September, 2013
Index
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41 Apps for Appraisers - Something for everyone!
Page 1
How to get non-AMC work. If they can’t find you, they can’t give you any work! Page 5
Subscriber survey results. You spoke. I listened!
Page 7
Bad Boys and Bad Girls
Page 12
Retrospective appraisals and reviews - how they differ from
Page 17
current value assignments
41 Apps for Appraisers - Something for everyone!
By Dustin Harris
Editor's comment: So many possibilities to add to my iphone! Some of them I use, but many I
have never heard of or didn't know how they could help me.
My first cell phone was a brick, came with 150 minutes per month (talk only, of course),
and cost me more than a few appraisal fees per month (I find it is easier to justify purchases in
the number of appraisals I must do to pay for them). Today, I carry an iPhone. I have nearly
unlimited minutes of talk, texts, and data, and my monthly bill is less than one appraisal.
Progress is beautiful. Smartphones have completely changed the way we live and do business.
This ubiquitous truth applies (or should apply) 100% to the appraiser. Ultimately, it is not the
hardware (the phone) itself that is the key to efficiency, but the software (apps) which determine
whether our smartphones are a blessing or a curse.
I was recently told by a 'computer geek' that I had more apps on my iPhone than he had
ever before seen. This surprised me coming from someone who lives for technology, but I will
take it as a compliment. The interesting thing is, I am not an 'app pack-rat.' I like a 'clean screen,'
so I only download apps that I am interested in and I only keep those I actually use. Maybe I
have a lot of apps (as of this writing, I have 91), but they are all utilized and each make me more
productive (except the ones that are designed to be a complete waste of time, but I keep for the
entertainment value).
Page 1–September, 2013 Appraisal Today
As a busy real estate appraiser, a large percentage of my apps are directly or indirectly
related to my work. Most of my day is spent on real estate appraising, so most of my apps assist
me with that work. The majority of appraisers are looking to become more productive at what
they do, so sharing some of the apps I use might be helpful to you. This is not an all-inclusive list
and only applies to iOS (Apple) products (though most of these apps-or comparable ones-are
also available for Android and other platforms). Most are related to my work as a real estate
appraiser, but a few I threw in just because they are too cool to pass up.
Alamode Total Mobile: For both my iPhone and iPad, this is my appraisal software. I gather all
of my information for each appraisal inspection (including photos, data, and sketch) and can
transfer them seamlessly from the office to the field and vice-versa.
Phoenix Mobile: Does similar things to Total Mobile, but is written for other appraiser software
companies (it also works with the new Total 2013). Yes, I use them both.
Eye-Fi: An app to use in conjunction with the Eye-Fi SD Card which assists with transferring
my photos from a handheld camera to my mobile device when I do not use my tablet or
smartphone to take my appraisal pictures.
2XClient: I keep my appraisal software on a server. 2XClient allows me the ability to log into
the server from anywhere I can get Internet connectivity.
RoboForm: Stores all of my usernames and passwords (how many different passwords do you
have for all of those AMCs you work for?) so I do not have to remember 400 different
passwords. I just have to remember one.
Realtor.com: Allows me to see at a glance the listed homes for sale within a certain radius of the
home I am appraising.
Vocalocity: My VOIP system of choice. The app allows me to forward calls from my office, get
voice messages, etc. from the field.
iBooks: I do a lot of driving getting to and from appointments and taking comp photos. iBooks
allows me to download books and it will read out loud to me while I travel. How cool is that?
Kindle: Though it won't read to me, some books are only available through Amazon so this little
app allows me to buy and read them without needing to buy a separate Kindle tablet.
Dropbox: A cloud-based storage that allows me to send and receive computer files seamlessly.
It syncs with all of my devices and other computers.
Google Drive: Another cloud-based storage for more permanent files.
Evernote: One more cloud-based file keeper, but each is used for its own purpose. This one I
use for more temporary files, photos, audio notes, and such that I am currently working on.
Page 2–September, 2013 Appraisal Today
Expensify: A place to keep track of all my spending and mileage. Allows me to record miles
driven for each assignment and record purchases for my budget. It even allows me to take a
picture of the receipt for tax purposes and keeps me paperless.
Camera: Though I mostly use the on-board camera on my iPad Mini, I like having a camera app
on my iPhone as well for a backup. Photos will transfer between devices as well.
NoteTaker HD: Allows me to download pdf documents into the app and then draw on them
with my finger. MLS sheets can be sent to my mobile device and I can make notes as I take
photos of each of them without printing physical paper.
HP ePrint: I have a wireless, Hewlett-Packard printer. This little app allows me to print
documents, emails or other important papers from the field so they are sitting on my print tray
when I get back to the office.
LogMeIn: Allows me to see my computer desktop and work in a pinch from anywhere there is
Internet access.
Fast Food: Trying to travel and keep healthy is a tough task. Fast Food has the menus for all of
the major (and some not-so-major) fast food joints. I can quickly look up the calorie, fat, and
carb count of any meal. By the way, Jimmy John's #17 (a personal favorite of mine) has 763
calories and 39g of fat (in case you were wondering).
Redbox: Movie night? Can't beat $1.20 for a video. This app tells where the nearest Redbox
dispensing machine is, what is available, and even will allow me to reserve before I get there.
Fandango: Okay, so I love movies. My local theater is a Regal establishment and this app tells
me what is playing so I can play hooky and hit an afternoon matinee.
Slacker: An app that streams free music in the genre of my choice.
Pandora: Same as Slacker, but not as good (in my humble opinion). I keep it because it has a
few genres that Slacker doesn't.
I Heart Radio: Used by most to stream your favorite live music station, I use it to keep on my
political talk shows when I am away from the car radio.
FoxNews: My news app of choice (though more and more I am simply using my Twitter feed
for breaking news).
Newstand: Comes with iOS, but I use it to stream audio and the digital version of Success
Magazine.
Facebook: I will admit, I don't use it much (except my business page), but it is there, for the
Page 3–September, 2013 Appraisal Today
occasions I need it.
Twitter/Hootsuite: Love it. Hootsuite allows me to schedule tweets so I do not have to send
them the second I write them.
LinkedIn: I use it to keep up with my fellow appraiser friends across the country.
AccuWeather: Up to the minute weather information that comes in handy in Idaho (where I
live) and when I travel.
Google Maps: Though I use my automatic navigation system through Siri most often, Google
sometimes has rural addresses that iOS can't find.
MapQuest: I do not use it very often, but once in a while it has something the other two mapping
programs don't. It has gotten me out of a bind on more than one occasion.
