Realtors Conclude Value
By The Magnificent Flying Miser
Those who follow the main-stream news media may have heard about the new Home Valuation Code of Conduct (HVCC) rules, designed to reduce bias and allow for more honest real estate appraisals. We have heard from myriad real estate agents who tell of underappraisals leading to unjust loan denials, inducing a downward spiral in home prices, which of course begs the question: “How are these rules seen by other actors in the real estate business? Would the rules be seen the same way by the appraisers themselves? Would the rules have the same impact across all states and real estate markets?” Although the National Association of Realtors is giving all it has to the PR campaign against the new law, there are apparently one or two people who disagree.
Chip Atvaloo, certified residential appraiser in Phoenix, AZ., believes that the new rules don’t go far enough because real estate agents are still able to interfere with appraisal methodology.
“The new HVCC laws … have not stopped the appraisers from receiving pressure with values. Typically, we do not receive direct pressure from the loan officer within a bank, (but) … this does not mean that banks and their loan officers no longer have an avenue to request a higher value, the process has simply changed.”
“Until recently, a loan officer was able to contact the appraiser to discuss the appraisal and the concluding value directly. Currently, if the loan officer believes a value increase is warranted, they must provide their comparables and rationale to a third-party vendor management company, who in turn forwards this information to the appraiser. The appraiser will then review the information and make a determination as to if a value increase is warranted and supported. The appraiser then sends the findings and revised report back to the vendor management company, who forwards back to the client/bank/loan officer.”
“In my recent findings, it is the Realtors who are now requesting additional information and rationale concerning comparable selection on appraisals which coincide with the sale of a property. Appraisers, by law, are not supposed to discuss the appraisal report, scope of work, or conclusions with anyone other than the stated client of the report. If an appraisal is being conducted for mortgage lending purposes, the Realtors associated with the transactions are not the client.”
“Realtors conclude value and decide contract pricing based off of the price-per-square foot method. This simply takes the overall square footage of the residence and divides it into the sales price to conclude an overall number with which to compare all other homes in the area. Appraisers do not utilize this method! … If an appraiser concludes an estimate of market value that is less than the overall price per square foot for the area/and or subject, then the Realtor automatically assumes the appraisal is bad, or too conservative. When this occurs, appraisers receive the most pressure.”
Karen Lodwick, licensed real estate appraiser in OH and WV, believes the HVCC rules will help to reduce bias introduced by mortgage brokers:
“I have had some pressure from mortgage brokers to ‘make the deal’. I don’t work for those people more than one time. My job is to present an opinion of value that is realistic and fair.”
“As appraisers, if we follow our Uniform Standards of Professional Appraisal Practice (USPAP) provisions, the over- and underappraising problem is not an issue. With the new HVCC regulations/guidelines, the appraiser’s contact with the mortgage broker or loan origination person will be very limited and all pressure should be eliminated from the process.”
“By following the provisions in this document, the buffer zone between the lending officer and the appraiser will be expanded and should eliminate most, if not all, pressure appraisers feel.”
On the other hand, Brenda McGann, a public relations specialist for an undisclosed client (http://www.mcgannpr.com/), sees a host of boogymen with the new rules, completely unrelated to appraised values:
“Because of the (HVCC), it is illegal for lenders or brokers to have any contact with appraisers, particularly to suggest a value. … Appraisals around the country are now ordered through middle-man companies, partially owned by banks. This has created huge problems in the appraisal industry.”
“The problem is that individual appraisers can’t get enough work from appraisal management companies to stay in business. They have to do twice as many appraisals as ever before because half their fee is absorbed by the appraisal management company (AMC). There isn’t that much work to go around.”
“Some AMCs send a link to every appraiser who signed up for that geographic area. The first one who responds gets the business, even if that appraiser is miles away and unfamiliar with the area. They’ll drive great distances for low pay because they need the work. Other AMCs demand 24-hour turnaround time from the time the appointment was scheduled. … appraisers should have more time to search for the best comparables if necessary, (but) … if you miss too many deadlines, the AMC will not send you more work. That kind of pressure promotes mistakes. Eventually, the system will weed out the incompetent appraisers, but not before many good appraisers have left the business to find employment that will support them. Other AMCs have closed their lists. Period. No discussion, no matter how many years you’ve been an appraiser.”
“Appraisers with integrity … have always said no to pressure to inflate or deflate values. Lenders and brokers … understood and did not risk their license … for one loan. When it did not, appraisers were free to decline to work for that lender. … The exception usually involved actual cases of fraud, conspiracy, and other criminal wrongdoing. Now, the HVCC has completely wiped out those established business relationships.”
“I believe … that a system that does not allow the appraiser to know the client, but demands that he or she instead work for low pay under extreme deadlines for what appear to be soulless corporations who don’t care about their vendors because they can always get someone willing to work for less, will soon create apathy among individual professionals who used to take pride in their work but are now forced to turn out products under a type of “assembly line” system that offers little reward or incentive for good work. Quality work used to mean you would continue to get business. Appraisers no longer have that reassurance. When the only qualifications an industry requires is a willingness to work for low pay and meet tight deadlines, that’s exactly what it’s going to get.”
I would love to have had an appraiser with us last night. We were in Jersey City. The amount of inventory that has been built there in the past few years, plus the amount that is still under construction, is mind boggling. I think they thought that every single person from Manhattan was going to move to Jersey City.
Has the world really forgotten the law of supply and demand? I believe so. Well, maybe not. Perhaps every builder was just working in his own little orbit. They never realized that they were like asteroids that would smash into each other and start to decimate the entire asteroid field. But they are surely smashing into each other.
We met a couple that lives in Manhattan and has their lease renewal coming up. They thought their rent staying the same would be good. The City Boy nearly jumped over the balcony. Well, I nearly threw them. I told them, “no way. You need to stick it to them. For the first time in years you have leverage. Use it.” My very upbeat ranting made them feel better. See, I can have a positive effect on people. I’m very uplifting at times. I told them we got knocked down 14% and it could have been more.
I believe there are still deals everywhere. Sales prices in Manhattan are down more than 20% in one year. That is what I call a crash. And the real estate world should have even more inventory coming online. I hear Steve McNair’s condo in Memphis will be going up for sale. A little cleaning and a new carpet may be needed. Too soon?
‘Has the world really forgotten the law of supply and demand?’
