Customary and Reasonable Fees: The Elephant in the Room

Appraisal Buzz, Spring 2016Ernie Durbin

By Ernie Durbin, SRA, CRP, RAC Member

Wikipedia describes the metaphor “the elephant in the room” as, “an obvious truth that is either being ignored or going unaddressed. The idiomatic expression also applies to an obvious problem or risk no one wants to discuss.”

Somehow, recent events in the valuation space have deflected attention away from the elephant in the room, customary and reasonable fees. Real estate appraisers are resilient folks. They can adapt to change as well as any other professional. But like everyone else, they don’t want to do more work for less pay. Most of the issues facing the valuation space today point to one simple problem- customary and reasonable fees. It’s time to address this obvious problem and the risks that it poses to our industry.

Enjoy the full article here.


Worldwide ERC and RAC Appraisal Report Writing Contest

WERClogoRAC Logo - New Design

We’re excited to announce that RAC and Worldwide ERC are partnering up to hold an appraisal report writing contest, where relocation appraisers can showcase their professional expertise to the world. The winners will be announced to members of Worldwide ERC® and RAC as well as their constituents. The contest will provide terrific exposure to the best relocation appraisers in the business.

You can get all the details here: Worldwide ERC and RAC Appraisal Report Writing Contest.

“Jamba Whirl’d Center” – Coming to North Texas

jambaJuiceLogoEmeryville, California-based Jamba Inc. — which owns and franchises Jamba Juice stores — plans to relocate its headquarters to Frisco’s Hall Office Park, which will bring 100 corporate jobs to North Texas.

Jamba has signed a lease for about 25,000 square feet of office space at 3001 Dallas Parkway in Hall Office Park, which will include about 19,000 square feet of office and meeting space, as well as about 6,000-square-foot test kitchen and retail store front.

Read the entire story at the Dallas Business Journal.

Salt Lake City Market Summary

Mobility Magazine of Worldwide ERC, April 2016

By Don Mueller, CRP, RAC Member

Northern Utah, aka the Wasatch Front, is a metropolitan region in the north-central part of the state, consisting of a chain of cities and towns stretched along the Wasatch Range from approximately Nephi in the south to Brigham City in the north.  Roughly 80 percent of Utah’s population resides in this region, as it contains the major cities of Salt Lake City, Provo-Orem, West Valley City, West Jordan, and Ogden.

The Wasatch Front is long and narrow.  To the east, the Wasatch Mountains rise abruptly several thousand feet above the valley floor, climbing to their highest elevation of 11,928 feet (3,620 m) at Mount Nebo.  The area’s western boundary is formed by Utah Lake in Utah County, the Oquirrh Mountains in Salt Lake County, and the Great Salt Lake in northwestern Salt Lake, Davis, Weber and southeastern Box Elder counties.  The combined population of the five Wasatch Front counties totals approximately 2,125,000 according to the 2008 census estimate.

Although most residents of the area live between Ogden and Provo – a distance of 80 miles – which includes Salt Lake City proper, the fullest built-out extend of the Wasatch Front is 120 miles long and an average of five miles wide.  Along its length, the Wasatch Front never exceeds a width of approximately 18 miles because of the natural barriers of lakes and mountains.

The region on the other side of the Wasatch Range, including cities such as Park City, Morgan, Heber City, and Midway, sometimes referred to as the Wasatch Back, has recently shared in the rapid growth of the region.

Utah’s first settlers of European decent were the Mormon pioneers, who migrated from the Midwest in 1847, led by Brigham Young, the prophet and president of the Church of Jesus Christ of Latter-Day-Saints.  Upon entering the Salt Lake Valley, Young made this declaration:  “This is the place.” (Some say he said, “This is the right place.”) The famous statement still holds true today in regard to real estate values and investment in the Wasatch Front.