RouteOmizer: One of the coolest apps for appraisers ever invented (though it wasn't invented
for appraisers). Trying to find a series of comps, but do not want to drive back and forth across
town to get the pictures? Put all of your addresses (up to 7) in the RouteOmizer and it will give
you a 'milk-run' route to get you to each place in the most efficient manner possible. Now, if they
would just invent one for navigating Walmart.
Orbitz: As mentioned, I travel a lot. I use this little app to book plane tickets, hotels, and rental
cars. It also saves all of my trips so I can refer to them while I travel and not carry paperwork
with me.
Yelp: When I travel, I like to know where to go for the best food and entertainment. This little
app is invaluable when I am in a strange city.
Stopwatch: Does what the title says. I use it to record travel times so I know which route to take
next time.
HeyTell: This is a walkie-talkie app where I can send short audio notes to my staff back at the
office. It keeps us in contact with one another so I do not have to run the risk of texting while I
drive.
Flashlight: Though I carry a powerful flashlight in the car, this is my backup and works quite
well for those basement areas where the electricity has been shut off.
JotNot Pro: Turn any document (including blueprints) into a pdf.
Wi-Fi Finder: Though I have a hotspot on my phone and usually get fairly good reception, I
sometimes need a regular wifi signal to upload a report or work remotely. This app tells me
where the public wifi connections are around me.
Page 4–September, 2013 Appraisal Today
Corkulous Pro: It is a bulletin board where I can keep 'sticky-notes' of my weekly goals, vision
board, punch list, and other important pictures or phrases.
WinStreak: I try to never go to bed without recording my 'wins' for the day. WinStreak makes it
easy.
Apple vs. Android
There are many reasons some consumers swear by Apple and just as many why others
cannot live without Android. I chose Apple because I love the way my apps transfer and sync
between my iPhone and my iPad. What I do on one device can immediately be seen on the other.
In the end, you must choose what works best for you, but hopefully a few apps that I have shared
with you might make you a more productive real estate appraiser. What apps do you use?
Now, go create some value!
About the author
Dustin Harris is a multi-business owner, but he has found most of his success as a selfemployed, residential real estate appraiser. He has been appraising for nearly two decades. He is
the owner and President of Appraisal Precision and Consulting Group, Inc., and is a popular
author, speaker and consultant.
He owns and operates The Appraiser Coach (www.theappraisercoach.com) where he
personally advises and mentors other appraisers helping them to also run successful appraisal
companies and increase their net worth.
He will be presenting a two-day workshop in Salt Lake City on Oct 7-8. He and his wife
reside in Idaho with their four children.
How to get non-AMC work. If they can't find you, they can't give you any
work!!
Lots of appraisers are unhappy with working for AMCs. Fortunately, there are other options:
non-AMC lenders and non-lender work. However, to get this work, clients must be able to find
you easily.
Unfortunately, too many appraisers don't run their firms like businesses. They just
complain about working for AMCs. They get approved by AMCs and just wait for them to call.
I have spent many years networking with appraisers, real estate agents, attorneys, etc.
About 2/3 of my business is by referrals from contacts built up over 25 years. This is great, but
takes a lot of time over many years.
What's the answer? Make it easy for them to find you on the Internet. About 1/3 of my
non-lender work is from the Internet.
What if you don't want "one time" clients?
That's fine. Stay with AMC work. If you decide to try it in the future, you have the basic
info here.
Page 5–September, 2013 Appraisal Today
Number 1. Have a professional voice mail response when a prospective client calls.
Far too many appraisers have something similar to "This is Joe. Leave a message."
Would you leave a message for a company that has this as their message?
Instead have, for example: "This is Joe Smith Appraisal Company. We are out of the
office. Please leave a message and we will return your call as soon as we can." Or, you could say
"Joe Smith Appraiser", etc.
How long does this take to set up? A few minutes.
Number 2. Have a business phone line
Never change your business phone number. I have the same number from when I started
my business in 1986. I have moved my office four times since then. There is a nominal fee for
call forwarding.
When you do a google search for appraiser in Alameda, CA my name comes up at the top
of the search. Why? Because I have a business listing. Type in "appraiser in Alameda CA" and
see what comes up.
There are only four appraisers with business listings and we are all there. What is the
cost? Only the cost of a business listing.
It has my address, phone number and links to my web site. Your address can be your
home. Two of the appraisers do not have web sites, so it just repeats the basic information. But,
they could easily add more information to the basic Google+ information.
Number 3. Have a Web site.
I get about 1/3 of my business from the Internet and it increases every year. Earlier this
year I got a $10,000 estate appraisal job for multiple properties, with both current and
retrospective. All were 1-4 units and could have been done by any residential appraiser. How did
the executor, a retired bankruptcy judge find me? An Internet search for an Alameda appraiser.
The most important way to have people call you is your "tag line" at the top of your web
site. Mine is "Looking for a local commercial or residential appraiser for Estate and Trust
appraisals in Alameda County CA? Go to About Us!." I only have a few pages at
www.appraisaltoday.com about my appraisal business as it is primarily for my publishing
business.
Go to www.appraisaltoday.com and see what it looks like.
Why do I have that relatively narrow "tag line"? When I started my business I advertised
in the Yellow Pages that included other areas. Calls that resulted in appraisal orders almost
always were from people looking for an appraisal in Alameda, with a population of about
75,000. I don't know why.
Why estate and trust? That is what I like to do best.
What would you have as your "tag line"? What type of appraisal work are you looking
for? The more specific, the more appraisals you will get.
The other Alameda appraiser has a Web site that is "generic". It says "Valuation
specialist for all commercial industrial, and multiple family real estate." He doesn't get any
business directly from his Web site, but he is very easy to find on the Internet.
Page 6–September, 2013 Appraisal Today
What does a Web site cost?
Nothing. Almost all Internet service providers offer Web site templates that are free or
low cost. My provider is Comcast, which offers free personal web pages.
All you need is your contact information (including location), what services you provide,
a tag line, and something about yourself - qualifications, years of experience, etc. That's all I
have on my web site.
If you want your own domain name, customized appraiser templates, or more help, you
can go www.appraisersites.com, which is run by Wayne McErley who also runs the very popular
appraiser online chat site, www.appraisersforum.com $20 per month, with discounts up to 20% if
you pay for a full year.
Some appraisers use a la mode's Xsite Web site add-on.
Number 4. Get listed on www.linkedin.com
When doing a google for information on an appraiser, their linkedin listing often comes
up. I have a free basic public profile with my web site and contact information plus info on my
company.
A plus for linkedin is the very active appraiser chat boards where you can discuss lots of
appraisal issues. To find them, search for Real Estate Appraisal (or Appraiser) Groups. The more
active groups have many members and many discussions.
