. No apprasier is bringing the market down, the market is going down due to investor inflated deals in 2005, supply and demand, cost of a borrowed dollar, higher insurance costs, taxes based on higher ad-valorem values, etc.. That was a weak statement to state that the appraiser are artificially driving the market down. You provided the info in your pst regarding past sales being higher than current pendings. They are calling to see if those pendings are lower due to distress situations.

NM homes By the way, the apprasier does not work for you. and shouldnt be worried about losing the mortgage broker as a client. They should be worried about getting blackballed by the banks and losing their license.. since they are on the hook forever.. I repeat, forever.. not just the life of the loan. Download the current excell sheet of licensed mortgage brokers in the state of Florida.. you can go throug them like dirty underwear and still have business, then there are another 49 states of brokes to go through. Give me a break. Take an appraisal class and get the facts. Those statements are way off base.The appr licenses are not easy to get, I've been working for a long time to get mine. and the real estate license is a joke to get. and has the least liability.. so i see that you've only beenon 'one side of the fence'.
feel free to repond here and also email me if you want to further discuss.

BIGnick
BIGego (at) toughguy (dot) net.

It sounds like you are joining my market! I think Las Vegas is the only one that is having a good time, right now. Not the greatest of times but like you said, we have to go where the goin is and that seems to be the short sales and the foreclosures.

Bryant, I would first like to apologize once again for the misspelling of your name, I should have corrected it when it was first brought to my attention, but I did not think that someone else was going to be cut & pasting parts of my posts.

Second, my first instinct when I read the response by Nick was to fire back, but I will not do that for a couple of reasons. First, this is your blog and I am going to respect that. Second, to fire back would mean that I would be contributing to turning AR into the type of forum that I don't want it to become. Thank you Bryant for always being a gentleman, and I look forward to reading and commenting in your next blog.

yes true, I guess a nerve was hit and I got carried away. So I should apoligize to Bryant for going off and 'staining' the treasured blog,. as it's more than a great read. But feel free to share your thoughts with me through the email, as we can dicuss further (or you can fire off) so you can share your viewpoint, because right now it doesnt make sense. my emails above.

nick

Hey Nick and George, All comments and debates are welcomes. That what this is all about. As long as it is civilized then have at it. The rules are debate the issue but respect the person. Other than that go for it.

I actually agree with the facts in Nick's comment. Market conditions are vital to a proper appraisal. Downward adjustments are going to become more frequent as Lenders start taking large losses on all the aggressive loans they have made over the last few years. We may not like them but we will have to deal with them. I am already very hesitant for my sellers to accept offers with closing costs going into the deal. That 3%-6% will be very difficult for an appraiser to justify, unless of course it is the norm for that market. The days of appraisals just flying through underwriting are over, at least for a few years.

OK Bryant, I will make it quite in my response. I am a Loan Officer Nick, not a Realtor. I assign the appraiser on all my loans. If I feel that an appraiser is basing his appraisals on future predictions instead of actual data, I will not assign him to any more of my loans. You might not like that, but that is my choice. I don't what him to lie, or cheat, but I do expect him to look at all the existing comps. If appraisers can predict the future they are in the wrong business. I expect appraisals done on facts not predictions. Last year the prediction was that interest rates would be over 7% by January of this year on 30 year fixed mortgages, and continue to go up, that didn't happen. Interest rates almost a year later are still between 6.25% and 6.50% on a 30 year fixed. I guess the people who looked into that crystal balls were wrong.

I assummed wrong, your not a Realtor(r) so those comments in my post do not apply to your situation.
my first post aready addressed some of your points in your rebuttle.

this is all I could find to debate. almost non-personal, but the word 'I' appeared a lot.
"I expect appraisals done on facts not predictions." FACT: Someone could export the data from a local MLS and search sales in 2006 for similar sized homes using basic parameters in any given neighborhood or subdivision. Put the data into a spreadsheet and graph it. I can promise you it will show a downward trend, and without a crystal ball. Who's predicting? A past sales from Feb 06 may warrant a downward adjustment. current pendings can be called to find out if there is distress to cause a lower price. DOM (days on market) will show long exposure times. So, without line item adjustments (even if they are -) the check box on the first page that says 'decline' for market conditions will surely get an appraisal review called. Which do you prefer?
I have so much more, but this isn't my blog. good luck.

forgot my logo.

