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Hey Underwriters! Reviewing Additional Sales Will Not Always Mitigate Risk

By Mike Armentrout



Normally I write an article to chime in on a topic as it relates to appraisers.  Rarely do I address colleagues in other related fields outside of my own industry.  Today shall be different.

This post is specifically intended to talk to our lender clients about an increasingly frequent stipulation request we are seeing from many underwriting departments.  That is to comment on or possibly grid additional sales.  Here's how it goes; after we submit a report, an underwriter sends over three to four sales and asks why they were not considered.  Sometimes these sales were discovered in our original research and other times they may be outside of the defined market area.

Appraisers do have the duty to respond to any and all questions that the client as an intended user may have in analyzing collateral.  Such requests should also be handled in a professional manner.  It is certainly a lenders' prerogative and responsibility to scrutinize an appraisal when they are…

What Happens When Contracts Rocket Past List Prices

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by Mike Armentrout


In light of the historic low inventory levels, the existing demand appears to be exploding.  This does not mean that the current demand is unprecedented in terms of volume.  We simply have some markets with a very low supply of available listings and a disproportionate number of buyers.

This is not only resulting in multiple offer scenarios but is also ramping up the offering prices as buyers are leveraging whatever they can to beat out the competition.  In fact, it has become a wild West environment as agents are attempting new strategies to win the bidding wars.

So with all this frenzy, one might ask when will it change?  The simple answer is, when supply comes more into balance with demand.  Until then however, appraisers are going to have to work through some minefields. With agents desperately seeking new listings, they are feeling the heat to close as many buyers as possible.  The last thing they want to deal with is appraisals coming back less than the contra…

Regulation Differs Between Accountants and Appraisers?

by Mike Armentrout
So the other day was ironically Friday the thirteenth.It started off without a hitch until I got the dreaded call from my accountant.He hit me with the news that my various personal returns and first quarterly estimates would result in me writing checks that totaled over $16,000.I spent the weekend pouring over the numbers and still could not figure out how I owed so much more than the prior year and yet only made a few hundred dollars more than last year. I talked and texted the accountant several times with questions in hopes of finding cause for revision, but was met with only disappointment.I am sure he could sense my growing frustration.In fact, I’m sure the thought crossed his mind that after twenty four years of doing taxes for our company and the personal taxes of my business partner and myself; he just might lose us as a client.
Then it hit me.This was eerily similar to many calls we get as appraisers from disgruntled AMCs, lenders, realtors, sellers, buyer…

Adjustment Misconceptions

by Mike Armentrout

I was recently perusing a social media page that caters to appraisers and came across a thread where a user had posted a grid from a peer report.  Aside from the fact that publicly displaying the work of others can be highly controversial, I reluctantly followed that inner desire to see the carnage that would be wrought in the comments.  It didn't take long before the knives came out, as is the case when online anonymity promotes a less than civil discussion.

Most of the comments centered around the adjustments that were made to the grid.  In the midst of numerous responses, someone had noted that the bath adjustments were "so 2007".  That particular phrase stayed with me for a few days.  Was this a passing quip meant to be humor, or was it a reflection of their real views on adjustments?

Market based adjustments are not commodities that are subject to simple inflationary rates through time.  They are instead typically tied proportionately to the value…

Sketching the Interior: Why I do

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Completing a sketch for an appraisal assignment is something that can easily get glossed over as a mechanistic procedure.  Occasionally it is good to take a minute and consider why it is that we perform certain functions.

Providing a sketch within an appraisal can serve a few purposes. Obviously the biggest reason is to calculate gross living area (GLA) and the square footage of auxiliary use spaces such as basements, garages, outdoor living areas and outbuildings.  There is no shortage of posts regarding GLA calculation so I wanted to cover other factors that a quality sketch can provide.

Through time, I have noticed that the vast majority of appraisals I come across do not contain sketch details of interior spaces.  That's not to say that there always should be.  In fact, I have not even required my staff appraisers to indicate interior data unless it can communicate a special condition.

For myself however, I have always provided fairly detailed interior information such as wal…

Square Footage; Perception vs Reality

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by Mike Armentrout
In a recent article that made the rounds on social media, a story was reported that should not be surprising to any appraiser.  A homeowner was seeking legal damages against the realtor who listed her home for the 2007 purchase. Pam Whelan contended "Had I been presented with the more accurate square footage, I could have made a more educated guess on whether or not I wanted to proceed in purchasing the home."  The concluding assumption was that she could not sell the home for as much currently.

We can discuss obvious questions about the listing sources and if an appraisal was done but this reveals something I have had concerns about for a long time.  Can buyers actually perceive how big a home is in real numbers simply from an inspection?  For that matter, can realtors or appraisers even perceive this?  Notice I used the term perceive and not calculate.

I would like to conduct a hypothetical semi-scientific study that consists of 50 typical buyers, 50 loc…

Gaining Perspective On Our Profession

by Mike Armentrout
I hold no particular pedigree or credential to speak for everyone in the real estate appraisal profession. All I can do is draw from nearly 26 years of being a part of it. In that time, I have heard almost every opinion on every issue that promises to be the next big challenge for our industry.
It’s true that like everything, change is inevitable. We adapt to new technologies and practices as well as learn new skill sets. From FIRREA to Dodd-Frank, appraisers have continued to evolve when swift moving currents require them to alter their course.
In the wake of the financial collapse, we had major impacts on what we do. A precipitous and prolonged drop in work volume resulted in a significant migration out of the industry and sped up retirements for others. For those of us that remained, we were left with a regulatory framework that now defined who our clients were supposed to be. The net result was the proliferation of appraisal management companies. While the use o…