Taking the wrong exit on the aspiration highway

Ten Years After the Mortgage Meltdown; Banks will do anything to get around primarily, the cost and secondly the purpose of an appraisal. After all, the Big banks are certainly not making enough money as it is, correct?

Like many folks, I’d assume, most don’t keep up to date with the mortgage and banking industry. Moreover, I can confirm that there have been some very interesting $#*& Going down in the new and improved “valuation space” formerly known as Appraisal, that could jeopardize appraisal accuracy, so grab a cup of whatever you like, and let’s focus forward.

Background and Detail

There has been a five-year-long false narrative campaign that there is a shortage of appraisers that have resulted in longer turn times and higher fees.

Lenders and their AMC’s have been cherry picking the data that Appraiser numbers have declined and that therefore, there are not an adequate amount of active appraisers to meet the demands in the majority of “their” areas.

Who is this source that’s spreading these rumors?

What they’re not sharing is that since legislation went into effect post, 2007-2008 has spurred the creation and growth of “Third Party (Think of HMOs) Appraisal Management Companies (AMC’s) who have appropriated the Fee Appraisal industry like Temp Agencies. 

Systematically, fees paid to appraisers have been steadily “Compressed” as this was how the AMC’s idea of paying appraisers like giving them a minority percentage of the entire Appraiser fee paid by the bank for the Appraiser.

Well, there is a term for this. it’s called “Assumpsit,” which  in English is called “Unjust Enrichment.”) And this has and has been the main reason that many Appraisers refuse to work for these AMC’s. 

And the reaction from the AMC/Lending industry was to utilize the AMC and Lender Associations and lobby groups to implement an ongoing “Appraisal Shortage Fake News” cycle that has finally gained the The Appraisal  Standards Committee to eliminate the four year degree requirement for the Certified Residencial License and lower both the Class Room and Experience hours in 2017. 

Then in 2018, Fannie Mae began the Property Inspection Waiver, and there is Senate Bill 2155 which eliminates the need for an Appraisal in rural America, where it is especially needed.

All Players in the Real Estate Industry affected with “iBuyer, FrontDoor, Zillow Offers” the banks are finding ways to get around the appraisal process and or continuously finding ways to lower the cost of an appraisal to the bank.

This race to the bottom is a one-sided, self-serving pursuit of winner take all. Like the Chinese water torture fable, each of these disruptive business models not only serves to decrease the accuracy and reliability of the service of the appraisal, but for the Real Estate Agent and Lenders as it undermines Consumers and the integrity of NAR, and the financial institutions of our country.

Reader, I’d like to Introduce to you, three new, improved and Cheaper “Valuations” that the Lenders and FNMA are implementing since 2018.

Property Inspection Waivers (PIW), Hybrid Appraisals, and Appraisal Waivers.

1) Property Inspection Waivers- (PIW)In a PIW situation, when the traditional appraisal is not mandated, but instead the buyers’ property value is based on an Automated Valuation Model (AVM) by Fannie Mae’s Collateral Underwriter (CU) program from the Independent Appraiser’s from across the country since 2014. 

There is very little daylight between Fannie Mae’s AVM and Zillow’s “Zestimate” because both rely on algorithms (not boots on the ground data) to base the value of your home and loan. 

Algorithms are both Deterministic ( producing the same output going through the same states) and Non-Deterministic ( will show different behaviors for the same input on different execution and there is a degree of randomness to it.)

Both FNMA and Zillow do not publish or share their methods to either to the Appraisers whos data they use, the Lender or the Consumer. Is that even ethical under statute or current business law? All this allows for margins of error when these fatalist Algorithms machines Appraise”your property.

However, has Fannie Mae factored that in if they’re their costs calculations? No Worries, Fannie Mae (A GSE who was bailed out by the taxpayers in 2009 have absolved themselves, including the originating Lender (as in your local lender) from any future lawsuits that may pop up in the future from current and prospective consumers. Misleading or am I too “judgy.” 

Let’s Summarize: The Government Backed FNMA is not Responsible. The Lender is not responsible, and There is no Appraiser to complain about or their E&O Insurance.

Which practitioner is potentially holding the “Bag”? Could it be the Buyers Agent and their Brokerage?

2) Hybrid AppraisalsA hybrid appraisal is where the functions of the appraisal process are divided up among farmed out to unknown parties, each with their ways of doing things.

The number crunching performed by a certified appraiser and is similar to a desktop appraisal. The Appraiser property observation is farmed out by AMC to a non-appraiser. Which, could be a real estate agent or some other type of property inspector, all who by the way are not familiar with each other’s Real Estate credentials or experience. 