Well, Washington DC certainly has.
I think it may have a little more to do with the fight for votes and funds than forgetfulness.
OK, we all understand the cynical nature of politics. But only a fool tilts against supply and demand in what is the largest market in the world. Also, that used house salespeople would do this sort of thing is almost to be expected. But aren’t our reps in DC supposed to be above this?
The way the universe of ideas is supposed to work is, the person that sees through the BS and is able to convey that to the masses wins public support. I’m thinking Dean Baker and Peter Schiff should get voted in.
I worked in DC after law school for a bit, and clerked for an appellate judge for a year. I wish I could say I felt I met an elected official that tried to understand the issues and do what best for the Nation (or applicable subset) as a whole in the long run as opposed to what they felt was in their own self interest, but I really can’t. I had to resign and leave all postions I held out of disgust. Every issue that came up we had to run by key supporters and had to do what they said and pretend to believe it.
As for legislation, I can tell you most of the officials don’t even bother reading it, and would fail a simple quiz on what they are voting on. They poll their key supporters and vote accordingly.
I used to volunteer a lot in politics, and I stopped for the same reasons. But still, things aren’t going to get better until we do something about this process. I’m ultimately an optimist, so I’ll never give in on what needs to happen. I guess I’m just waiting for the public to wise up.
Ben:
Not going to happen, This is the Moron Generation, and you want to trust them to change things for the better?
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I guess I’m just waiting for the public to wise up.
SoUtah
My local “Representatives” ignored the early warning signs (and my very public comments made on the record) in regards to the housing bubble and the consequences of counting on it’s continued grow for future revenues.
Their arrogance has continued on for the last three and a half years.
Payroll spending is up 120% in the last two years. Lawyer “consultation” fees (for annexing land and writing up Developer/Town contracts)up over 100%, etc, etc, etc.
Yet, housing revenue (impact fees, licenses, etc. that was going to pay for everything)down over 70%.
Four major Developers were going to bring riches to the Town. Their number has quickly dwindled to three then two and now one who can no longer tell us when he is going to start “developing”.
We are now seeing local tax increases (a 6 percent energy tax and a three and one half percent telecommunications tax passed last week)to cover the ever increasing expenses and the total depletion of Town savings to cover their budget shortfalls (over $200,000.00) of the last three years.
The tax increases and the lack of ability of my Reps to stick to a Budget (deficits) along with their utter failure to bring in the “growth’ (and riches) that they promised may give an outsider (non LDS, CA transplant) like me a chance to jump into the system.
So……..I’ve made the decision to run for Mayor this November.
I’ll let you know how it works out.
As for legislation, I can tell you most of the officials don’t even bother reading it, and would fail a simple quiz on what they are voting on. You’re not telling us something we aren’t already painfully aware of.
“I had to resign and leave all positions I held out of disgust.”
Tim —
You ‘da man! Did you have to hold your nose as you handed in your resignation papers?
NYC,
I can’t live like that; I’d go crazy if I didn’t think things would get better. I recognize what we are up against, but common people have a way of seeing truth when it’s shown to them. Think of all the crappy political systems that have gone away. The USSR, the Sandanistas, even commie China to a degree. And the worn out, failed philosophies, like Cubas or in North Korea, are doomed and everybody knows it.
Sure, things have to fall apart sometimes, but that is apparently the nature of man. I just accept it and try to be constructive in the meantime.
Ben;
Its hard being an optimist when i see failure and backstabbing everywhere i go.
Even something simple, bar had no business 6pm on a friday night and i offer to dj for free…answer NOPE, unless its T-pain, Rhianna, and lady gaga…(i’ve been to at least 30 in the last 3 months)
And when I post on CL the other dj’s flag my ads, i guess they are scared of anyone being different.
Looks like i will get 2 training vouchers to go to school for a few weeks in web design and graphic design…yeah no jobs there either, so my websites will be my portfolio .
But yes Ben This time it is different, one brother (electrician) hasn’t had steady work since november, The other HVAC company is closing down the satellite office next year and he can work from main office 50 miles away, instead of the 3 mile commute he has now.
All i am saying is I am at a real loss to what is next. Last recessions, I just moved and worked at another TV station
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I just accept it and try to be constructive in the meantime.
We can always hope our muddled masses are yearning to breathe free.
Ben,
I agree with you that there is hope, and it’s venues like this blog that will hopefully motivate people to get involved.
I hope steadykat wins the mayoral race!
Its hard being an optimist when i see failure and backstabbing everywhere i go.
You need to move, my man. Yar, you’re gonna see stupid humans and willful blindness where-ever you go, but jeeze! You sound like Pollyanna Negative Squared.
Think about moving, maybe. Just sayin’…
Actually Oly i have lived in 11 states and moved a lot…when jobs were plentiful. I just don’t know where to move to thats any better.
“I just don’t know where to move to thats any better.”
Is working as a DJ your only viable option (and I mean not only in terms of what you can do but also what you are willing to do)? I ask this from the standpoint of someone who, like AG, started out adult life as a gig musician but learned to adapt for survival purposes…
Many years ago I worked for one of the DC trade associations comprised of elected officials. I resigned in disgust after 6 months. There was nonstop pressure to spend money mindlessly. Not once was the question asked, “Are we getting value for the money we spend.”
When I saw that the Executive Director of the Association had spent $1,800 to place “fruit baskets” in the hotel rooms of participants at a conference in LaJolla, that was the final straw. This incident occurred in the mid-80s - those !@#$%!@#$% fruit baskets would probably cost $5000 today…
I used to travel to Jordan for work with coworkers, and every time the very nice hotel manager would make sure we had fruit baskets every night when we got back to the hotel.
One morning we got to chatting with him about what we did in the evening (sit in the hotel bar and drink).
That night instead of a fruit basket we each got vouchers for drinks at the hotel bar.
The next night we each got a bottle of arak.
I might never go back to Amman, but if I do, I’m staying at the Hyatt. That was money well spent by the manager.
My rep has voted 98% for what her party line has ordered, until recently( to my surprise) and voted for the energy bill.
Well, you wouldn’t believe the ppl in her group that are writing horrible editorials against her for this ONE vote. Those articles and editorials have stated unequivocally that they will Pull support for her run next yr.-4th term.
That alone showed to me that reps are forced to not think for themselves OR their constituency.
