Appraisal Insight Feed

NAR Appraiser Trends Survey

For a while now, NAR has heard from REALTORS® concerned about the state of the appraisal industry. Agents talk of difficulty finding appraisers, long turn-around times, and “rush” fees for faster service. Appraisers note increased difficulty in attracting young people into the profession and the challenges of being an appraiser in today’s market.

In response, NAR set out to get to the heart of these issues by asking appraisers about their experiences. NAR’s Research Department, in collaboration with The Olinger Group, surveyed over 2000 respondents, made up from appraisers who were registered on the Appraisal Subcommittee’s list of licensed and certified appraisers and were also members of the NAR. The results of this research are now available on NAR’s website.

NAR Appraiser Trends Survey

Drones – the Appraiser’s Next Great Tool

The following is a guest post by Greg B. Mays.

After years of consideration, the Federal Aviation Administration (FAA) has finally published rules on how to integrate drones safely into the National Airspace System (NAS). There is now an easy to understand system and set of rules which anyone flying a drone must follow. This booming and exciting new technology is making its debut in many different fields of commerce and real estate is no exception. An interesting question arises from all of this. Should real estate appraisers consider using this technology when appraising real estate? The simple answer is, absolutely.

(aerial drone)

It’s been a long time since a new technology, other than software and gadgets that can measure and take notes in the field, has been available to us and I find it very exciting.

Our office has utilized aerial photographs in an appraisal on more than several occasions. Here are some examples: pictures of a new roof system installed on an older improvement; large acreage tracts that the client wanted in order to know more about forestation and topography; proximity to surrounding properties or features such as rivers, lakes, commercial buildings, and power lines – just to name a few. This bird’s eye view can provide the client with a much better idea of the neighborhood surrounding a property and physical characteristics of the property itself. To coin a phrase, “a picture is worth a thousand words.”

(birds-eye view of a property taken by aerial drone)

While the ability to fly a drone for commercial use cannot be learned overnight, no longer are commercial drone operators required to hold a pilot’s license that is expensive and time consuming to obtain. Any interested appraiser should look at the FAA’s website. I can’t stress enough doing this the right way. It is important to not think of a drone as a flying camera but as an aircraft requiring knowledge and certifications to fly.

Until we have cars that are driving themselves while you write your report this is as good as it gets.

 Greg B. Mays is the owner and operator of Flying Fish Aerial Photography, LLC. He has been a licensed drone operator since 2015 and a REALTOR® Appraiser for over 25 years.

Appraisal Course for Lending Professionals and other Non-Appraisers

Lending professionals and other non-appraisers will gain a better understanding of the Uniform Standards of Professional Appraisal Practice (USPAP) and its applicability to the lending process through this online seminar created by The Appraisal Foundation in partnership with McKissock.  The seminar provides insight about appraisers’ USPAP-related obligations in an assignment and arms the underwriter with knowledge of how to best evaluate an appraisal report for USPAP compliance.

This program is not intended for appraisers or to provide training for those performing appraisal review (as defined in USPAP) assignments.

Register for the seminar here.

Feel free to pass this along to your colleagues in the lending community!

Questions?  Please contact Paula Seidel at paula@appraisalfoundation.org.

Third Exposure Draft – Valuation of Green and High Performance Property: Background and Core Competency

The Appraisal Practices Board (APB) of The Appraisal Foundation has issued the following document for comment:

Third Exposure Draft – Valuation of Green and High Performance Property:  Background and Core Competency

All interested parties are encouraged to comment in writing to the APB before the deadline of December 12, 2014. Respondents should be assured that each member of the APB and the SME Group will thoroughly read and consider all comments.

Written comments on this Exposure Draft can be submitted by mail, email and facsimile.

Mail:

Appraisal Practices Board

The Appraisal Foundation

1155 15th Street NW, Suite 1111

Washington, DC  20005

Email: 

APBComments@appraisalfoundation.org

Fax:

202.347.7727

If you have any questions regarding this Exposure Draft, please contact Staci Steward at staci@appraisalfoundation.org.

Alliance for Valuation Education Seeks SMEs

The Alliance for Valuation Education, a non-profit established with the support of thirteen leading valuation-related organizations (including the National Association of REALTORS), is soliciting applications for course authors as well as those interested in serving as subject matter experts (SMEs).

If you are interested in applying to be a course author or SME, please visit the Alliance for Valuation Education website.

If you have any questions, please contact Magdalene Vasquez, Staff Executive, at magdalene@avenew.org or 202-595-3321.

AQB Exposure Draft of a Proposed Revision to the 2015 Real Property Appraiser Qualification Criteria

The Appraiser Qualifications Board (AQB) has issued an Exposure Draft of a Proposed Revision to the 2015 Real Property Appraiser Qualification Criteria.

In recent months, as states have worked to make the necessary revisions to laws and regulations to implement the changes in the Criteria, the AQB has received additional feedback surrounding Background Checks.

All interested parties are encouraged to comment in writing to the AQB before the deadline of July 11, 2014. Respondents should be assured that each member of the AQB will thoroughly read and consider all comments.