The problem with this type of Fractured (Hybrid) appraisal is that if the property observation is performed by someone who does not hold a State Appraisal Credential and does not know what to look for in that context. 

Knowing what to look for is one of the most critical components of the trained Appraisers job, and the results of the observation get reconciled with the other parts of the professional appraiser. Which can impact the final opinion of value?

 3) Appraisal waivers in rural areas referenced at the top of this post, SB2155 allow the Lender to invoke not only a property inspection but eliminates the need for an appraisal by an unbiased third party appraiser.  What Could go wrong?

Most would state that this is just an example of the “dumbing” down of services across all industries. The Real Estate Industry for both Residential and Commercial is a 25 Trillion Dollar Annual Market, and the wolves are at the door.

In closing – For Home Buyers getting mortgages, before allowing the bank in your negotiations, that you will enable them to perform one of these types of Valuations (they are not appraisals), you should know that you as a Consumer are not achieving your due diligence and need to be aware and accept whatever the consequences.

As for Real Estate Broker’s and Agents and or E&O insurer if you have coverage for this under any of the three Valuation substitutes you’ve have read about today, and most importantly, create a very tight legal disclaimer. 

Home Buyers Remorse -What Their Redo Would Be Like

Recent Homebuyers Divulge What They Would Change If They could have Do-Over, Research Shows.

  • 39 percent would change size, price or neighborhood.
  • 56 percent wish they knew more about the financial aspects.
  • Recent buyers would do more homework to make critical choices if they had a second chance.
  • Although nine of every ten buyers felt prepared when they bought their home, in hindsight, 56 percent wish they were provided with more knowledge- especially:
  • The ins and outs of closing on the house – 22 percent
  • Making the offer and negotiating –19 percent.
  • Financing a home – 15 percent
    Buyer’s post-experienced that there are many challenges and acknowledge there are areas for improvement, like:
  • Locating and financing a new home.
  • Affordability and home value Upfront costs.
  • Mortgage lending, and the paperwork process for a smooth transaction.
  • Essential tips for the first-time and a self-employed buyer.
  • How to negotiate the price of a house.
  • Be aware of a differing neighborhood along with size, and price data and historical trends
  • Overall, respondents stated it cost more than expected.
  • 80 percent of buyers considered their home move-in ready, but in reality, 76 percent have to or are planning to renovate the home now.
  • 66 percent of recent homebuyers sought advice from real estate agents, while 45 percent turned to banks, mortgage bankers and loan officers.

Contact us for a custom Scope of work for you and your family. info@treasplc.com

 

Source:http://www.businesswire.com/news/home/20140429006147/en/Homebuyers-Divulge-Change-Do-Over-Chase-Research-Shows#.U2OSKvldV8F

https://treasplc.com – What Buyers would redo if they could

Home Buyers Demand Accurate Home Measurements

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Home Buyers Demand Accurate Home Measurements

One might think that there is a law that requires the disclosure of the exact finished floor area in a house, no there’s not. Will, the sellers, and their agents get out the measuring tape? The State of Michigan has responded to this demand by passing some laws which require more real estate disclosures.
The total floor area of a house is one of the most important things a seller and buyer needs to know. For years real estate agents, have been using a hodge-podge of methods to estimate residential floor area.

The top Multiple Listing Services (MLS) area that received high errors include either no buildings or room descriptions, or no dimensions. And the most important measurement of all, the above and below ground square footage was part of this list as well.

Some buyers think this is just another way that real estate salespeople are trying to trick them. Without knowing the floor area, the home buyer does not get accurate or consistent information to use in comparing houses. This means that the State Licensed and Certified Real Estate Appraisers can’t make the correct adjustments to the COMPS (comparable sales) and the lenders backing the loan have less accurate estimates of market value on which to base their investments.

We want you to know that our clients can rely on Trust Real Estate Appraisal Services PLC, for the correct footage Buildings and room dimensions. We use the ANSI Z765-2003 defacto standard for Single-Family Residential Buildings Square Footage Method for Calculating your homes Gross living Area and Total Square footage area.

Get in Touch, Order your Measurement today.