NM baby

nick 'duh' appraiser

Nick, Now tell me again why you haven't joined AR yet?

Ok, I'll play moderator. George using pendings as an indicator of market movement, be it, upward or downward, is not predicting the future. Pending transactions are a current event. They are a snapshot of what the market is doing right now. In fact in that respect they are even more accurate than solds.

Example: you have 3 sales(for this example, identical) that have happened in the last 6 months. 1. 4 months ago closed at $200,000 2. 2 months ago at $198,000 3. 1 month ago at $195,000 and there are 3 current pendings that are listed at $193,000---$187,000 and $189,000. Clearly that would show a depreciating market and an adjustment would need to be made.

My point is because of all the foreclosure activity that is looming in some markets, lenders are going to be looking real hard at recent sales AND current market conditions to arrive at value.

Nick, I have not had a single appraisal sent for a review on an in house that the comps were base on houses sold within a reasonable radius and time period of the proposed loan. The appraiser provides us with a map showing the location of the house and the comps used. These are based on the present sales, not predictions. If those comps are for less than what the same house sold a year before, that is fine, but again it is base on a fact not a trend or future trend. I am not saying that they go back to the beginning of the year, that would never fly, but don't base it on what has not sold yet either. We have our own in house underwriters who follow all Fannie Mae & Freddie Mac guidelines and are tough on loans. The only loans that I have had the appraisal go out for review are loans that are done by outside venders. Those loans are very few, and the review is an automatic no matter what is checked off, and I have never had an appraisal rejected on those loans either.

George, Maybe some of this issue relates to you not being in Florida. We have a major problem down here with properties that were bought using inflated appraisal over the last couple of years. Because of that appraisals being reviewed rejected is almost the norm right now. That why appraisers are being overly careful.

Bryant, we don't know if those pending sales are going to sell for those amounts. They might sell for less, they might get multiple offers and go for more. Buyers are going to shop for the best deal they can get, if their Realtor is doing his or her job they will show them those other comparable house that are selling for less. The higher priced house unless it has extras that the other houses don't have it will sit there until it comes down to what the market is dictating. But reguardless of this, can the comps be produce to support the loan. If yes, you have a loan. If no, you have a problem.

Now that I can understand. So maybe we are talking about two different things Bryant.

If nothing else I have learned how to spell your name.

George,
thanks for your reponse and the lo-down on your local guidelines. I understand how it works and I can appreciate your grasp of it. A little off-point though. My 'long' post was about your comments that appraisers are determining the direction of the market and not basing on future/possible events. As you stated in an earlier post.
"but I don't want them to base an appraisal on what has not happened yet either. We all lose if they lie and over inflate, but we also lose if they feel they have the right to artificially bring the market down, we all ready have the news media doing its best at that."

EGO SAYS: So now you get my viewpoint. I see that you refer to closed sales as present sales and I call them past sales. So maybe, from your perspective, my present pending may look like futuristic crystalis ballus to you. But my other reserach will back my pending decisions.
so its a case of you call it 'to-ma-to', I call it 'to-ma-te'
have a good night. thanks for the company, I had to work to do on the PC tonight.

I think the last response was from Nick, there is nothing at the bottom of the post to indicate who. Nick if it was you, I think we are starting to maybe understand what the other was trying to say, and might not be to far apart. Well said 'to-ma-to', I call it 'to-ma-te'. I hope you take Bryant suggestion and join, this is a great site. I look forward to future posts with you.

wow..... did I miss the bus on this one.

I agree with George the most....I tried remembering every comment and I am sorry if I repeat anything. Like George said, it doesn't matter what market that you are in. If the appraiser does his job....finds the best sold properties in the last few months, within a certain distance....and they comp out, then that is what the price is. And if some of the houses are selling for less, it will happen. But after this particular property would sell. It does come down to the realtor doing his or her job upfront though. And yes, I am sure some sellers are tough. "no, I don't want to sell it for less." They take their chances.

