Blog

Appraiser competency for relocation assignments

Am I competent to complete this relocation assignment? Who on earth wants to ask themselves that question? Who on earth thinks they may be incompetent?  We have to remember to ask ourselves whether we have the competence to complete an assignment, or whether we can gain the competency to do so by the time we deliver our appraisal report.

The Uniform Standards of Professional Appraisal Practice addresses competency as its own rule, which stresses how important this rule is.  The appraiser has to be competent to perform the assignment, or if lacking, acquire the necessary competency to perform the assignment.  The appraiser must inform the potential client before accepting the assignment about any lack of competency as well as address it in the report and what they did to become competent. If the appraiser will not be able to perform in a competent manner, they have to decline or even withdraw from the assignment. It does happen occasionally that in the midst of an appraisal, a problem arises that the appraiser will not be able to solve. At that point, they will either need to get assistance or withdraw.

What happens when the property type and location are something that we have familiarity with, but there are assignment elements that we do not? How about accepting a relocation assignment without understanding that the definition of Anticipated Sales Price is not Market Value, and that there are steps that are involved in this type of assignment that are not found in a mortgage report?

Relocation work is fascinating, and allows the appraiser to apply their knowledge of the market, and what drives value in a very detailed manner.

Being in touch with trends within your own community related to what buyers want in various market segments is key, as well as understanding supply and demand, and the fact that the past may not dictate the future is important. Understanding and being able to measure what is happening in the market, right now, as well as what is likely to happen in the very near future related to the listings that are on the market and competing with your property are critical.  At the very least, an appraiser who takes on relocation work who has not taken classes or learned the process, needs to disclose this to their potential client. Let the client decide if they want to use the appraiser, or chose someone who does understand this work and has the experience to do it properly. Relocation work does allow the appraiser to gain competency while working on the assignment, as long as the report is competently completed by delivery.

There are appraisers who have made this type of work one of their primary specialty, and most are happy to help someone who sincerely desires to learn and understand the vagaries of the product type. The first place to start if you have not completed this type of work, is to visit the Worldwide ERC website and sign up for the Relocation Appraisal Training Program https://academy.worldwideerc.org/relocation-appraiser-resources/the-relocation-appraisal-training-program/. There is a cost for this program, but if the desire is there to take on a different type of assignment, this is a small price to pay, and a good foundation of knowledge.  In addition to the training above, WERC sells the guide for relocation appraisal, found at https://erc.org/Resources/USRealEstate/Pages/Relocation-Appraisal-Guide.aspx. The cost for the guide is $95 for members and $195 for non-members, but is a “must-have” for the new relocation appraiser. Another option is to go to the ERC 2010 form report itself, and study the first page. This first page lays out the requirements of the form and helps the appraiser understand the process.

Asking relocation appraisers for help is another great way to learn, but please be respectful of their time as well, as they are likely helping without any compensation. Much of what we need to become competent in this type of work is readily accessible, and there are articles written addressing the differences between Market Value and Anticipated Sales Price, and elements that may be important in a relocation assignment. Some things to watch for related to this work is that we do not use UAD language; condition and quality is relative, not absolute; floor plans are cross-examined by a peer appraiser’s work; and colors, modernization and property oddities might be extremely important here, as well as general upkeep. Anticipated Sales Price does require the analysis of forecasting, and listings and pending sales are very important in the relocation process. Where the subject property is positioned in relation to the listings is something to consider and address, and the appraisal report WILL be compared to another appraisal report (or two).

Relocation work is rewarding and interesting work, but the appraiser has got to be competent in the product, not just the property type and location.  If a call comes in to complete a relocation assignment, and you have never done one, let the potential client know. It is possible that they will be fine with someone new to this field, but will want to ensure that the work was completed in a manner that meets the needs of the client. Although it is uncomfortable to admit that we may lack competency in a type of assignment, this is one where we can actually gain it during the process. That is, if we are open to learning.

By Rachel Massey, with great assist from Chip Wagner

The 2018 Worldwide ERC® and RAC Appraisal Report Writing Contest!

Relocation Appraisers & Consultants (RAC) and Worldwide ERC® are partnering to offer relocation appraisers the chance to demonstrate their excellent report writing techniques in a Worldwide ERC® Summary Appraisal Report Writing Contest.

Don’t delay – only the first 50 entrants will be considered. Entries must be received by June 15, 2018.

Get useful feedback from the experts and showcase your skills to a wider audience!