Getting referrals from appraisers, real estate agents, etc. for non-lender work
I give a lot of referrals to other appraisers. But, if I can't google their name and find
contact information, I use someone else. I could always look at asc.gov or their state appraisal
regulator, but it is inconvenient and they often do not have phone numbers and email addesses.
If it is another appraiser that I don't know well, I want to find more about them before I
give a referral. No Web site, no referral.
Having direct lenders call you
Lenders are just like me. They get the name of an appraiser from another appraiser or
another lender, but they can't google them. Can't find you on Google. No Web site. No phone
call to place an order.
As a paid subscriber, you can read the past 18+ months of newsletters at the paid
subscriber page (good though October) at http://www.appraisaltoday.com/deglaze.htm .
Page 7–September, 2013 Appraisal Today
Subscriber survey results. You spoke. I listened!!
Many thanks to the subscribers who took the time to take the August survey.
Most of the questions were "standard" appraiser survey questions about license level,
gross income, etc. so I can get more information about subscribers to better know what is
wanted. For example, no "basic" appraisal articles are needed as almost everyone is certified.
Subscribers say they want to read about USPAP and regulations, plus appraisal issues
such as supporting adjustments.
I will have more articles on these subjects. Be warned that the USPAP/regs stuff can be
really boring. I will do my best to keep you awake when reading them. Plus, I will have some
comments on my opinion, postive or negative, of the changes. Plus, I will have more articles on
appraisal issues, including how they relate to AMCs. I am looking for appraisers to write about
this for Appraisal Today. The requirements: writing or teaching experience (beyond writing up
appraisal reports), practicing appraiser who works for AMCs (staff or fee appraiser).
A less formal writing style is preferred, such as how I write, but not required. Before
starting this newsletter in 1992 I had been writing about appraisal business issues since 1987 and
prior to that wrote a monthly newsletter for my sailing club for 5 years, where I developed my
less formal writing style.
Survey results
License level and education
License level:
Certified residential - 67%
Certified general - 31%
Licensed - 1%
Trainee - 1%
Types of appraisal - estimated percent by annual billings
- Residential - 80%
- Commercial/apartments - 20%
- Reviews - 12%
- Agricultural - 6%
- Other - 12%
Although 30% of respondents have a certified general appraisal license, many also do
residential, similar to my business. Many appraisers who started before licensing worked for
lenders and did some apartments and small commercial properties. They qualified for certified
general licenses when licensing started in the early 2000s.
I did not know that so many subscribers did commercial/apartment work. I will include
more information on this market, such as commercial AMCs and fees.
Education level:
High school graduate - 22%
2 year degree - 17%
Page 8–September, 2013 Appraisal Today
4 year degree - 48%
Masters - 8%
Phd - 1%
This is typical for appraisers, with over 50% having a bachelor's degree or higher.
College education hours - if no degree (the remaining 4% of respondents)
Under 20 - 7%
21-60 - 12%
61-100 - 4%
Over 100 - 4%
I asked this question because many appraisers have taken college classes, but did not
graduate.
Professional designations
- 33% of respondents had designations from the AI, ASA, or NAIFA (the three survey options):
- 83% of the designations were from Appraisal Institute (66% SRA and 18% MAI), ASA had
4%, and NAIFA had 11%.
- Four respondents said they were working on AI designations. Others mentioned were NAR,
Employee Relocation Council, and MBREA.
I was surprised to see so many designated appraisers. Many residential appraisers
dropped their designations or have no interest in getting one.
Type of employment
- Self employed - 95%
- Staff appraiser - 4%
How many people, including yourself, work at your independent appraisal company. (Part
time counted as "less than one")
Appraisers Less than 1 full time - 3%
1 - 58%
2 - 17%
3 - 5%
4 - 5%
5 - 5%
Over 5 - 7%
I was surprised to see that only 61% of subscribers work by themselves, with an
additional 27% with two appraisers. I keep hearing about most appraisers working by themselves
in their home offices. Or, maybe my subscribers are more "business oriented" than most
appraisers.
Clerical/admin.
Less than 1 full time - 34%
1 - 58%
2 - 36%
Page 9–September, 2013 Appraisal Today
3 - 12%
4 - 7%
5 - 1%
Over 5 - 7%
42% of the appraisers reported that they had clerical assistance. I guess there are
appraisers, including myself, who see themselves as running a business and have clerical
workers. Four respondents said they had family members as assistants - spouses and children.
This is a great option as you do not have to classify them as employees and pay mandated
benefits such as social security.
Gross income from appraising in 2012
Under $20k - 3%
$21k-$40k - 9%
$39k-$60v - 15%
$61k-$80k - 13%
$81k-$100k - 15%
$101k-$125k - 13%
$126k-$150k - 9%
Over $150k - 18%
Only 23% were under $60,000 in gross income. About 1/3 were over $80,000. I assume
the under $20k were part time appraisers.
Incomes over $150,000 were mostly from large appraisal companies, but there were a
few small appraiser companies with 2-3 appraisers.
Estimated income from appraising first 6 months of 2013
Under $20k - 10%
$21k - $40k - 26%
$41k - $50k- 18%
Over $50k - 43%
Appraisers had higher incomes for the first half of 2013 as compared with all of 2012.
Looks like I should have given more options over $50,000 for the first 6 months of 2013.
Page 10–September, 2013 Appraisal Today
Ratings for newsletter topics (1 is lowest, 5 is highest)
Category
Rating
AMCs
3.6
Appraisal issues
4.3
(adjustment support, concessions, etc)
Non-lender appraisals 3.8
Tech tips
3.9
(software, hardware, etc.)
Product reviews
3.6
(online services, etc.)
Collecting past due 2.8
billings
Time management
3.3
Regulations, USPAP, 4.2
Fannie, Freddie
Appraiser profiles
2.6
Appraisal issues and Regs/USPAP were the highest rated. See comments in the top of
this article.
Collection was rated under 3. I will refer subscribers to previous articles on this topic
available for free on the subscriber web page. I will put notices in my free weekly email
newsletter about AMCs closing down.
Time management was also rated under 3. But, I think this topic is critical to the success
of appraisal businesses, so I will continue to remind subscribers about this topic with shorter
articles, referring readers to my older articles.
Appraiser profiles was rated the lowest, so I will probably not do any more. Or, they will
be very brief.
Thanks again to those who filled out the Subscriber Survey!!
Page 11–September, 2013 Appraisal Today
Bad Boys and Bad Girls
There are many fewer mortgage scam cases now as we get further away from the peak scam
years in 200-2007. But, appraisers are still getting convicted of crimes resulting from appraisals
done during those bad times. Some appraisers went to jail. Others lost their licenses and got
probation. And, others who used fake appraisals or "forced" appraisers to over-value properties
are also going to jail.
