Appraisal View

May 9th, 2019 7:49 AM
Fannie Mae recently announced they are testing a change in the appraisal process which would involve having appraisers rely on a 3rd party data collector for the data elements they normally collect when they inspect a property. 
One can surmise the idea for this came about through a meeting between Fannie Mae and the CEO of a certain large property acquisition company who pioneered a similar idea during the last market downturn. The meeting happened at the suggestion of President Trump who is a huge proponent of technology and innovation. One can also then surmise that this is not the only change that is planned. When you consider that Blackstone used automated valuation models coupled with their property inspection data to make decisions on how much to pay for a foreclosed property, the intellectual partnership would surely be planning a similar move in the future. The only question that remains is will it actually work? 
I could bore you with the reasons it would work in tract homes that have typical updating, no deferred maintenance, no view, and typical locations, but would be marginally to highly inaccurate in all other instances, but instead let me state simply that data collected by 3rd parties that have zero liability is unreliable. Real Estate agents will stretch photo's to make a room look bigger, exaggerate views, quality, and condition just so they can get a buyer to look at a house. 3rd party photographers are more likely to get more work if the pictures they take make a house look better than what it is. And 3rd party data collectors are likely to miss many critical value details as they rush through a property because they have no liability for the missed item and they have 10 more inspections booked that day (using Blackstone's data collection model a 3rd party inspector will make $25-$35 per inspection, you do the math on how long they can spend on a property and still earn a living).  Based on this, in my opinion, the answer to whether this will work or not is "Not a chance." But that won't stop them from implementing it. 
Big Data is here. How it is used will not only determine the fate of the appraisal, real estate, and loan industries, it will determine the size of the next bubble, and the people affected by the fall when it bursts.  
 

Posted by Jeff Pickerel on May 9th, 2019 7:49 AMLeave a Comment

Subscribe to this blog
May 5th, 2019 8:18 AM

The number one question homeowners ask an appraiser is "How can I increase the value of my home?" After almost 20 years of appraising and studying what improvements have the greatest contributory value when a home is sold I have concluded the definitive answer is.......
Proper Home Maintenance!    
National averages suggest a remodeled kitchen can add 80-85% of the cost to value when you sell, and a remodeled master bath can add 60-65% of the cost, a properly maintained home will recoup 100+% of the cost when you sell. 

This is generally true even if you wait until something breaks before you fix it, but if you really want to get bang for your buck, tackle those maintenance jobs that (let’s face it) some of us forget or put off until it’s too late.  

So get out your tool kit, because we’re about to take you through the essentials of home maintenance.

What Home Maintenance Items Should I Budget For?

Okay, first think of the necessities—water, heat, cooling and the roof over your head. These are year-round needs for all households, and the things that make them possible require love and attention!

Budget every year for the cost of an expert to service your HVAC unit and water storage heater and to check your roof. Let’s take a closer look at each of these services and how much they cost.

Heating, Ventilation and Cooling (HVAC)

The HVAC is that boxy, noisy thing that sits outside your home, doing its job day in and day out. It gives you cool air in the summer and heat in the winter. The major parts inside an HVAC unit typically last between 10 and 25 years, so you need to have it serviced annually to make sure things are running smoothly.

How much does it cost to have it tuned up every year? That’ll run you about $49 to $199. But if you need to replace your HVAC unit, it will cost you $4,000 to $8,000 and up to buy a new one and have it installed. So it’s well worth paying for the annual checkup, especially if you spot a problem before it’s too late.

Hot Water Storage Tank

Just like the HVAC, you should have a professional look at your hot water heater every year. A tank lasts 10 to 15 years on average, and a new one can cost from $800 to $2,500 depending on the type you need.The average cost of installing a new tank is about $1,200.

During the annual service, the professional will flush and drain the tank (to remove sediment built up inside) and check the pressure relief valve. The cost of a service should be in the range of $100 to $200.   