Blatant and appalling.
PS. now she is backtracking foolishly.
Yep, the entire area of NoVa and Maryland is stuck at a “permanently high plateau” with regard to prices. You can still get your junkie, Post-War shoebox for $250,000 to $300,000+ if you don’t mind needing to replace EVERYTHING, being stuck with street parking in narrow streets never designed for the automobile age, etc. Or, we have overpriced condos in failed developments selling for the same (or more!)… then, there are the crumbling rowhouses in Baltimorgue that come complete with druggies and bullet-holes in the windows.
Yep, we’re living the Housing Bubble life in Maryland. By the time I can afford a place, I’ll be too old to get a 30-year mortgage! *sigh*
I’ve lived in Jersey City for close to 10 years (recently moved). The local paper estimated at one point that the downtown area had 15,000 new condos built over the past few years (I think that number was slightly high, but it was probably pretty close).
The amount of people who are willing to pay $450k-500k for 1br apartments in “luxury” buildings that many times charge up to a $1000 a month in maintenance fees has gotten drastically smaller. I have seen some buildings turn into rentals or into a mix of condos and rentals. I think many developers are still holding out for wishing prices and will end up biting the bullet either through discounting or foreclosure in the next 12 months. That area has quite some time to go before the bubble unwinds.
‘That area has quite some time to go before the bubble unwinds.’
I was thinking about this yesterday; I finally found a house we had been trying to find for months (it’s difficult in these areas near forest service land). I asked a neighbor about the place and she gave me a UHS flyer. They had been asking $550k.
$500k used to be a lot of money, and I suppose it still is. And I’m guessing these people HELOCed the heck out of this house. But the real value of this place is probably closer to $125k. So it dawned on me; we still have a huge housing bubble.
I recently helped a friend with his house search, and although prices were down from the peaks, you still see many people pricing homes at levels that they will never sell at. The same houses languish for months at a time. Since I helped my friend with his search (he ultimately ended up continuing renting) I check the listings in the town he was looking in. Almost no houses have had price cuts, some have let the listings expire, only to list them at the same price with a different realtor. Even at this point in this cycle the denial is still thick.
There are just enough fools out there who pay through the nose to keep the sellers’ hopes up that they can get their high asking prices. It’s going to take more time.
“I recently helped a friend with his house search”
You too? I did that a couple of months ago. He told me he was looking to buy because he thought the market had bottomed. So I kicked him in the nuts, slapped him in the face and screamed “are you f—ing crazy?”. It felt good to help out an old friend. I enjoy being helpful.
“denial is still thick.”
In my Sacramento exburb, I don’t know if it’s really “denial” anymore; it’s more like “Hail Mary pricing,” the last step before walking away.
It continues to be difficult to sell anything over 300K. Generally, the higher the price, the greater the disconnect from the reality of the market.
It felt good to help out an old friend. I enjoy being helpful.
NYCB, you made me laugh like a hyena.
“Even at this point in this cycle the denial is still thick.”
Easy prediction: At the end of this cycle, an unprecedented number of homes will go directly from the MLS to foreclosure/REO sales without so much as an offer at the MLS wishing prices owners are asking.
It felt good to help out an old friend. I enjoy being helpful.
NYCB, you made me laugh like a hyena.
Make that two hyenas.
“So it dawned on me; we still have a huge housing bubble.”
Agreed - though with all the money being pumped into the system - is this just the first signs of massive inflation propping up housing and other prices?
Few years back it was a housing bubble due to funny money coupled with an ‘investment’ mania in housing.
But these mania part seems gone now, so what else is propping up prices?
I was talking with someone the other day about this. It was mentioned here recently that San Diego RE was ‘on fire.’ But the difference is that it’s on fire, perhaps and falling. People bought dotcom stocks all the way down, too.
What is propping up prices? The same things that helped fuel the boom; government entities and quasi-govt corporations, with the full cooperation of the REIC. Don’t forget, the UHS are still the largest trade group in the country. And they can get away with loads of horseshit, when everyone knows they are wrong, because of it. Sorta like the Pentagon.
Here’s an example, Ben…
We toured this house this past week:
http://www.sdlookup.com/MLS-090036516-1602_Burgundy_Encinitas_CA_92024
Built in 1925, and has lots of gorgeous trees on the lot. Near-ish the coast, and on almost half an acre in a decent location. Okay, those are the good parts.
This house will also probably need new plumbing, electric, roof, foundation work, and a host of other work because it looks like it’s not been maintained at all since 1925. Though I am a tree-hugger, the lot desperately needs to be cleared (not the large trees), because it is severely overgrown and likely has many varmints living in and around the house. After touring the house, I told the realtor that it reminded me of “The Money Pit” — all kinds of character, but don’t start work on it without expecting to do triple what you thought you’d have to do. Estimating a **minimum** of $200K to get this up to code and in clean, livable condition. That brings the price up to $900K, at least.
How many offers? Eight on the first day, and I’m sure many of those are over list.
This is being repeated across all price categories if houses are priced anywhere near 2003/2004 levels — which were already pretty peak-ish around these parts (we were ahead of the pack). In the lower-end areas, prices are already higher than they were 6-12 months ago, with competing bids on almost everything.
I’m attibuting most of this activity to the **somewhat** lower prices, but also to the investor groups that have decended onto the scene. The low rates and tax credits have been cited by many people for being the reason they are jumping in right now. Also, many people have mentioned a fear of severe inflation, and are trying to hedge their bets. With rates on liquid money at 2-3% (if you’re lucky), it’s easy to see why people are looking at other ways to dump their money again.
We desperately need higher rates and tighter lending (no 3.5% down payment FHA loans) to curb this speculation.
There will be no higher rates until years from now, IMHO, and the low FHA lending standards will continue until FHA needs a trillion dollar bailout. And even then, we’ll still have vulture “infestment” groups looking to buy houses and flip them to each other at ever-higher prices.
It’s almost impossible for somebody who isn’t rich and/or stupid to get a reasonable house at a reasonable price anywhere, and I don’t expect this to change since there’s just too much money to be made getting people in debt and keeping them there.