I am tired...I might not be explaining myself that well or losing some of you. One made the comment that George is not in Florida and that it's different. Did anyone think for one minute that this is being excepted as an answer by all lenders and underwriters that work and live in Florida? I am making this point because I live in NJ, but I also do 25% of my business in Florida. And I haven't had a problem yet. As long as the appraiser can prove that his final number is shown within the comps, my underwriter is not picking it apart. There is no biased judgment because it's a fact in Florida that it happens. "Perception" and "opinion" is now taking over the final say of the appraiser.

Okay....some houses were over priced in the past and the appraiser went with this. Sure, in many areas, the market is declining. Sure....you now expect the underwriter or review appraiser to mark the price down. Basically what we say...."chopped value." Just like George said..... we also underwrite our own loans.....unless we have to broker it to someone else.....and many, I mean many...even the "A" paper companies are cutting values.... it's their investment, because they have to deal with the end result. I don't want to give away all secrets.... but when you are a banker and sell it after the fact...we have total control. And that is what George was trying to say. Like I said..... I do 25% of my business in Florida....I really don't have this problem.

George.....do me a favor if you read this. Go back up 9 comments and make that comment bigger for some of us...... lol I don't wear glasses, but I feel like I need them now....lol

I've been reading this all night in between watching TV. I had put notify me of new comments a couple of days ago. Think this blog should get a double star for most comments. It's time for you guys to go to bed! Including Nick

I will take your advice Karen after this post.

Jeff, it doesn't look like you are to tired to me. I should of had you write my response, because it is like you were inside my head, and that is a scary place to be. Thanks for making it clearer.

wait...what happened? I just got an e-mail in regards to Nick....he came back. He said he is a loan officer. I wanted to debate this and ask him a few questions.... but what happened to his comment?

BB...did you delete it?

george..... my pleasure....it's great from time to time when someone can fill in your thoughts...I like when someone can finish with my thought, when I am stuck on it.... dwelling on what to say...and then say it and I am like.... "does that make sense?" Then you re-think it over and over....then you have no idea... but yes, I am tired, but my juices are flowing. I love a good debate at times.

Good topic again BB>

Jeff, I just got that too, I think he just updated his own comment from above.

ok so i had to peek one more time before shutting down..
am i the only one that sees the curve ball in the 'debate'? dont bother answering. I agree with George on many points, except the one I got fired up about.. but the point is, the discussion went off track. no point to beat it with a stick. and who are we kidding, an appraiser and a broker in harmony? (insert laugh here)

i think this was an internet case of the 'telephone game' and it will never be understood.

BTW, i didnt sign my earlier post. the blank one is me, so you know who you disagree with.

nick

(cue the logo)

You dont have to agree. I'm still solid.

lol.... you make a statement and then say...don't bother answering. I think that's called... "the I want to get the last word in" statement.... lol Maybe I shouldn't say anything, because I came into the middle. But I couldn't resist. Hence....the last word.

Nick...I am sorry.....but are you ready for a good debate now? I am saying this because you made this comment... " no point to beat it with a stick. and who are we kidding, an appraiser and a broker in harmony? " Nick, you don't think it can happen? How long have you been in the business, if you don't mind me asking? I am just curious.

Just a little perspective on my part in regards to that last comment. Yes, they both can be in harmony. It's called ... the appraiser knowing the mortgage business and what underwriters look for..and the appraiser truly knowing his job...duties...and ethics. So..back to you comment. Yes, I have 2 appraisers that I am in harmony with. And I have never had an issue....never.

ANyhow.... having an opinion is great. But in a debate.... you need facts and those facts that reference what is being said..... and that can be checked.......verified. Not just an opinion. Nite...

OCT

2006

Hey Guys, good to wake up to a post that was raised from the dead. Good points on both sides.

In case anyone ever wonders, I would never delete a comment from from anyone ever. UNLESS is was laced with profanity. Other than that all opinions and comments are welcomed. Just always remember my post are PUBLIC.