Roof Inspection and Gutter Cleaning

Have an expert inspect your roof every year, especially if it’s on the older side. And if your home is framed by large trees, keep your gutters free of gunk and blockage with a cleaning once a year. If you’re fine with heights and have a sturdy ladder, you could do this yourself. Or, for around $100, you could opt to have a pro take on the task.

Home Maintenance: What Should I Do and When?

Now, here’s what you can do yourself to keep your home running like a well-oiled machine inside and out! Do these jobs to get the most out of your appliances and fixtures. It’ll help your biggest asset—your home—hold onto its value!

Monthly

Clean the inside of your washing machine.

Use store-bought sachets or throw a cup of white vinegar into an empty machine during a hot wash cycle to banish limescale and soap scum. Leave front-loading machine doors open after a wash to prevent mold from forming around the rubber seal.   

Give the garbage disposal a workout.

Run some ice cubes through the disposal to sharpen the blades. Do you have a persistent odor problem? Vinegar and baking soda make a sizzling combo for breaking down food and grease buildup and refreshening the whole thing.   

Clean drains around the home.

Hair. Soap. Limescale. Ugh! Rid your sinks, showers and bathtub drains of these things by using the vinegar and baking soda trick, or grab a store-bought solution if you have a slow-flowing or pungent drain.  

Degrease your range hood filter.

If you love to cook (and even if you don’t), the extractor hood filter soaks up all the grease and aromas, so give it a clean every month to keep it running well.

Quarterly

Replace your HVAC air filters.

The amount you use your HVAC really affects how often you need to replace your air filters. Some folks will replace their filters every couple of months, and some do it monthly. But, at minimum, you should do it quarterly. Experts agree if you use thinner filters and change them more often, they’re easier on your HVAC (Remember what it costs to replace that item!) compared to thicker ones that use more energy. 

Clean faucet aerators and shower heads.

Dirty aerators on the end of your faucets could mean limescale and dirt are blocking the water stream, and that can affect water pressure. The same goes for shower heads!

Clean your washing machine filter.

This filter in your machine picks up larger bits of debris and lint from your clothes. Unscrew the filter and clean it every few months to keep your machine running well.

Test smoke and carbon monoxide alarms.

Alarms come with a test button to make this a quick and easy job. You should also replace the batteries every year, even if the low battery beep hasn’t kicked in yet. Or splurge and buy 10 year detectors that have sealed batteries, just don't forget to still test them monthly.

Lubricate garage doors.

Garage doors have moving parts that need dusting and proper lubrication every few months. Visit your hardware store to grab some heavy-duty white lithium grease to do the job.  

Test GFCI outlets.

Usually, in your bathroom and kitchen, you’ll see outlets with buttons that say test and reset on them. These are ground fault circuit interrupter (GFCI) outlets, and they monitor the electricity flowing through them to prevent shocks. Press test and then reset every few months to make sure the trip function is working correctly.

Check salt levels in your water softener.

If you have a water softener unit (it removes minerals that cause hard water), check the salt levels inside every few months.

Check for pesky pests.

Ants? Termites? Spiders? Wasps? It’s worth keeping your eyes peeled for signs of pests inside and outside your home every few months. You can take care of some problems with over-the-counter products, while some might require professional attention.

Annually

We already covered the big-ticket items you should check every year. But what about other annual outdoor maintenance jobs?

Clean your deck or patio.

If you’ve got a wooden deck stained with a thinner, transparent varnish, restain it every year or so. And remember those fences, too!

Check your siding.

If your home has wooden siding, inspect it annually for any signs of damage or peeling paint. Also, check for cracks around the foundation of your home. It’s better to find them now before they turn into bigger issues.

Care for crawlspace vents.

Close your crawlspace vents at the start of winter to protect pipes underneath your home from cold and dry conditions. Then open them in the spring to stop moisture buildup in your crawlspace.

Remember your outdoor faucets.

If you live in a cold region, cover your outdoor faucets with an insulating cover in the winter to avoid frozen and bursting pipes.  

Fertilize the lawn and check trees and shrubs.