What does this mean for you? Be careful when dealing with home builders, flippers, and
other suspicious people.
Don't let AMCs bully you into just "getting the appraisal done" when you suspect
something is not right and need more time to investigate. You are liable, not the AMC.
Trainee Appraiser Sentenced to 60 months for Inflating Home Values
August 19, 2013
Source: Department of Justice press release
Bobbi Jo Wojewoda, 46, Grimes, Iowa, was sentenced by United States District Court
Chief Judge James E. Gritzner to 18 months in prison for conspiracy to commit bank fraud.
Judge Gritzner also sentenced Wojewoda to serve 60 months of supervised release following the
completion of her prison term.
In an earlier hearing, Wojewoda admitted she used her position as an apprentice appraiser
to prepare appraisals with inflated values to help herself, and others qualify for mortgage loans.
Wojewoda also failed to disclose material conflicts of interest to the mortgage lender when she
performed appraisals on her own home and homes where she was the real estate agent.
In a related matter, Wojewoda's husband, Wade Charles Wojewoda, 45, pled guilty to
receipt of proceeds obtained under false pretenses, related to the purchase of the Wojewoda's
home in 2003. Wade Wojewoda admitted he received loan proceeds knowing, or he was aware
of a high probability, that the proceeds had been obtained under false pretenses. Specifically, he
knew, or deliberately closed his eyes to the fact that a false document had been submitted to a
bank to secure the loan proceeds. Wade Wojewoda was sentenced to three years probation on
July 31, 2013.
United States Attorney Nicholas A. Klinefeldt announced the sentence. This case was
investigated by the Federal Bureau of Investigation, and the case was prosecuted by the United
States Attorney's Office for the Southern District of Iowa.
Additional information from a 6/1/2012 news story in the DesMoines Register, it was
reported that she forged her supervisor's name. Her husband was a Des Moines police lieutenant.
"Documents say a late 2003 transaction, in which Bobbi Jo Wojewoda served as real estate agent
and allegedly prepared a fraudulent appraisal, involved loan documents for the purchase of a
$625,000 home on 83rd Place in Ankeny. Bowers-Danielson, the buyer, actually paid $400,000,
according to the indictment, because she had "arranged to receive a kickback in excess of
$100,000 from the seller following closing without the lender's knowledge."
Page 12–September, 2013 Appraisal Today
Registered Appraiser Sentenced to 33 Months in Prison
July 29, 2013
Source: U.S. Attorney, Western District of Tennessee
Michael Pinkney, 43, Cordova, Tennessee, and Alan R. Price, 50, Olive Branch,
Missouri, were each sentenced to 33 months in prison and ordered to pay $1,283,728.53 in
restitution for their roles in a foreclosed real estate flipping scheme.
According to facts revealed during their respective sentencing hearings before U.S.
District Judge Samuel H. Mays, Pinkney, the owner and president of Capital Mortgage and
Peanut Construction Company, and Price conspired to identify foreclosed properties, recruit
nominee buyers to purchase and refinance the properties, and submit false and fraudulent
documents to mortgage finance companies.
Using his position as a registered property appraiser, Price would submit appraisals
reflecting that improvements had been made to the foreclosed properties, knowing that they had
not. These appraisals falsely inflated the value of the properties, which allowed more money to
be borrowed against them. These loans were obtained through Pinkney's mortgage company. As
a result, the loan funding companies CitiMortgage and Taylor, Bean and Whitaker lost
$1,283,728.53.
One example cited in the original information charging the men was a property on
Harbert Avenue purchased by nominee buyers in January 2009 for $65,000. Two months later,
Price submitted an appraisal which valued the property at $400,000 even though no
improvements had been made to the property since its purchase. All of the properties listed in the
information were located in the Midtown area of Memphis.
Both men pleaded guilty in mid-April to one count of conspiracy to commit wire fraud
and one count of wire fraud.
Additional informatoin from a 6/9/2011 story in the Commercial Appeal Register in
Memphis, TN:
"A federal judge this week ordered U.S. marshals to seize from three bank accounts more
than $146,000 gained through a Midtown real estate scheme that a federal prosecutor described
as fraudulent....
Private investor Jimmy Leslie and property appraiser Alan Price formed a joint venture in
late 2008. Leslie would buy foreclosed or distressed properties at a bargain because of their
condition. The properties then would be refinanced ostensibly at 75 percent of market value and
supposedly to use the refinance loan proceeds to renovate the houses so they could be resold at
full market value.
However, Price provided fraudulent appraisals for the refinance loans, greatly inflating
the true value, the affidavit states.
The houses and their purchase and inflated refinance or resale values were: 1155 Vance,
$45,000 and $245,000; 1804 N. Parkway, $75,000 and $250,600; 265 McNeil, $116,900 and
$385,000; 1429 Peabody, $107,900 and $412,500; and 1297 Harbert, $65,000 and $400,000.
Instead of plowing the inflated refinance proceeds back into house and repairs, Leslie,
Price and others split the money among themselves, the government alleges.
Page 13–September, 2013 Appraisal Today
Appraiser Gets Probation for cooperating with Attorney General in Mortgage Fraud
Conspiracy
May 7, 2013
Source: Minnesota U.S. Attorney press release
Bryan Joseph Lenton, 33, Oakdale, Minnesota, was sentenced for his role in a mortgage
fraud scheme that caused losses to lenders exceeding $7 million.
On May 2, 2013, United States District Court Judge David S. Doty sentenced the
defendant to three years of probation on one count of conspiracy to commit mortgage fraud
through interstate wire. Lenton was indicted, along with two others, on December 7, 2010, and
pleaded guilty on March 8, 2011. He cooperated with authorities in the prosecution of his codefendant, John Anthony Spencer, 33, Albertville, Minnesota, and in the investigation and
cooperation of James Hoffman, another mortgage fraud defendant currently serving a 78-month
sentence.
In his plea agreement, Lenton, a real estate appraiser, admitted he provided appraisals for
properties that falsely inflated market values in order to create a pool of funds to be split among
him, his co-defendants, and straw buyers.
The scam, orchestrated by Spencer, involved brokering fraudulent loans that were used
by recruited purchasers to buy residential real estate at inflated prices. The transactions generated
proceeds that greatly exceeded what the sellers were content to accept as full payment for their
properties. The excess money was split up among the buyers Spencer recruited as well as
Spencer himself and accomplices he solicited in an effort to bring the transactions to fruition.