Definitely, and I also see increased sales in some good in the past, fairly stable areas which I believe is a wave of knife cathcers thinking the prices can’t get any lower; in the meanwhile we are still in a huge bubble that is slowly deflating and will deflate faster when banks have to make a decision to start foreclosing on properties that have been sitting delinquent for couple of years now.
that’s no doubt, Ben.. same goes for things here in Marin County… prices are down substantially from the peak, but not to where they should be (and will be) once all this imbalance is worked out of the market.. anyone buying now will eventually regret the decision in these heavy, heavy bubble areas with lots of arrogance and greed inbred…
I totally agree, Ben - the Bubble is still HUGE.
People don’t get it. They look at a junkie house that is in bad need of a massive overhaul in a neighborhood past its prime and instead of seeing the place for what it is worth (maybe $125,000), they think “Gee, it’s selling at $250,000 vs. $300,000, so it must be a STEAL! And, when the housing market comes back next year, I can sell it for $300,000 and move into the McMansion I deserve!”
It’s insane, and this mindset doesn’t even factor in the huge, crumbling wreck of our economy, which is still sinking like some doomed ship while the sheeple mistake every explosion and collapsing bulkhead for “green shoots.”‘
I’m glad you told that Manhattan couple that advice. I would have loved to witness that discussion!
Lots of us bloggers have only been preaching to the choir and not daring to bury an FB’s face in the dirt of the housing bubble burst. But we’ve been long ridiculed by them. I have some reasons still for not crowing about being a renter and for buying gold bullion when my contemporaries were buying up condos.
As for McNair - from what I read, the young woman must have shot him several times and then shot herself. She had one gun wound and the gun recoil (normal in suicides) made the gun fly across somewhere - police say it took awhile for them to find the gun.
Rents are beginning to sink in other parts of the country. people just can’t afford the high prices. I just offered $1200 for a nice place in Bozeman that they’re asking $2800 and have come down to $2400. No response yet. I don’t really expect to get it, just doing my part to remind the FBs that the world ain’t what it used to be, someone has to do it.
$2400… for Bozeman? Sheesh.
Trophy house…
Good for you, Lost!
>I hear Steve McNair’s condo in Memphis will be going up for sale. A little cleaning and a new carpet may be needed. Too soon?
Man you were making so much progress… then this.
I lived in JC too from 2004-2006 (rented at the Avalon Cove, a nice apt/condo complex overlooking lower Manhattan over the Hudson). There were a lot of high rise condos being built at that time and I had put my name down on a builder’s mailing list on one of the high rices and even now, about 3 years after the building has been completed, they are still trying to sell the units in that building because I kept getting emails from them saying interest rate is low, ya da ya da. But in no email did they say they are willing to cut prices, just a bunch of ya da nonsenses. Anything but lower prices is their strategy, I guess. I don’t think they ever sold all their units either and now has become rentals.
>high rices
I mean high rises. Yikes.
I was wondering about ” high rices” thought it was something new and illegal..to smoke? cook, stirfry? lol
Yes, I became hungry right away, also.
And then I threw up.
I looked into Avalon Cove in 2007. We hated it; it turned into a place where each apartment unit is occupied by the maximum allowed number of Indian IT workers. This also had the effect of driving up the rent, since individually, each such IT worker has to pay very little.
Good luck getting the curry smell out when they leave. You can smell that when you walk the hallways of those buildings.
Curry and other spices permeated the building in this complex that I lived in three years ago. I now am in a building adjacent to a noisy, busy street lined with 3 and 4 story apartments. I guess the Indians do not like living streetside because no such aromas here anymore.
The Indians, Pakistanis, and what not that I encounter here are very friendly. Three years ago it was the opposite. They would not smile at all. I don’t know what the difference is but I won’t complain.
World peace through communication and understanding folks! We can do it! And no frigging nationalism!
Schadenfreude?
Reminds me of the Port Jefferson development in downtown Palm Springs. Seller/Dev of condo cattycorner to this huge dev said the entire PJ was sold out. Well, then as I look at him quizzically is it not built and is going to be a park/parking lot for PS? hmmmmmmmm?
Hmmmmmmmmmmmm?
I know several who had put their $ down for when it was going to be built(2yrs ago) but when they found out a studio of 500′ or less was going to cost them ….drumroll…$900+ k, they backed out. It was downtown for petesake.
Tada nothing built whatsoever.
There are definitely benefits for moving to Jersey, e.g. saving the 4% City Tax. The deal I got for signing up with a new place in West NY is 3 months free rent on a 14 month lease.
I recently signed a new lease at a place in Bergen county and got a month’s free rent. I’ve seen other complexes offering 2-3 months free. It’s hard to see how “prices have bottomed”, when there is so much pressure being put on rents.
I just checked the corporate web site of my Ahwatukee (Phoenix, AZ) apartment. Rent for 2 bedrooms, 2 bathrooms starting at $720. Haven’t looked at it in a couple months, but I’m sure it’s fallen.
Was thinking of getting my main address out of Phoenix but my lease is up for renewal in September. I pay $966 per month (excluding water) and I pay a pet fee, although I do not have any pet there (found a new owner for my cat).
I will hold their feet to the fire. I am prepared to move my stuff out if they refuse to get my rent down to the low $700s.
Nice clean neighborhood, very quiet, surrounding houses are in the $200k outrageous price range. Houses within a mile are in the 7 figures.
Interestingly, my rent in South Scottsdale when I lived there starting in 2000 was $785 per month and did not have a washer or dryer. So I think Phoenix rents are coming down the the late 1990s price range.
The worst are places like the Beacon in Jersey City, where they turned the old hospital into luxury condos, which haven’t sold at all (I’d hate to be one of the people that bought there as their HOA fees must be huge). Plus its in a pretty sketchy area.
“Realtors conclude value and decide contract pricing based off of the price-per-square foot method. This simply takes the overall square footage of the residence and divides it into the sales price to conclude an overall number with which to compare all other homes in the area.”
Realtors in the areas I look at try to use this too. PPSF is almost useless in most circumstances, as it assumes the land, location and view has no value (except it may be useful for comparing condo units in the same building). They are using it in neighborhoods where some lots have 6k sq foot mcmansions and others have 1k sq foot bungalows, despite the fact that lots used to go for $500k and some of the older homes (and newer homes) can only be described as tear downs. Only Realtors can forget to, or can’t comprehend, how to account for the land and the location (i.e., quiet mountain views v. next to the highway or gas station - it’s all the same thing???).
I could go on about many of the older homes being smaller historic homes with character, and many of the newer homes being stucco crap boxes, but I assume it’s obvious to most non-Realtors.