Monitor trees and shrubs that might be a bit too close to your house or are in need of a trim. Get in touch with a tree doctor to check on the health of your trees if you need to.

Check the clothes dryer vent.

The vent for your clothes dryer should be free of dirt and lint. While you’re running a load of laundry through the dryer, go outside to make sure the vent is doing its job. It should be releasing lots of fresh-smelling air!

Test your garage door’s safety features.

Your garage door should have stop and auto reverse motion detection to sense if an object is in its path. Get a 2x4 piece of wood and place it underneath the open door, then close the door using the button on the wall. The door should stop closing once it detects the wood and go back up.  

Let’s step inside your home for a minute to go through those annual indoor maintenance jobs.

Inspect your attic.

If you have an attic, get up there at least once a year to clean, check for pests, and rule out leaks after heavy rain.    

Get a pro to clean your carpets.

Get your carpets cleaned professionally every year or so to keep them looking great and to remove allergens and odors.

Check bathtubs and shower caulking.

Retouch caulking around your bathtub and shower if there are places that need it.

Seal your shower floor.

If your shower floor is tiled, clean the grout every year. There are lots of grout cleaners out there. Apply a sealant to protect the shower floor from all the water. 

Vacuum around bathroom extractor fans.

Clear away any dust and cobwebs from around extractor fans.

Vacuum behind the refrigerator.

Do you know those coils on the back of your fridge? You should gently vacuum them once a year to stop the fridge from working overtime.

Clean and check windows inside and out.

Clear away dead bugs from between your bug screen and window pane. Check window screens for holes and replace them if needed. Check the condition of weather stripping around your windows and doors, too. Any big gaps could mean loss of heat in winter and cool air in summer.

Maintain your fireplace.

Whether your fireplace works with real wood or is gas-powered, get your chimney swept and have your flue inspected every year.

Check window air conditioning units.

If you have in-window units, clean them every year. Also, think about covering them in the winter if you’re not storing them away from the elements.   

Do your basement business.

Basements can be a bit “out of sight, out of mind,” but try not to neglect them! Give basements a thorough cleaning every year and check for mold and cracks in the walls. Clean window wells outside any basement windows, too. You might have a sump pump (it removes accumulated water from the area), so inspect it every year.

I know the list seems long, but most items take just a few minutes to maintain. I sincerely hope this list helps save you from a costly repair down the road.  


Posted in:Advice and tagged: maintenancevalue
Posted by Jeff Pickerel on May 5th, 2019 8:18 AMLeave a Comment

Subscribe to this blog
January 3rd, 2019 8:43 AM

I keep hearing people complain about how interest rates have gone up and the general consensus seems to be if you didn't buy, refinance, or get an equity line in 2017 then you missed the boat. However, while it may be true that if you didn't BUY in 2011 or 2012 you missed the low point of the housing market, and if you didn't REFINANCE in July of 2016 you missed the historically low interest rate, if you click on the chart link below you will see the facts are TODAY'S MORTGAGE RATES ARE A FULL PERCENTAGE POINT LOWER THAN THEY WERE IN 2003-2006 (The years of explosive real estate values leading up to the real estate bust). 

So yes, while rates may have creeped up, they are still historically low, and significantly better than the rate I received when I purchased my first home (8.6%)  

http://www.freddiemac.com/pmms/pmms30.html


Posted by Jeff Pickerel on January 3rd, 2019 8:43 AMLeave a Comment

Subscribe to this blog
December 28th, 2018 9:31 AM

Whether you're a homeowner, loan officer, realtor, trustee, or appraiser, we've all thought it. "The weather report says it's going to be nasty, is the appraiser still coming?" For me the answer has always been "Yes". I have inspected properties in howling winds, pouring rain, and in the snow in near white out conditions. Maybe it's because I grew up on a ranch where the animals had to fed, fences repaired, and chores completed regardless of the weather, or how during my early years when I was working construction I wished I could work in the rain in order to keep food on the table during those lean winter months. For me, regardless of the weather, I don't cancel appointments, and neither should you. Here are four reasons why.