Written comments on this Exposure Draft can be submitted by mail, email and facsimile.

Mail:

Magdalene Vasquez

The Appraisal Foundation

1155 15th Street NW, Suite 1111

Washington, DC  20005

Email: 

AQBcomments@appraisalfoundation.org

Fax:

202.347.7727

If you have any questions regarding this Exposure Draft, please contact Magdalene Vasquez at (202) 624-3074 or magdalene@appraisalfoundation.org.

New Appraisal Tools Section on REALTOR.org/appraisal

NAR has added a new resource on the REALTOR.org/appraisal page called “Appraisal Tools.”  The Appraisal Tools page provides links to educational resources for real estate agents who want to educate clients about the appraisal process.  Links include NAR’s new Frequently Asked Questions brochure about appraisals as well as three publications from the Appraisal Foundation including common myths about the appraisal process.  The “Tools” page also has links to Seller and Servicer Guides from Fannie Mae and Freddie Mac, as well as the Green MLS toolkit and a Field Guide to Appraising a Real Estate Office. 

New Mercury Mobile App May Speed Appraisals

A new iOS app from a la mode, the Naples, Fla.-based real estate and mortgage technology company, offers a solution to appraisal delays.

The app is called Mercury Mobile. It enables appraisers in the field to respond instantly to new orders from Mercury Network lenders and AMCs, according to the company. Appraisers using the app receive notification when a Mercury Network client order comes in. They can quickly accept, negotiate, or decline the order. Bottom line: You’ll be less likely to lose opportunities that come in while you’re out on field inspections.

By combining Mercury Mobile with a la mode’s mobile appraisal inspection and sketching product, TOTAL for Mobile, appraisers can handle the entire order-to-inspection cycle onsite on an iPad.

a la mode has an established history of mobile innovation, with more than 300,000 downloads of apps for appraisers and real estate agents. Its platform, Mercury Network, powers more than 20,000 appraisal orders a day and is used by more than 600 lenders and AMCs.

“Just offering a cool tool of some sort, whether simple or complex, isn’t sufficient,” said Dave Biggers, a la mode’s founder and chairman, in a prepared statement. “It has to be done by a company with the ability to penetrate the market in sizable numbers, with a training, support, and distribution network reaching directly to the devices and desktops of enough appraisers that an impact is felt industry-wide.  This new Mercury Mobile product meets all of those criteria.”

What do you think? Do you sometimes have trouble getting back to clients on a timely basis? Would an app such as this be likely to improve your response time on appraisal orders? And if you’ve already tried Mercury Mobile, what do you think?

The Mercury Mobile app is available at no charge for iPhone and iPad, and an Android version is on the way. More: www.MercuryVMP.com/MercuryMobile.  Download the app:  http://alashort.com/1c0YBwO.

Appraisal Practices Board National Talent Pool

The Appraisal Practices Board (APB) of The Appraisal Foundation is seeking valuation professionals for a national talent pool to serve as a resource to the Board as it develops future voluntary guidance on generally recognized valuation methods and techniques.

Under the direction of the APB, those chosen as subject matter experts will research recognized texts, journals, articles, educational offerings and other resources in order to provide voluntary guidance on emerging or complex issues. Subject matter experts are not compensated for their time but are recognized in all guidance issued by the APB, which are known as Valuation Advisories.  Examples of adopted Valuation Advisories include:

  • Identification of Contributory Assets and Calculation of Economic Rents
  • Adjusting Comparable Sales for Seller Concessions
  • Residential Appraising in a Declining Market
  • Identifying Comparable Properties
  • Identifying Comparable Properties in Automated Valuation Models for Mass Appraisal

Topics currently under consideration by the APB include:

  • Collection and Verification of Sales Data
  • The Valuation of Customer-Related Assets (Business Valuation)
  • The Valuation of Green Buildings:
    • Background and Core Competency
    • Residential Green Buildings
    • Non-Residential Green Buildings
  • Market Participant Acquisition Premiums (Control Premiums) (Business Valuation)
  • Contingent Consideration (Business Valuation)

If you are willing to share your expertise, be part of a broader conversation, and receive recognition for your contributions, click here for an application.

Questions? Please contact Staci Steward, Practices Board Administrator (staci@appraisalfoundation.org or 202.624.3052) with questions or if you would like additional information.

Subject Matter Experts Needed for Green Building Valuation Report


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The Appraisal Practices Board (APB) of The Appraisal Foundation has issued solicitations for Subject Matter Experts (SMEs) for The Valuation of Green Buildings – Residential Properties and The Valuation of Green Buildings – Non-Residential Properties.  The respective solicitations can be found by clicking on the links below:

The Valuation of Green Buildings – Residential Properties

The Valuation of Green Buildings – Non-Residential Properties

The application deadline is February 14, 2014.