I think everone on here yesterday was half blasted. I know I was.
Drinking and posting on the HBB? It never occurred to me…
Me neither!
I’ve been eating, drinking, posting and having fun for 2 days solid and I ain”t done by a long shot !
Milwaukee County Zoo had their open house Appreciation Day for Active Duty, Veterans and their families. It was all Free, everything from beer to rides and I had really good time and it was nice to see so many happy people. Thousands and thousands enjoying a really wonderful day! I didn’t see one problem of any kind even with all those people and the free beer. I believe adults are much better behaved when lots of little kids are around and watching them.
Speaking of kids, I borrowed one of my Vet friend’s daughter’s little 6 year old girl and got her a surprise full animal face painting at the Zoo. She was absolutely thrilled with it and was the most beautiful little Pink Panter girl you ever saw. Pink face with black outlines, little whiskers and a little black nose.
It was a masterpiece. Everybody complimented her and she danced on cloud nine all day long. One little boy at the next picnic table even told her she looked “very pretty”. She whispered that her Grandpa.
I was the one that got a great big hug and a kiss which made my day and now her mom has the problem of how she is going to get this wondeful little kid into the bathtub and wash her pretty little Pink Panther face away.
I told her Mom, I’m pretty good at making the mischief but I’m not so good at figuring out solutions, smiled and had another cold free beer.
Great 4th of July holiday here.
This is a good story. Thank you, mikey. Really.
Cool story Mikey.
IIIII was fully blasted, and full of patriotism. So full that I stuck about a hundred little paper cocktail flags in my hair and drew more flags and eagles and Uncle Sams on myself with crayola markers, and that was even before I really got going. I will mercifully spare all of you the rest of the details. (besides which, I can’t remember some of them.)
And do you know what? As a reward for being such a patriot I don’t even have a hangover today! I’m as chipper as a happy, yet sober, bunny! Can’t believe it.
Thanks, Baby Jeebus and Ben Franklin!
But my head did about ’splode an hour ago when I heard some news: a friend of mine just closed on a house in Tumwater last week. I heard this from a different friend, so I hung right up and called him up and rebuked him and asked why he hadn’t told me, and he said ‘Because I knew you’d try to talk me out of it.’
Well, of COURSE I would! That’s what friends are for! To helpfully point out when yer being a total dumb-a*ss! What an idjit. The PNW was slow to arrive, but boy howdy, we’re definitely present at the Consequences Party now, and pu*king ever more enthusiastically into the punch-bowl, it seems to me. Why, we just had a bunch of state-employee layoffs, too, a great many of whom live right HERE. He should have waited, even just a few freakin’ months maybe, because I think things will likely get quite exciting hereabouts.
Sigh. What ya gonna do. I pointed out his lack of brains and then concluded with the hope that he at least have a good moving sale.
Ben Jones, I hope you had a great 4th. Thank you so much for your blog. I wonder how much money and resources you’ve saved HBBers, if it were somehow able to be added up? A gazillion dollars?
Thanks OG, I did have fun yesterday. BTW< I haven’t forgot about your shirts; when I moved everything got haywire for a while.
HoooraYYYYYYYY! I thought you changed your mind or else that they got lost in the mail and I was very, very sad. So I’m thrilled to hear this.
Man, mowing is no fun. Don’t rush things, Sir Ben, you got lots on your mind.
So now I can anticipate! I love to get mail. Sometimes, when I get a book or some stamps from ebay or whatever I will shout with joy and then open it up with a noisy flourish and exclaim and hop around and all that, and then the next day after I’ve fondled it a bit, I’ll wrap it back up and put it in the mailbox and then a couple of hours later go get it and go through the whole process again. Twice the fun, see. Prolongs the excitement. This is partly made possible by the possession of a fruit-fly-sized attention span. (Who says ADHD is a bad thing? Someone who doesn’t like to open enticing packages, obviously.
Hahahaaha!)
Anyway, great!
I meant ‘moving’ is no fun.
It isn’t, either.
But mowing is also no fun. Which is why I don’t do it. Luckily, moss and leaf-mold don’t need much fiddling with.
It’s a good day for a refill of my growler…
http://www.redcarbrewery.com/
What, now yer not a commie?
“…and pu*king ever more enthusiastically into the punch-bowl.”
I heard the problem was a turd in the punch bowl, not puke.
Who’s gonna quibble? I don’t want to discover either one in my Styrofoam cup.
Say! You’re in the Czech Republic?! Tell us about it! Food and stuff! What are the shoes like? Are they made from goat-skin and other exotic ingredients?
I think you and Mikey should have lunch together, or dinner, if he can make it. He’s one of us, ya know?
What! Hiccup. Was yesterday the 4th or is it today? Need to go have another margarita. Hopefully this will stir up my memory
Need to go have another margarita. Hopefully this will stir up my memory.
What a genious you are.
Can you type a little quieter…please
NO. HAHAHAHAH! GOT A HANG-OVER THERE, RANCHAAA!!!??
*barf *
Actually I didn’t barf. Which was surprising to me, too.
I did.
You guys crack me up!
Hope you all had a great 4th!
I’m in the process of closing on a house in far North Phoenix.
The appraiser put the replacement cost at $307k and appraised it at $250k.
This is a four bedroom + office, 3900 sq feet. I almost lost the house due to the contract price being at $295k. One of the houses cited as a comparable is one of the same model and floor plan that is currently for sale at $249k and needs “TLC” per the MLS listing.
Our house is move-in ready due to an investor buying it earlier in the year and doing some nice upgrades in it. We’re glad to get it at the cheaper price, but see how these appraisals are going to further bring down the market.
but see how these appraisals are going to further bring down the market.
Isn’t that putting the cart before the horse? Appraisals are reflecting the market, not bringing the market down, no? All they do is put the ‘reality’ of current pricing in print.
It’s Schroedinger’s House, man. It doesn’t lose value until you try to figure out what it’s worth.
LOL…
Nice one, bink!
Agreed.
I’m going to save that one.
Hmm, does Schrodinger’s cat bounce?
Hmm, does Schrodinger’s cat bounce?
If you throw it hard enough, I bet it does.
How much did YOU blow up, Mr. Muggy? Tell us!
Who’s Shhroedinger and that dude Palmy is talking about?