1. The homeowner/realtor's time is important. You had them commit to an appointment for which they have already taken time off from work, school, or did not accept another appointment. Canceling may cost them money, and even if it doesn't, it will cost them time, which is even more valuable.  

2. Your client relationship is impacted negatively when an appointment is canceled. Canceled mortgage appraisal appointments lead to canceled loans (and canceled appraisals) approximately 40% of the time. Sometimes this is due to a borrower changing their minds on obtaining a loan but the vast majority of canceled appraisals are due to the borrower seeking a loan elsewhere, and that number is on the increase due to the instant availability of data on borrowers applying for home loans. When you cancel an appointment your client holds his/her breath and hopes another loan officer doesn't convince their borrower to switch to different lender.

3. The weather forecast is rarely right. How many times have you shown up for an appointment and despite the gloomy forecast, there was no rain at all? Or how many times have you arrived at the subject property when it was forecast to be cloudy but not raining, yet it was pouring, but since you're there you inspect the property in the rain? Here's something to consider. The weather forecast will be equally wrong about whether it will be raining, or not, at the time of your appointment.

4. Technology has made it easier than ever to appraise in inclement weather. Gone are the days of jammed up tape measures, soggy sketches, and rain blurred notes that read like Marie's good-bye letter to Navin in "The Jerk". By using a high quality laser measuring device, a small tablet or large phone, a rain slicker, slip on boots, and a little patience, you can inspect the exterior of almost any structure without compromising the integrity the appraisal.

As a business owner I know you understand the need to keep your clients happy. But more importantly, before you cancel an appointment, consider how that may impact the appointee. Be considerate of their time, and treat them how you would like to be treated. For me that means being there when I say I am going to be. Even if sometimes it means I end up wet and cold.   

     


Posted by Jeff Pickerel on December 28th, 2018 9:31 AMLeave a Comment

Subscribe to this blog
August 15th, 2018 9:48 AM

     How do you manage and grow a successful business and maintain a home life balance? Well first off you have to prioritize them. For me, and what my advice and insights are based on, my priority is my home life.  In fact, the reason I have grown my business to where it is today for the purpose of providing a successful home life.

     What does your successful home life look like to you?  Knowing what you want in life enables you to better understand what you need to do to enjoy it. Mine includes concerts, weekday  trips, camping, vacations, Disneyland, the beach, holiday dinners, working on the yard, spending time with my family, and the newest addition, Tuesday date nights. These all take two things, time and money. I tell you this not to boast about how awesome my home life is, but rather to demonstrate that you can have both a successful home life and a successful business. You just have to be smart with your time. Here is how I did it.

     In the beginning. All businesses have a starting point. Mine started on an old desk picked up for free off Craigslist in the corner of a small dining room, with a land telephone line, an old computer, scanner, printer, and digital camera. Yes, a digital camera. They were new to the industry, and the quality was poor (or maybe it was the photographer), but boy did I think I was cutting edge! As my business grew so did my investment in technology. My computer kept freezing due to its inability to run the software upgrades, so invested in a newer, faster computer. My printer was constantly running out of ink so I purchased an all in one printer/fax/scanner that used less than 1/4th the ink. My neighborhood only had dial up internet available due to antiquated phone wire, so I researched and talked with local internet providers, and was able to get DSL by installing new phone wire in my house, from my house to the phone box, and from the closest hub to the phone box by my house. All of these investments served the purpose of saving me time. Time I now had to spend with my family. The point is to always be looking into new technologies and don't let obstacles prevent you from using them. I have tried and failed at using several, pocket pc's and original tablets to name two. But my successes have far outperformed my failures. Yours will too.

     As I grew. Do you use technology to make you faster? Over the years the technology in my industry has changed. Computers are faster, my all in one printer/fax/scanner is obsolete, and digital camera's have been replaced with smart phone's. Of all the advances, the smart phone has been the greatest time saver of my career. But as with all technology, you have to learn how to use it before it will save you time. Spend the time needed to learn how to use it, the company you purchased it from should be able to demonstrate all the functions. Learn how to use all features of your software on it, and equally important, learn how not use it for non-essential functions as these will 'spend' the time you saved plus some. Stay away from the gaming and social media temptations and you will find you will have more time for home life and business growing. 