The trends noted here are for Salt Lake County but also reflect the adjoining Wasatch Front area.  A report in February by the Salt Lake Board of Realtors notes that real estate agents in Salt Lake County sold 13,323 existing single-family homes last year.  This is a nine-year high surpassed only before the Great Recession with 15,317 homes sold in 2005 and 15,283 the following year.  The combined value of single-family homes sold in 2015 rose 22 percent over the previous year, to $4.1 billion.   The upward trend in housing prices persisted last year, logging an increase of almost 7 percent over 2014 for a single-family home, to a $272,000 median sales price, and 8 percent for a multifamily unit, to $189,

“There is still room for moderate house-price increases, provided mortgage rate increases are gradual,” says Cheryl Acker, president of the Salt Lake Board of Realtors.  The board report characterizes real estate in Salt Lake County as “still relatively affordable” for qualified buyers, as a family earning the median household income and devoting 30 percent of its income to a mortgage payment could afford 56 percent of the homes sold in the county in 2015.


The Salt Lake Board of Realtors expects an 11 percent gain in total residential home sales of all types this year in Salt Lake County, to more than 19,000 units.  An increase of 5 to 7 percent in the median single-family home price, to $290,000, is predicted as housing demand continues to exceed available inventory.statistical-snapshot

The number of homeowners with negative equity has now dropped to 2.5 percent of all mortgages.  In previous years, homeowners were locked in to their current home and could not move up.  Hence, in 2015 the move-up market was again supporting higher levels of sales, which put upward pressure on prices.

Another benefit of improving market conditions is the huge reduction in the sale of distressed homes (short sales and foreclosed properties).  For five years, the “fire sale” prices of distressed homes dragged down overall housing prices.  In 2011, one-third of all homes sold in Salt Lake County were distressed properties; it’s no coincidence that 2011 was the year of the largest decline in prices, 9.5 percent.  The near elimination of short sales and REO sales by 2015 was also a contributing factor to the acceleration of price increases in 2015.

There is no sign of a bubble – both prices and sales are sustainable.  There is very little inventory, and prices are increasing.  The market is free of REO and short sales.  From a market perspective, Utah and Salt Lake County seems to be “the right place” to buy and invest in a single family home.

Don N. Mueller, CRP, is a professional appraiser and real estate consultant based in Ogden, Utah, and a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 801 479 6123 or

“It was really about affordable housing.”

Toyota LogoSure, the low taxes, relaxed regulatory environment and Central Time Zone are nice. But none of those factors tops the list of reasons Toyota decided to plant its North American headquarters in Plano, bringing in more than 3,000 jobs, mostly from California.

The main driver of Toyota’s move from Torrance, California, was housing costs, according to Albert Niemi Jr., dean of the Cox School of Business at Southern Methodist University, who has inside knowledge about the move. Niemi shared the anecdote at an SMU Cox Economic Outlook Panel on Friday morning.

“It wasn’t so much that we don’t tax income,” he said. “It was really about affordable housing. That’s what started the conversation. They had focus groups with their employees. Their people said, ‘We’re willing to move. We just want to live the American Dream.’”

Toyota did the math and found that housing costs in Los Angeles County, where Torrance is located, are three times per square foot the cost of a house in Dallas-Fort Worth.

“They’re paying the same salary,” Niemi said. “So in real terms, they’re going to triple the affordability of housing they can buy if they move to Texas.”

Read the entire article at the Dallas Business Journal.

Texas Keeps Getting Bigger – “Four Texas metro areas together added more people last year than any state in the country”

Texas Keeps Getting BiggerU.S. Census Bureau – MARCH 24, 2016 —

Four Texas metro areas together added more people last year than any state in the country except for Texas as a whole, according to new U.S. Census Bureau population estimates released today. The population in these four metro areas increased by more than 400,000 people from July 1, 2014, to July 1, 2015.

The Houston-The Woodlands-Sugar Land and Dallas-Fort Worth-Arlington metro areas added about 159,000 and 145,000 residents, respectively — the largest gains of any metro areas in the nation. Two additional Texas metro areas adjacent to each other — Austin-Round Rock and San Antonio-New Braunfels — were each also among the 16 nationwide to gain 50,000 or more people over the period.

