Eating tacos and 10 housing market truths

I eat tacos with investors. That’s right. A few times a year a group of real estate friends get together to talk shop at the best taco joint in town. It’s informal and fun because we’re friends, but it’s also valuable to get a sense for what everyone is seeing out there in the trenches. Anyway, despite not having tacos in front of me at the moment, I wanted to share some of the things that have seemed to come up lately in housing market conversations. Anything to add?

33102060 - top 10 - businessman with chalkboard

10 truths about the housing market

1) One high or low sale doesn’t make or break a market.

2) Just because inventory is low doesn’t mean buyers will pay any price.

3) The market isn’t doing the same thing in every neighborhood or price range.

4) There is no such thing as a national housing market. The “national” market is actually made up of thousands of local markets (Jonathan Miller).

5) Appraisers only measure the market. They don’t make values go up or down.

6) There is no recipe or formula for the way a housing “bubble” has to pop. In other words, for all the conversation about a current “bubble”, if the market did “pop” it wouldn’t necessarily have to look the same way it did 10 years ago.

7) Real estate advice has a shelf life, which means it might not be good for every market (or every price range or location).

8) Markets aren’t so perfect that we can say a property is only worth one certain amount like $336,456. It’s best to recognize there is a reasonable range for what the market might be willing to pay (say $330,000 to $340,000). Is there any support for the appraised value to come in at or near the list price or contract price? Does this price fall within the range of what is reasonable?

9) “Negative market trends are not the end of the world. They represent opportunities for some” (from Jonathan Miller).

10) Thinking positively or talking positively about the market doesn’t drive the market. In other words, “you can’t overpower the market with the power of positive thinking. The market doesn’t care what you or your client thinks” Jonathan Miller.

You may notice I referenced New York Appraiser Jonathan Miller a few times above. I realize that makes me look like a fanboy, but that’s okay because he’s an influential voice in my life and I appreciate his weekly notes every Friday. Last week Jonathan knocked it out of the park in his section entitled “McMansions, McEgos, McPrices and McHonor” (that’s where I picked up point #9 and #10).

how-to-think-like-an-appraiser-class-by-ryan-lundquist-150x150Class I’m teaching on Thursday: On September 29 from 9am-12pm I’m doing my favorite class at SAR called HOW TO THINK LIKE AN APPRAISER. We’re going to have a blast talking through seeing properties like an appraiser does. We’ll look at comp selection and talk through so many issues. My goal is to help you walk away full of actionable ideas. Register here.

Questions: What types of conversations are coming up in your circles right now? What is #11? I’d love to hear your take.

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10 things appraisers can do to improve the appraisal industry

The appraisal industry is in a funk. There is a lack of national unity, but more than that there is a culture of isolation and negativity that seems to leach the industry of forward progress. I was reminded of this recently while reading an article by Jonathan Miller, so I thought it might be fitting to share some practical and actionable steps to improve the appraisal profession. I’m not pointing fingers or talking down to anyone, but rather hoping we as appraisers can get on the same page about some of the basics. This is coming from a guy who frequently collaborates with other appraisers, and serves as a board member for an appraisal organization in Sacramento. What do you think?

isolation in appraisal industry -image purchased by sacramento appraisal blog

10 things appraisers can do to improve the appraisal industry:

  1. Increase your skill set. Study the market. Become a local expert.
  2. Think of appraisers as peers or potential collaborators instead of the enemy.
  3. Learn to visually illustrate the market by graphing trends. This can help you be relevant, show support for market trends instead of using boiler plate lingo, and ultimately tell a more compelling story of value in reports.
  4. Stop working for clients who pay too little. Expand your skill set so you are more marketable to a better clientele, and then break up with your old clients. Marketing to new clients can feel scary for anyone, but if you don’t step out to do it, you’ll never get those clients. Remember, waiting for the phone to ring is not a marketing plan.
  5. Don’t be afraid to ask questions. You will never grow if you do not ask questions and reach out to other appraisers for help. Don’t be a lone ranger.
  6. Be friendly. Appraisers are not known for their warm people skills, but it’s still possible to be personable while remaining objective.
  7. Be professional. Incessant complaining about other real estate professionals is a bad look. Why would a real estate agent, attorney, or CPA want to work with you if you are a toxic person?
  8. Be humble since no appraiser gets value absolutely right 100% of the time.
  9. Be a mentor by answering questions to other appraisers (whether they are younger or older). Too many appraisers think they are right about everything, but at the end of the day being right doesn’t help anyone grow. Find ways to share your knowledge and build others up. Realize lots of appraisers need your help because they had poor training or were taught to “hit the number”. Many of these appraisers are isolated, so help draw them out.
  10. Join a local appraisal organization that meets together regularly. Isolation is hands-down one of the biggest threats in the appraisal community, so this is a necessary solution. Think about how you can improve the organization too. Or better yet, become a board member or volunteer.

The truth is we all have room to grow in life and business, and there is no such thing as a perfect appraiser either. There are surely some big things that need to happen to help steer the appraisal industry toward health and national unity, but if we begin to focus on some of the small steps above, it just might help put us on the right track.

If you have further thoughts, ideas, constructive feedback, or feel inspired about something, I’d love to hear from you in the comments.

Questions: Any thoughts or stories to share? What is #11?

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