The properties included six single-family homes in north Minneapolis, five residential
condominium units located on Fisk Avenue, St. Paul, four condo units located on Dayton
Avenue, St. Paul, Minnesota, a home in Albertville, Minnesota, and two investment properties
located in north Minneapolis.
Spencer, a mortgage broker at Minnesota One Mortgage, agreed to assist the owner of a
five-plex condominium unit on Fisk Street, St. Paul to sell those units. To that end, Spencer
recruited Lenton to appraise each of the units at substantially more than the owner of the units
was willing to accept as full payment for them. Spencer then recruited straw buyers to purchase
the units with loan proceeds obtained via fraudulent loan applications prepared by Spencer and
Patrick Arthur Dols, 40, Minneapolis, Minnesota, another mortgage broker.
On October 31, 2011, Spencer was sentenced to 125 months in prison on one count of
conspiracy, ten counts of wire fraud, one count of bank fraud, and one count of money
laundering. He was convicted on June 2, 2011, after a three-week jury trial.
On November 29, 2012, Dols was sentenced to one year and one day in prison on one
count of conspiracy. He pleaded guilty on March 1, 2011. In his plea agreement, Dols admitted
that his role in the conspiracy was to take fraudulently drafted loan applications in the names of
various straw buyers and find lenders willing to make mortgage loans based on the false
information he was providing.
My comment: Interesting that the appraiser was actively involved and was not "just the
appraiser" (Vic the appraiser's comment in the Soprano's tv show.).
Page 14–September, 2013 Appraisal Today
Homebuilder Gets 14 Years for Hiding Buyer Incentives Behind Inflated Appraisals
July 24, 2013
Source: FBI press release
Paul Wagner, 59, Las Vegas, Nevada, a homebuilder has been sentenced to 14 years in
prison, five years of supervised release, and ordered to pay $4.4 million in restitution for selling
houses at inflated prices in order to fraudulently obtain mortgage loans.
The defendant was sentenced on Monday, July 22, 2013, by U.S. District Judge Miranda
M. Du. Wagner was convicted by a jury in October 2012 of one count of conspiracy to commit
bank fraud and wire fraud, six counts of bank fraud, and three count of wire fraud.
Wagner was a home builder in Las Vegas for 20 years, building tract homes in the
northwest part of the Las Vegas valley. From about 2007 to 2009, Wagner created a scheme to
provide large cash incentives to buyers, real estate agents and others to sell his homes. The
incentives included Wagner paying buyers' mortgage payments, making large cash payments to
real estate agents and others to find buyers, and paying buyers' down payments.
To pay the incentives, Wagner inflated the value of the homes by causing appraisers to
create false appraisals. Wagner concealed the incentives from the lenders, who would not have
made the loans had they known about his methods. Using this fraudulent scheme, Wagner sold
about 85 houses from March 2007 to mid-2009. Most of the homes went into foreclosure after
Wagner stopped making the mortgage payments. According to the Indictment, the losses to the
financial institutions were more than $18 million.
"Since the inception of our mortgage fraud program in the spring of 2008, over 200
persons have been charged with federal mortgage fraud crimes in Nevada," said U.S. Attorney
Bogden. "Most of those individuals were convicted and are in prison. Wagner is the first home
builder to be charged and convicted."
Comments from a 7/30/10 Wall Street Journal article, over two years after the market
crashed:
"At the height of the real-estate boom, commissions in Las Vegas regularly reached
double digits, real-estate agents say. Kurt DeWinter, a Henderson, Nev., agent, received a
$70,000 commission on a $550,000 home from Beazer Homes USA Inc. BZH -3.03% two years
ago. He says he gave half of that to the buyer."
"They didn't care what you did with the money as long as the buyer paid the price they
wanted for the house," says Mr. DeWinter, who personally went into foreclosure in that same
neighborhood on a $500,000 Beazer home. He says he received a $50,000 incentive from the
builder, which he used for his down payment. Beazer didn't return calls seeking comment.
Some builders continue to make generous offers. Wagner Homes Inc., a local home
builder, advertises in big capital letters at the top of a flyer "$130,000 commission any way you
like it!" for homes in developments like "Dawn Day Fusion," a northwest Las Vegas subdivision
that offers homes with Asian-inspired architectural flourishes. New homes listed there in midJuly for $530,000 even though similar model homes in that development sold for $400,000 two
years ago.
"A fee that high has got to raise a bunch of flags," says Kenneth LoBene, HUD's Las
Vegas field director, because builders typically reduce the price of the home rather than offer
such large incentives and because homes in that subdivision have sold for as little as $240,000 in
foreclosure auctions. Representatives of Wagner Homes didn't return calls seeking comment.
Page 15–September, 2013 Appraisal Today
Steve Hawks, a Las Vegas real-estate agent, points to offers like this as one that a commercial
lender wouldn't back if properly disclosed. "You find me an institutional investor that's going to
buy this loan," he says."
My comment: Appraisers beware of home builders. Now we have an example of what I
have suspected for many years. I quit doing new home appraisals a long time ago. As is typical
for these types of cases, no appraiser was named or indicted.
Real Estate Agent Sent to Prison for Kickbacks to home builders, appraisers, investors,
and others
May 29, 2013
Source: Source: Minnesota U.S. Attorney press release
Robert Leo Rick, 52, White Bear Lake, Minnesota, was sentenced for his role in a
mortgage fraud scheme that defrauded mortgage lenders out of at least $7 million.
United States District Court Judge Susan Richard Nelson sentenced the defendant to three
years in prison on one count of conspiracy to commit mail and wire fraud. Rick was charged on
December 23, 2011, and pleaded guilty on January 27, 2012.
In his plea agreement, Rick admitted that from 2005 through 2007, while employed as a
real estate agent for Rick's Realty, he worked with developers, builders, and investors seeking to
"invest" in residential real estate. Rick admitted soliciting and conspiring with others to secure
investors to purchase multiple residential properties, in transactions where those investors, or
buyers, would receive undisclosed kickbacks from mortgage loan proceeds.
To generate the funds for the kickbacks, builders sold the homes at reduced prices,
appraisers appraised the homes at inflated prices, and the mortgage loan lenders were informed
only of the inflated prices, and thus awarded buyers mortgage loans based on the inflated prices
rather than the true, reduced sales prices. The excess mortgage loan proceeds were then used to
provide the buyers with the promised kickbacks, which were not disclosed to the mortgage loan
lenders. All of this was known to Rick.
