Posts from — February 2010

If my blog had feelings, it might be upset I’m a few days late in saying this, but February 20th marked the first birthday of the Sacramento Appraisal Blog. Here we are….. 243 posts later.

Thanks everyone for taking the time to read and for the conversation too!!! This was a great and fun first year and I’m looking forward to the next one too.

I took a photo of a “McMansion” today in South Sacramento. This house is currently for sale and is a whopping 3,293 square feet in the middle of a neighborhood of mostly single-story 1100-1400 square foot homes (with 3 or 4 bedrooms). It looks like this one may have actually been 1607 square feet originally, so it was already on the upper end of gross living area for the neighborhood, but now it has grown to over twice its original size. This house weighs in now as a 6 bedroom / 3 bathroom property (with a 3-car garage). What do you think?

I’m heading to an appraisal inspection shortly in Roseville and I wanted to share some preliminary research. I find it interesting to take a panoramic glimpse of citywide data like this. What do you see in these trend graphs below? What stands out to you? The graphs are based on all single family residential sales and listings in Roseville from Sacramento Metrolist. I’d love to hear your comments below.  

While on the subject of Roseville, I wanted to mention that one of my Twitter friends, Realtor Steve Ostrom of Coldwell Banker, posted an interesting video a couple of weeks ago about shadow inventory in Roseville and Rocklin. It’s interesting to look at what the numbers are saying. How many houses are in the process of foreclosure? How many loans have defaulted but not listed on the market yet? Statistics like this are very important to watch and they can be indicators of what is to come too. If you can’t see the video below, then click HERE.

Have you heard horror stories about out-of-area appraisers driving 200 miles to appraise properties in places they know nothing about? There is a new bill (AB 1796) to pay attention to as it relates to real estate appraisals and this very issue. You can read this very short one-page bill HERE. In essence, AB 1796 looks to require the Director of the Office of Real Estate Appraisers (OREA) to adopt regulations for Appraisal Management Companies (AMCs).

I understand the reasons behind this bill, but the part of the bill that actually really concerns me is the following:

The director shall adopt regulations governing appraisal management company activities, including, but not limited to, the following:   (a) Use of out-of-area appraisers.

I understand the need to limit those pesky out-of-town appraisers who are “killing deals” because they are appraising in locations they know nothing about. I get that, but there are several good reasons why “regulation” language concerns me as it pertains to this point: 

1) There are certain properties in my own county and city that I wouldn’t even think of appraising. Not all appraisers are qualified for all types of properties – even in the city they live in. I don’t know of an appraiser who would say it differently. So the issue is not about distance from the property per se, but does the appraiser have the experience to get the job done (or can he gain the experience)?

2) I’d hate to see the government impose some sort of a “two county” rule where AMCs could only send appraisers to properties within two counties or 50 miles of their location. Again, some appraisers have vast experience in multiple counties. This would probably hurt appraisers located in more rural areas too.

3) I’m not a big fan of the government imposing more rules and regulations on the appraisal industry. Appraisers are required already to be “geographically competent” by USPAP (our uniform standards) and if an appraiser is not, then the hammer needs to come down from the appropriate authorities already (OREA) instead of inventing new rules. This is a bit like parenthood. If you have rules in place, you need to enforce them. Don’t just go make new rules if you are not enforcing the old ones.

Isadore Hall of Compton, CA authored this bill.  

Isadore Hall
Box 942849
Room 6025
Sacramento, CA 94249-0052
Phone: (916) 319-2052

I know I sound a bit ranty, but trust me, I’m concerned – not hostile. How this bill is ultimately handled can have big implications for the real estate industry. I am optimistic that OREA will not make some hard and fast “2 county” rule as I mentioned above, but my internal sensors are dinging and I’m aware of the importance for our legislators to understand how the appraisal industry works as it pertains to appraising in multiple counties. 

I’d like to hear what you think. What is the solution to the problem? What implications do you see for the appraisal or real estate industry if this was handled poorly? Feel free to comment below.

If you’re wondering where to get a free flood map online or how to find out if your property is located in a flood zone, have a look at the following video. An appraiser friend in Georgia made this video and I think it’s helpful and worthy of re-posting.

FEMA has updated their website since this video was shot, but it’s still easy to follow along Bryan’s descriptions with FEMA’s newer site design. Good luck, and let me know if you have any questions.

One of the visible impacts of the foreclosure crisis is unkempt lawns. Although banks are supposed to take care of their vacant homes, that doesn’t always happen right away, so home owners surrounding the property are left with a dilemma of what to do. 

If the lawn or vacant lot next door to you looked like this, what would you do about it? What sort of impression do you think a situation like this leaves on neighborhood visitors? I’d love to hear what you think.

This photo was taken in Stanislaus County today on an appraisal inspection. The neighborhood is five years old and most lots are built out, though there are a handful of vacant sites like the one above.

While pulling out of the SAR parking lot this morning, something caught my attention. Across the street at Home Depot I saw a cluster of men huddled together waiting to be picked up for work. These guys are in the construction trade, and their game plan is to stand around for hours to hopefully get hired for the day by a local contractor.

I know there are reasons why these guys do what they do, but it really got me thinking. If we’re not intentional about the way we do business, we could easily fall into the trap of “standing around”. Sometimes the idea of marketing can feel risky, so we feel paralyzed by fear and instead sit back and wait for the phone to ring. Or we build a stylish website and then expect the site to now do all the hard work of bringing in clients. Or we employ some impersonal spammy email marketing plan and think it’ll bring home the bacon. 