Click here for more information!

A special thanks to RAC member Allen Gardiner, SRA for leading the effort for RAC!

RAC Member Ernie Durbin Receives 2018 Valuation Visionary Award from CRN

Our very own longtime RAC member Ernie Durbin, Chief Valuation Officer for Clarocity Corporation, was named the 2018 Valuation Visionary award winner by Collateral Risk Network (CRN). Here’s the interview with Appraisal Buzz.

Each year, the Collateral Risk Network presents the award in recognition of the person who demonstrates leadership, innovation, professionalism, and one who strives to better the industry for their peers. We will be presenting the award at Valuation Expo in Charleston in March.

Ernie Durbin is renowned for creativity with technology advancements and industry-wide involvement. Ernie is widely recognized as an innovative leader with vision and foresight. Ernie was nominated by his peers and we are honored to recognize him as the 8th recipient of Valuation Visionary.

I can’t think of anyone who is more future-orientated in our profession than Ernie and we thank him for all he does for RAC.

Congrats Ernie!

Jonathan J. Miller CRP, CRE
RAC President
jonathanmiller@rac.net

Dwellworks Featured Appraiser: Sherry L. Kaley, Knoxville, TN

One of our RACers, Sherry L. Kaley, was the first featured appraiser in the new Dwellworks newsletter.

Sherry L. Kaley is a Certified Residential Real Estate Appraiser, and partner of Kaley and Tuck Real Estate Appraisers, the only two-woman appraisal firm in Knoxville, and has been appraising in Knoxville/Knox County and eight adjoining counties for nearly 20 years…

Congrats to Sherry!

Jonathan J. Miller, CRE, CRP
RAC President 2017-2018
Relocation Appraisers & Consultants
www.rac.net

______________________________________

RAC Conference Frisco TX: Changes, Challenges, Solutions

As I’ve said many times, the annual RAC conference is the best appraiser-centric conference I’ve ever attended. It is developed and operated by active appraisers who are working to help you thrive as a professional.

As the current president of RAC, I’m proud to be part of an organization comprised of the best residential appraisers in the U.S.

Click here for more information.

Minneapolis-St. Paul Market Summary

Mobility Magazine of the Worldwide ERC, June 2017

by Byron Miller, SRA, AI-RRS, RAA

Minneapolis and St. Paul, Minnesota, represent a tale of two cities. Known to the locals as “the cities” or the “metro area”—“the metroplex” to hipsters—each city has its own personality and draw. Minneapolis is viewed as the younger city, with many modern skyscrapers, while St. Paul maintains an Old World charm in contrast to Minneapolis’ cosmopolitan feel.

Minneapolis is the largest city in Minnesota, with a population of 410,939 as of the 2015 U.S. Census estimate. St. Paul is the state capital and has a population of 300,851. Statistically the cities are known as the Minneapolis, Bloomington, St. Paul, Western Wisconsin Statistical Area.1 MN-WI MetroSA, as it is known, consists of 16 counties, including two in western Wisconsin, with 3.52 million people.

LOOKING BACK

Minneapolis and St. Paul are two very different cities, built by two different industries that share a common thread—water. The cities abut each other in some places and are separated by the Mississippi River in others. In the early days, the mighty Mississippi provided a means of shuttling flour and lumber from the city of St. Anthony, which would later become Minneapolis. Minneapolis’ development is tied to early milling and lumber companies that went on to become international powerhouses such as Pillsbury Company, as well as General Mills, which shipped more than 14 percent of America’s grain at its peak. Further downstream, St. Paul developed as a transportation center, first by shipping goods via the Mississippi and later by the vast railroad network built by James J. Hill.

snapshot

Minneapolis was influenced by early Nordic immigrants such as Norwegians, Swedes, and Finns. St. Paul was influenced more by other European immigrants such as French, Irish, Italians, and Germans. Both cities are influenced by an influx of immigrants to this day—Minneapolis–St. Paul has the largest Somali and Hmong populations of any U.S. city. This welcoming atmosphere still holds true for modern-day transferees.

TODAY

The cities have diverse industries as well as long histories of job creation and innovation. Sixteen Fortune 500 companies have a presence in the area, attracted to the highly educated local workforce. A partial list of major employers includes United Health Group, Honeywell International Inc., Cargill Inc., Target Corp., Best Buy Co., 3M Co., U.S. Bancorp, Ecolab Inc., Xcel Energy Inc., Thrivent Financial, Ameriprise Financial Inc., SuperValu Inc., General Mills Inc. (including Pillsbury), Land O’ Lakes Inc., Medtronic PLC, and St. Jude Medical Inc.