Questions? Please contact Staci Steward, Practices Administrator, (202) 624-3052

New Appraisal Standards Board Q&As now available

The Appraisal Standards Board (ASB) has issued January Q&As on the following topics:

  • “Verifying” Completion of an Appraisal
  • Assignment Results
  • Fannie Mae Form 1004
  • Use of Certification with Form 1004D/442
  • Applicable Edition of USPAP

For questions, please contact Emily Mann, Standards Administrator (202-624-3058).

OCC Guidance on Third-Party Relationships

The Office of the Comptroller of the Currency (OCC) recently updated its guidance to national banks and federal savings associations for assessing and managing risks associated with third-party relationships.

The guidance includes a discussion of comprehensive risk management processes throughout the life cycle of the third-party relationship.

OCC BULLETIN 2013-29

High-performing Homes: New Source on Local Incremental Cost Data

Summary: Lack of time, information, and resource has made it difficult for appraisers to factor green building into their valuations. Now, the Northwest Energy Efficiency Alliance has released a means for appraisers to gather incremental green cost data locally. The National Association of Appraisers calls NEEA’s Cost Data Addendum as “a significant step forward in providing data to residential appraisers about local incremental costs to install energy-efficiency and green features.”

While residential appraising still relies heavily on the market or sales comparison approach, green building and particularly energy efficiency is now recognized in some areas as a new market influencer.   With this, appraisers need verifiable and credible secondary evidence to support an adjustment to the primary approach.  Where can appraisers go for this secondary evidence?

Despite the efforts by the Appraisal Institute to standardize reporting of green characteristics with their Residential Green and Energy Efficient Addendum, appraisers at the local level are still left relying on some combination of national replacement costs (Marshall & Swift’s Residential Cost Handbook Green Addendum), builder interviews, and manufacturer product information to gather cost data.

Builder and manufacturer interviews on green features and strategies are time-consuming and invariably incomplete. Typically, the appraiser is expected to know in-depth high performance building strategies and national replacement cost data.  That’s particularly problematic given the hit to appraisers’ fees from appraisal management companies and the AMCs’ demands for shorter turnaround times.

Appraisers have lacked reliable data to support builders’ claims of higher property worth based solely on the cost of the energy-efficiency and sustainability measures.  The cost of green building improvements rarely if ever equates to market value. Indeed, builders who’ve dropped out of home certification programs or elected not to build more sustainably commonly cite their inability to recoup the cost of incorporating green and advanced building practices.

In 2012, the Northwest Energy Efficiency Alliance (NEEA) released the Cost Data Addendum (CDA) for High Performance Homes to support residential appraisal industry efforts to recognize value for high performance homes by providing a means of gathering credible local incremental green cost data.

CDA Version 2, released in February 2013, added tables for estimating the energy and water savings for homes that incorporate high-performance measures.  Both the original addendum and V.2 is completed by the builder and informs the appraiser of improvements that elevate the home’s performance beyond state and local codes.  V.2 also provides the incremental cost of those improvements with the Gross Living Area (GLA), details rebates and incentives, and estimates utility savings associated with the improvements.

So what can appraisers do with this cost data information when provided?   As they build their knowledge base of green building features and systems, the CDA ensures they won’t overlook these green features and strategies (after all, none of us know what we don’t know). In addition, the data provides appraisers with measurable initial (first) cost impacts as well as information on the ongoing operational cost impacts due to a particular green feature or strategy.

The CDA, if used properly, could lead to significant changes in green valuation by providing credible and supported cost and savings data on green characteristics, many of which are essentially invisible to an appraiser on a typical inspection.

The National Association of Appraisers’ executive board has endorsed the addendum, stating: “The NAA supports, in principle, NEEA’s new Cost Data Addendum for High Performance Homes as a significant step forward in providing data to residential appraisers about local incremental costs to install energy-efficiency and green features.”  Take the CDA alongside the Appraisal Institute’s addendum—which focuses on standardizing the reporting of green features to lenders—and it seems appraisers are beginning to have significant tools available to assist them in the complex world of green valuation.

To familiarize builders with the Cost Data Addendum, SEEC LLC gives webinars explaining how to use it. Watch SEEC’s calendar of events for updates.  You can also find a PDF of the most recent webinar’s presentation on SEEC’s resources page.

Download V.2 of the Cost Data Addendum for High Performance Homes.

Appraisal Foundation White Paper on Alternative Valuation Products

The Appraisal Foundation has drafted a white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).

The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.

Comment Deadline: December 31, 2013
Send Comments to: tafcomments@appraisalfoundation.org

Respondents should be assured that each comment will be thoroughly read and considered.

Appraisal Practices Board Valuation Advisories on Comparable Properties

The Appraisal Foundation announced that the Appraisal Practices Board (APB) has adopted the following Valuation Advisories:

APB Valuation Advisory #4: Identifying Comparable Properties

APB Valuation Advisory #5: Identifying Comparable Properties in Automated Valuation Models for Mass Appraisal

The APB is an independent Board of The Appraisal Foundation, which is responsible for developing voluntary guidance on recognized valuation methods and techniques.

Questions? Please contact Staci Steward, Practices Administrator, at 202.624.3052.