Home Buyers-Your Lender Wants an Algorithm to Appraise Your Home

[et_pb_section][et_pb_row][et_pb_column type=”4_4″][et_pb_text] Currently, the terms “Artificial Intelligence,” and “Algorithms” have been sold to the masses as being objective, scientific and unfortunately accurate. What has been sold to us, is and has been, merely a marketing trick to intimidate consumers with accepting algorithms as gospel. A lot can go wrong when collectively, we put blind faith in big data. If Fannie Mae and Freddie Mac now allow ‘Algorithms’ be the ‘Decider’ and not human appraisers for your next Home Loan – Then is it not logical that the laws be updated and enacted to properly reflect and acknowledge that the programmers and their Bosses who’ve signed off on them by holding them to the same level of accountability as both the Licensed and State Certified Real Estate Appraisers? Algorithms are everywhere. They sort and separate the winners from the losers. The winners get the job or a good credit card offer. The losers don’t even get an interview, or they pay more for insurance. We’re being scored with secret formulas that we don’t understand that often don’t have systems of appeal. That begs the question: What if the algorithms are wrong? To build an algorithm, you need two things: you need data, what happened in the past, and a definition of success, the goal that you’re looking for and often hoping to repeat. You train an algorithm by looking, figuring out. The algorithm figures out what’s associated with success. What situation leads to success? Algorithm’s; Artificial Intelligence are 21st-century machines. They require a human being to function. Therefore algorithm/A.I., cannot usurp the human mind. A machine can solve only “deterministic” problems. New data/information would be a surprise. A “deterministic algorithm” is an algorithm which, given a particular input, will always produce the same output, with the underlying machine always passing through the same sequence of states.” The second type: “nondeterministic algorithms” are often used to find an approximation to a solution, when the exact answer would be too costly to obtain using a deterministic one. A nondeterministic algorithm represents a single path stemming into many routes, some of which may arrive at the same output and some of which may arrive at different outputs.
  • However, both are just machines and require a human being to function.
  • Machines do not think
  • Computers lack creativity
  • Devices lack consciousness
  • Only human consciousness produces thinking.
Who are these human oracles from the Banks and their Coders programming these algorithms? What are their goals, their biases, responsibilities, and accountability? In an industry that has multiple regulatory requirements, how do they fly so low under the radar?  [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Executors-Administrators-Trustees of Estates

With the recent popularity of living trusts and all the sophisticated tax avoidance methods being used by affluent individuals, appraisals are being needed more and more for both tax planning purposes prior to a property owner’s death, and for settling an estate after death. At Trust Real Estate Appraisal Services PLC., we specialize in delivering high-quality appraisals that meet the requirements of the courts and involved agencies. Plus, our convenient electronic ordering and delivery system allows us to provide much quicker turnaround times than other appraisal services and helps eliminate costly miscommunications. We are also experienced in these matters and will be sure to act in a manner that is sensitive to the feelings of-all parties involved.

  • Among the instances when an Estate Appraisal may be needed are:
  • Sale to a relative
  • Partitioning an estate among the heirs or beneficiaries
  • Sale to a non-relative
  • Prior to listing the home for sale
  • Partial interest (typically income property)
  • Federal or state estate tax returns
  • Gifts and gift trusts
  • Determining the basis for capital gains tax

[embedyt] https://www.youtube.com/watch?v=roQk70zRQXI[/embedyt]

Who May Need an Estate Appraisal?

  • Attorneys
  • Accountants and enrolled agents
  • Gift trusts
  • Executors and administrators
  • Trustees

Home Buyers Ask-Why Should I Hire a Certified Real Estate Appraiser?

Our Buyer Clients benefit from our impartial, third-party appraisal, State Certified expertise for an in-depth scope of work based on your home buying needs and requirements.

Buyers ask; why should I hire a Licensed Certified Appraiser?
Appraisers are the go-to professionals for Mortgage Lenders, Attorneys, CPA’s, and individual Buyers & Sellers. Home Buyer 101: You’re Drowning in Data – Typical Buyers will experience the ultimate Data Dump of ever-changing, high-level information, boilerplate disclosures, and Documents to “review and approve in this highly regulated industry. It is almost impossible for many home buyers to absorb and comprehend so much information In the time allowed.

“Let The Buyer Beware”. Is a principle of contract law in many jurisdictions that places the burden on You, the buyer to perform your own due diligence before making a purchase.The term is commonly used in real property transactions but applies to other goods, as well as some services.

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Who’s Helping Whom
Generally, the only advice a Buyer will get is from a Real Estate Agent (Sellers Agent or Buyer Agent). Most real estate agents are diligent and ethical. But they are not qualified to give Appraisal or legal advice, and the successful ones avoid doing so. So, Buyer Beware. Real Estate agent(s) will only earn a commission (get Paid) if and when the buyer purchases the property. If the agent gives the buyer advice which might result in the buyer deciding not to purchase, the agent may lose tens of thousands of dollars. As a result, there is a temptation for some agents to downplay the risks or problems in a particular purchase.

Still, want to Go at it alone? Get in Touch with us Today.