These four Texas metro areas collectively added about 412,000 people. Texas as a whole gained about 490,000.

The statistics released today provide population estimates for our nation’s 381 metropolitan statistical areas, 536 micropolitan statistical areas and 3,142 counties.

Eight counties drove Texas’ metro area growth and were among the 20 counties nationwide that gained the most population between 2014 and 2015. Altogether, they added 306,736 people:

  • The Dallas metro area contained four of these counties: Tarrant, Dallas, Collin and Denton.
  • The Houston metro area contained two: Harris, which led the nation by gaining more than 90,000 people, and Fort Bend.
  • Bexar, in the San Antonio metro area.
  • Travis, in the Austin metro area.


Land Report 100While not related to the relocation industry, I found this very interesting and wanted to share it with everyone.  I hope you enjoy.

Few material possessions speak to “having” as do acres upon acres of one’s own land. Land to ranch, to fish, to hunt, to farm, to grow timber, or merely to wander over or gaze upon is like almost nothing else. It concretizes place-ness in most of our minds, and it’s the finite raw material without which we’d have no home building or residential development.

Here’s the 2015 Land Report 100, a 5th annual analysis that profiles America’s 100 leading individual landowners. It’s a production and publication of Fay Ranches Inc., a land broker.

Researched by Jeremiah Jensen, Lisa Martin, Katy Richardson, and Roxanna Thompson, the piece profiles John Malone, Ted Turner, and the 98 other families, dynasties, and individuals who own the millions of acres of America’s most pristine tracts, whatever the purpose.

Mortgage Rates Remain Near Long Term Lows


Mortgage News Daily, February 1, 2016

Mortgage rates were in line with the best levels in 8 months as of last Friday.  Although they moved slightly higher to begin the new week, today is still the 2nd best day in the past 8 months.  Lenders continue quoting conventional 30yr fixed rates of 3.75% for the most part with 3.625% being the next most prevalent rate.

In general, rates are taking cues from the big picture economic considerations and global financial market turmoil.  Low oil prices and volatile stock markets have been helping.  Most of the more focused economic data has been falling short of its usual potential to move markets.  An exception will certainly be made for this Friday’s Employment Situation report, which is the most important economic report of any given month.  In the bigger picture, the trend toward lower rates continues, but any day that rates bounce slightly higher (like today) can mark the end of that trend.

mortgage rate1

30 Year Fixed Rate Mortgage

mortgage rate2

15 Year Fixed Rate Mortgage


View the full article at: Mortgage News Daily

Southern California Market Summary

Mobility Magazine of Worldwide ERC, December 2015

By Craig Gilbert, CRP, SRA, RAC Founding Member

Southern California consists of eight counties, from Santa Barbara in the north to San Diego in the south, and from the Pacific Ocean on the west to Nevada and Arizona on the east. This report focuses on the five most prominent counties:  Los Angeles, Orange, San Diego, Riverside, and San Bernardino. These are also the five most populous counties in the state, with a total combined population of almost 21 million.


Housing prices increased throughout Southern California from approximately 1997 through mid-2006. The market peaked at varying times geographically and by price range. This peak was followed by a steep decline in prices. The credit crisis of 2008 and lack of credit for potential homebuyers, together with a weakened economic base during the Great Recession, led to a high number of foreclosures and short sales. The Inland Empire (Riverside and San Bernardino counties) was among the hardest hit and experienced the greatest percentage of decline in prices. No areas of Southern California were completely immune from economic problems. Some of the older, lower-priced, lower-income coastal areas also experienced significant price depreciation compared to more affluent areas nearby. Housing prices bottomed between 2009 and 2011, differing by geographic location and price range. The coastal and higher-income areas fared better than the Inland Empire and the lower-income and lower-priced areas. The coastal areas had a lower percentage of decline and recovered more quickly. This was related primarily to employment growth and stability. All counties experienced price appreciation from 2012–13 to 2015. Current prices are still below previous market peak prices, and none of the counties in Southern California has yet achieved median prices equal to or higher than previous market highs.Market at a Glance