Don’t confuse asking prices with comparables. You need sales prices to get a fix on the market.
Will, you just proved my point.
The appraiser included it in his report as a comparable. He used the listing price as justification for his final assessment.
3900 sq.ft in the desert…good luck cooling that puppy down!!!!!
Didn’t he get the memo?, McMansions are oh so 2008.
“The problem is that individual appraisers can’t get enough work from appraisal management companies to stay in business. They have to do twice as many appraisals as ever before because half their fee is absorbed by the appraisal management company (AMC). There isn’t that much work to go around.”
Nice to see that they have adopted the agent method of business where the holding company keeps 1/2.
But shouldn’t there be roughly the same amount of appraisal work to be had? Doesn’t each bank have to get an appraisal when they foreclose on a property in order to determine its value vs. book value? And doesn’t each new buyer of a foreclosed property need to get an appraisal? It seems that each foreclosure should generate at least 2 appraisals.
I would think that since the bank hasn’t put the back inventory on the market, they don’t need as many appraisors, so the few are getting all the work that is being released as well as the stuff that isn’t foreclosure already.
Just guessin?
Checked out a vacation place at the lake this weekend. My guess is it would not appraise well.
It seems the sellers are underwater. what do you guys think?
home.comcast.net/~r.massey/CABIN.JPG or click on my name for the link.
“It seems the sellers are underwater. what do you guys think?”
I’m guessing that they are living in Atlantis. The waterfront owners seem to be the most delusional of all right now. They just can’t believe that their water palace could go down in price. They are trying to relive the final scene of the movie The Alamo. They are like John Wayne playing Davy Crockett. The torch is lit and they are heading towards the powder room. Only they think it is a fully furnished bonus room.
Anecdotal real estate story: A friend has a lake lot. I believe he paid about $150k 5 years ago. At peak he probably could have sold for nearly $400k. Don’t ask me how that is possible? He put it on the market less than a year ago. He figured it was worth $300k. He listed it at $250k for a quick sale. It sat and sat and sat. He is now under contract at $156.5k. I bet that lot goes back to 1990s prices which is probably in the $40k range. The lakes of America will look like the Dead Sea with blood everywhere.
Knock off $6k for commission and 2k a year for taxes and he lost about 9.5k in 5 years. On the bright side he beat the S&P 500. I really don’t understand just holding a lot. If he wanted a place to retire, he should have bought one with a modest but usable fishing cabin. At least it would have some rental income to cover the tax bill, and he could knock it down if he wanted something nicer when it came time to retire.
No one seemed to be complaining when appraisers where pushing house prices higher.
New appraisal rules under fire
Critics charge that a new system is fostering the use of appraisers willing to work for low fees and who are willing to conduct home appraisals far outside their typical areas of activity, leading to low-ball appraisals that can hurt builders, real estate agents, consumers and lenders.
WASHINGTON — It’s by far the hottest controversy in real estate this summer and it could directly affect the value of your house — probably negatively — by tens of thousands of dollars. The issue concerns lowballed valuations and the new rules guiding appraisers in both price-depressed and rebounding markets. Consider these snapshots:
• In San Diego, Steve Doyle, division president for Brookfield Homes, is trying to close out the final 20 houses of a 120-unit single-family subdivision. Prices range from $340,000 to $350,000.
But recently there’s been a major hitch: Appraisers assigned by banks are coming in with valuations $60,000 or more below Doyle’s selling prices. The appraisers, who Doyle says are unfamiliar with local market trends, inexperienced or both, are using foreclosures and short sales of existing houses as their “comparables.”
• In the suburbs near Cleveland, Enzo Perfetto, manager of Enzoco Homes, builds custom houses on clients’ lots. He said banks have begun assigning appraisers from far outside the area to value lots as part of mortgage packages on new homes. Some of the comparables they use are foreclosures, and that depresses land valuations.
“I think the pendulum is swinging way too far in the wrong direction on appraisals,” said Perfetto. Bank-assigned appraisers often “don’t know the local market and they’re going for low numbers to be ’safe.’ ” Complaints about lowballed appraisals — from builders, realty agents, consumers and lenders — have erupted since May 1, when government-sponsored Fannie Mae and Freddie Mac put their new appraisal rules into effect nationwide.
Critics charge the new system is fostering the use of appraisers willing to work for low fees — sometimes 50 percent below previous standards — and who are willing to conduct home appraisals far outside their typical areas of activity.
So, there are three approaches to valuation used by appraisers.
1. Cost Approach - Cost to build it + land.
2. Market Approach - Comparable sales in the area for a specific time period.
3. Income Analysis - The present value of the future cash flows (isn’t N=10 typically used in this scenario? what would be the discount rate?)
Comps are comps right? Using Market Analysis, if another real property is similar to the subject and in the same condition then it’s a comparable, regardless of what circumstance it was sold under (foreclosure, short sale, cash deal, etc.)?
With rents on the decline, it would be fun to see what property valuation are using the Income approach.
Robiscrazy, what the heck is that thing?
Reminds me of houseboating in the west and staying out of certain coves now due to water level receding and trees appearing. Makes for un fun skiing.
That’s a chimney. Jenkinson Lake in Northern CA. It used to be a valley that settlers traveled. There was a stop there with a store, hotel etc.
El Dorado Irrigation district built a damn way back and flooded it. Not sure if the house still under there, probably just the chimney and fireplace.
1. Cost Approach - Cost to build it + land.
2. Market Approach - Comparable sales in the area for a specific time period.
3. Income Analysis - The present value of the future cash flows (isn’t N=10 typically used in this scenario? what would be the discount rate?)
robiscrazy, those are EXACTLY the 3 that I use together. Works every time.
But there is also a 4th one - Cost to rehab/update/repair.
“No one seemed to be complaining when appraisers where pushing house prices higher.”
I think you meant for that to read, “no one with a bunch of politicians in their pockets seemed to be complaining when appraisers were pushing house prices higher.”
I’m glad I could clarify that point for you.
“New appraisal rules under fire”
Any rule change that promotes transparency and increases economic efficiency is anathema to NAR members, who prefer to manipulate the appraisal process in order to bamboozle their customers.
PB, you said you are in the Czech Republic right now. Is there really no bubble?
PB: never to correct the professor, but antithetical might have been a better choice of words.
Ate:
antithetical is lawyer talk, bamboozle is much more to the point!
