When I started in the appraisal business in 2002 my mentor told me "Real estate always goes up in value." I suppose a case could be made for that based on the Consumer Price Index or inflationary trends, but working as an appraiser through the Subprime Mortgage Crisis in Atlanta necessitated a more realistic view. That period was the first time I recall marking property values as "Decreasing" on an appraisal report, and it was the first time I recall making any sort of date of sale adjustment to comparable sales. Since then, I've analyzed price trends in the development of every appraisal report I've completed.
Which leads me to a recent Announcement from Fannie Mae which further clarifies their requirements around time adjustments in appraisals, effectively increasing their standards for supporting such adjustments or the lack thereof. Works for me. The tools I've used for years to accomplish this task should easily meet or exceed the recent increase in expectations.
But there is the matter of the following widely distributed graph which Fannie Mae released as further guidance on the subject:
Correct me if I'm wrong, but this graph appears to support making increasing date of sale adjustments, decreasing date of sale adjustments and no date of sale adjustments in the same report! That's a new one on me. Even with the safeguards surrounding appraiser independence which have been put in place in recent years (see last month's email again), I'm a little concerned that my days in this business will be numbered if I start using such practices. Or maybe the opposite is true! The methods I've developed over the years look at quarterly figures for an entire area (generally a high school or elementary school district), year over year figures on a quarterly basis for an entire area and the "1004MC" data which generally considers the sub-market of similar homes. (As a side note, I am considering whether the quarterly method should be updated to a monthly one.) I'll only make a positive or negative date of sale adjustment if there is a clear trend in either direction over the course of the previous 12 months. Makes sense to me. Hopefully it will continue to make sense to those reviewing my reports. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.
A recent article in Business Insider which was included in the Apple News Feed is causing some buzz in the appraisal world. It details the controversial role played by Appraisal Management Companies (AMC’s) in the business. It’s worth reading but is now behind a paywall. AMC's have positively contributed to the restoration of appraiser independence since their introduction in 2010 following the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, but there are some AMC’s which engage in dubious practices. These include assigning appraisals to the lowest bidder and taking an exorbitant cut of the fee. Settlement Statements generally note an “appraisal fee” but don’t detail how much the appraiser was actually paid and the portion of the fee that went to the AMC. Appraisers should be paid fees that are “reasonable and customary” for their market, and, in my view, a reasonable target for AMC’s is around 20% to 25% of the total fee paid. If this fee is significantly greater than that, there is cause for concern. I could digress as to my experience in the appraisal space prior to 2010 and my experience since. Certainly, lower volume has put pressure on all players in the appraisal industry, but it remains that most of the appraisal fee should go to the appraiser on the ground. The article proposes that the appraisal fee should be broken down in the settlement statement to note the fee that went to the AMC and the fee that went to the actual appraiser. I think this separation would be a good practice and provide greater transparency to the consumer. Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.
Attempting to live out the principles of pacifism, simplicity, and racial integration, a pair of white Baptist ministers and their wives, Mabel and Martin England and Florence and Clarence Jordan, established Koinonia Farm on 400 acres in rural Sumter County, not far from Plains Georgia, in 1942.
The ministers also hoped to teach improved farm practices. Named after the Greek word for fellowship and based on the early Christian church, Koinonia was to be a Christian community in which members pooled their resources into a common treasury and treated all persons as equals, regardless of race or class.
In Koinonia’s first year, curious neighbors visited England and Jordan to warn them that they were violating local customs by eating meals with their Black day laborers. Other Sumter County residents criticized Koinonia for welcoming conscientious objectors during World War II (1941-45). In 1950 the Rehobeth Baptist Church, just a few miles north of Koinonia, voted to remove the names of six Koinonians from its membership roll because church members perceived that the Koinonians were trying to integrate the church. In 1956 Jordan’s unsuccessful endorsement of the applications of two African Americans to the state university system’s Georgia State College of Business Administration (later Georgia State University) in Atlanta precipitated two years of vandalism, legal investigations, and violence, as well as a decade of economic boycott against Koinonia Farm. The successful farming enterprise halted. Koinonians developed a mail-order pecan business, which depended on purchases from people across the United States who had learned of Koinonia’s plight from the national news media.
By 1956 Koinonia’s population had grown from the original England and Jordan families to include approximately sixty people, although many were not full members. Most Koinonians were white Southern Baptists from areas of the South outside of Georgia, but about one-fourth were Black people who were primarily local. The decade of boycott and violence, inflicted by the Ku Klux Klan and others, dismantled the community until only two families, including the Jordans, remained. At the height of the civil rights movement, Koinonia Farm was essentially dormant.
Koinonia Farm was about to close when new leadership and new ideas revived it. In 1969 Jordan and Millard Fuller, a businessman, reincorporated Koinonia Farm into Koinonia Partners. They instituted a low-cost, interest-free building program that eventually constructed 200 houses in Sumter County. Over the years Koinonia’s landholding had expanded to include more than 1,400 acres, and part of the land adjacent to the center of Koinonia was divided into two neighborhoods that included many of these new houses. During the 1970s the number of Koinonia’s full members peaked at thirty-six, plus children and volunteers. Dozens of other people, however, bought the low-cost houses in Koinonia’s housing villages and became a part of its extended community. In 1976 Millard Fuller and his wife, Linda, left Koinonia to establish Habitat for Humanity International in nearby Americus. This organization implemented worldwide the house-building program pioneered at Koinonia.
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Twenty-two years is a long time folks! I began my real estate appraisal career in 2002. Some of you may remember those days. It was the "refi boom" and the market was hopping. That was the upside. Then there was the downside which was the rampant mortgage fraud which we had to navigate leading up to the 2007 crash. In some areas you really had to be careful that the comps you picked in appraisal reports were arms length transactions. Talk about a time consuming headache! A lot of people ask me if things were tough after the meltdown, but fortunately I was still busy, appraising a lot of HUD owned homes for one thing. As a matter of fact, I started my own company in 2007, and I'm still here.
I still remember being proud to say that I had been doing this five years, but over twenty definitely is something else. And, yes, after that much time you can honestly say you've pretty much seen it all; done a lot of things right, made some mistakes (we learn!), appraised the wrong house (it happens!), had clients go out of business, had great new clients show up seemingly out of nowhere, worked around the clock on huge deadlines, and watched the tumbleweeds blow and wonder if another order will ever show up.
Being an appraiser can be a grind, but there are a lot of upsides: being your own boss, making your own hours, meeting new people and having the priveledge to be of service. Thanksgiving was this past Thursday, and if there is one thing I can say that has remained constant throughout my career in this profession, it's that I'm always grateful to be doing what I do.
Contact Comp One Appraisal Services today and put our local expertise to work for you. Based in the Globe Building at Peachtree Dekalb Airport, we are the perfect resource for attorneys, agents, homeowners, and lenders. Thanks for reading! Got an appraisal issue or question? Call my Appraiser On-Call For You Hotline at 404-245-7577.