Through this scheme, Rick assisted builders and developers, including TJ Waconia, to
sell approximately 102 residential properties with mortgage loans totaling approximately $26
million. He also served as property purchaser, directly or through the use of his then-wife's
name, for at least eight properties, and received a total of approximately $397,000 in purchaser
kickbacks. To further his scheme, Rick admitted using the U.S. mail and commercial carriers, as
well as interstate wire communication, to pass along information to investors.
My comment: No appraiser name was mentioned. Another appraiser beware of home
builder scams.
Woman & Unlicensed Appraiser Admit Using Fake Appraisals to Defraud Lenders
July 16, 2013
Source: www.mortgagefraudblog.com
Kimberly Eileen McMillian, a/k/a Kimberly Simmons and Kimberly Simmons
McMillian, 46, Baltimore, Maryland, and Glenroy E. Day, Sr., 73, an unlicensed appraiser, Oxon
Hill, Maryland, pleaded guilty to wire fraud in connection with a fraud scheme involving more
than $1 million in fraudulently obtained mortgages.
According to her plea, in 2007, McMillian approached a man who had bought three
Page 16–September, 2013 Appraisal Today
houses in Baltimore and had finished renovations on two of them, and told him that she had
clients from the New York area who were interested in purchasing the properties. When he
agreed to sell, McMillian submitted loan application packages to a loan officer at a mortgage
corporation in connection with the three properties, as well as a fourth property. The four loan
application packages were subsequently approved.
Investigation revealed that virtually all of the information submitted in the four loan
packages was false. In two cases, the purported buyers were individuals who had already
returned to their home countries or planned to do so in the near future; the other two "buyers"
listed on the loan applications were either stolen or fictitious identities. In none of the four cases
was there a real individual who actually intended to live in the properties and make the mortgage
payments on them....
McMillian arranged to have Day, an unlicensed appraiser, prepare the appraisal reports
on all four properties because she knew he would provide an appraisal at the specific contract
price without regard to the actual condition or value of the property. For the two properties
located at 2243 Madison Avenue and 2359 McCulloh Avenue, Day admitted that he falsely
represented that both properties had been recently upgraded and renovated. Day further admitted
that these two appraisals also included interior photographs that were actually taken in
completely different and thoroughly renovated houses. Day's appraisals indicated that each of the
four appraisals had been reviewed and approved by a licensed appraiser, but the individual
specified has denied that he saw or reviewed any of the four appraisals....
McMillian received a total of approximately $278,000 from the four transactions at the
closings, although she in turn transferred $122,000 of the settlement proceeds to another
individual and an associate's business checking account. Day received approximately $2,000
which he had charged for preparing the four appraisals.
Following the closings, the mortgage on each property soon went into default. Typically,
either no mortgage payments were made at all, or only a couple of payments were made.
McMillian and Day face a maximum sentence of 30 years in prison and a $250,000 fine,
and will be required to pay restitution for the full amount of the victims' losses. U.S. District
Judge George L. Russell III scheduled McMillian and Day's sentencing for October 11, 2013 at
9:30 a.m. and 11:00 a.m., respectively.
My comment: The unlicensed appraiser got $2,000. The scamster got $228,000. In a
2012 court document: Day's appraisals falsely stated that it had been reviewed by Mr. J.G., a
licensed appraiser. This document also said that Day stated a property had been completely
renovated when it actually needed work. Interior photos of another home were in the appraisal.
Also, it was appraised for $360,000 when it had been previously listed for 136 days for
$200,000.
Where to get more information
www.mortgagefraudblog.com is the best place to find out who is in trouble with the law.
For more information on the appraiser, google the appraiser's name. The court documents can be
very interesting.
Page 17–September, 2013 Appraisal Today
Retrospective appraisals and reviews - how they differ from current value
assignments
By Doug Smith, SRA
"As they say on my own Cape Cod, a rising tide lifts all the boats." - John F. Kennedy
"As house prices fall, a huge amount of financial folly is being exposed. You only learn
who has been swimming naked when the tide goes out — and what we are witnessing at some of
our largest financial institutions is an ugly sight."-Warren Buffet
Even as the market shows signs of recovery, lenders continue to experience foreclosures as
borrowers finally give up their properties.
Clients seek to mitigate losses by making repurchase demands on loan originators based
on imperfect appraisals. In a more recent development, private mortgage insurance companies
seek to discredit appraisals on which they based the underwriting of private mortgage insurance
(P.M.I.)
The property in question is typically a distressed property either in foreclosure or
involved in a negotiated short sale where the sales price is not likely to meet the current
outstanding loan amount.
There are two levels of appraising distressed properties. On the one hand, lenders seek
appraisals for properties under current market conditions. On the other, lenders seek appraisals as
of the origination date or appraisals reviews for appraisals completed to underwrite the original
loan.
Appraising distressed properties is not for everyone. For lenders, distressed properties
imply costs, liability and loss of revenue.
Appraisers are often the bearers of grim news not well received by clients. It may truly be
said: never take on appraising distressed properties with the idea your client will be grateful.
Appraisers have much to consider when taking on the appraisal of distressed properties,
not the least are fundamental USPAP issues and a full consideration of intended users.
Fannie Mae, for instance, in their engagement letters for retrospective reviews, clearly
indicates that the review may be used to support a formal complaint to the State Board of
Appraisal Regulation.
One private mortgage insurance company is referring original appraisals and the
subsequent review to State Insurance Commissioners, alleging fraud.
Who knew about PMI claims against lenders?
While appraisers have long provided appraisals to clients seeking to cancel private
mortgage insurance, (P.M.I), few appraisers realized that the appraisal done for a lender for the
original loan was also used by the insurance company to underwrite the initial private mortgage
company insurance policy.
Now faced with claims because values have fallen below the 80%/20% private mortgage
company safety margin, private mortgage insurance companies are dusting off the original
appraisal and sending it out for review.
If the appraisal is not found to support the retrospective value, the P.M.I. Company is
provided with grounds to deny the claim.
Page 18–September, 2013 Appraisal Today
In all of the discussion back in 2005 about intended users that led to Fannie Mae agreeing
that appraisers could clarify Certification #23, there was never any mention that insurance
companies were using appraisal reports to underwrite private mortgage insurance.
On the other hand, appraisers clearly understand that HUD is an intended user for the
purposes of supporting HUD insurance. Appraisers must be cautioned that if working for P.M.I
clients, the intended users may include the State Appraisal Board.
The P.M.I. Retrospective Program
P.M.I companies typically undertake the retrospective review process in two steps.
First, the appraiser is engaged to conduct a retrospective drive-by appraisal for an agreed
upon fee. At the onset, the appraiser agrees that, if ordered, the appraiser will conduct a field
review on the property for an additional fee.