We do all these things, but if we don’t make meaningful connections with others online and in person, then we’re really just “standing around”. 

Business is all about building relationships and trust with people. If you want business, then be intentional about meeting others, nurturing relationships, being authentic, and being resourceful to those you meet along the way. Standing around might work to some degree if you’re lucky, but there just might be a better methodology out there.

What do you think?

If you were buying a house, how would you feel if the appraisal was ordered as below? Or if you are a real estate agent or loan officer, and your deals are hinging on quality appraisals, how does this strike you? 

I received an email with the text below just a few days ago. I don’t personally do business with these types of companies, but I guarantee someone did accept this assignment.

My name is XXXXXXX with XXXXXXXXXXX. I have a 1004 Conventional order in Auburn, CA. It has a fee of $200. Please let me know if you are interested.

What’s wrong with this message? Several things: 1) The fee is too low and not customary to typical market rates for a real estate appraisal, especially in Auburn; 2) This email was likely blasted to a high volume of appraisers, and orders like this typically go to whoever responds the fastest. Is that really a good methodology? Instead of picking the most qualified appraiser for the job, it selects whoever happens to be available to work for cheap; and 3) The management company ordering the appraisal likely charged the bank easily $400+ for the appraisal. That doesn’t seem very fair to the borrower or the appraiser.

Thankfully not all appraisal management companies (AMCs) operate like this, but unfortunately there are many that do. When I do appraisals for loans, I only work for good AMCs that respect my time, work and pay me decently. If you are in a position to order appraisals or you use an AMC, what is the process like for engaging appraisers for business? Is it like what I explained above? Different?

Please know that I’m not ranting or asking for pity for the real estate industry (like anyone would give some anyway). That’s not it at all. I just want to provide some insight and context into the happenings of the appraisal ordering process because over the long haul this is not going to be helpful to consumers or the real estate industry. 

What do you think?

This isn’t related to real estate, but definitely worth sharing. My brother recently let me know about someone he heard of named Betty Londergan. Betty inherited some money and she started something called What Gives 365 Project. In short, Betty is giving away $100 every day to causes she chooses. And she’s blogging about it. 

“This is all my money. It comes from what my dad left each one of us kids when he died, and I can’t think of a single thing my mom would have loved more than to see me giving it away to worthy causes. (However, my dad would undoubtedly say that I need to get my head examined.)”

Why am I bringing this up? I am very pleased to announce that Betty donated $100 to Project  680, a grassroots organization I help steer. Read Betty’s post today on Project 680 entitled “Underwear, Socks, Shoes“.

What do you think of this and what Betty is doing?

Here is our Valentine’s Day promo. What do you think? Don’t worry about flowers, chocolate or anything foofy. Love is about satisfying the needs of the heart. This promo is only good for two more days, so hurry up and get your sweetheart a real estate appraisal.

Obviously we’re just joking. Though we’d accept your business, it would be very bad for you to pull something like this. Happy Valentine’s Day!!!

Does the city you live in have an online system set up for residents to ask questions, report code violations or send in suggestions or complaints? Are you familiar with how to use it? Have you seen any results from using a system like this?

Yesterday I wrote about the life cycle of neighborhoods, and I’m convinced that one of the most important pieces of the puzzle to see a neighborhood enter a phase of “renewal” is grassroots activity among residents and a city encouraging these efforts. If there is poor communication between residents and City Hall, then that’s going to show up in many potential ways – unenforced codes, unkempt properties, lack of pride, loss of hope… Moreover, I sincerely believe there is a correlation between the level of civic engagement in a neighborhood and property values. Do you agree? Disagree?

Anyway, I thought it would be useful to make a brief video for my area to show others how to use the “My City Hall Online” system for the City of Rancho Cordova website. This system is also referred to as the “Comcate” system, and is a very useful tool for us residents. My take and experience is that the more we communicate with City Hall, the greater the chances are of obtaining the results we want to see.

I’d be very curious to hear your stories. Comments are welcome below.

Neighborhoods don’t breathe or bleed. They aren’t alive in the same sense as we are. Yet they still have a life cycle and it doesn’t necessarily take a real estate expert or economist to decipher what stage of life a neighborhood is in.

Four Stages of Neighborhood Life: 

Growth: A period during which there are gains in public favor and acceptance. Demand increases.

Stability: A period of equilibrium without marked gains or losses. No real obvious change.

Decline:A period of diminishing demand and acceptance.

Renewal:A period of rejuvenation and rebirth of market demand.

When you think of a neighborhood that is in the “growth” stage, it might be a new tract that is the talk of the town or an area where new buyers are just waiting for someone to die out of the subdivision (literally). In contrast, a neighborhood experiencing stability would really be in a place where there is an overarching sense of equilibrium without demand increasing or decreasing. A neighborhood in the stage of decline would likely have characteristics such as unkempt lawns, dilapidated units, maybe increasing crime, and less owner-occupied properties. Lastly, renewal takes place when a neighborhood in decline experiences a renaissance of sorts – for whatever reason, maybe gentrification, political action, a neighborhood association springing to life to bring change, or even governmental stabilization programs directed toward the area. 

When you think about particular places in the Sacramento region, which neighborhoods comes to mind for the categories above? Where would you put Oak Park, Rosemont, Tahoe Park, Rancho Cordova, Los Lagos, Rancho Murieta, Land Park, or wherever you might happen to live? Or a bonus piece of conversation, why do certain areas experience a decline while other areas grow?

* The four stages above were taken from Harrison & Lee “How to Pass Residential Appraisal Certification Exam” (A book I used to pass a big test. These stages show up in any real estate book though).