In this case, this is a great discussion. Thanks

"Good Morning Everyone"

BB's Lovely Wife here...What a great discussion this is.

Wonder what you would all think about the Multiply Licensing problem we have in Florida?

Hmmm...Realtor/Appraiser...What a mix that is and it's legal.

Makes you wonder...When the offers come in they arrive with the Realtors Apprisal...

Stuff those wallets...Baby...Stuff those wallets!

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

Good morning Jeff and others. You are welcome to the 'last word' if you like. The appr/broker comment is more like a joke and the'insert laugh here' is called a clue. Now I understand that there are different moitvation and interests on both sides of that coin. And yes, I do get along with some brokers who are more on the honest side, but many have come across my desk, tried to influence me to do things when we were in a crazy market or straight out committing fraud and I personally am not having it. I have comes across multiple contracts in a deal, and obviously only one of them is real. To answer your question 3 years. Yes, 3 short years of working my tail off and will say with complete confidence, that I am familiar the major in and outs of the mortgage business, and I feel that I know my job. I am ethical all around, no worries there. I will never do something that is even borderline.

So I welcome your debate. But lets stick to the point. Broker Bryant made a comment in his post about downward adjustments. George commented about appraisers influencing the direction of the market. I fired off in my long post with the bolded points being in quotes and my comments. Ok , so they veered a little towards the end, Buy I would love to hear what you think I said without facts. About reports being kicked into unerwriting for checking a certain box? The entire point of my entering the thread is noted at the beggining of this paragraph. That is what I was debating. I even think that Bryant agreed with some of my statements. Somewhere in there you commented that I said I was a loan officer, etc.. So I think maybe you got a little confused and lost within the thread. Read Georges first 2 o 3 posts from the beggining, read my 'bolded' post, if you notice everything went of tangent, then fine. If you respond talking about guidlines etc, you missed the point. This is getting repetitive.. sorry.

Let me know what you want to dicuss, or Maybe Bryant will write a new post about this topic and we will post another 60 something comments on that thread. I can easily defend my position about adjustments, market conditions, using pending sales etc. So your experience may be greater, but I've been in the trenches in a booming South Florida Market, so no BS get by me. BTW, I was thinking last night as my PC was shutting down. The definition of market value is the most propbable price a home with sufficient market expsoure will bring in. So ths house is worth whatever someone is willing to pay for it. IMHO, a pending sale is what someone is willing to pay for a home in that market, therefore that seems like a good indicator to me.

And yes, Mrs BB, I hold both lic., but they never come into play in the same deal.

So Jeff, we can drag it on. But please, quote my exact words so I can see exactly where you think I am going wrong. Also, I just noticed that you folks can edit your posts after the fact. Dont change your words now!!

"Nick"

I certainly was not pointing a finger at you. If you have mentioned having ML's I have not noticed it.

I was simply curious what folks think about ML's. My presentation of my comment is the way I present comments. It's me. Just the way I am.

That is all, that is it, nothing more. No hidden agenda Sir.

Just a curious mind that has dealt with ML's in the past and had a few bad experiences.

I hope I have not offended you in any way. If I have please accept this Lovely Wife's apology. :>

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

Mrs BB, no offense at all. Didnt feel any finger pointing at me.
I guess I have that stronger type personality where things come off a little more 'abrasive' than I mean them :)

But I came back to comment, the problem with Multiple lic's is when it a Realtor(r)/Mortgage Broker combo. Because in that case, the broker ego pushes to get the deal done in unethical ways becuase of their interest in the sale (i.e. the commiss. on the sale also).

oh, and my skin is much tougher, so no worries. I wouldn't be offended. But I love heated discussion. Mr BB. its like bad publicity, but I got the post count UP!!! :)

best regards to all. Yes, also to George and Jeff.

BIG ego or should I say multiple EGO.

BIG nick (is really under 6 ft tall, way under.. haha)

"Hey Nick"

Good. I very small fingers and I do not use them to point...They are easily broken you know! LOL. See :>

We have had our share of "stuffing the wallet" as I call it.

