Opinions of Value

Your source for appraisal news and trends

Appraisal Institute Supports Intent of Bank Examiner Bill in Congress

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The Appraisal Institute and American Society of Farm Managers and Rural Appraisers this week expressed support of the goals of House Resolution 3461, the Financial Institutions Examination Fairness and Reform Act (bank examiner bill).

blog_image_2_1_12The two appraisal organizations submitted a statement for the official record of the Feb. 1 House Financial Services Committee hearing on H.R. 3461, The Appraisal Institute and ASFMRA promoted consistency of bank examinations and due process, and any efforts that would enhance consistency in the interpretation and understanding of the guidelines and regulations.

Bank appraisal departments and individual appraisers have often faced inconsistent interpretations of the Interagency Appraisal and Evaluation Guidelines and other applicable guidelines, such as the Policy Statement on Prudent Commercial Real Estate Loan Workouts. The Appraisal Institute also supports due process and an administrative appeals program in connection with disputes regarding valuation or appraisal methodology. [Read more…]

Appraisal Institute Announces Support for New Solar Valuation Tool

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The Appraisal Institute this week announced its support for a new tool that will assist appraisers and others seeking to establish the value of a property’s solar-powered features. The spreadsheet was developed by Solar Power Electric and Sandia National Laboratories.

Finding a way to value residential and commercial properties with photovoltaic (PV) installations is a growing challenge facing the nation’s real estate industry. As more homes and businesses turn to solar power, the need grows for ways to develop reliable and credible opinions of value of the installations and the power they generate.

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PV Value works within a Microsoft Excel spreadsheet to determine the value of a PV system. This is done using an income capitalization approach whereby the energy value is calculated over the lifetime of the PV module warranty. Inputs to PV Value include the zip code of the location, local utility rate and characteristics of the PV system. An appraisal range of value estimate is returned as a function of a pre-determined risk spread. This tool can be used to value a PV system at any location in the U.S. through its interface with the National Renewable Energy Laboratory’s PVWatts simulator. [Read more…]

Appraisal Institute Leadership Sets Organization on Path to Success

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blog_presidentheadersWith the next Board of Directors meeting taking place Feb. 6-8, the Appraisal Institute will continue to focus its efforts in several key areas, particularly the Candidate for Designation Program. I look forward to working with AI leadership on behalf of our nearly 23,000 members in nearly 60 countries, and the valuation profession at large in the coming year.

Hopefully by now you’ve heard about the Candidate for Designation Program, approved by the Appraisal Institute Board of Directors last month. Effective Jan. 1, 2013, the Appraisal Institute will consist of: Designated members, Candidates for Designation, and Affiliates (practicing and non-practicing), as newly defined. The program’s emphasis will be on Designated members and those seeking to become designated. Learn more about the program.

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During 2012, current Associate members will have the opportunity to choose whether they wish to become Candidates for Designation or Affiliates, as newly defined. [Read more…]

Appraisal Institute Continues Push on Customary and Reasonable Fees

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The Consumer Financial Protection Bureau recently issued a new Interim Final Rule on the Truth-in-Lending Act’s provisions related to appraiser independence. This rule includes the previously issued rules relating to “customary and reasonable fees” that originally were issued by the Federal Reserve Board last year.

blog_image_1_26_12The CFPB Interim Final Rule was issued in order to restate all of the Federal Reserve’s Truth-in-Lending Act regulations as CFPB regulations, effective Dec. 31, 2011, as authorized by the Dodd-Frank Act. As part of this process, the CFPB adopted the Federal Reserve’s Interim Final Rule, and the agency stated its action does not constitute any new regulatory obligations.

 

The agencies are under statutory deadlines to complete three rulemakings; requirements for higher cost mortgages, appraisal management company registration & oversight requirements, and automated valuation model quality control standards by January 2013. No statutory deadline exists for customary and reasonable fees. [Read more…]

New Appraisal Institute Book Helps Estimate Value of Convenience Stores

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Convenience stores represent a complex and fascinating retail channel that has responded to the economic challenges of the last decade by embracing new ideas, according to a new book by the nation’s largest professional association of real estate appraisers.

convenience_store_book_coverThe second edition of “Convenience Stores and Retail Fuel Properties: Essential Appraisal Issues,” published this week by the Appraisal Institute, is intended to help appraisers of convenience stores keep up with these changes and understand how real estate value is created and estimated in the industry.

