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An article from the Wall Street Journal discussing what living breathing appraisers already know:  Computerized appraisals (i.e. AVM's) are WRONG more often than they are right.  Zillow.com is terrible in most neighborhoods.

Nothing can take the place of a real person, with the knowledge and experience of the neighborhood and market trends, acting under no pressure, to appraise real property.

Here's the article:  http://online.wsj.com/article/SB20001424052970204204004576049974087536438.html

BTW, my New Year's resolution is to blog more.  :-o

Next Appraisal / Steven Gray appraises residential properties in the Contra Costa and Alameda county cities of Richmond, San Pablo, El Cerrito, Albany, Hercules, Pinole, Walnut Creek, Oakland, Union City, El Sobrante, San Leandro, San Lorenzo, Hayward & more.

We wanted to announce and warmly greet the newest teammate to Next Appraisal, Celeste Lee-Wong.  Celeste will be working as a part-time typist and data entry person for the near future.  Celeste worked as an appraiser trainee a few years ago but suffered the loss of her position when the real estate business fell through the floor and unfortunately was not able to get her appraiser license.  She remains passionate about appraising and looks forward to slowly working her way back into this awesome profession.

  Welcome Celeste! We hope that we learn a great deal from each other!  :-)

So, the business agreement (not a law) that was known as the Home Valuation Code of Conduct is sunsetting this month.

In response to this sunsetting, Fannie Mae has developed their own appraiser independence requirements to take it's place and is essentially the same as the HVCC.  The new requirements are clearer to read and understand.  The rules still prohibit anyone who receives commission from a loan from ordering an appraisal.  It does not prohibit mortgage company staff from ordering appraisals as long as there are rules/firewall in place that sperate those originating loans from those ordering appraisals.

Here's the link to the new Fannie Mae requirements.  https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/air.pdf

Next Appraisal is a residential appraisal company that services Contra Costa and Alameda counties.

Business is going like gang busters!  Due to that fact, I've decided that I need to cut down on my drive time and stick closer to my home areas.  Therefore I will stop taking appraisal orders for Solano county.

I still will be appraising homes in both Contra Costa county and Alameda county.  I've been receiving a lot of appraisal requests for Orinda, Moraga, Berkely and Walnut Creek lately.  Those places haven't been hit by the recession as hard as some others and homeowners still have equity.  Areas of Richmond are in pretty sad shape still.  I'm seeing many homes in North Richmond and the Iron Triangle neighborhood for sale well below $100,000.  San Pablo is a bit better, but not much.

The talking heads say we're in an era of no inflation and possibly deflation.  So, can anyone tell me why my E&O insurance went up 20% this year???  I've never had a claim, ever. 

...more to come later.

Sounds weird? 

What I mean is, it seems the busier I am, the more and more work I attract.  I mentioned this to a friend of mine the other day and he said quite matter of factly, "would you prefer to see a doctor that can see you right away, or one that can't see you for a week?".  Makes sense to me!  :-)

I really appreciate all my loyal clients who entrust me with business.  I never forget that what I do is serious business and affects people's lives.  I strive and work extremely hard and long hours doing the very best job I can for each and every property.

THANK YOU!

Truth is, I'm busy as heck lately!

Bankruptcy appraisals are down, purchase appraisals are WAY up and refinances are steady. 

Still, I need to blog more so I'll get a few thoughts out this coming weekend.

By the way, I received my first order for a property that was a farm on 56 acres in Byron California.  Had to decline of coure, I don't have any experience in that property type.  Would have been interesting to accompany the appraiser who received that assignment though.

HVCC may be sunsetting.... more on that later too.

Finally I've been able to attain the domain www.NextAppraisal.com from cyber-squatters!  Yippee!!!!!

For now, it's just pointed to my existing NextAppraisal.net domain, but I'll work with my webmaster to get that sorted out.

Standby for more new.  I've been extremely busy with both work and training/learning.

-Steven

ps. I do FHA 203(k) appraising in all of Alameda and Contra Costa county!

Yesterday I was listening to my favorite morning radio talk show "Ronn Owens" on KGO 810am in the Bay area.  Ronn's guest was Patrick Lashinsky owner of Zip Realty.  Patrick made a negative comment that appraisers are "killing deals" by coming in below the contract price on homes for sale.  He gave an example of a house with "20 offers" and the appraisal came in below the contract price.  His point was, if there are 20 offers on a house then the contract price should be the market price.  Well, my blood began to boil.  I had to drive home quickly in order to get on the phone and call in to Ronn.

I got on the air and set Patrick straight.  Appraisers don't set the market!  We measure it.  Contract prices don't set the market!  Closed/Sold prices set the market.  I remained calm and made several points to Patrick:

1) Appraisers work in the past, not the future.  (OK, sometimes we work in the future, but those are special circumstances and special appraisals).

Every lender I work with now has requirements that two sale comps must be within the past 90 days and the third must be within the past 6 months.  Due to the market conditions there are very few exceptions to this requirement nowdays.  In addition, every lender requires two listings or pendings that support the final value opinion.

2) The price a home sells for becomes the market price of that home after it closes.  It's not the contract price while it's pending close of escrow.  If the contract price of a home is $500,000, but the highest sale in the neighborhood is $490,000, guess what?  The appraiser is going to come in at $490,000.  If the appraiser cannot support a value of $500,000 with closed sales, the appraisal will be rejected by the underwriter.  There are very few exceptions to this and I rarely have seen it work.  It certainly won't work in this kind of market.

A borrower is always welcome to offer more money than what a house appraises for, this is America afterall!  But, it doesn't mean a lender has to lend on that higher price.

Recap:  Appraisers don't set the market, we measure it.  If the contract price cannot be supported by two recent sales in the neighborhood, and at least one listing or pending, don't be disappointed when the appraisal comes in lower than the contract price.

This is a very interesting and trying time for all of us and most appraisers work very hard at their jobs (for less and less pay by the way).

Peace.

(Next Appraisal is a residential appraisal service company covering the Alameda county cities of San Leandro, San Lorenzo, Hayward, Union City, Livermore and many others.)