     Bill Gates once told Congress a business that wasn't trying to grow was going to eventually fail. But how to maintain balance? We've all experienced it, you have to grow the business before you hire people or invest in technology to maintain it. How on earth is it possible to take a day off, go the beach, or (gasp!) take a full weeks vacation when you're in the midst of growing your business?! Well, consider this. You should be in the midst of growing your business at all times, so you better figure out how to make time for your home life while doing it. In the early years I would get up at 4:00 am and use the hotel computer to respond to emails, schedule work for when we returned, and appease my clients needs. A few years later I was able to wait until 5:00 am and use my laptop (another great innovation) in the hotel room. Today I am able to handle most items with my smart phone, which I recommend planning a couple time slots each day to do this, which enables me to enjoy my vacations while still maintaining and growing my business.

    The future is made today. This applies to both business and home life. Don't wait until tomorrow to get started on your future. Spend some time researching and learning technology, get your thumb off the social media and gaming functions, and use your time to make today, and your future, amazing!  


Posted by Jeff Pickerel on August 15th, 2018 9:48 AMLeave a Comment

Subscribe to this blog

Real estate values go up, real estate values go down. The old model of a typical year to year market went up a few months, stabilized or dropped slightly for a month or two (a lull), then continued on it's rise. The new normal, what we have been riding for the past 17 years, is a market that has gone up up up and away, fell crashing to earth "unexpectedly", then has once again gone up up up and away, with a few lulls along the way. Will it fall again? Well, the closest item I have to a crystal ball is my elder son's old Magic 8 Ball, which in the past has been right about the market about half the time (which puts it on par with most economists). However, I have studied market history, and one constant is it will eventually repeat itself. The answer to when lies in the data.

As a professional real estate appraiser there are two items I address on every appraisal, has the market been declining, stable, or increasing, and how long would the marketing time be if a property were listed for sale today? These items are important when we look back at data to help predict future values. Although I do not opine as to the future of the market on a typical appraisal, on occasion I have provided a prospective (future) value to a client. How I do this, magic 8 ball aside, is by relying on historical data for individual market areas and property types. The longer I have been appraising, the easier this has become because I can not only use the historical market data available through my subscribed data sources, I can also utilize my own historical data for specific areas.

Which brings me to the questions posed in the headline, "is the housing market declining?" Let's see what the data says. But first a little history on market data in my service area.  

Nearing the end of the last big real estate boom, in August of 2005, I noted on several appraisal reports that values were stabilizing after a four year period of significant value increases, in September of 2005 the market surged and I noted on most appraisal reports that values year to year had increased, and also had increased over the past 30 days. Then in mid October 2005 I reported declining values on a property located in a market area that had been experiencing explosive value increases for several years. This was followed by my reporting declining values in several other market area's in late October, and all areas by the end of November 2005. Meanwhile, the media, economists, local MLS, and state wide data sources did not report or recognize declining values until 2006 and in fact most still indicated values were increasing. (With a few exceptions)

Today the media and economists are talking about when a slowdown might come, and a few are suggesting declining values are on the horizon, but they may once again all be reporting the actual facts for your area a few months too late to help buyers avoid over paying for a property and sellers waiting too long to sell. This week's appraisal data looks eerily like August of 2005. For example, I appraised a property, coincidentally in the same area as I discussed above, and I discovered/reported stable values, and noted marketing times had doubled over the past three months. Deja vu anyone?

The facts are marketing times are increasing, sellers are lowering prices, and it seems buyers are starting to notice. Is this a sign that history is about to repeat itself or is it a just another lull in the market? My son's Magic 8 Ball says "Reply Hazy, ask again later"


Posted by Jeff Pickerel on August 9th, 2018 5:19 PMLeave a Comment

Subscribe to this blog