Welcome to the Fall 2012 Online Edition of Real Estate Valuation Magazine.
Real Estate Valuation Magazine started in 1986. Since then, we have published over 100 issues—75 printed editions through the Spring of 2003, and 25 online issues since then. For the past 15 years, my wife and longtime collaborator, Ruth Lambert, has been the editor of REVMAG, assisted by our son, H Alex Harrison, who has been REV’s webmaster since we launched the site in 2003.
With this issue, Ruth is retiring from a long and successful career at REV Magazine. In June 2013, Ruth is receiving her MFA in Creative Writing from Goddard College (also my alma mater for my Masters in Adult Education). Thereafter, Ruth plans to start her next career as an author and teacher. Many of you know Ruth, and I am sure you will join us in wishing her well in her new endeavors.
We will continue publishing and writing for the magazine as in the past. H Alex is stepping in as Editor, effective this issue, and will continue on as REV’s webmaster.
H Alex is our youngest child (of four) and only son. He earned his J.D. from Northeastern University School of Law and B.A. from Sarah Lawrence College. He has worked for REV as webmaster since 2003, and I welcome his vision of REV as we launch a series of new initiatives in 2013 to embrace the digital age.
Many REV readers are former students of mine, which pleases me, as real estate appraisal education is now my primary occupation. I continue to write and update my books as needed, and we have expanded our online education in collaboration with Van Ed (www.vaned.com) in Denver, CO.
My newest seminar, “Basic Home Construction,” has just received AQB approval. It is suitable for both Appraisers and Realtors. It will be available shortly, for both classroom and online presentation. The course is based on my best-selling product knowledge book, HOUSES: The Illustrated Guide to Construction, Design and Systems, which has sold over 500,000 copies since its first publication in 1973. (HOUSES is currently being revised; an updated version will be published in 2013.)
What’s New: Starting with the next issue, REVMAG is launching a free national Appraisal Education Directory. This Directory will list available classroom and online appraisal courses and continuing education seminars on a state-by-state basis, by date. The Directory will be continuously updated based on information we receive from schools and appraisal chapters around the country. The Appraisal Education Directory is the first of its kind, offering a single centralized location for Real Estate Professionals in every state to find basic and continuing ed courses quickly and easily.
REVMAG is poised to grow! We look forward to hearing from you, our readers, about what you want us to focus on, what features you especially enjoy and appreciate, and what's working well for you. Enjoy this latest issue of the magazine! Be sure to sign up for our free email newsletter by entering your email address in the sign up box on the right. It is the easiest way to stay up-to-date regarding everything we offer.
Well wishes and accolades can be sent directly to Ruth (email@example.com); any questions or suggestions should go to our new editor, H Alex Harrison (firstname.lastname@example.org); and I always welcome personal messages and your appraisal questions as well. Please email me at: email@example.com
Just as our former Editor starts on her new path, REVMAG too is growing and changing every day.
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When Will the Residential Real Estate Recession End? (Part II)
On October 11th, the Federal Reserve lowered its forecast for growth slightly this year and forecast that the economy would grow slightly in 2013. I stated in my June Editorial (below, dated 6/03/12) that the key to the overall economic recovery, and especially to the recovery of the residential housing market, is new construction.
Here are the annual housing starts as reported by the US Census:
You don’t have to be an economist to understand what these figures are saying. To me, this table shows that all things being equal, we can absorb about 1,500 million single family houses per year, and starting in 1999, we started to over build. To absorb these extra houses, lenders sold homes to people who previously would not have qualified to buy them.
Once we absorb these extra houses, we should be able to build and absorb another 1,500,000 houses per year. Think what this will do for the economy! Millions of new jobs just to build the houses and millions more to produce what goes into them.
The bottom line is that it is hard to sell news when comparable used houses can be purchased at a much lower price. So far I don’t see much happening to rehabilitate and sell off the houses that have been foreclosed, plus at least another million houses that will be foreclosed in the next few years.
So to repeat my forecast made below from June 2012: In spite of what you read as part of the election campaign rhetoric, nothing much is going to happen in the next few years to improve the overall housing market. Keep in mind that as there will be local markets that buck the national trend and will improve sooner, and others that will improve slower.
Dear Mr. Harrison,
While inquiring why my workload has slowed down, I was just informed by Streetlinks AMC that Chase has placed me on a banned list. Streetlinks cannot tell me why or for what reason. All they are saying is to get in touch with Chase.
I have tried 7 different numbers for Chase, Chase Financial, Chase Home Lending etc. and they are all telling me there is no appraisal department and no way to help me get this resolved. I even went into a Chase branch. Chase is telling me to go back to the AMC to find out who the contact person is. Naturally, Streetlinks does not give out that info and are directing me back to Chase, who directs me back to the AMC who directs me back to Chase who directs me back to the AMC and on and on and on.
