Appraisers Add Form to Help Value ‘Green’ Homes

The Appraisal Institute recently released a form to help appraisers factor in energy-efficient home features when valuing homes. The forms can also be used by real estate agents in describing “green” properties on the MLS, the Appraisal Institute notes. 

Everything from a home owners’ energy efficient appliances to solar panels may now get more attention from appraisals with the added form.  

The new form allows appraisers to identify and describe a home’s green features. It will serve as an optional addendum to Fannie Mae Form 1004, which is the appraisal industry’s mostly commonly used form for mortgage purposes, used by Fannie Mae, Freddie Mac, and the Federal Housing Administration. 

“We hope lenders, home builders, real estate agents, and home owners will take advantage of this new tool,” Joseph C. Magdziarz, president of the Appraisal Institute, said in a statement. “Mortgage lenders who want to see energy features analyzed should request the green addendum to be included with Form 1004. We also encourage lenders to provide the green addendum to home owners so they can fill it out and provide it to their appraiser. If a new home is being appraised, home builders can use the addendum to provide data to appraisers. Real estate agents also can use the data to help populate the MLS.”

 Source: “Appraisal Institute Issues Form to Help Real Estate Appraisers Analyze ‘Green’ Features,” RISMedia (Sept. 29, 2011)

 Other Placerville, El Dorado County, California information at: www.dougandbudzeller.com

REOs to Trigger More Legal Disputes?

Nearly 60 percent of real estate professionals say they believe REO-related disputes will increase over the next two years. What’s more, 76 percent said they believe it will be among the top three issues they will face in real estate, according to the National Association of REALTORS®‘ newly released 2011 Legal Scan: Legal Issues Facing Real-Estate Professional.

In the survey of real estate agents, brokers, attorneys, and educators, survey respondents said disclosure in these transactions remain a main culprit to problems, pointing to banks and listing brokers who sometimes fail to disclose known material defects about a property.  

Overall, according to the 2011 Legal Scan, the top three issues that cause the most disputes in a real estate transaction are dual agency, disclosure, and breach of fiduciary duty. 

Short sales, in particular, are causing more disputes in some of these areas, the survey found. Short sales are more commonly being listed in “as-is” condition, which has “resulted in a decline of quality of seller disclosures,” the survey notes. Another disclosure problem reported is the failure of listing agents to report that the property is or will soon be in a short sale situation.   

Source: “Brokers Foresee an Increasing Number of Lawsuits Related to Short Sales,” Realty Times (July 26, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Helping Home Buyers to Get What They Want

This economy hasn’t taken away the desire to own a home!

People still want a place of their own to raise their families, share with friends and a place to feel safe and secure.  Over 50% of the current buyers are first-time buyers.  For people with a down payment and good credit, this may be the best time ever to buy a home.

This economy hasn’t eliminated the need or aspiration for a larger or newer or older or different home.  People’s situations change and their housing needs change also.  They may just not feel the urgency because they already own a home even if it doesn’t fit their current needs.

The role of today’s real estate professional has changed.  It isn’t enough to be an order taker.  It’s now about providing service way beyond what the buyer and seller expect.  It’s not just finding the “right” home; it’s about showing them the way to minimize the cost of housing by negotiating the price and terms.  It’s about recommending alternative financing and giving them options.  It’s all about helping them to make better decisions. It will take information and tools.  It will take knowledge and training.  But more important, it will take commitment and investment.  Today’s professional must be committed to doing more than the minimum necessary.

Could New Home Appraisal Rules Get Scrapped?

There is an increasing amount of opposition to the new home appraisal rules as many mortgage brokers and real estate agents are serving up criticism that the Home Valuation Code of Conduct (HVCC) guidelines adopted in 2009 are resulting in inaccurate and low-ball appraisals.

The main argument amongst critics is that the new rules have undesirable affects where appraisers are now being overextended, underpaid and forced to churn out appraisals in a hurried fashion. Conversely, many mortgage lenders, including J.P. Morgan and CitiGroup, have vested interests in the appraisal management companies that now play the role of divvying up appraisal assignments, so they naturally are against revamping the current appraisal guidelines.

Implemented last spring by Fannie Mae and Freddie Mac, the Code of Conduct bans mortgage brokers and loan officers from selecting appraisers to valuate homes in the deals which they are brokering. The purpose is to prevent the inflated and sometimes fraudulent appraisals which were partly responsible for an artificial surge in home prices during the past decade.

According to a recent article by Jessica Holzer in the Wall Street Journal , realtors and mortgage brokers have succeeded in inserting language into a House-passed financial-regulation bill that would end the new protocols. The measure would direct federal regulators to come up with an improved set of rules.

Under the new system, appraisal management companies now solicit out appraisal assignments for a fraction of the cost of what the work used to pay – in some cases less than half of the industry’s former compensation rate. As a result, many appraisals end up in the hands of the lowest bidder, and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods.

“More and more people are leaving the appraisal business than ever before because appraisals are now going out to the lowest bidders, commanding lower pay and fees,” says Bill Schettler, Vice President of Sales at Total Mortage Services, LLC.

Mr. Schettler, who worked six years as an appraiser himself, added, “Unfortunately, because of what the appraisal management companies are paying, many people are no longer able to make a living in the industry and there are more inexperienced people now doing the job. What is happening now is that appraisers have to travel further and further to cover more territory, so they can’t be as familiar with the homes as they were before”

National Association of Mortgage Brokers CEO Roy DeLoach told the Journal that out-of-town appraisers hired by vendors are diminishing homeowner equity through home valuations that aren’t credible: “It’s basically hollowing out the equity in communities whether you intend to sell or not.”