Thursday, September 7, 2017

A unique way for Appraisers to help.....

The SBA is looking for appraisers to help with the wave of disaster loans as a result of Hurricane Harvey.   These are not volunteers positions,  appraisers are paid.  Check out the article published by the Appraisal Institute.

Wednesday, April 5, 2017

Lowering The Bar

In response to the declining numbers of appraisers nationwide, the Appraiser Qualifications Board (AQB) of the Appraisal Foundation is considering lowering the qualifying education and experience requirements for appraisers.  In it's third exposure draft to the Real Property Appraiser Qualification Criteria issued in March 2017, the AQB is proposing changes that would make it easier for appraisers to upgrade their licenses.  If adopted, the changes would go into effect no sooner than January 1, 2018.

In January 2015, the AQB mandated that four year college degrees be a prerequisite to obtaining either the Certified Residential or Certified General license.  Additionally they required a two year college degree or 30 hours of college level education in topics relevant to appraising.

They are now proposing no college requirements for Licensed Residential Real Property Appraisers. For the Certified Residential Real Property Appraiser credential they are proposing an alternative to the four year college degree.  If an applicant has held a Licensed Residential Real Property credential for at least three years and is in good standing with their respective jurisdiction, then they would only require 21 hours of college level course work.  The course work will have to be in topics relevant to appraising such as algebra, economic, composition, etc.   The four year degree requirement for the Certified General credential will remain.

Additionally, the experience needed to upgrade an appraisal license is also potentially being changed

                                      Current                           Proposed
Licensed Residential:   2,000 hours                     1,000 hours
Certified Residential:   2,500 hours                     1,500 hours
Certified General:        3,000 hours                      2,000 hours

This no doubt would be a relief to existing Licensed appraisers that are unable to meet the four year college degree requirement to get to the Certified Residential level.  But add the reduction in experience requirements and the question becomes "is the bar being lowered too far?"

Saturday, March 19, 2016

Number of appraisers declining

With increasing barriers to entry and the average age of appraisers being around 55, there is a looming shortage of qualified professionals within the industry.  Some locations are already experiencing it.  As we all learned in economic class when supply goes down, price goes up.  This creates a great opportunity.

Remember in your Appraisal Principles class when we discussed a seller's market?  Appraisers are increasingly operating in a seller's market where they have greater negotiating power.  In Minnesota there were around 4,500 licensed and certified appraisers prior to the housing market crash.  Today we are down to around 1,900.  If you are of the belief your fees are not where they should be, now is the time to do something about it.

Tuesday, March 24, 2015

FHA Handbook 4000.1

Remember when keeping track of the FHA appraisal requirements meant sifting through the 4150.2 handbook, but then having to review all the Mortgagee Letters to see what had been changed?  Well no more.  HUD has just released their newly revised and updated Single Family Housing Policy Handbook 4000.1.

This handbook replaces the 4150.2 handbook and includes the Mortgagee Letter changes so as to become your one stop shop for appraisal policy.  The book was issued in March of 2015, with most of the changes to take effect on June 15, 2015.

The handbook is much like Fannie Mae's Selling Guide in that it includes policies for not only appraisers, but lenders, originators and closers.  So as an appraiser you likely do not need to read all 539 pages (unless you are suffering from insomnia and looking for a cure).  The good stuff for appraisers is found in Section II. B.  starting on page 421.


Tuesday, December 30, 2014

The New Supervisor/Trainee Course

A very common question I hear lately is "are all supervisors and trainees required to take the new supervisor/trainee course?"

Drum roll please......the answer is no.

Anyone within an established supervisor/trainee relationship prior to January 1, 2015 does not need to take the course.  If, however, you create any new supervisor/trainee relationships after January 1, 2015, you will then have to take the new class.

Monday, December 29, 2014

Fannie Mae drops net and gross adjustment guidelines

So I was doing a little casual reading of the Fannie Mae Selling Guide ( I know.. I'm a sick puppy) and found a recent change that made my jaw drop.  Fannie Mae no longer has any guidelines with respect to net and gross adjustments.  So many of us residential appraisers were weaned on the 15% net and 25% gross adjustment guidelines.  Essentially these benchmarks were used to test the comparability of a sale used in the sales comparison approach.