It is such a blatant conflict of interest. I am real big on The Code. Just a Code king of gal. I can tell you are also big on that Code...Big Nick!

Glad you have tough skin. You need it in this business.

I know you guys like to go at. I watch and sometimes you all just crack me up! Bad Pub...Funny!

Don't you get me started on the Multiply Ego thing. I could get carried away with that.

It is best if I tip my cowgirl hat right on out of this little box!

Tipping Baby...Tipping...Must go spread some love in the Rain!

TLW "The Lovely Wife"...Kum La Ka Lakka...ROAR!

Ok here's some good reading.

http://commerce.appraisalfoundation.org/html/2006%20USPAP/std1.htm

When reading through this it clearly states the appraiser MUST take into consideration economic conditions and data, especially if it affects the value of the property. If the market is declining he MUST note this is in the appraisal. This is not a choice this is a requirement on any government related loan i.e Va, FHA, Fannie Mae, etc.

Hey Nick... there is too much to go back and read .....etc etc... but overall, next time you jump ito a discussion and we don't know anything about you, tell us what you do.... considering that you are both a loan officer and an appraiser. It does make all the difference in the world. Because as I go back and read a lot of it....it can be confusing on what position that you are taking and why.....and when someone knows what your background is, it can help a little...at least for me to understand where you are coming from and why.

Thanks....everyone, enjoy your weekend. Oh yea...didn't Bryant ask you why you hadn't joined yet? I could see someone that was not part of this industry..... just curious.

Bryant just curious, are you interpreting that the appraiser has to "note that there is a declining market" with him having the right to adjust the value of the house down?

George, In my opinion, yes. I am not an appraiser. However, the example in my post is a true case. And it happened again yesterday. Appraisers in my are ARE making downward adjustments due to market conditions. This is no different from '04 when they were making upward adjustments on comps for "time" and market conditions. I think this is where is falls:

Identify any extraordinary assumptions necessary in the assignment;

Comment: An extraordinary assumption may be used in an assignment only if:

it is required to properly develop credible opinions and conclusions;
the appraiser has a reasonable basis for the extraordinary assumption;
use of the extraordinary assumption results in a credible analysis; and
the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary assumptions

AS a perfect example, there was a condo development in Kissimmee that was built and sold to overseas investors wanting to do short term vacation rentals. These were being sold brand new for $225,000. This is a true story by the way and happened about 7 years ago. These were being sold with the promise that the on site management company would rent them out for x amount of dollars every week and they would pay for themselves. Well it was a rip off. The development had about 50 units and all were sold in a short period of time. Within about 2 years all were foreclosed on and taken back by the original lenders. They were placed on the market at prices ranging from $65,000 to $85,000. There had been a couple of resales to other unsuspecting investors in the $200,00 range. How would you appraise these current units if one went pending? Would you base it on the historical sales price of $200,000 or would you have to make an adjustment "downward" to reflect current market conditions? Obviously, you would have to make a downward adjustment. This is an extreme case but true.

In my market right now, whether they have to or not, appraisers are making downward adjustments based on market conditions and info obtained on pending transactions. The reason they called me was to find out the price the pendings were under contract at. I could not give then the selling price but could tell them they sold at list price or less with seller concessions of 3%.

It may not be happening where you are at but is definitely happening all over Florida.

I would think that the appraiser would now use the lower prices, he can't go back two years, the lower prices were the most recent and he has to use those, because that is what he has to work with, he didn't create the price.

The appraiser stating on the appraisal the market conditions is required, that alerts us to what they are seeing in the field and it allows the bank/mortgage company to access the risk. But it seems to me that in Florida, the appraiser are going beyond what they are required to do. Warn, yes...but discount"

The market over here is flattening out here, but I have not seen what you are experiencing in FL., I hope you keep it over there. Good luck with it.

OCT

2006

i'm back. didnt notice these posts, I wasn't signed up to receive notification.So 'wow!' to the situation on those units, Bryant. I wonder what the comps were in the area 7 years ago?..I'm guessing much lower than 200K. Someone probably broke a few laws there and pushed that value. I can tell your all about the 'Code'.