Typically, if the retrospective drive-by does not come within ten percent of the value of
the original appraisal, a field review is ordered. With most of the research completed, the field
review scope or work is somewhat reduced.
From personal experience, I am finding about two thirds (2/3) of the assignments result in
an additional engagement for a field review.
Typical REO Assignments are still the bulk of the market
The typical REO assignment calls upon the appraiser to provide a timely and impartial
appraisal that assists the client with the planning strategy of dealing with a non-performing
mortgage instrument.
Not all non-performing loans fall into foreclosure. Lenders are scrambling to head off
foreclosures by working with borrowers to reduce interest, loan amounts, adjust payments and in
some cases, allow borrowers to sell their properties with some of the indebtedness forgiven. An
accurate appraisal facilitates the decision-making surrounding these workout measures.
If the property has already fallen into foreclosure, the objective of the lender is to look to
the appraiser for an opinion of value on which to base a selling price.
Furthermore, if the property is not now marketable at a price level to mitigate a loss, the
appraiser is asked what steps must be taken to bring the property up to marketable condition. The
appraiser must carefully define these issues with clear agreement with the client as to the purpose
and function of the appraisal report and the intended use.
The scope of work is likely to be more inclusive than with other assignments. In REO
appraisals done for HUD, for instance, appraisers must include an Environmental Compliance
Record/Single Family Property Disposition form. This form calls for determining if the subject
property is or is not listed on the National Register of Historic Properties or whether the property
lies in a Historic District.
This form also calls for determining whether the property lies within the boundaries of an
airport runway clear zone. The form requires closer scrutiny of available flood plain information.
Lenders may have any other number of requests for additional information. For instance,
the typical report often must contain a grid with property listings.
The FHA REO Management and Marketing Program
Beginning in September 2010, HUD set out to streamline the system of appraising
Page 19–September, 2013 Appraisal Today
properties returned to HUD. The nation was divided into regions with Marketing Contractors and
separate Maintenance Contractors assigned to each region.
HUD now refers to these contractors as Asset Managers (AM) and the property
maintenance companies as Field Service Managers. (FSM) The major asset managers, BLB
Resources, Best Assets, Ofori REO, Matt Martin Real Estate, PEMCO, Home Telos, and
Cityside Corp. were selected as HUD's asset managers.
The AM companies, in turn, have actively recruited appraisers to carry out the appraisals.
The appraisal process is changed substantially from the former program.
HUD uses the maintenance company (FSM) to not only secure the property, but also
prepare the repair estimates. The scope of work to the appraiser is significantly reduced. The
appraiser is engaged to prepare an "as is" appraisal that utilizes the repair estimates furnished to
the appraiser as part of the engagement letter. The appraiser integrates the maintenance report
into the submitted report.
The sticking point of the program is that HUD set a mandatory nationwide ceiling on fees
for these appraisals. However, recently each contractor has begun to rely on negotiated fees
when they are unable to locate appraisers willing to take on these properties. To locate the M
&M Contractor (Asset Manager) in any region go to:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/mm/mminfo
Page 20–September, 2013 Appraisal Today
Changes in estimating repair costs
The new HUD program eliminates the issue of preparing repair costs. This is not the case
in the typical REO appraisal. One area where the typical REO property differs from another
assignment is that the appraiser is asked to estimate repair costs.
Based on the premise that the appraiser is not a home inspector or otherwise qualified to
assess construction hazards, environmental hazards or pollutant hazards, the appraiser must at the
very least be prepared to report matters that are observable and associate these observations with
cost estimates that are credible.
Appraisers must have greater understanding of the typical structural and mechanical
elements of a home.
USPAP issues - higher standards for REO appraisals
The final area of concern to the appraiser is carrying out the appraisal process adhering
rigidly to both USPAP Standard 1 and Standard 2.
The lender typically asks that in addition to the "as is" value, the appraiser report values
that may represent a "quick" sale price, which is value in liquidation in a time frame shorter than
typical marketing time. The lender frequently asks for an "as repaired" value.
Each of these values calls for strict adherence to Standards 1 and 2, where the appraiser
must go through the same process that is called for in determining market value.
Opinions rendered for liquidation sales values must have some market support and not be
based on some sort of "hunch."
If the appraiser reports any value other than market value contained in the typical 1004,
the appraiser must supplement the market definition within the report.
The Appraisal Standards Board in the 2010/2011 USPAP edition made significant
changes in Standard 3, Appraisal Review, Development and Reporting. A careful reading of
Standard 3 and also Advisory Opinion 20 that centers on an appraisal review assignment that
includes the reviewer's own opinion of value is critical to completing retrospective review
assignments.
USPAP Statement 3 addresses retrospective value opinions and provides direct guidance
on retrospective appraisals. This statement concludes, for instance that, "Data subsequent to the
effective date may be considered in developing a retrospective effective value as confirmation of
trends."
Adherence to USPAP exposes the typical REO appraisal specialist to higher standards
than those found in preparing a typical report where the value opinion is confined to determining
market value alone. The typical REO appraisal is likely to receive much closer review and more
attention than the typical appraisal. Lenders want to do better next time and learn from previous
mistakes.
When doing some HUD REO properties, I sometimes shake my head in bewilderment,
asking myself why the condition I am reporting on the REO property was not addressed in the
first appraisal.
Our lot as objective appraisers is not to speculate unduly about such matters lest they
create bias and redirect efforts to do the job right this time around. Attention to detail is an
essential work ethic in a REO assignment and important to ensure reliable results.
Page 21–September, 2013 Appraisal Today
Objectivity
There is one important issue to address when dealing with distressed properties.
Appraising distressed properties calls for even greater impartiality than perhaps any other area of
appraising. Properties in foreclosure or about to be foreclosed represent the under belly of
mortgage lending. Horror stories abound of properties left trashed and in despicable condition.
The subject of predatory lending is widely discussed and most agree it is a major
problem. The client may very well be a predatory lender that sought to take advantage of a
borrower. Investors and real estate agents seek advantages in handling REO properties and
attempt to exert influence over the appraisal process.
As will be discussed later, the chain of intended users is more extensive than with typical
appraisal assignments. None of these problems, challenges or circumstances of appraising a
distressed property, however, should in any way influence or otherwise slant the objectivity of
the appraiser.
To quote USPAP: "An appraiser must perform assignments with impartiality, objectivity,
and independence, and without accommodation of personal interest."
While the property may very well be over- valued initially, when appraising a REO
property, the REO appraisal specialist must guard against under appraising or otherwise
presenting any bias in completing the assignment.
Another area of concern in retrospective appraising is "that is then, and this is now."
Market conditions were decidedly different in the past and therefore, the current value must only
be considered in the context of values on the effective in the past or the effective date of the
appraisal under review.
