I did not realize something that was happening in foreign countries, and now in the United States would have an impact on the real estate appraisal industry.
The federal reserve has just reduced the interest rates. The stock market has gone down, wiping out most, if not all, of the gains over the past three years. Mortgage originations have started to increase tremendously.
In addition, the mortgage rates falling below three to four percentage points. In my professional opinion, when the mortgage rates get to two percent, there will be a lot more people looking to refinance. With lower interest rates, the buyers will be able to afford more of a house. Maybe there will be negative interests this year.
I think it is interesting that real estate appraisers are under local and federal guidelines: the banking industry, AMC’s, regulators who are always trying to make changes to the industry. This same group is continually saying we are doing a lousy job.
Just recently, just when the coronavirus/ pandemic situation was escalating, I had a lender call me this past Monday and asked when the report was going to be so they could close on this Friday. Keep in mind; I only inspected it “on Friday”. I assume that the person expects me to work the weekend and on a 24/7 work schedule.
Although each of us doesn’t have a crystal ball, I feel this coronavirus/pandemic is going to get much worse. The federal government did not take it seriously early on.
FAIL TO PLAN PLAN TO FAIL. As of this writing, it appears it has only taken China about 3 months to rebound from this. In addtion, research how South Korea has approach this pandemic from their experience with SARS. Here in the United States, it will take a lot longer; I am sorry to say.
Be careful out there and take the necessary precautions and use common sense; everyone, that is something in our control.
President, Coast Appraisers and Consultants Inc.
We are in a New Year and a New Decade. The start of a new decade is an exciting time.
There are as many questions as there are some unknowns:
President, Coast Appraisers and Consultants Inc.
Remember that in your county with a revised calendar, the notification date may be different.
It is interesting how local and state governments are concerned for the police and fire departments and other professions that have stress. They are trying to help these people deal with their stress. There are the unions and local groups there to help them. It is important they have a place to turn to for help.
Below are just some of the typical particulars real estate appraisers have to work through:
All of this must be accomplished in 24 hours, or else you get reprimanded. As you can see, this is a perfect example of the kind of stress and pressure real estate appraisers can expect.
Recently I received a call from a real estate agent at 8:30 am on a Friday, and she wanted to go that morning and check the work was completed on the house. I explained to her I am in my office getting ready to go out for appointments. I will try to be there that afternoon. I was able to rearrange my schedule; I was there at 2 pm. I drove an hour out of my way to accommodate her and the buyer. I get there, and the buyer meets me and starts to give me a hard time about the repairs on the house. I explain that the lender requested it. Nothing I said was right; I was the one holding up the closing. I did not need this stress from them, and now I have the lender pressuring to sending in the report so they can close. They expect me and demand that I work through the weekend who needs this stress.
We are under the federal mandate, and every week they want to change the rules of this profession. They want us to work faster and harder for less money.
The profession is dying. The median age of appraisers is close to 60 years. New people do not want to enter to work long hours for low pay and no benefits. They are always coming up with new report types and raising the bar of excellence. It makes it very stressful, and stress in the profession never takes a holiday.
According to the current administration, there is no recession, and there will not be a recession.
The Federal Reserve this year reduced the interest rates twice. Their concern Is the US economy, and the Global economy is slowing down.
Recently the short-term interest rates when out of control for a few days before the Federal Reserve was able to get the situation under control.
The big banks and lenders are predicting the recession will be 2020.
Various economists are starting to predict the recession is on its way.
Wall Street is starting to talk about “The inverted yield curve.” This is causing some buyers to be hesitance with the uncertainty of the future market. Early this year, the Federal government was shut down for 35 days. That affected the US economy. With the trade wars and new tariffs, this is having an impact on the US economy too.
Some countries are talking about doing negative interest rates. I have never heard of this before. Is it possible for this to occur?
There is an interesting article, “setting off a recession with words” by Robert J Shiller. The item is worth reading.
We are in crazy times, and crazy things can happen. In the US, with the elections a year away in 2020. I would think the current administration would do whatever they can to avoid the recession.
At this point, time will tell. I would watch the stock market and the inverted yield curve, the big banks, and the Federal Reserve.
I have been in the appraisal field for decades. My brother got me my start in the business. He is a commercial appraiser. He told me to do my best and write an honest appraisal report. Here it is several decades later and so many crisis’s savings and loans, Fannie Mae failure the bogus too big fail crisis and so forth.