These companies make up key industries such as agricultural, biomedical, engineering, finance, health care, and information technology (IT). The diverse industries buffer the metro area from market cycles, providing economic stability. The climate can be challenging. However, for those who enjoy the outdoors, the area has much to offer. More than 10,000 lakes offer fishing, hiking, and water sports in summer, and skating and skiing in winter. Hunting options are available in each season.

market-at-a-glanceThe Twin Cities host major professional teams for baseball, basketball, football, hockey, and soccer. The cities have much to offer culturally as well. The Minneapolis Institute of Art has a permanent collection of famous artists and hosts traveling art shows from other major metropolitan art institutes. The Walker Art Center has its own permanent collection and hosts more contemporary art exhibits. The cities have well over 100 theater companies, ranging from the world-renowned Guthrie and Fitzgerald theaters and the Ordway Center for the Performing Arts to smaller regional theaters. There is a wide range of live music options as well—after all, the cities are where Bobby Zimmerman, aka Bob Dylan, and Prince first played before stepping onto the national scene.

The local economy is still recovering from the mortgage meltdown of the mid-2000s. Like most of the country, the cities have seen both high and low economic tides over the past decade. However, variations in this area have not been as dramatic as in the rest of the country, due to industry diversity. At the market’s peak in 2007, the average sales price was $302,845. In contrast, the market’s low sales price was $211,580 in 2011. Recovery from the low point continues today, and the market has increased over the past three years. For example, the average sales price (ASP) of a single-family home in 2016 was $282,997, up 4.1 percent from 2015. Year-to-date ASP for 2017 is showing another 5 percent increase over 2016, with an ASP of $297,230. Days on market have decreased over the same period, from 83 days in 2015 to 68 days in 2017. Similarly, inventory has decreased from 4.2 to 2.7 months over the same period. Local unemployment has been steadily decreasing over the last decade. The seasonally adjusted unemployment rate for February 2017 was 4 percent, in contrast to the national rate of 4.7 percent.

Additionally, since the bottom of the last recession, the cities have seen a significant increase in new construction, from starter homes in suburban development to the high-end condo segments in the downtown districts. While there is some multifamily construction, affordable multifamily housing continues to be in short supply.

LOOKING FORWARD

Although still in recovery from the last recession, the cities’ vitals look promising. Low interest rates and unemployment, zero inflation, and a recovering housing market fuel an optimistic tone. However, the caveat to the recovery is that rising interest rates and prices of key staples such as food, clothing, and energy could stall the recovery in the next chapter of this tale of two cities.

1 MN-WI MetroSA: State of MN Employment & Economic Development:

en.wikipedia.org/wiki/Minneapolis%E2%80%93Saint_Paul#Counties.

2 A portion of these statistics supplied by BM Appraisals.

3 Unemployment data: mn.gov.

4 North-Star Multiple Listing Service, February 2017 (Single-Family Homes).

Byron Miller is with BM Appraisals in Minneapolis and is a member of RAC (Relocation Appraisers and Consultants). He can be reached at +1 612 822 5985 or byronmiller@rac.net.

 

Dallas-Fort Worth #2 in Growth

DFW #2 Growth 2010-2016The U.S. Census Bureau estimates that the Dallas-Fort Worth Metroplex has grown by almost 2,500 persons per week since April 2010.

Eleven major metropolitan areas, led by the Texas duo of Houston and Dallas-Fort Worth, are growing at a pace of more than 1,000 persons per week, based on population estimates issued this morning by the U.S. Census Bureau.

See the full story at the Dallas Business Journal.

1/3 of Texas Sales in February were in North Texas

Sold House 2017About a third of all Texas home sales in February took place in North Texas, according to the MetroTex Association of Realtors. Using the dollar volume metric, Dallas-Fort Worth accounts for about 35 percent of total state sales.

For reference, Dallas’ population of just above 7 million represents about 25 percent of state’s population.

There were 6,909 homes sold in Dallas-Fort Worth last month, the report said, a 5-percent increase from last year. Both the average home price and median home price, $285,940 and $235,000, respectively, were up 13 percent from last year.

See the complete article at the Dallas Business Journal.

