Sandra has been an appraiser for the past 15 years, and primarily services the Boston metropolitan area. She decided to enter this field of work when she made a career change after gaining custody of her 2 grandsons. Over the years Sandra has worked through fluctuations in her market, and has seen the changes that have come as a result. Recently, the shortage of inventory in the Boston market has led to an increase in sale prices as bidding wars have driven prices up over the appraised value. In her spare time Sandra enjoys painting and writing, but has remained busy with work in her market. According to Sandra, the key to success as an appraiser is patience. The educational requirements of becoming an appraiser and trainee experience needed is a long process, and patience is essential.
Boston, Massachusetts Market
Sales prices reached new heights in January 2017 for the Boston metropolitan area as demand continues to outweigh supply. The average price for a single-family home increased 7% statewide to $342,500 compared to January of last year, as inventory remained low (The Warren Group). According to The Wall Street Journal, the median sales price for the Boston Market rose from $685,000 in 2015 to $791,000, while rent in the neighborhoods surrounding Fenway Park increased 2.5%. Though inventory is being added to the market, there is a shortage of affordable housing for middle and low income buyers. According to Boston Agent Magazine 80% of the new construction being added to the market is housing, but primarily in the form of luxury apartments and condos. This paired with bidding wars has driven prices up and out of reach for many low-income buyers.
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- Arizona SB 1197 which makes various changes to the state’s appraiser licensing law and appraisal management company oversight and registration law.
- California SB 70 which allows a state-licensed or state-certified appraiser to deviate from the Uniform Standards of Professional Appraisal Practice in certain circumstances.
- Connecticut SB 780 which allows real estate brokers and salespersons to estimate for a fee or other valuable consideration a probable property sale price or lease price.
- Florida SB 716/HB 927 which makes changes to the state’s AMC law and would allow appraisers to perform evaluations in compliance with the Interagency Appraisal and Evaluation Guidelines and allow the Florida Real Estate Appraiser Board to consider the adoption of standards of valuation practice other than USPAP for use in non-federally related transactions.
- Hawaii HB 50/SB 390 which enacts a comprehensive AMC oversight and registration law.
- Illinois HB 722 which prohibits AMCs from passing along to appraisers any costs, fees or other expenses.
- Illinois HB 723 which requires the fee paid to an appraiser be shown separately from the fee paid to an AMC in any residential real estate closing document that lists real estate appraisal fees.
- Indiana SB 76 which requires AMCs to compensate appraisers within 30 days of their submitting an appraisal to an AMC.
- Kansas SB 2414 which allows appraisers to utilize the Appraisal Institute’s Standards of Valuation Practice and Valuers’ Code of Professional Ethics when performing an appraisal for any purpose other than a real estate-related financial transaction, and would allow appraisers to perform evaluations.
- Kentucky HB 443 which reorganizes the state’s appraiser licensing and certification agency.
- Massachusetts SB 104 which enacts mandatory appraiser licensing.
- Minnesota HF 593/SF 366 which clarifies that allegations that do not result in disciplinary action against an appraiser are not made public, and that a background check is only required for an initial appraiser application. It also provides for the sequestering of information related to disciplinary actions more than five years old and imposes a six-year statute of limitation on civil actions against real estate appraisers.
- North Carolina HB 431/SB 576 which clarifies that state-licensed and state-certified appraisers may perform evaluations.
- Nebraska LB 17 updates the state’s AMC law to bring it into compliance with federal minimum requirements and the state’s supervisor and trainee requirements so they’re consistent with the Appraiser Qualifications Board.
- New Hampshire SB 53 updates the state’s existing AMC law to bring it into compliance with federal minimum requirements.
- New Jersey AB 1973 enacts a comprehensive AMC oversight and registration program.
- Oklahoma SB 533/HB 1505 requires appraisers to include an invoice in the appraisal report.
- Oregon HB 2189 establishes an appraiser-specific statute of limitations.
- Pennsylvania HB 863 establishes the parameters around which a real estate broker or salesperson may perform a broker price opinion or comparative market analysis.
- Rhode Island SB 543/HB 5620 establishes a comprehensive AMC oversight and registration program in accordance with federal minimum requirements.
- South Carolina S279 enacts a comprehensive AMC oversight and registration program in compliance with federal requirements.
- Tennessee SB 279/HB 376 enacts a statute of limitations applicable to civil claims against real estate appraisers.
- Texas SB 1516/HB 3261 makes various changes to the state’s existing AMC oversight and registration law.
- Vermont HB 506 repeals both the requirement for criminal background checks for appraisers and the state’s existing AMC oversight and registration program, vesting that authority instead to the Vermont Real Estate Appraiser Board.
Albert Einstein once said, “Nothing happens until something moves.” Well, in the real estate industry you could say, “Nothing happens until an appraisal is done”. With most real estate transactions today, all parties involved are in a holding pattern until an appraiser looks at the property and puts a number on what they think it’s worth. This holding pattern stands true whether it’s a first time homeowner buying a single family home in the suburbs, Donald Trump wanting to build a 200 million dollar skyscraper in the city, or anyone in between. Nothing happens in real estate until the appraisal report is signed and an opinion of the property’s value is provided.
With that level of responsibility you would assume the appraisal industry would have an excellent relationship with the lending community; however, anyone working in the industry knows that appraisers are often seen as a necessary evil by most lenders. In turn, most appraisers believe lenders to be money-hungry deal makers that don’t understand an appraiser’s profession or the independence required to act prudently. The disconnects don’t stop there, as even from within the lending community you have a variety of opinions on the appraiser’s job within the transaction. Some lenders are under the impression that an appraiser’s job is “to get the deal done”, and, on the reverse, I’ve been told by some lenders that “they want an appraiser that everyone in production hates” as their job is to prevent risky situations. I personally lean towards the middle of the road, as an appraiser’s job is to be unbiased and completely independent of the transaction but simultaneously realistic and practical.
This post is designed to help mortgage lenders understand what appraisers go through and what they wish you knew about the industry.
What Every Appraiser Wishes Lenders Knew – Residential Edition
- The appraisal never goes away – Similar to the way a lender gets a repurchase request years later, once an appraisal is signed and delivered it never goes away and there’s no safe harbor. I haven’t personally done an appraisal in years, and I still get requests from time to time on appraisals that I did years ago asking for clarification. Unlike a repurchase request – which lenders get for deficiencies on loan and can be resolved with money – one bad appraisal can get an appraiser blacklisted for life. The worst part is most of the time it simply comes down to a difference of opinion, and the appraiser may never get a chance to defend their work. Appraisers are keenly aware that the appraisals they complete never go away and consider this when making their decision on a particular property.
- Appraising is a full-time profession – An average realtor will close 1-2 deals a year, an average appraiser will do 1-2 appraisals per day. Most appraisers have been in the business for 20+ years and want to stay in it for a very long time. They are trained to be very careful when it comes to what they will and won’t do when it comes to value, property condition, and selection of comparables. One deal or favor is very often one too much. What most Realtors don’t understand is that an appraiser’s job is to be completely unbiased about the transaction. Appraisers want to dig up everything they can on a property – both good and bad) – so that the lender (client) can make an intelligent decision about the property. The appraiser doesn’t approve or disapprove the loan but rather reports what they find.
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