Blogsberger's Box

 "Appraisers Don't Set Value":

http://www.appraisalbuzz.com/appraisers-don%27t-set-value

Amen, I say!   The essentially residential problem is highlighted in the first few paragraphs, with lots more 'nitty gritty' of the problems with implementing the congressional intent.   And, as a bonus, highlighting the power plays and typical behind the scenes political maneuvering by the agencies and regulators.

 http://pop.to/5eo1

"Sara W. Stephens, MAI, told members of the House Financial Services' Subcommittee on Insurance, Housing and Community Opportunity that the Dodd-Frank Act passed by Congress last year is not being properly implemented by federal regulators.

Among other highlights, the Act calls on appraisal management companies (AMCs) to pay "customary and reasonable" fees to residential appraisers. While lenders can manage appraisal operations with internal staff, some choose to outsource these functions to third-party management companies called AMCs. These firms act as "middlemen" between lenders and appraisers

"Unfortunately, the Federal Reserve's Interim Final Rule is not faithful to Congressional intent," Stephens told lawmakers. "The Appraisal Institute thinks Congress' intent was right on target. We urge Congress to guide the regulators' aim, directing them to correct the Interim Final Rule to promote credibility over speed and cost."

Here's the ful testimony:  http://financialservices.house.gov/UploadedFiles/071311stephens.pdf

Here's a nice little feature I found in Redfin, with interactive home inspection photos - so many things can be done so poorly!

http://www.redfin.com/home-buying-guide/interactive-home-inspection

As Kenneth Harney says, frequently the answer is 'NO'.

And that (NO) is the answer many of these 'lowball' Appraisal Management Companies hear from me when they call with a "new order in your neighborhood".  But, I do like to look at the requirements they put into their appraisal orders.

Consumers, and their Lenders are not well served when the appraisal is done by the most desperate, most willing to cut-corners, appraiser they can find who will do the job for the lowest fee, while being pushed for the fastest turnaround.

And, the conditions these outfits list in their orders point to precisely the kinds of things that have 'slipped by them' in the past by desperate appraisers trying to pump out as many orders as they can just to pay the bills -- mandating appraisers 'prove' they are really doing the work -- e.g.  give us a close up of the house number (to prove they're not reusing 'stock' photographs) -- show us pictures of every room, show us an aerial photo of the home, show us what the home faces, show us the details on all the potential comparable sales, write a detailed description of why you excluded comparable 'A', but selected 'B'.

All well and good if that's the appropriate 'scope of work' - e.g. a complete (not summary) appraisal for legal proceedings -- with an appropriate fee.

But, when the lower the fee, the crazier and more detailed the specifications for the appraisal content -- you can see the game the Appraisal Management Companies (AMC)'s are playing....

I can no longer recommend Mozy as an online backup solution for home users.

It will be interesting to watch how this unfolds.

The decision makers at EMC may not have factored in the total costs when making their decision to increase their prices and eliminate the unlimited backup that had been a feature of Mozy since the product was launched.

Their weak argument for the price increase - 'more folks are backing up photos and videos' - sure doesn't ring true in an environment of exponentially decreasing storage costs and increasing bandwidth -- I can stream all the Netflix movies I want over my home internet connection for $7 per month, and buy a 2TB drive for less than $100 bucks -- unheard of when Mozy was launched several years ago.

Certainly the direct revenue hit from losing a bunch of consumer / end-user accounts at $5/month isn't a big deal for a company the size of EMC.

But, the loss of goodwill and likely ill will it creates may well ripple into business-to-business purchasing decisions - a disgruntled current home user who has some impact on purchasing decisions for their business may think twice about EMCs tactics - and that may end up costing the EMC corporate sales folks thousands in a lost initial sale, and thousands more in the follow-on annual maintenance contracts.

And, the lost opportunity for EMC to capture new users (e.g. students, recent grads) and introduce them to the EMC product family may have further costs in lost revenue down the line.

The impact of a business-level price increase is different than a consumer product price increase -- we holler more and take it personally when it hits our own wallets. Marketing 'fluff' about new features doesn't carry much weight when there's no choice but paying more.

Can anyone think of an example of a successful 20%+ price increase on a consumer type of product in the high tech world?

Key quote :)  - "Don’t leap out of your seat and accost the first appraiser you run into. It’s not their fault."

Here's the article.

Actually, the key idea in the article about the frustrating position of having good credit but not enough equity to refinance, is expressed in her paragraph near the end of the article:

"And then there is the glaring error of logic along the Potomac. If our hypothetical borrower already carries a low debt-to-income ratio, incredible credit, a great job and is able to pay her current $1,463 monthly payment, how can the government end up with a worse loan if she decreases her payment by almost $300 through a simple refinance? Obviously, she and the government will find themselves in a better situation, and Fannie and Freddie will reduce their loss exposure as her debt burden declines."

My headline comes from John Burns Consulting, a national firm providing custom consulting services to homebuilders and others.

The current link to his full commentary is here.

He makes points I've noted before, and include in my appraisals every time I reference Zillow data, and less frequently when I've used the Case Shiller data:

1. Zillow and other AVM (automated valuation models) are not able to factor in important attributes (e.g. condition, what's across the street) of a specific property, so unless your home is "average" in every key aspect, be careful.  But, Zillow and the AVMs provide excellent statistics for the important things that are 'average' in a neighborhood:

  a.  price movements from period to period in a neighborhood -i.e.  is the market 'going up', 'going down', or 'stable'.

  b.  how does one neighborhood (or zip code, or city) compare to another in average prices of homes.

2. Case Shiller and other sequential sales models are driven by 'what's currently selling' - not a representative sample of the entire market.

If you received your 2010-2011 Notification of Assessed Value in Santa Clara County, and are uncertain if your property is overvalued, please contact me for a consultation before the September 15th deadline!

A recent ZipRealty survey published on Inman:

  http://www.inman.com/news/2010/06/15/top-10-sought-after-home-features

And it made me wonder about the trade-offs one sees folks making here locally in mid and low end homes - converting their garages into storage space, or living space, and moving their cars to the streets or driveways.

I guess its just the result of the relatively high cost of living (an of storing stuff) here in the Silicon Valley.

Here's the latest updates to my analysis of the local market area (Milpitas - 95035, Berryessa - 95132 and 95131).

The chart below is a combination of all 3 zip codes, showing a strong improvement over the last 12 months in Sold price (the green bars) as compared to For Sale (asking, the red bars) price, although down about 10% from prices 24 months ago:

The charts for the individual zip codes are linked on my home page - click and see!  The trend is similar for all 3 zip codes, with 95132 looking the most consistently strong of the three.