 

 

Attorneys Are You Searching For An Experienced Appraiser?

Trust Real Estate Appraisal Services, PLC, clearly understands that you have a responsibility to carry out the wishes of your clients – but also to guide your clients to what is legal, ethical and what is in their best interests. We also understand that Discovery is a serious process and that we have strict documentation, uniform USPAP workflow processes and maintain excellent record keeping of our field data, checklists and work files.

What You Can Expect From Us

  • Is a clearly written, defensible fair market valuation report.
  • Accuracy, Clarity & Communications.
  • Continuous Improvement and Best Practices.
  • Sustained Appraisal Regulatory and Legal Compliance.
  • How to effectively use or not use our Appraisal Services.
  • A comprehensive Scope of Work.
  • Letter of Engagement.
  • Appraisal Assignment Workflow.
  • Detailed Communications.
  • Established Fee Structure.
  • Disengagement Letter

When it comes to real estate values in West Michigan, you can rely on us for the utmost in professionalism, credibility, and expertise. All our appraisals are delivered by the method you choose; email in Adobe Acrobat, UPS or 1st class mail. Second-day air and overnight available at additional cost(s). We have an agreed turnaround time. When we agree to a deadline, we honor it. You are kept fully informed of our progress, as well as any problems we may encounter. Fair fees, and detailed work; we are at your service.

What are The Differences Between a HOA and a POA in Michigan

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What are the Charter Differences Between an HOA (Home Owners Assn.) and a POA (Property Owners Association?

A Property Owner Association (POA) and a Home Owner Association (HOA) are essentially identical entities and the only real difference is that an HOA requires actual homes to be on the sites; whereas a POA means anyone who owns a lot in the community is a member.

This is frequently an issue when the developer is in control of these associations and they have not turned them over to the owners as the developer can control and charge all types of fees that can be unfair to the other owners, but unfortunately, this is the right of the party that is in control. Source: http://www.justanswer.com/real-estate-law/5sbh3-legal-differences-hoa-poa.html

HOA VS. POA – WHAT’S THE DIFFERENCE?

(HOAs) and property owners associations (POAs) are easy to confuse because they are similar in nature. If you are considering starting one, but don’t know which to choose, check out these three facts that will help you understand the difference.

1) POAs Are More About the Property

a) To start an HOA within a neighborhood, you need to actually have homes or condos (or other dwelling units). The homeowners become members of the association and work together to make the neighborhood better.

b) On the other hand, POAs are more about the property. You can have a POA that is nothing but empty lots. In this instance, it’s the property owners who become members of the association. HOAs can be found in just about any neighborhood from urban to suburban, but POAs are often started around a landmark, such as a lake or a golf course, in hopes that people will buy the land for its location.

HOAs and POAs Can Be Very Similar

HOAs always rely on a board, and a list of rules and regulations that specify how the neighborhood is run, and homeowners must follow the guidelines. They usually have to pay monthly fees and get approval for many decisions, such as exterior paint color.

Not all POAs have rules and regulations the way HOAs do, but in other cases, a POA may be run almost exactly like an HOA with rules and fees. It varies from POA to POA.

c) HOAs are all about the neighborhood, which is why they have rules and regulations. The goal of the HOA is to create a pleasant and inviting neighborhood that people want to move to. The HOA wants to encourage people to move into the neighborhood, but they aren’t too worried about the real estate market outside of their neighborhood.

d) A POA, however, looks at the larger scale. They’ll often offer networking and other opportunities in an effort to boost and support the local real estate industry and other business entities. A POA can consist of homeowners, property managers or business owners.
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Both HOAs and POAs can create pleasant and enjoyable places to live.

e) For neighborhoods with actual dwellings, an HOA is a great choice;
f) But for areas with many empty lots, a POA is the better choice.

In the past a nonprofit corporation is formed under the Michigan Nonprofit Corporation Act. Some purposes for which nonprofit corporations are commonly formed are those involving religious, educational and charitable activities.

The Michigan Department of Treasury no longer has an application process for tax exemption from Michigan Sales and Use Tax for nonprofit organizations. Organizations exempted by statute, organizations granted exemption from Federal income tax under the Internal Revenue Code section 501(c)(3) or 501(c)(4) or organizations that had previously received an exemption letter from the Michigan Dept. of Treasury are entitled to sales and use tax exemption. A copy of the federal exemption letter or a letter previously issued by the Michigan Dept. of Treasury must accompany a completed Michigan Sales and Use Tax Certificate of Exemption, form 3372.

Source: https://associationvoice.wordpress.com/2016/01/21/hoa-vs-poa-whats-the-difference

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