I’ll bite. The difference between Enzo’s wishing price and the appraiser’s appraisal price is margin, and disappears into Enzo’s pocket with no value added, and certainly nothing for the FB. Amazing that this has not been shouted from the rooftops. Amazing that the FBs themselves have been so compliant in contributing to charity.
Didn’t new houses used to cost ‘more’ than regular houses because of this, and didn’t you have to have a big downpayment for a new house because the bank wouldn’t loan you enough to just buy it because it would become a used house pretty quickly?
I remember when I was a kid if somebody bought a new house, you knew they had to be doing well to afford it. Or an addition.
During the boom, if you were not sneezing out mcmansions and crapping out pools, you must have been a bitter renter.
“When the only qualifications an industry requires is a willingness to work for low pay and meet tight deadlines, that’s exactly what it’s going to get.”
Old saying that has had a number of variations over the years, and is applicable to a number of industries: Done Fast, Done Cheap, Done Well…Pick Any Two.
Old saying that has had a number of variations over the years, and is applicable to a number of industries: Done Fast, Done Cheap, Done Well…Pick Any Two.
I had two well regarded, experienced (10+ years) project managers new to my company sit down in a meeting on a new project with myself and four other engineers and cite that “we have an agressive schedule with a tight budget and we need to impress the client with our quality so we get future work!”
I turned to both and cited palmetto’s saying above. They hemmed and hawed and couldn’t decide what they wanted.
Fast forward three years ago. The project came in behind schedule, well over budget, and the quailty was terrible. Both project managers are long gone - one fired a year ago, the other moved on to greener pastures where the engineers weren’t going to disagree with their violations of common sense.
BC, Do you design civil?? If so what type?
“On the other hand, Brenda McGann, a public relations specialist for an undisclosed client (http://www.mcgannpr.com/), sees a host of boogymen with the new rules, completely unrelated to appraised values:”
Let me fix that for you:
On the other hand, Brenda McGann, a public relations specialist for an undisclosed client (http://www.mcgannpr.com/), IS PAID TO see a host of boogymen with the new rules, completely unrelated to appraised values:
She is a highly-paid REIC shill. Why would anyone with sense listen to her on this subject?
On the other hand, Brenda McGann, [says] “Because of the (HVCC), it is illegal for lenders or brokers to have any contact with appraisers, particularly to suggest a value.”
Isn’t the entire point of an HONEST appraisal to be completely independent of some realtor’s “suggested value”?
“The PNW was slow to arrive, but boy howdy, we’re definitely present at the Consequences Party now, and pu*king ever more enthusiastically into the punch-bowl, it seems to me.”
Fantastic imagery, as always, Olygal…
The PNW was definitely late to arrive, and my working hypothesis has always been that we would crash harder to catch up; we were sufficiently bubbly that a softer/smaller crash made no sense, and the only other alternative is for the crash to take just as long and thus lag on the recover side as well.
Which left me quite puzzled recently when the latest Case-Shiller data showed Seattle with a small price increase for April. WTF? Sampling error? Price firming a bit at the higher end just as the mix-shift includes more of those properties? I’d be keenly interested in any theory the HBB denizens can come up with…
I would expect April - July to be have higher mean averages. While the demand for investment property and small houses for couples or single ppl often remain the same throughout the year, most large family homes are sold during a 4 month period because of the disruption a move during the school year would cause. After that 4 month period, those big family homes must be discounted again if they need to sell soon. I think September will show declines again.
I should note that you specifically referred to C/S which attempts to use the repeat sales methodology, however, I think the increase in demand would come into play assuming the upward tick was based on month over month numbers. Means reported by NAR would have much larger distortions.
Means reported by NAR would have much larger distortions.
Hmmmm. By that do you mean that NARs are…liars? Lubed up and oily data massagers? Could this possibly be?
Maybe even August will show drops, due to some schools starting in Aug..in some places. Keep us in the loop!
Seasonally adjusted Case-Shiller for Seattle was down about 18% for year ended April 2009. Month over month was also off about 0.6% or around 6% at an annual rate. So much for signs of Spring in the PNW.
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html
More stmulus?
Housing in peril as Obama fails to get breakthrough
By KATHLEEN M. HOWLEY
Bloomberg News
Sunday, July 05, 2009
LOS ANGELES — Driving through Riverside, Calif., Bruce Norris pointed to a half-dozen empty houses with “For Sale” signs stuck in untended lawns that he said investors might buy if banks would just extend some credit.
“People today look at us as the enemy,” said Norris, 57, head of Riverside-based Norris Group, which purchases and renovates homes to rent or sell. “That’s a big problem for housing because if we can’t get the financing we need, a lot of these properties are going to sit vacant.”
Four months after President Barack Obama pledged $275 billion to shore up home sales, the engine that powered every U.S. recovery since 1960 is stalled. Bankers’ reluctance to finance buyers who won’t live in properties is one barrier to a turnaround. Stricter qualifying rules and a rise in the cost of residential loans to 5.42 percent have impeded new mortgage lending, which is at a 13-year low. An inventory of 2.1 million unoccupied houses on the market, created by the fastest foreclosure pace in history, may be a drag on a revival.
The $8,000 first-time homebuyer tax credit in the U.S. economic stimulus package and a government program to subsidize some mortgage payments have had little effect, according to Eric Belsky, executive director of Harvard University’s Joint Center for Housing Studies in Cambridge, Mass.
“It hasn’t been much more than a see-sawing of data,” Belsky said in an interview. “Housing has led the U.S. economy out of every recession for at least 50 years, and for that to happen again more stimulus is going to be needed.”
Yes - it’s very scary when not even the executive director of Harvard University’s Joint Center for Housing Studies in Cambridge, Mass. realizes the difference between recessions brought on by a housing bubble and those that were not, and how those difference come into play in figuring out how this will end.
he said investors might buy
I thought the whole point of the government plans was to put homeowners into houses, not to support the real estate speculators.
Why should the government care about what speculators want?
If demand was reduced to ppl purchasing primary residences for themselves, you know how many Realtors, brokers, developers, etc. would be out of work? Not to mention housing falling 20-50% from current levels, and many, many more bank failures. One could take the bleed the investors view.
I read/heard somewhere this wk that the stim that was to be enacted is still in the proposal stages and hasn’t passed or signed …Yet.
