Tuesday, March 6, 2012

Monday, October 24, 2011

Over the past several years Real Estate Appraisers have been dealing with increased demands in the appraisal report. This is affectingly called in the profession as “scope creep”. Back in the good old days when the appraiser received an appraisal request it seemed a lot easier than it is now. The appraiser would do the research put three or four comps in the report and send it to the client and very rarely would there ever be any questions. Now days with “scope creep” the appraiser’s engagement letter reads like an instruction manual for a new gas grill. Fannie Mae and Freddie Mac have made substantial additions to the appraisal guidelines. In 2009-2010 the introduction of the Market Condition forms (1004MC) it requires the appraiser to report. This report requires the appraiser to give marketing trends in increments: 7-12 months, 4-6 months and current – 3 months, Number of sales, absorption rates, active listings and months of housing supply. Also the median sales price, days on market, listing prices and the medium sales price as a percent of average list price. All of this information in the time increments listed above. Appraisers were told that no additional fees were warranted as they were already researching this information. This is just one of Fannie Mae and Freddie Mac new guidelines. This new requirement is only part of the increased scope of work. Lenders typically have overlay appraisal requirements. These may include:

· Two comparable sales in the past 90 days

· Aerial photo of subject property

· If subject property appraisers for more than one million it requires 4 comparables and two listings

· Urban properties report distances in blocks, suburban in miles.

· Zoning-make the determination if property destroyed more than 50% can it be rebuilt.

· Cost to cure on listed repairs.

· Turnaround to complete appraisal 4 days from when it was assigned.

These are just a sample of the requirements from lenders and appraisal management companies. Appraisers were very happy when they read the section of Dodd Frank that addressed appraisal fees. Appraisers were to be paid a fee that is “reasonable and customary”. The verbiage in the Dodd-Frank bill was very specific as to how to determine “reasonable and customary appraisal fees”. Reasonable and customary was to be determined WITHOUT fees paid by appraisal management companies. Simple stated only fees paid directly to appraisers by banks, mortgage companies, and other entities could determine what is “reasonable and customary”. Appraisers however were in for a surprise when the Interim Final Rules were published. Suddenly the small paragraph about R/C was 18 pages of verbiage with 2 presumptions of compliance. Presumption one allowed for business as usual and that was the option that most AMC used. For the appraisers it was a disappointing revelation of how our government works with lobbyist.

No one in the appraisal profession wants to set fees, however between 60 -70% of all residential mortgages and appraisals flow through 5 or 6 companies. This represents an Oligopoly. They set the appraisal fee market. It is not reasonable to think an appraiser can effectively negotiate with one of these multi-billion dollar banks. In my humble opinion the best way is more transparency. AMC’s owned by banks have become profit centers for the bank. More immediate profits are derived by paying the appraisers less money. Again IMHO this is short sighted from the banks perspective. The old adage of getting what you pay for is true. If an appraiser is paid a reasonable market fee it is reasonable to believe the report will be a higher quality report.

One of the quickest and best ways to fix this problem is transparency. The AMC’s scope of work and their fee should be negotiated separately with the lender. This way there is no incentive to pay the appraiser less money. The appraiser’s fee should be determined as detailed in the Dodd-Frank bill. Surveys commissioned by Universities, trade organizations and/or government entities are good way to determine what is “reasonable and customary”.

The URAR was last updated in 2005. There are several new valuation products on the market. These products can analyze years of sales data in seconds. An appraiser skilled in regression analysis can produce a statistically accurate property valuation with local market knowledge. Fannie Mae and Freddie Mac are the drivers of the residential real estate appraisal reports and acceptable methods. When they embrace this new technology our profession will once again be a trusted part of mortgage lending. There is no shortage of opinions on how to fix our profession.

There is no aspect of the mortgage business that is easy. The Dodd-Frank bill is 2,300 pages of new regulations that touched every aspect of the financial sector. We all have to deal with a difficult changing environment.

J. Mark Chapman has been a certified appraiser since 1990. Currently is the President/CEO of SouthEastern Evaluations a regional real estate appraisal management company.

Tuesday, August 16, 2011

South Carolina Professional Apprasiers Coalition (SCPAC)

Mark Chapman has been in the real estate appraisal profession over 20 years. Currently he is the President/CEO of Southeastern Evaluation and the 2011 President of the South Carolina Professional Appraisers Coalition.

Imagine this: An appraisal order has just come into your office for a house that is perfectly square, in a neighborhood that has at least 6 sales within $2,000 of the purchase price. There are even lot sales on the same street to help with the land value of the property. Sounds perfect doesn’t it? What appraiser would NOT want to do that? More often than not, the property is actually a 6,000 square foot house 10 miles away from ANYTHING, sitting on 8.5 acres of land, and oh yes….it has a barn AND a pool. Now THAT is more what a typical property is like.

Whether you think this is a good time for appraisers depends on your perspective. The appraisers’ perspective has changed over the past 2 or 3 years. The advent of HVCC, Dodd Frank and Interagency Guidelines has really changed the way appraisers conduct their business. The debate over reasonable and customary fees in ongoing. Our profession has seen more changes in this period of time than any other in our history. Most regulations have been made with little input from the appraiser. My perspective is that appraisers are mad and not going to take it anymore.