This book should prove to be a valuable reference not only for real estate appraisers, but also for eminent domain attorneys, convenience store operators and corporate managers. [Read more…]

Appraisal Institute Offers Input on Interagency Rulemakings

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The Appraisal Institute recently participated on a conference call with staff of key federal agencies – including the Federal Deposit Insurance Corporation, Federal Housing Finance Agency and Consumer Financial Protection Bureau – to discuss rules resulting from the Dodd-Frank Act that address:

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  • When interior inspection appraisals are required in “higher-cost” (i.e., subprime) mortgages;
  • When second appraisals are required for properties sold within 180 days;
  • Minimum operating and state registration requirements for AMCs and reporting obligations to the National Registry maintained by the Appraisal Subcommittee; and
  • Development of quality control standards for automated valuation models (AVMs).

The Appraisal Institute emphasized that interior inspection appraisals are the “gold standard” within the industry. The Dodd-Frank Act provision sought to quell use of drive-by and desktop appraisals in higher risk mortgages. It also sought additional collateral risk assessment to combat property flipping. The Appraisal Institute strongly supports these provisions. [Read more…]

Appraisal Institute Seeks Separation of Appraisal and AMC Fees

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The Appraisal Institute continues to represent the interests of its members in ongoing rulemakings resulting from the Dodd-Frank Act, including the separation of appraisal and appraisal management fees in order to provide transparency to consumers.

blog_post_1_20_12Last November, AI and the American Society of Farm Mangers and Rural Appraisers urged the Consumer Financial Protection Bureau to separate appraisal fees and appraisal management fees. Last month, Appraisal Institute representatives met with CFPB officials about a new Consumer Disclosure Form slated to replace the current HUD-1. The Dodd-Frank Act authorizes, but does not require, separation of appraisal and appraisal management fees on these loan documents. The CFPB is expected to issue a Notice of Proposed Rulemaking this summer and will seek public comment.

The Appraisal Institute believes that appraisal management is different than appraisal services and will continue to advocate for clear separation of fees on the new form. Appraisal Institute members should voice their opinions during the public comment periods. [Read more…]

Appraisal Institute Helps Appraisers Choose Comparable Sales in Declining Markets

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The nation’s largest professional association of real estate appraisers published guidance this week to help appraisers know when and how to use distressed sales, such as foreclosures, as comparable sales. Such knowledge is particularly crucial in the current market where distressed sales are common, creating complex valuation challenges.

The Appraisal Institute noted that appraisers often use comparable sales (or “comps”) to help develop an opinion of value. But in today’s distressed real estate market, many potential comparable sales represent foreclosed properties. Some owners have complained their home’s values have fallen because appraisers have used such sales as comps.

blog_image_1_19_12The Appraisal Institute’s “Guide Note 11: Comparable Selection in a Declining Market” notes that “transactions used in an appraisal assignment require adjustments for changes in market conditions.”

According to the Appraisal Institute, qualified and competent appraisers with local market knowledge are capable of using their experience and education to determine when – and how – to use distressed sales as comparables. These appraisers know what adjustments to make, if any, when using distressed sales as comparables, for such methods are taught in basic coursework and updated seminar materials available to professional appraisers.

The Appraisal Institute’s Guide Note says: “A declining market will likely exhibit very little sales activity. When the sales comparison approach is necessary, but there are virtually no current sales in the market area to analyze as comps, the appraiser must: 1. Expand the geographic area for comp search, then adjust for location as appropriate, and/or 2. Use less recent sales, then adjust for market conditions as appropriate.”

Designated members of the Appraisal Institute – such as those who have earned the MAI (commercial/general) or SRA (residential) designation – are among the appraisers capable of properly performing difficult assignments such as those found in today’s challenging real estate market. They have achieved levels of education, experience, standards, ethics and peer review above those of licensed or state certified appraisers.

Click here to download the Appraisal Institute’s six-page pdf of “Guide Note 11: Comparable Selection in a Declining Market.”

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Designated Appraisers Rise Above the Competition

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blogpost_1_17_12Real estate appraisers know how challenging it can be to differentiate themselves from the competition. But appraisers who have received the MAI and/or SRA designation from the Appraisal Institute have found the best way to achieve that goal.

Designated members know it’s about taking their career to the next level, enhancing their reputation, expanding their earning opportunities and having the satisfaction that they are among the best of the best.

Obtaining a designation shows appraisers’ clients that they have gone above and beyond the education and experience needed for state certification and have demonstrated professional knowledge, understanding and ability.

[Read more…]

Appraisal Institute Honors January Volunteers of Distinction

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The Appraisal Institute has announced its “Volunteer of Distinction” honorees for January: Iverson C. Grove, MAI, SRA, of Region V (Northern Indiana/Southwest Michigan Chapter); Orell C. Anderson, MAI, of Region VII (Southern California Chapter); and Roman Cherwonogrodzky, SRA, of Region VIII (Houston Chapter).

[Read more…]