Monthly Archives: May 2018

Detrimental Crime Scene Discounts

Home of the Suspected East Area Rapist

Recently Joseph James Angelo was arrested outside of Sacramento and was accused of being the East Area Rapist. The East Area Rapist terrorized California in the 1970s and committed more than 50 rapes and 12 murders before disappearing more than 30 years ago. My friend Ryan Lundquist started a poll and conversation on his blog: What discount would you expect if the East Area Rapist’s house came on the market?

The results are interesting. Most respondents were in the 0-10% and 10-20% brackets. I was in the 0-10% bracket based on the one time I’ve worked on a similar problem.  Several years ago I was completing an appraisal on a house for a purchase in one of my markets and I noticed a weird note in the listing. “Blessed by a deacon.” What the heck did that mean?

I called the listing agent, a friend of mine, and asked her what she meant by that. Turns out there was a murder on the site within the past six months.  Would have been nice if she’d let me know when I scheduled the appointment that, oh, by the way, there was a murder at the subject….

I frantically called the lender to warn them that a murder had occurred at the subject in the past six months, that I would need time to analyze this new evidence, and that I needed more money for the report because of the extra due diligence. I called my mentor to get advice on how to deal with this and to see if he had any data (nope). I then searched MLS over the past 10 years but for some reason, listing agents don’t normally advertise “recent murder here” when trying to sell homes so struck out again. No one at the local Realtor meeting could remember any sales of homes after a murder or similar circumstance either. One of my comparables, however, had a death by natural causes within six months of date of sale.

So after a bunch of due diligence, I had jack squat for data. I took a step back. This was an entry tier home at a time where inventory was low in a relatively safe neighborhood where the murder was unlikely to occur again. Three full-price offers were received for the subject and all three potential buyers were aware of the home’s history. Was there a discount because of the murder? My best evidence, the three full-price offers, showed little to no market reaction from the murder. I discussed my research in my report and concluded no market reaction and sent it in. The purchase closed less than a month later.

This is not the exactly same situation as if the East Area Rapist’s house was on the market. First, no reports to date suggest that crimes were committed at the accused’s house while the house I appraised was the site of a murder. Second, the murder at my subject’s property was one off with little news coverage outside of the community where it occurred.  The East Area Rapist is notoriously known throughout California, if not the US, especially for those of age at the time of his crimes. A better but not perfect model might be Dorothea Puente, the landlord in Sacramento who murdered at least seven people and buried them in the backyard. Ryan plots the sales of her duplex on his poll results post.

Tony Bizjak, the real estate writer for the Sacramento Bee, liked Ryan’s post enough to turn it into an article and quoted me for the story.

p.s. Randall Bell, PhD, MAI is the national expert on diminution in value and determining crime scene discounts. His book Real Estate Damages is highly recommended. He thinks the discount will be closer to 25% if the home of the East Area Rapist hits the market.

 

The Outsize Influence of Sacramento on the Appraisal Industry

Sacramento area appraisers stand large in the appraisal industry. We have much more influence than you would expect from a sleepy state capitol halfway between San Francisco and Lake Tahoe. Here are four locals you might know.

Ryan Lundquist might be better known by his website http://sacramentoappraisalblog.com/. He is one of the leading real estate appraiser bloggers in the US and is widely quoted in national media. Here’s a link from quoting Ryan in Ken Harney’s national real estate column from yesterday. Locally, Ryan is famed for his monthly regional market summaries and for being named the 2014 Affiliate of the Year by the Sacramento Association of Realtors. Realtors voting an award for an appraiser? Really? See Ryan speak at the Appraiserfest this November in San Antonio about his expertise in leveraging social media to increase his business.

I’ll be at Appraiserfest too if you want to grab a beer.

Next up is John Brenan. John is the Director of Appraisal Issues for The Appraisal Foundation (TAF). He’s the appraisal point person for the Appraisal Practices Board (APB), Appraisal Standards Board (ASB), and Appraiser Qualifications Board (AQB). Or, in English, he’s the guy helping to set the standards, qualifications, and practices for our industry. John was the author of TAF’s letter urging that the Appraisal Subcommittee reject TriStar Bank’s request for a temporary waiver of appraisal certification and licensing requirements. Every appraiser with lender clients should be grateful for the support. Here’s more about how our industry dodged a bullet.

Don Machholz is another local appraisal industry star. When Fannie Mae required the 1004MC form added to residential appraisals in 2009, Don stepped up and created the 1004MC Calculator and released it free of charge. Don created almost 50 different versions for use with different MLS systems around the country. I went from an hour before Don’s spreadsheet to 5 minutes with it. Don went on to create a host of tools for appraisers to use and now that he’s retired, you can download them all on Don’s website for free. Photos from Don’s retirement party below….

Vicki Keeler may not be known as well outside of the region as Ryan, John, and Don but she deserves to be recognized. She’s one of the founders of the Real Estate Appraisers Association (REAA). REAA started in Sacramento as a local appraiser association and has grown to five chapters across California with approximately 300 members. REAA hosts monthly or bimonthly meetings for practicing professionals and is a model for other state appraiser organizations. Vicki has devoted countless hours to providing education to her fellow appraisers and is one of the unsung heroes of our industry.

Not too bad for a sleepy little town in the middle of the Central Valley….