Getting back to the appraisal adjustments, I could see how there could be negative adjustments for time here. If there are limited comps that are most similar in size and location, age, style then you would use that you have within an expanded range and time, and use a combinaton of each (older sale and one from a competing subdivision, etc). It all depends on what the area is doing and how much data is available. Well, you all know that.

If a time adjustment (or a condition adjustment) is made whether positive or negative, then a comment describing why should be made. For a time adjustment, I need to horde some data to prove my point, about 1 yrs worth and get a final percentage for the past year. 'the stinker' is when you check the current listings on the market and find a home sitting on the market for months and months which is similar to the subject in size >ouch< and listed just above the price it looks like the appraisal is coming to. Makes you wonder.. Having this license seems like gambling. let me see those comps again?

hi jeff, just to clarify. I'm not a loan officer.. and i guess for the record, not actively appraising. I dropped off a while ago when the market got tight in end of 2005. just doing my share as a local Realtor® now and applying to the state for my appraiser certification. Yes, for the moment, technically I am (drop head in shame) just a trainee..(who has been stepped on too many times).

So, obviously I AM guilty of getting a sore nerve squeezed and going off. now i see that huge post, and realize even more so that i overeacted. my apoligies all around. let me chant.. 'stay level headed, stay level, stay.." thanks for George for pointing out the obvious and keeping his cool first.

Mortgage George, I think in Florida we got investor pushed,.(IMHO) by both the flipper, foreclosure guy, builder, etc. There is a development in an area here that put up a sign last year for Single Family Homes starting at $399,900. and I was like "what?!".. with the comps in that area?!? now after permitting, clearing the land, etc.. the sales office trailer goes in and the now sign reads 'starting at $299,900. I'm curious as to how many units they sacrificed that 100K spread on!

just my 2 cents. I guess we can all get along! Just kidding.. of course we can.

nick

Hi Nick, There was definitely fraud involved in the selling of these units. It was and is still a big mess. Lawsuits flying everywhere.

Now rules for debate. Debates can be as heated and intense as anyone wants to get. But always respect the person. Debate the issue, respect the person.

Personally, I don't think anyone crossed the line on this thread. You guys can debate on my posts anytime. It's why I write them.

Ok off to Church!

Nick, no need to apologize. I think the more each one saw where the other was coming from, we started to understand each others point of view. It would be pretty boring if we all agreed all the time on everything, but by discussing things, maybe we can walk away with a better perspective.

The information above is helpful to me in understanding what is happenning in FL.

I agree with Bryant everyone stayed within the lines, and Bryant I just got back from Church, and I almost cleared the building with my singing.

OCT

2006

Thanks for the insightful post. There is no question we are headed into turbulent times, and upside down closings. Lenders are gun shy and fearful of being burned. We need to be extra diligent these days.Hopefully we are not living in "Paradise Lost"

AUG

2007

Bryant, before I start reading all of the comments-this same thing happened to me a few years back. The appraiser was not so straight forward though, I had to squeeze it out of him why he needed to know. It was not a pretty conversation.

OK, I guess I will throw in my 2 cents. I don't know what more I can add really..but here goes.

An appraisal to me should be 2+2=4. A downward appraisal is like saying 2+2 might equal 3 if the market continues to go down. BUT what if the market turns and 2+2=6?

I found this conversation to be very interesting, especially to see an appraiser view on it. I understand what all is being said, but that doesn't mean I have to like it. I'm just thankful that we are in a better market over here.

Stephanie, Like it or not...it's true in some markets. It makes sense if you think about it. And the way the lenders are taking a beating right now it will become more common. Thanks for taking the time to read through all these comments.

AUG

2007

Hi Bryant, It does make sense. But here is another thought. The banks have been out of control for many years, IMO and this is another way for them to have control over something. Do we really want the banks to control our Markets?

Hmm. It's a little scary to me, even though I understand why they are doing it. Just a little more food for thought. :)

AUG

BB,

Here I am almost 2 years after the last comment - and you're right - it still makes great reading!

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