I still every day try to do the best appraisal report I can. I make sure it is credible, and the information I have in it is correct and not miss leading. Most people do not realize the responsibly of the real estate appraiser. We are held to a high standard; we are responsible for knowing everything about the market areas that we do appraisals in and we are responsible for what we do not know.
When you had a high-level, government official who did not know having government information on a personal computer was against the law, no action was taken against that person. With dealing with the public and working with realtors, homeowners, attorneys. Lenders, etc. You have to explain to them why you need the information and the delays in completing the appraisal reports. I have to review the sales contract and make sure the buyers and sellers have signed the contract. I need to see if there are any condition of sales, for example, seller concessions. I must disclose that in my appraisal report. I am not an attorney.
If you are doing a VA appraisal and it is a purchase, you must review the VA escape clause and make sure it is in the sales contract and signed by the buyer and seller. What is interesting is the attorneys involved in the transaction are not required to review it. I am now a loan processor too.
There are delays that are beyond our control. In a recent assignment, the buyers went on vacation, and the sales transaction was delayed, and the lender pressured me to turn the report in faster. Another delay when the homeowner submitted the paperwork for the refinance and can not see me for a month because they had surgery. When I did schedule the appoint, the homeowner wanted me to rush.
I needed my lawn sprinkler system repaired. I called the lawn sprinkler company, and they told me 3-4 weeks before they could come out. I told them I need them to come out right away. I had to wait several weeks for my sprinkler to be repaired. But for the appraisal report, it must be ASAP.
Wow, I think I may make a career move.
So you boot up YouTube, or you watch the fixer-upper shows on television. Now you feel empowered, and you can tackle anything and any project.
I have an example of a DIY project that went wrong. A homeowner has a brick colonial, and they needed the shutters redone. So they did a DIY on the shutters and painted them blue. What is the big deal correct?
The problem is now the house is listed for sale, and no one wants to see the house. I was consulted and asked why isn’t anyone interested in the home? The homeowner was perplexed. “I just repainted the shutters so what is the problem with the house?”
When I saw the picture of the front of the house, the blue shutters jumped right out at me, almost screaming!. If it bothered me. It is going to bother and be a distraction to the next person.
My suggestion was to paint the shutters black and do an open house immediately after that and see what happens. Good luck to that DIY, but do your research of the dangers.
In New Jersey, there have been changes to the construction process where certain things do not need a permit — replacing the roof, siding, etc. When it comes to the kitchen or bathrooms if you only replace what is there and not move any plumbing? No permit is required or town inspection. That sounds great, and the homeowner saves money right. No wrong if that homeowner does not install everything correctly, they can damage the house.
Take a bathroom re-model for example. If the showerhead is not installed correctly it could be leaking behind the wall and create a mold problem.
When they go to sell the house, and the buyer hires a home inspector, the inspector will point out all the things that were not installed correctly. That could hold off the sale and may be a deal-breaker. Depending on the township Certificate of inspection on resales may fail it.
Spring is here and summer is around the corner. The buying/selling season has begun. Good news interest rates are low. The federal government is talking about keeping the rates low. With the presidential election next year, they should stay low until then.
The millennials who were left out of the market. There is talk about college loan forgiveness. If they occur that would make millions of millennial potential buyers.
With these lower interest rates, it will make it affordable for people to buy a house, that is part of the American dream.
There is options available 3% down payment with FHA financing. Banks and various lending institutions are also lending on 5% down payment and specials with closing costs.
With the VA you can purchase a house with no down payment. The federal reserve may lower the rates. Finally, the stock market has gone up with this news. The negative to this news if the interest’s rates go down and the potential loss to gains in savings, CDs, treasury, 401k, etc.
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President, Coast Appraisers and Consultants Inc.
When it comes to the interior of your house. Painting it with too personal colors may harm the sale of the home. When I was putting my house on the market for sale. I asked several realtors and other professional what is a popular color at the time it was gray. Probably now it is a different color.
The color I choose was a neutral color beige. That color went well with the tile floor in the kitchen and the hardwood floors.
When my house was on the market there was another similar house on the market. It had different colors in every room and the colors were bold. That house took longer to sell, I think one reason, too many colors in the house and too personal.
The buyer of that house would have to immediately spend thousands of dollars to change the colors to their liking.
You can hire experts to come in and tell you what fool proof colors will sell your home. Like you see on those real estate shows on television.