I never received any notification from Chase explaining why they are banning me. It seems unfair that I can be placed on a 'do not use' list without any explanation or any chance to rebut what they felt is wrong with the appraisal. I’m not afforded any appeal, and I was informed that they share these lists. 10 years as an appraiser and not one single complaint, and now this and no one can tell me why or how? This is my livelihood! I have a mortgage and bills like everyone else. I cannot afford to not work.
Any help, suggestions, numbers to call...ANYTHING that you can offer that can help me resolve this would be truly and deeply appreciated.
Frustrated and unfairly treated,
P.S. I know it was with Streetlinks because they were the only AMC I was doing any work with.
Your situation is, unfortunately, not an isolated example of this unfair type of treatment. The easiest thing to do is hire an attorney to represent you. Other things that you can do is file complaints with the Appraisal Commission, or Banking Commission in your state.
Good luck, but I am not very hopeful that you will get satisfactory results no matter what you do.
Number of Certified Appraisers on the Rise
Source: Appraisal Buzz
Excerpt: “Even with the myriad challenges in today's residential and commercial real estate markets, the percentage of appraisers with a certification is at an all-time high, according to Appraisal Institute research. However, because more than half of appraisers in the U.S. are age 51-65, and since many have left the industry in recent times, there needs to be a concerted and strategic effort to attract younger individuals into the profession.
The Appraisal Institute has analyzed the Appraisal Subcommittee National Registry data since 2006 using a consistent methodology, and the long-term trend is now clearer:
The number of appraisers continues to decrease at a rate of about 3 percent per year; Appraisal firms decreased the number of trainees dramatically over past two to three years; and The appraiser population could decrease 25 to 35 percent over the next 10 years due to age attrition and fewer new entrants....While the overall number of appraisers is decreasing, the number of certified general and residential appraisers is on the upswing.”
Comment: Interesting analysis. Well worth reading. Don't be “put off" by the AI promoting itself towards the end of the article. To read the article in full, click here.
I have a question: If an appraiser works for a bank and reviews a property by another appraiser, then does an appraisal on the same property, and is an expert witness in court for the bank -- is that legal or illegal? Does that violate USPAP?
There is nothing in the USPAP that directly addresses this question. I am unaware of anything that would make this illegal. xThe USPAP does permit an appraiser to appraise the same property for more than one client. I think this would apply in your situation too. However, the USPAP does have rules about confidentially which would prohibit you from using any confidential information that appeared in the appraisal you reviewed for the bank.
Even so , I would not do it as it sounds to me like you would be looking for trouble. Trying to explain to a judge why you did this, which appears to be a conflict by giving as your reason that it is O.K. because of the USPAP is not a position I would like to be in. You should always think twice about appraising the same property for two different clients unless you feel that one will never have anything to do with the other. I don't even like being in the position of asking the first client for permission to do an appraisal for a second. You maybe bumping into the Confidentially rules by revealing to one client that someone else in interested in their property.
by Steven J. Herzog, MAI
With Eunice H. Park
Soft Cover • 106 Pages • $45.00
Publication Date: 2012
200 W Madison, St
Chicago, Il 60606
phone: 312 355-4400
The first 16 pages of The Appraisal of Water Rights are an illustrated guide to the complex water rights situation in California, with maps and pictures of its vast water collection and distribution systems. While interesting, it has little to do with water rights appraising in the rest of the USA.
Next is a primer on “The Nature of Water Rights.” It cautions that, “It would be presumptuous and dangerous for the appraiser to think that the rules for one state could be applied to another without first performing extensive research.” However, no guidance is offered as to how to go about doing this research.
Seven types of water rights are described: Prescriptive rights, Pueblo rights, Groundwater rights, Riparian rights, Appropriative rights, Contractual entitlements, and Federal Reserve. This provides good introductory information about each of these types of rights.
Chapter 2 starts with the quotation: “You can transfer water if it is your water and not somebody else’s water, provided the transfer does not injure another water right holder or unreasonably affect instream beneficial use.” The chapter then goes on to explain the basics of transferring water.
It is important to understand that this book does not address how value is affected when a property abuts or is near water. In many markets, this is considered an amenity that may substantially add to the value of the property. However, this book is focused on how to buy, sell and transfer water rights.
What this book does is let the reader understand the complexities of water right transfer and valuation. However, the only way I can conceive that most appraisers could take such an assignment is to associate themselves with another appraiser well experienced doing this type of work.
SAN DIEGO, SEPT. 13, 2012 – DataQuick®, a provider of advanced real estate information solutions powered by data, analytics and decisioning, announced today that Frank V. McMahon has been named executive chairman of DataQuick.
In this new role, McMahon will play an active part in the management of many of DataQuick’s most significant client relationships and the development and execution of strategic priorities. He will participate in many of DataQuick’s growth initiatives, including the company’s plans to expand Rels Title. In addition, McMahon will continue to work with John Walsh, president of DataQuick, and the company’s senior management team on product development, operational, partner and client initiatives.