Express Yourself

One of our new RAC members, Rachel Massey, SRA, is a prolific writer of appraisal-related topics. She loves appraising and is passionate about appraisal education. The following is something she shared with our members, that had appeared on WorkingRE. We thought it was something we should share with you.

________________________________________

Massey, RachelExpress Yourself
By Rachel Massey, SRA

The appraisal was good. In fact, it was really good. The logic was sound and the comparables used and analyzed were the best available. It was a complex property and the appraiser did a terrific job considering the likely buyer and what their alternatives would have been. Unfortunately, there was a problem.

The problem was that the report was bad. In fact, the report was really bad. None of the appraiser’s logic and analysis came through in writing. The complex property appraisal looked like a jumble of disconnected sales that had nothing to do with each other, let alone the subject property.

The disconnect was simple. The thought process that was involved in developing the appraisal did not make it from the appraiser’s head to the reader. While all the steps in the appraisal process had been followed and a logical result occurred, communicating the result, the last leg of the process, was weak. It was weak because the appraiser was unable to adequately communicate what was going on.

The house was unusual for the market. The market was rural and there were few comparable properties to choose from. There were sales in the area but the sales were just that, sales. The best sales were distant, older, and looked dissimilar with the exception of a couple key features. The key features in this instance were acreage properties with large pond sites, far from any town and close to areas with recreation land.

Start at Beginning
When you begin a report, think about the intended users, as well as the reviewers who will be viewing the report and step back to see if it contains sufficient information for them to be able to understand what the complexities of the situation are. Where do you start? Start at the beginning by describing what the problems are. Why is the property complex? How is it unusual? How many sales are there in the competitive market over the past year? How about two years? What is the competitive market? What would drive the buyer to consider this property and what would their alternatives logically be?

Had the appraiser laid out the problems unique to this property at the start of the narrative, the logic would follow that the client should not expect a pretty report. If the property was rural and unique and the market from which the likely buyer would consider properties broad, then say it. Spell it out so that the client knows what to expect. If the typical buyer for this property would only consider acreage properties with large pond sites, and eclectic style houses that were secluded from all neighbors, then perhaps the market includes properties thirty miles apart.

Convince the client that this is the case. If the typical buyer is a horse enthusiast who wants to be able to take their horse out for trail riding, then the likelihood is that they want to be within a short ride of the horse trails. Talk about it. These are very real considerations for many buyers and may be the overarching drivers as to which properties get considered.

Even on complex properties, there are usually sales that can be located, and those sales are either superior, inferior, or equal to the subject property. If the appraiser steps back and looks at the bigger picture of these sales and logically details why one is better than the subject and one not as good, without any adjustment at all, the appraiser can lay out a logical value range. Watch almost any house hunting show on television and you will see this is very much what buyers do. If buyers do this and appraisers try to reflect the actions of the market, this kind of logic can help present an answer to a difficult appraisal assignment. Even with very imperfect sales data, we can still tell the story of what makes the property unusual and how the sales we choose compete and rank in comparison. From a logical standpoint, simple bracketing with inferior and superior properties can help convince our client that the property is worth more than X and less than Z, with the telling of the “why” being up to us.

Remember that no matter how good the appraisal is in our heads, if we don’t communicate it in the report, our client may well think we have presented nothing more than a jumble of sales. It is up to us to tie everything together into a cogent and compelling story and convince our client that our value opinion is sound. After all, that is what they are paying us for.

Austin, TX: Salaries can’t keep up and it’s pushing people out of town.

Austin, TX 2-14-2017AUSTIN – The American dream of owning a home may be slipping even further away for many people in Austin.

KVUE has been investigating the issue and found that while the sky seems to be the limit for home prices in the city; salaries can’t keep up and it’s pushing people out of town.

According to federal housing data housing prices have risen faster in Austin than anywhere else in the country.

But the real issue isn’t just a need for housing. Instead, the salaries that most people in Austin receive is not enough to keep up with the price hikes.

Over the last 26 years in the city, family incomes rose 97 percent. At the same time, median home prices rose 290 percent.

Put another way, a family making $50,000 in Austin would have seen their income rise to $98,500. However, a home that cost $100,000 then would now cost $390,000.

It’s not an isolated trend in Austin, statewide prices are increasing at a rate that wages can’t keep up with, but Austin still far outpaces the larger cities like Dallas, Houston, and San Antonio.

Read the full article at KVUE News

1 2 3 7