So that is why banks and sh iti hasn’t extended loans, they are the only ones so far who say they will participate, but it isn’t law yet. So they just Look like the good guys, for now.
Correct me if this info is incorrectamundo. Grac ias.
Totally OT, but here’s a vid I made of Montana, if anyone wants a diversion:
http://www.youtube.com/watch?v=UJR1U5itFSI
Great job! Makes me want to say good-bye to Florida. So maybe you better do another one for me in January.
LOL!! You’ll have to wear ski goggles cause it’ll be blinding white.
Thanks for the good word.
Really enjoyed your video(s) Thanks Chinle.
Wish I could be hangin with you and then having some brewkis with views.
Come on out, seriously! Would love the company. I just shoot from the hip and ask questions later.
Beautiful country Lost. You do it justice with your photography and slide shows.
BTW….when I need a chuckle I watch your “Chug-A-Lug” video. If I’m reincarnated as an animal, hopefully, it will be as one of your dogs or cats.
Thanks, I don’t know what they’d say, since I make them tow the line and hike every day and eat hot dogs and swim in the creek and stuff…
But I guess they do OK.
It has been years since I have seen an appraisal using rental income to value a residence, and the cost analysis is screwed as the builders inflate their costs to build, and the appraisal manuals don’t do enough.
So that leaves sales approach, and no one wants the appraiser to use the sales approach in declining markets as that means the appraiser has to reflect the anticipated loss since the last sale to be considered.
But they do love it when the appraiser thinks the market is going up and inflates the valuation.
Appraisers are the whipping boys for all of the troubles, and , perhaps they should be!
But, like any human being, they follow the orders of the boss (the client), or they quit the job.
Who quits jobs in bad economic times.
Jack
Then why even have appraisers if they are malleable and any independent unbiased analysis is cast aside?
The banks would be screaming at the appraisers to lower their estimates beyond expected losses if they had to keep the loans on their books.
That’s when the whole appraising process was honest. When the bank made a loan and kept it on its books to make money, they wanted accurate appraisals.
When they started making money on the fees for selling the loans to investors, they no longer cared about it.
I think the real solution is to force banks to ’season’ loans for 5 years past any reset date before they can securitize them. Lending standards would be solved overnight.
Price per sq.ft. had me screaming on the way up but I sure like it now on the way down. I’m not ready to buy so that will just draw more RUI’s (RE-useful idiots) into the market place and set new lows with each round of buyers.
Question: everyone always comes up with “it’s got a view” and adds more blue sky to the purchase price. Just how much are you willing to pay for a view when you put curtains over the window and guests really don’t care after the first viewing?
Is a view of the ocean worth more than one of the mountain forrest or one of the lake?
Then there is the ‘life-style’ pitch when you live near the coast. Do you go in the water? Do you go outside at all and take advantage of the weather or do you just go shopping and hope to be surrounded by younger prettier beings?”
You buy the acreage because it sounds great. What’s the fire maintenance? Can you grow anything on it? Can you afford to water it?
I’m not feeling sorry for myself, I’m just pissssed off seeing people bidding up property just because it’s here in the bay area because they believe that the ‘bay area’ label is like buying other labels that they chase “BMW, BENZ, COACH” etc.
Back to another round of Maker’s Match.
RUI’s (RE-useful idiots)
salinas, is that in reference to ROUS, rodents of unusual size?
Good one!
In California (L.A. County) is there any way to publicly view records to see if a homebuyer received a Proposition 60/90 property tax exemption? This allows someone over a certain age (I’m not sure - 55?) to carry the assessed value of a home they sold to a newly purchased home, subject to certain conditions. I see a house on Zillow that sold for $537k in 2007, and Zillow shows 2008 property tax as $3700. Californians can also petition the county assessor for a reduced assessed value if they can produce comparables to justify it. The low end of the Zestimate is $442k, which would still not justify a $3700 prop tax bill. I know Zillow is a joke, but I wonder if this is another wrinkle they conveniently ignore…
Suspicious doin’s in Phoenix AZ?
“A man escaped serious injury in a fire that gutted a $2.6 million Biltmore home early Sunday, said Phoenix Fire Capt. Dorian Jackson.
Fire crews remained throwing water on hotspots by late morning, after firefighters arrived to the posh golf-resort home at 71 N. Biltmore Estates Drive about 4:30 a.m.
Fire investigators, who had yet to enter the 7,600 square-foot, two-story home, believe the blaze started on the first floor and trapped a man on the second floor, Jackson said.
“He said he was sleeping when he was awoken by the smoke from downstairs,” Jackson said.
The man grabbed a scuba-diving oxygen bottle and a rolled ladder, which he used to climb to safety down the side of the home. He was transported to the hospital for observation for smoke inhalation.”
http://www.azcentral.com/news/articles/2009/07/05/20090705biltmorefire0706.html
.
Be sure to read the comments; one person did dome digging and found…dirt.
HVCC was pushed through without much debate, so it leaves a lot to be desired. The biggest beef seems to be that many appraisers are assigned to areas they are pretty much unfamiliar with. That then leads to undervalued results that stop deals in their tracks, and who is happy with that. Nobody.
I call bullsheet on that analogy
The buyer and the lender should be happy with that. The result would not be undervalued but valued at the price of the current market which is going down.
Said like a UHS!
Mortgage peddler, according to the link associated with his user name.
coupla points..
if they’re not familiar with the area, what makes you think they will ‘undervalue’ the property rather than overvalue it? methinks you have an agenda.
nobody is happy with that?? what about people that are looking to buy homes? you think they might be happy prices are coming down? methinks you have an agenda.
WASHINGTON - Vice President Joe Biden said the Obama administration “misread how bad the economy was” but stands by its stimulus package and believes the plan will create more jobs as the pace of its spending picks up.
RE is heating up again the fear of Inflation as planned by the Government but can they re-inflate ? We have poor demographics for inflation.
“Realtors conclude value and decide contract pricing based off of the price-per-square foot method. This simply takes the overall square footage of the residence and divides it into the sales price to conclude an overall number with which to compare all other homes in the area.”
Forget about school districts, crime rates, proximity to the beach, lot size, condition of major fixed appliances, etc., not to mention what others have recently paid for similar properties or what it would cost to build a similar structure — pricing is a simple matter of multiplying square footage by average price per square foot???