McMahon will continue to serve as a member of the Advisory Board of Decision Insight Information Group (DIIG), the holding company that owns DataQuick as well as Marshall & Swift/Boeckh (MSB), Decision Insight Information Group–Europe and Access Point Information Canada.
“Frank has provided invaluable insight and direction to DataQuick and the other DIIG businesses as an Advisory Board Member,” said Chris Cartwright, chief executive officer of DIIG. “His expanded role will allow him to leverage his extensive industry experience to help DataQuick meet the needs of our clients and grow more effectively.”
McMahon has served as a consultant to TPG Capital, DIIG’s parent company, since 2010. Prior to this, he served as CEO of the Information Solutions Group at The First American Corp. for two years and as vice chairman and CFO of the company for two years. Despite challenging economic and market conditions in 2008 and 2009, the Information Solutions Group grew under McMahon’s leadership achieving GAAP EBITDA of $484 million in 2009. Prior to 2006, McMahon spent 20 years as an investment banker with Merrill Lynch and Lehman Brothers.
McMahon graduated with a bachelor of science degree in Economics from Villanova University and a masters of business administration from the Fuqua School of Business at Duke University.
San Diego-based DataQuick, a Decision Insight Information Group Company, delivers advanced information solutions powered by higher quality data, innovative analytics and automated decisioning across a national footprint. The company drives better decision making and improved profitability for the real estate, mortgage lending and secondary investor markets. DataQuick’s integrated solutions include property data and analytics, appraisals and non-appraisal evaluations, flood determinations, mortgage credit reports, automated valuation models, automated decisioning software, title insurance and property information, property research portals and marketing tools. For more information, visit the company’s website at www.dataquick.com, on LinkedIn or on Twitter at @DataQuick.
About Decision Insight Information Group
Decision Insight Information Group, located in the U.S., Canada and Europe, delivers a comprehensive range of information, infrastructure and decision support products and services for financial and legal professionals. Operating at the heart of the property industry, Decision Insight Information Group manages complex information solutions and provides clarity on decision making for buying, selling, conveyancing, financing and insurance. Decision Insight Information Group companies include MSB and DataQuick in the U.S., Access Point Information Canada, SearchFlow, xit2 and Decision Insight Hub in the UK, Millar & Bryce in Scotland, Rochford Brady Group in the Republic of Ireland, Wertweiser, a joint venture with HVB Bank, in Germany, and Decision First, a joint venture with First Title, in the UK. Decision Insight Information Group has 1,100 employees in 16 offices. For more information, visit www.decisioninsightgroup.com. Decision Insight Information Group is a TPG Capital portfolio company.
I am appraising a unique property. It is located in an area that has very few duplex's. There are no resent sales in the subject's city. I know I can go to a similar neighborhood to get comps however the neighborhoods are in a different city with different tax base. This area of South Florida has many different cities within a 10 mile area. How far can I go from the subject property and still be considered a comparable neighborhood?
Thank You for you help,
There are no USPAP requirements that limit the distance you can go to find the best comparable sales. Actually, it is just the opposite because it is a violation of the USPAP to limit your search for the best comparable sales based on instructions from the client. However, it is O.K. for a client to ask you to explain why you needed to go some unusual distance to find the most comparable sales.
Sometimes the market area in which the best comparable sales are located is very limited because it is near a university, hospital, or public transportation, etc. An opposite example is when a typical wealthy buyer, who is working in New York City, considers buying a mansion in Long Island NY, Morristown NJ or Greenwich CT, then you may end up looking for comparable sales in three different states.
New USPAP Frequently Asked Questions & Answers
Effective Date: January 1st, 2012 - December 31st, 2013
If you look carefully at the 2012-2013 Uniform Standards of Appraisal Practice you find a separate section of 159 pages answering 321 questions. It reminds me of when I walk into an attorney’s office and looked at their book shelves. The number of books that interpret the Connecticut statutes were far greater then the number of books that contain the statutes.
When I receive an “Ask Henry” question the first thing I do is look up the subject it covers in this FAQ section of the current USPAP. Often I am able to use what I find as the basis for my answer. (If you have the electronic version of the USPAP it is easy to look for a subject by using the search function).
After publishing the current USPAP (2012-2013), the Appraisal Foundation continues to publish answers to frequently asked questions. You can see these questions and all the 2011 questions at www.appraisalfoundation.org. (On the right side of their home page click on the “Appraisal Standards Board (ASB) – USPAP Q&As” tab which will take you to eight new 2012 questions and seven 2011 questions.)
Below is a list of the 2012 USPAP Questions and my summary of these questions and answers:
I have been doing lender work for the past 13 years and would like to get more involved in doing non-lender work including estate work, trusts, divorce, bankruptcy, tax appeals, gifting, etc. Do you know of any good books or courses that cover any or all of this?
There are some good books and articles covering this subject. I suggest you contact the Lum Library and ask them for help.
550 West Van Buren St
Suite 1000 Chicago IL
tel: (312) 355-4100. You can also send your question to them by email: firstname.lastname@example.org