The annual percentage of change in median housing prices for all counties peaked from 2013 to 2014, with annual increases between 10.3 percent in Orange County and 19.2 percent in San Bernardino County. However, although housing prices have continued to appreciate, the rate of appreciation has decelerated significantly in all counties, from 0.5 percent in San Diego County to 7.8 percent in San Bernardino County for the most recent period.


The California Association of Realtors has been computing a housing affordability index (HAI) for all counties since 1991. The HAI, which represents the percentage of households that can afford to purchase the median-priced home based on traditional assumptions, is a function of median price, income, down payment, mortgage rates, and current underwriting standards.

The least affordable period for all areas (2005–2007) was just before the market peaked. The indices ranged from 8 percent in San Diego County to 19 percent in San Bernardino County. The most affordable period for all areas (2011–2012) occurred just as housing prices bottomed. The indices ranged from 39 percent in Orange County to 78 percent in San Bernardino County. The indices have subsequently decreased significantly and currently range from 21 percent in Orange County to 56 percent in San Bernardino County.  All areas have been in a transition from more affordable to less affordable, which is primarily a function of price appreciation.

The most significant economic factor has been a substantial improvement in the economic base. There have been positive changes in both employment and unemployment over the past five years, according to the U.S. Department of Labor. Total number of employed in these five Southern California counties increased by 11 percent. The unemployment rates have declined by approximately 50 percent as employment simultaneously increased. The official unemployment rate in the Los Angeles–Orange County metro area declined from 12.3 percent to 6.4 percent, in the Inland Empire from 13.8 percent to 6.8 percent, and San Diego from 11.1 percent to 5.1 percent.Statistical Snapshot

Household income, however, has been relatively stagnant in most areas, with some exceptions. This factor is quite significant with regard to direction and magnitude of future housing prices. A number of corporations in California have been moving to lower-cost areas of the U.S. or offshoring work, in part due to unaffordable housing and the high cost of living and doing business in the state. Toyota Motor Co., for example, is in the process of moving its U.S. headquarters from Torrance (Los Angeles County) to Plano, Texas, along with about 3,000 medium- to high-value-added marketing and finance jobs.

Mortgage rates were at historic lows around the fourth quarter of 2012 (about 3.3 percent), increased slightly through the third quarter of 2013 (about 4.5 percent), decreased through the second quarter of 2015 (about 3.7 percent), and have subsequently increased slightly to about 4.0 percent. Rates will likely remain within 50 basis points of current levels for the near future. This is a favorable factor for buyers and sellers. The favorable year-round climate also has historically contributed to housing demand and desirability of Southern California.

Housing at or near the median price, and those not more than about 20 percent above the median, will likely continue to appreciate in the foreseeable future in most areas. Higher-priced properties, primarily about 25 percent or more above median, are likely to remain stable at best, with a more probable decrease in price due to current and impending oversupply.

The rate of price appreciation has recently decelerated due to a decline in affordability, especially in the higher-priced areas. Housing inventory of 2.5 months (San Diego) suggests a slightly undersupplied market. Housing supply and demand are more balanced in Los Angeles, Orange, and Riverside counties, at 3.3 to 3.9 months’ supply. San Bernardino appears to be moving from a balanced to an oversupplied market at 4.4 months’ inventory. The availability of mortgage financing is a significant factor in the mortgage market. Underwriting standards are quite tight to avoid the pitfalls that led to the 2008 credit crisis.

Craig Gilbert, CRP, SRA, is a professional appraiser and real estate consultant based in Huntington Beach, California, and a co-founder of RAC (Relocation Appraisers and Consultants). He can be reached at +1 714 847 8087 or