In 2006, the South Carolina Professional Appraisers Coalition (SCPAC) held its first meeting. It was organized by a group of appraisers with various backgrounds. Their primary goal was to be proactive in legislative and regulatory issues affecting SC appraisers. Since that first meeting, the coalition has continued to grow. In 2010 the board decided that we could better serve our membership by having local chapters. The first chapter began in Myrtle Beach, SC. Since then we have started chapters in Greenville, Columbia, Charleston, Florence, Hilton Head and Aiken. Monthly meetings may include speakers from the state appraisal board, local education providers, real estate brokers, certified financial planners, marketing experts and tax assessors. In additional to the informational part of the monthly program we have created an atmosphere where appraisers feel comfortable talking with other appraisers about what is going on in their market.

The annual meeting is held the first quarter of each year. The officers and directors are elected at this time. We typically have one or two other statewide meetings to discuss major issues concerning our profession.

As a whole we are seeing more appraisers getting involved. Our membership continues to increase. This year we partnered with another appraisal organization to help write the state AMC bill. It was not voted on this year, but we anticipate it will be passed in next year’s legislative session.

Our perspective as appraisers is changing. This gives us hope that we can have an effect on what happens to our profession. Get involved, join a local organization. Don’t just gripe about all the changes, work to make a difference.

Tuesday, July 12, 2011

Job Description – APPRAISAL COORDINATOR

Job Description – APPRAISAL COORDINATOR

Job Summary: The Appraisal Coordinator is responsible for placing and tracking appraisal orders through the Appraisal Management System (etrac), monitoring assignments, and facilitating the return delivery of completed assignments from the appraisal vendor to ensure the file is processed accurately and in a timely manner.

Functional Responsibilities: Orders and tracks appraisal assignments through the APPRAISAL MANAGEMENT SYSTEM (ETRAC). Places orders for various appraisal products with appropriate vendors. Interacts with the appraiser, appraisal management companies, and the internal origination, processing and underwriting staffs, and other clients to facilitate the ordering and return delivery of appraisal assignments. Monitors assignments and the return delivery of appraisal products from the appraisal vendor to ensure the file is processed accurately and in a timely manner. Records daily work in the APPRAISAL MANAGEMENT SYSTEM (ETRAC) to ensure data is accurate and up to date. Other duties as assigned.

Supervisory Responsibilities: None

Job Requirements: Must have a high school diploma or equivalent; Associate’s degree preferred. Must have a minimum of 1-3 years related business experience; 1-2 years experience in a mortgage lending environment or large appraisal practice preferred.

Equal Employment Opportunity
SouthEastern is proud to be an equal opportunity/affirmative action employer. We are committed to attracting, retaining and maximizing the performance of a diverse and inclusive workforce.

How To Apply
For immediate consideration, email resume to garena@see-amc.com.

Friday, June 3, 2011

Appraisal Institute warns against appraiser indemnification agreements

(5/26/2011)

The Appraisal Institute cautioned real estate appraisers about signing agreements imposed by some appraisal management companies (AMCs) that seek to hold residential appraisers responsible for AMCs’ actions. In a press release, the institute’s president warned that consumers could be the ultimate losers.
“Appraisers should be very careful about signing any agreement, especially one that makes them responsible for another party’s actions,” said Appraisal Institute President Joseph Magdziarz, MAI, SRA. “While there are some fine AMCs doing business today, many AMCs shift liability onto appraisers. For many professional appraisers, it’s simply not worth the risk.”
Magdziarz noted that the most qualified, competent appraisers often refuse to sign such indemnification agreements. While lenders can manage appraisal operations with internal staff, some choose to outsource these functions to third-party management companies — AMCs.
“The Appraisal Institute’s best advice for consumers is to ensure their lender hires a qualified, competent appraiser,” Magdziarz said. “For appraisers, the Appraisal Institute advises that they know and understand any agreement they sign and that they not sign any agreement they feel is unreasonable or not in their best interests. For most AMCs, providing a certificate of insurance may be a good alternative to signing an indemnification agreement.”
“To get an idea of how potentially dangerous this situation is for appraisers, one need only look to the FDIC’s recent action,” Magdziarz said in reference to the Federal Deposit Insurance Corp. (FDIC) complaint filed May 9 against Lender Processing Services and CoreLogic that seeks to recover roughly $283 million in losses allegedly tied to appraisals. Regardless of the merit of the FDIC’s charges, there are potential consequences that come with signing indemnification agreements and expose appraisers to unnecessary liability.
Magdziarz also noted the potential effect on consumers, who often have to rely on valuation services from some of the least qualified and least competent appraisers hired by some AMCs. He warned that such agreements drive professional appraisers further from consumer mortgage lending valuation services.

Thursday, June 2, 2011

7 Most Popular Real Estate Web Sites

Realtor.com continues to hold onto its No. 1 spot in grabbing the most online traffic among real estate Web sites, according to Experian Hitwise, a Web metrics firm. Hitwise recently released its monthly report for April, which provides a snapshot of some of the most highly visited real estate Web sites.

Here are the seven most popular real estate Web sites in April, according to Hitwise:

1. Realtor.com: 6.5 percent of the market share
2. Yahoo! Real Estate: 6.1 percent
3. Zillow: 5.52 percent
4. Trulia.com: 4.75 percent
5. AOL Real Estate: 2.91 percent
6. Rent.com: 2.41 percent
7. Homes.com: 2.18 percent

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