axis appraisal presentation
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Appraisal Update April 10, 2013
Agenda Data Update
Legal Update HVCC turns to AIR
State Laws
UAD & UCDP
Appraisal Update What listings tell us in the current market
Unpermitted Space
Concessions
Reduce re-inspection fees
Appeals process
Questions & Answers
Listings & Seasonal Trends
Listings & the Principle of
Substitution • Non real estate example:
o Yesterday I bought bread for $3.50.
o Though I did not purchase it, today the store is selling bread for $3.25.
o What is the cost of bread?
• Listings create ceilings in declining or volatile markets
• Principle of Substitution: a buyer will pay no more for a
property than the cost of an equally desirable
alternative property
Seasonal Realities – Nation’s Capitol
$300,000
$310,000
$320,000
$330,000
$340,000
$350,000
$360,000
$370,000
$380,000
$390,000
2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4
http://www.gbreb.com/uploadedFiles/GBAR/GBAR_News/SF%201st%2011.pdf
Average Home Prices Contra Costa County
300000
350000
400000
450000
500000
550000
600000
650000
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2
average sold
average list
Santa Clara County
600000
650000
700000
750000
800000
850000
900000
950000
1000000
1050000
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2
(4/10)
average sold
average list
Market Changes • Q2 2012 $151,000
• Q1 2012 $135,000
• Q1 2009 $200,000
• Q2 2006 $307,000
GSEs want comps to come from
the past 90 days
DC Metro/Baltimore
Not just a value issue, but a numbers issue.
DC Metro/Baltimore
Data Trends
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3Qtr4Qtr1Qtr2Qtr3
2005 2006 2007 2008 2009 2010 2011
Average Selling Price - Coastal South
Same data – taking out quarters
Market Trends – Santa Clara County
600000
650000
700000
750000
800000
850000
900000
950000
1000000
1050000
1100000
average sold $
average list $
Market Trends - Cupertino
1050000
1100000
1150000
1200000
1250000
1300000
1350000
1400000
1450000
Average sold $
Average list $
Market Trends – Contra Costa County
200000
250000
300000
350000
400000
450000
500000
550000
600000
650000
700000
2007
Q1-2
2007
Q3-4
2008
Q1-2
2008
Q3-4
2009
Q1-2
2009
Q3-4
2010
Q1-2
2010
Q3-4
2011
Q1-2
2011
Q3-4
2012
Q1-2
2012
Q3-4
2013
Q1-4/9
median price
median list
Market Trends- San Ramon
600000
650000
700000
750000
800000
850000
2007
Q1-2
2007
Q3-4
2008
Q1-2
2008
Q3-4
2009
Q1-2
2009
Q3-4
2010
Q1-2
2010
Q3-4
2011
Q1-2
2011
Q3-4
2012
Q1-2
2012
Q3-4
2013
Q1-4/9
median price
median list
Bakersfield– 3 years
Bakersfield– one year
Home Affordability Trends
Data for Fence Sitters
o Payment as a percent of Income:
• National Average was 21.7% in 2007 and is 15%
in 2012 (NAR)
o Home Affordability Index
• Highest levels since 1970s
o Housing Opportunity Index
• Highest since its record keeping began in 1992
o Rates
• Remaining low
Legal Update
Home Value Code of Conduct
• Replaced by AIR o Appraiser Independence Regulations
o Minor changes – Lenders still determine appraisal
ordering process and must certify that no one in
production had a role in selecting the appraiser or
appraisal management company.
There must be separation of a Seller’s sales or Mortgage
production functions and appraisal functions. An
employee of the Seller in the sales or Mortgage production function shall have no involvement in the operations of the appraisal function.
State Laws No person with an interest in a real estate transaction involving an appraisal shall improperly influence or attempt to improperly influence, through coercion, extortion, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with a mortgage loan.
does not prohibit a person with an interest in a real estate transaction from asking an appraiser to do any of the following:
(1) Consider additional, appropriate property information.
(2) Provide further detail, substantiation, or explanation for the appraiser’s value conclusion.
(3) Correct errors in the appraisal report.
Uniform Appraisal Dataset
• It’s about reporting & validating
• Approves or denies an appraisal based upon computer submission and rules – limited in focus at this time.
Uniform Collateral Data Portal
• It’s about standardization
• Quality & condition ratings are key
Reasons for UAD • No common set of definitions among all
stakeholders in the appraisal process
Appraisal Update
Unpermitted Space • Bad News
o Additions in which there is no evidence of finaled permits can not be
included in the GLA and will be given very little if any value on the grid.
• Good News o Some lenders will lend on properties with unpermitted space if some or all
of the following criteria are met
• Done in a workman-like manner
• No apparent health or safety issues
• Typical for the area as evidenced by three-like comparables with
similar unpermitted space.
• Does not violate zoning ordinances
• Minimal cost-to-cure to remove the space.
• Bad News o MLS reporting field for unpermitted rooms???
Last thoughts on additions
• Anytime the home’s square footage varies from
public records, the appraisal process slows down.
• Consider researching and providing the appraiser
with permits or explanation of the space on the
front-end.
• Non-contiguous space must also be counted
separately.
Sales Concessions • Example:
o A model match comparable home sells for $200,000 with $10,000 credit
back to buyer from seller. Does the $10,000 adjust off the grid so that the
final adjusted value is $190,000?
• Answer: o Maybe
• Determining factors: o Typical for the market
o Purpose of the concession
o Amount and impact of the concession
o MUST BE REPORTED
Reduce Re-Inspection Fees
Value Appeals Process
• Best offense is a strong defense
• Share information!
• Understand lending constraints
Q & A
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