Announcing Our New TSI Appraisal Blog

TSI Appraisal, a division of Title Source, launches a blog especially for appraisers, entitled On the House. 

TSI Appraisal is a leading Appraisal Management Company (AMC) that provides valuation products and services nationwide. It's only fitting that they have their own blog that allows appraisers to engage in open dialogue, interact and learn from each other.

We're kicking things off with our first post, "Raising Your Level of Awareness," which focuses on professionalism in the appraisal industry.  The article was written by           Jordan Petkovski, a frequent author for several industry publications and TSI Appraisal’s Vice President of Appraisal Operations. Stay tuned for our upcoming series on "Things Appraisers See!"

Amateur investors purchasing residential housing properties

More regular Americans are becoming more interested in investing in residential properties in order to cash in when the market strengthens, according to USA Today.

Due to the current struggling housing market, with continued low home prices, there are more first-time investors jumping into the market. These people see the market as more attractive due to the continued rental price increases, as well as the heightened demand for rental properties, according to the news source. Buy making a purchase now, these people can get renters to pay them for now to pay down mortgage costs, and then, when the time is right, investors can get out of the market once home prices are strong again.

"Right now it's just that perfect storm for mom and pop investors," David Hicks, co-president of HomeVesters of America, told the news source.

The news source cited John Burns Real Estate Consulting, which released data showing more than one-quarter of home sales were by investors through most of last year. Overall, this was a 21 percent increase from 2007.

Raising Your Level of Awareness

By Jordan Petkovski, V.P. Appraisal Operations

I’ve been a strong proponent of continuing to foster professionalism in the appraisal industry.  The days of appraising as a vocation are long gone, so it’s incumbent on each and every one of us to ensure our actions are in the best interest of the industry.

Let’s talk about some immediate areas of opportunity based on the reports that I see on a daily basis.

1.       Transparency in Reporting:  Unlike your kids on Christmas morning, the investor community doesn’t like surprises!  The more information provided within the appraisal report, the better.  This doesn’t mean filling up ten pages with ‘canned’ commentary, this means providing a detailed synopsis of your analysis and findings.  Remember, providing enough information for the reader of the report to replicate your findings in the future is the current ante to play.  Did you analyze sales that were not used in your comparable sales analysis?  Why not disclose these sales within your report, in the form of an addendum, and identify why they were considered less reliable than those sales utilized in your comp grid? 

2.       Reconcile the Value:  Give the reader of the report an explanation of your reasoning for deriving the subject’s value.  Did you consider the inventory, absorption rate and depreciation?  Is the market stabilizing?  Did you give one or more comparables a greater preponderance of weight when concluding the value?  Why?  If you’re able to answer these questions in your reconciliation commentary, you’re less likely to find yourself defending the value down the road.

3.       Act Accordingly:  When engaging the borrower to access the property and while conducting your physical inspection, ensure you arrive on time, you’re professionally dressed and act as if you are a guest in the borrower’s home.  Remember, you may be the only face-to-face interaction a borrower has with anyone representing the lender.  If your presentment during the inspection is anything but exemplary, you are increasing the likelihood of a complaint.

These tenets aren’t all encompassing, but they can improve your practice in short-order if adhered to on each and every assignment.  The more time and energy you invest in a quality product and process, the better chance we - as appraisers - have at reclaiming the consumer confidence we’ve lost in recent years. 

Tight mortgage lending practices may hurt home sales

With home prices continuing to tumble, it is getting more difficult for consumers to have their mortgage application approved, according to MSNBC.

New home sales in 2011 reached their lowest levels in the nearly 50 years the government has kept the statistic and much of it could be because residential mortgage lenders have been much more picky about deciding who will get a loan, the news source said. Consumers are typically fighting over a smaller pool of money to receive from lenders, as well. This is because of a large amount of new mortgage originations made during the housing boom. Now, nine in 10 residential mortgages are backed by the federal government.

Consumers also need to have high credit scores to qualify for loans, according to the source. One measurement showed that the average FICO score was 730, and this is a nearly 200-point jump from the average credit score for subprime loans during the housing boom.

While there is a lack of volume in lending at the moment, this may be improving as home prices are projected to climb in 2012. This information could make lenders more confident in awarding mortgages.