Current prices not only reflect current market conditions, but also the motivation of the
sellers. Appraisers must exercise caution not become biased on the basis of the current market
for the current property.
Finally, particularly in the case of repurchase demands, the original appraiser may be
given the opportunity to rebut the review. Each retrospective review must be prepared
anticipating this eventuality and thus these reviews demand greater attention to logic and clarity
of explanations.
The role of the appraiser according to USPAP 2012-2013 ed., Definitions, p. U1 is "one
who is expected to perform valuation services competently and in a manner that is independent,
impartial, and objective."
Competency
Hand in hand with impartiality is competency. The demands of appraising distressed
properties include several important areas that in some case differ from typical appraisal
assignments.
Often REO properties have extensive damage. There may be damage caused by pipes
freezing in cold weather or other weather related damage. If a property has not been maintained,
there may very well be mold issues and damage caused by neglect. The inspection of distressed
properties demands a greater level of knowledge of property damage assessment.
While the Marshall & Swift Residential Cost Guide easily assists in producing estimates
of overall construction costs, an REO appraisal specialist must be familiar with costs of
remodeling. Lenders require realistic estimates of window replacement, plumbing fixture
Page 22–September, 2013 Appraisal Today
replacement, interior and exterior painting and a myriad of other repairs.
Marshall & Swift has an online version "Repair Cost Express" available with flexible
pricing. Another guide is the 2013 National Repair & Remodeling Estimator published by
Craftsman Book Company with a current price of $73.50. http://craftsman-book.com
Interviews with remodeling, roofing and painting contractors and with knowledgeable
home center employees are helpful ways to acquire knowledge of local costs and conditions.
Scope of work considerations
Preparing a REO appraisal is likely to take more time. The inspection process, for
instance, must never be hurried.
The operative word for the appraiser is patience, sometimes in short supply when facing
increased volume and demands for faster turn-around times. Appraisers must reconcile the
client's demand for timely reporting with a realistic assessment of the time necessary for
completing the assignment with credible results.
The imposition of unrealistic time frames must be considered an unacceptable condition
as defined in USPAP AO-19 to wit: "Specifically, an assignment condition is unacceptable when
it: limits the scope of work to such a degree that the assignment results are not credible."
The appraiser is the sole judge of both the effort and the amount of time it takes to
complete an assignment. Time frames that do not compromise results must be discussed and
agreed upon frankly in advance.
Database requirements and market research
The second tool necessary in appraising REO properties is the assembly of a database and
deriving market data. This may take some doing, as MLS info sometimes is not specific as to
how a property comes on the market.
Collecting market information is very much a local issue. In my market, the foreclosure
notices of sheriff's sales are published. Appraisers need to be alert for ways this information may
be gathered either in spreadsheet form or print outs from public sources.
The properties can be sorted down to neighborhoods and tracked through the MLS
system when and if the property is later put up for sale. Real estate agents are on the front lines
in the REO market providing lenders with CMA's and other services such a re-keying, securing
properties, managing tenants etc.
Often only a few real estate agents in a market deal with distressed properties. Keeping in
touch with these real estate agents and learning about market reaction is key to understanding
and later performing competently prepared REO appraisals.
Assembling market data about distressed property is the essential step in interpreting
market behavior. Like many appraisal problems, interpreting market behavior is sometimes best
answered following the tried and true who, what, where, when, how much and why analysis.
Using this outline, the first step is to determine who makes up the pool of buyers for REO
properties. Often this information leads to answers to the other questions. There are many web
sites promoting investing in REO properties that help you understand the market.
If there is commonality, the analysis sets up an expectation that an investor in a REO
property should only pay 80% to 85% of the market value. Most go on to add that the expected
return on these properties should be upward to 40%.
Page 23–September, 2013 Appraisal Today
To understand the dynamics in a market is straightforward. The first step is to determine
who are the buyers and then determine what their expectations are. A first time homebuyer is
likely to have different expectations than an investor.
In some markets, REO properties may very well sell at a premium. This too, is subject for
close analysis as, again, objectivity is key. Correctly defining the value goes a long way toward
mitigating losses by the lender. Following the who, what, where outline leads the appraiser to a
realistic determination of market dynamics, location elements and influences that encompass the
understanding of appraising distressed properties.
Other issues take more analysis, in particular the review of comparable sales. The
condition of the property is very relevant to valuation. I have found, for instance, that when there
is uncertainty about the plumbing and heating, buyers expect steep discounts.
Of course, my market is southwest Montana and the consequences of frozen pipes are
more severe than in markets not affected by cold weather. Since the condition of the plumbing
and heating bears heavily on value, the collection of data is made more difficult.
Persons with first hand knowledge have to be interviewed since this type of information
is rarely noted on typical MLS data sheets.
Should you appraise distressed properties?
With so much to consider, appraisers have to ask themselves if appraising distressed
properties is worth the effort and undertaking the preparation of retrospective reviews and
appraisals is a good fit.
The answer, I think, may be found in the appraiser selection process. Lenders quickly
discern that the selection of an appraiser for a distressed property is critical to the results.
Lenders, unhindered by market pressures to increase lending, finally desire to know only
what the property is worth. Their objective is straightforward, to mitigate any potential loss.
Lenders are likely to select appraisers more for experience and professionalism than for
low fees. Companies seeking retrospective appraisals and reviews on which to base a repurchase
demand or on which to deny a private mortgage insurance claim have a lot riding on the results
and are likely to be more open to upward fee negotiation for complex properties.
REO appraising and retrospective appraising positions an appraiser to be regarded in the
upper ranks in the selection process. The extra effort justifies higher fees and this, along with the
challenge of the typical assignment, tends to lead to greater satisfaction in providing appraisal
services.
About the author
Doug Smith has an appraisal practice in Missoula, Montana, and is a certified general
appraiser doing both residential and commercial appraising with a specialty in hotel appraising
and feasibility studies. He has an MBA from the University of Montana and the SRA designation
from the Appraisal Institute. He can be contacted at hotelman@montana.com.
Page 24–September, 2013 Appraisal Today
NOTE: If you can’t see the graph below, click in the blank space and grab a corner to
change the size.
MBA Loan Volume Application Index – 5/11 to 8/13
Market Index
Base = 100 in 1990
1600.0
1400.0
1200.0
1000.0
800.0
600.0
400.0
200.0
0.0
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No
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Ja
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Ma
y12
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The survey covers approximately 75 percent of all U.S. retail residential mortgage applications, and has
been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and
thrifts. Base period and value for all indexes is March 16, 1990=100.
Appraisal Today
ISSN 1066–3900
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