If your adjustments were in excess of 15% net or 25% gross, you had better have an explanation that was approved by the Pope (and even then it may not be accepted by some underwriters.)

No more.

According to Section B4-1.3-09, updated 12/16/2014 "Fannie Mae does not have specific limitations or guidelines associated with net or gross adjustments."

However, this does not necessarily make the appraiser's job easier.

The section goes on to say "If the extent of the appraiser’s adjustments to the comparable sales is great enough to indicate that the property may not conform to the neighborhood, the underwriter must determine if the opinion of value is adequately supported.

The concern now is that rather than having clearly defined benchmarks for judging the sales comparability, it is now more open to interpretation (and possibly dispute) by the underwriter.  An underwriter could now question a sale with 15% gross if they had a mind to do so.

Lets hope good judgment wins out and that this relaxation of the guidelines results in more acceptance rather than more stipulations.

Friday, July 11, 2014

Getting that first appraisal job.

As an appraisal instructor, I have the very great privilege of working with the next generation of appraisal professionals.  While many come to the licensing courses with a job in hand, many do not. Getting that supervisor lined up can often be the most difficult part of becoming an appraiser.  I am often asked by students how to go about it.

The direct answer is networking.

Most employed appraisers I know got their first gig because they already knew somebody in the industry.  They had that connection already.  If you do not, here is what it is going to take: persistence.

Jump on-line, grab the phone book (do they still publish those things?) and call every appraiser in your area.  Make them aware you are interested.  You are going to be told "We're not hiring right now" a lot. Don't let that bother you.  Keep their contact info and call them back in a month.  Call them back the month after that.  Ask to take them out to lunch so as to get their opinions about how to break into the industry and what it takes to be a successful appraiser.  Make sure that when they are ready to hire a new appraiser, you are the one they are thinking of.  Training a new appraiser takes a lot of time and effort. Supervisors want to know the person they hire are very interested.

Contact the assessor's offices around your area.  They often are willing to hire newly or soon to be licensed appraisers.  Contact your local chapter of the Appraisal Institute or other appraisal industry organization.  They love having interested guests at their luncheons.  You could not ask for a better networking opportunity.

Friday, May 16, 2014

Advanced Education

After what has felt like an eternity, I have completed the MAI and SRA designations with the Appraisal Institute.  It was a long journey and I most definitely feel it was worth the effort.  Are you looking to take your career to the next level?  It will require more education than that which you took to get your license.  This is a knowledge profession.  The more you know, whether it be about a market, a property type or a particular intended use, the more valuable the  clients will find you.  Never stop learning.

Wednesday, February 12, 2014

Trainee Appraisers In Minnesota - Heads Up

A quick note to applicants for the Trainee Residential Real Property Appraisal license in the state of Minnesota.  I just verified with the Minnesota Department of Commerce Licensing Division, that applicants must have a supervisor lined up before they apply for their license.

The Licensing Instructions for Trainees found on the Commerce Department's website do not specifically state the supervisor must be in place before applying.  However, when completing the license application, the name of the supervisor is required.

When a Trainee completes the state licensing exam, those test results are good for two years.  This means you have a two year window to get the supervisor lined up before you apply for the license.

Sunday, January 5, 2014

Welcome to USPAP 2014

Here we are again with a new edition of USPAP.  With this edition we see some great simplifications. Of interest to most appraisers is the retirement of "Self-Contained" and "Summary" written reports. Check your boilerplates.  There are now just two written report options: Appraisal Report (which is required to have a summary level of detail) and Restricted Appraisal Report (which is appropriate only when the client is the only intended user.)

The other major change, is the retirement of Standards Rule 4 & 5 which deal with appraisal consultation.  As these standards were rarely used correctly, they were retired.

Also, a clarification as to what constitutes assignment results.  As appraisers, we are very well aware that our value conclusions are confidential.  This clarification reminds us that not only the value conclusion are confidential, but other opinions developed during the assignment are also confidential.  These include items such as the highest and best use conclusion, the opinion as to the reasonable exposure time, opinions about qualitative factors relating to the subject and comparables.

With a handful other minor changes, I look forward to seeing you in the 7 Hour Update Class starting in February at Kaplan