Things are busy, but not crazy due to a lack of inventory. Is anyone interested in getting together for lunch? Send me your thoughts.
I haven’t put out many emails in the last year in part due to some computer issues messing up my email list and the fact that there have not been too many bad things happening in the appraisal industry lately. That is amazing. If you know someone that is no longer getting my emails, let me know. I had to piece things back together and I am getting some kicked back as spam. When I have time I will try to get things figured out to get the emails going the way that they should.
The shortage of inventory is doing a number on buyers out there. Folks are starting to get a bit crazy in their attempt to get a house. We now have a new phenomenon of the weekend listing. Listings fell 11% from last month. You may see things in the MLS notes of “no showings until Saturday. Offers being presented on Sunday”. That is how crazy it is. Sellers in the first time home buyer market can go away for the weekend and come back to a pile of offers to choose from. The competing offers are hitting $10,000 or $20,000 over asking price and the buyers feel justified because that is the only way that they can win the bidding war. The question is this going to relate to market value? Is there some duress in the auction setting? Home owners seeing the feeding frenzy may become motivated to put their homes on the market to take advantage of demand. What happens when rates go up? Will they go up? The Fed says yes, but they seem to have gone down. Lenders have tightened requirements but are pushing to eliminate the need for appraisals so they can do more loans faster. Appraisers keep slowing things down and coming in under contract price.
One question is how will this affect risk for the lenders and what is this shortage of supply going to do to borrowers 5 year down the road when demand is down and rates are up. Will the lenders come back on the appraisers questioning why the homes were appraised so high 5 years ago like they did in 2008 and later. If the market is paying higher prices that would relate to market value. How will this year compare to next year?
There is an appraiser shortage, so let’s eliminate the need for the appraiser and make things better.
That is what I have been hearing from the GSE’s and AMC’s. I keep seeing and hearing about all of these moves by the major players to change the appraisal industry (Modernization they call it). Fannie and Freddie both changed their requirements for licensed appraisers to do inspections of properties for certain loans. There is a push to put out property reports where they send a person out to take pictures of the subject and then an appraiser uses the AMC’s AVM to analyze the market and choose some comps and give a value. There is a video below about a Value Net appraisal. It shows all the reasons not to use a real appraisal. There is also a link to an example of one.
They always seem to miss the elephant in the room. What about paying reasonable fees? What about eliminating AMC’s continual bombardment of revision requests? What about eliminating excessive AMC fees? What about eliminating AMC’s? There answer always seems to be to eliminate the appraiser.
The VA had a hearing speaking to appraisal related representatives about how to make the industry better. It is good that those in charge are asking questions finally about why appraisers are getting out of the business. You can listen to Phil’s comments on the Voice of appraisal broadcast. The speakers include Mr. Jeffrey London Director Loan Guaranty Service Veterans Benefits Administration U.S. Department of Veterans Affairs, Mr. Gerald Kifer Supervisory Appraiser Loan Guaranty Service Veterans Benefits Administration U.S. Department of Veterans Affairs, Ms. Michelle Bradley 2016 Real Property Valuation Committee Chair National Association of Realtors, Mr. Stephen S. Wagner, MAI, SRA, AI-GRS Vice President Appraisal Institute, Mr. Russell Johnson Chief Revenue Officer Clear Capital – See more at: http://veterans.house.gov/calendar/eventsingle.aspx?EventID=1666#sthash.hCy2I8zK.dpuf
Clear Capital was pushing the desktop appraisal at the hearing with a professional photographer doing the inspection.
The complaints include:
It takes too long to get an appraisal done.
It cost too much.
There aren’t enough appraisers.
The number of appraisers is declining.
Rising revision rates.
Appraisers are killing deals.
Fast forward to about half way through because the video doesn’t start until then.
November Congressional hearing on Modernizing Appraisals.