Dan’s Take: Low Barriers?
By Dan Bradley, SRA, CDEI
Recently, Inc. Magazine’s online site published an article titled “6 Top Performing Industries for 2011”. The article lists “Real Estate Appraisal” as one of six industries with a bright outlook for 2011. Quoting from the article: “Looking to launch a business in 2011 but not sure where the best opportunities for success lie? IBISWorld has targeted six industries heavily concentrated with small- and medium-sized businesses that are poised to grow in the year to come.”
I like reading positive information about my chosen profession (BTW – it’s a profession, not an industry, but I won’t quibble over semantics). With all the doom and gloom that we hear all the time about being replaced by AVMs and having our profession co-opted by lenders and AMCs, it’s refreshing when someone sees a light at the end of the tunnel and doesn’t hear a train whistle.
In the wake of the silence from federal regulators regarding defining ” Customary and Reasonable” since Financial Reform legislation was signed into law last summer, many property appraisers are at loose ends.
The folks over at OREP/Working RE launched a survey a few months ago to help provide some insight on what the profession considers Customary and Reasonable. The survey measures turnaround time and standard fees for different types of non-AMC appraisals across the United States. Turnaround time was found to be what appraisers believe is the biggest obstacle to appraisal quality, based on an earlier survey by the same organization.
According to David Brauner of OREP.org, the survey results will provide a reference for appraisers as they set fees in the new post-HVCC environment. It can be used by lenders and AMCs to measure their fee and turnaround time policies. OREP also intends to make the data available to the government.
The survey is designed for all property appraisers and it’s anonymous. To date, it’s received over 9,300 responses. For appraisers who haven’t weighed in yet, it’s not too late. You can add your fee data & turn times here: OREP CRF Survey. To participate, you first designate your state, then answer 16 questions for each of the MSA(s) in which you work within that state. There is a rural area designation if you don’t work within any of the 365 defined Metropolitan Statistical Areas.
Preliminary results can be viewed by state by registering here and selecting the “Survey Results” group.
The U.S. Department of Housing and Urban Development (HUD) recently released the second issue of its online FHA Appraiser newsletter; one of the featured articles provides guidance pertaining to the appraiser’s inspection of the property.
This article does not establish any new requirements, but is instead intended to remind appraisers of their obligations for inspecting properties for FHA loans. A few points from the article:
- The appraiser must make a minimum “head and shoulders” entry into the attic, basement, and crawl space. The appraiser should have a flashlight or other device to illuminate the space being inspected, and should provide photographs of deficiencies to document needed repairs or required inspections.
- If the attic or crawl space is inaccessible at the time of inspection, the appraiser must contact the lender and reschedule the inspection when the area is made accessible.
By Dan Bradley, SRA, CDEI
I like to think of myself as a realist, as opposed to being an optimist or a pessimist. For me, the glass is neither “half full” nor “half empty”; it contains approximately 6 ounces. When it comes to the issue of customary and reasonable fees, however, my take is that not only is the metaphorical glass half empty, but the beckoning oasis that has been promising to fill up the glass is merely a mirage.
When the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, mandating that lenders and AMCs pay customary and reasonable fees, appraisers everywhere stood and applauded (some quite literally!) The Act did not specify exactly what was customary and reasonable – instead this responsibility was delegated to the Federal Reserve Board. In late October 2010, the FRB released an interim final rule for implementation of the Dodd-Frank Act, and it appears that customary and reasonable has been defined to mean essentially whatever an appraiser is willing to accept. Allow me to explain…
Editor’s note: This article is reprinted from HUD’s premiere issue of its newsletter, FHA APPRAISER.
Over the years, the meaning and importance of the three primary elements of MPR have become confused by the reference to safe, sound, and secure. However, the primary elements of minimum property requirements for FHA-eligible properties are correctly referred to as: safety, soundness, and security. The three S’s of property eligibility, as they are often referred to, are important for appraisers to keep in mind when performing property inspections. Often the three elements relate to and impact one another.
Safety refers to the health, habitability, and sanitary condition of a property. Systems within the dwelling contribute to the safety of the home. Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health and safety issues. Safety hazards can also be the result of issues having to do with the soundness of a property or simply a missing handrail or other hazards affecting the health and well-being of the occupants.
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