Tag Archives: #appraiser

Who needs an appraisal more than someone selling to an iBuyer?

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Opendoor wants to buy my house!

Have you heard about iBuyers? This is a relatively new business model in residential real estate where companies offer to buy your home for cash with a very short turnaround. These companies, such as Opendoor and Offerpad, make a preliminary offer, do a property inspection to determine needed repairs, and quickly offer a price for the home. The iBuyer then prepares the home for market, cleaning and making any necessary repairs, and lists the home for sale. Zillow, Redfin, and national real estate brokerages are starting to offer this model, too. Here’s a quick primer from Housing Wire that explores variations on this basic model.

Some clear advantages to the seller include fast turnaround and simplicity. Accept an offer, receive your cash, bid on the house of your dreams. This is a compelling story in our short attention span society. But what is the cost?

This story discusses the only study to date showing that sellers receive, on average, 11% less than on the open market when all costs are included.

That’s $45,000 in my neighborhood.

The iBuyer model works only if there is sufficient profit between buying the home and selling it. This creates an obvious incentive for the iBuyer-make the lowest offer to buy and sell the home at the highest price possible. What supposedly separates the iBuyer from the traditional flipper is advanced analytics to determine the market value of a home. The iBuyer model relies on a seller not knowing the market value of their home and/or a seller willing to accept a below market price. Sellers are trading money for speed and convenience.

There’s variation in the data. Some transactions were closer to market value, some were further. The key to making an informed decision is to understand what current market value is for your home before you accept an offer.

Before entertaining an offer from an iBuyer, learn the market value of your home from a local, independent appraiser.

AppraiserFest 2018 Impressions

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I want to add to the praise for the first AppraiserFest held last week in San Antonio. Kudos to Phil Crawford, Lori Noble, and Mark Skapinetz for a great first event! I’m very glad I made the decision to attend.

I was struck by how positive everyone was at the event. Even though the residential appraisal business is under threat from changing client needs and reduced loan volumes, AppraiserFest speakers gave us many ideas for how to grow our business.

I greatly appreciate that this was an appraiser-centered event with a distinct lack of client presence.

Attendees were younger than typical for industry events, a refreshing change. Also, a larger percentage of attendees were women.

I spent much of my time at AppraiserFest with George Dell and Steve Smith at the Valuemetrics booth discussing data analysis with attendees. Hanging out with George and Steve for several days was like a master’s seminar in appraisal. I’m so fortunate to have mentors so willing to share their experience like these two.

Tom, Ryan, Jamie, and Bill with yours truly at AppraiserFest

Meeting online friends in real life was the best part of AppraiserFest. I was fortunate to break bread with some of the best appraisal bloggers in the country including Tom Horn, Jamie Owen, and Bill Cobb. And Ryan Lundquist, a long-time friend in real life (!), was kind enough to put up with my snoring. Thanks for sharing the room Ryan.

This was my first trip to San Antonio so I had to visit the Alamo and the Riverwalk.

It was great catching up with Diane, John, and Teresa from the Excel class I gave in Portland two years ago. Can’t wait to see you again.

Takeaways:

  • Positive vibe throughout
  • Great networking with people I actually wanted to meet
  • Very professional event with great speakers and topics relevant to my day-to-day business

I will be back next year!

 

Thanks Don

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Don, Michelle, and son Mark

Thanks Don.

I’ve been very fortunate to know Don Machholz over the past 10 years or so. If you’re a residential appraiser, there’s a good chance you’re familiar with Don’s 1004MC calculator. In 2009, in a belated response to the housing crash, Fannie Mae and Freddie Mac required every residential appraisal going into their pipelines to include the now infamous Market Conditions Addendum-Form 1004MC. The good intention of this form was to force residential appraisers to consider and report market changes. (The form is a disaster. George Dell has a great article about how poor the 1004MC is here). The immediate issue for me was doing the calculations by hand was a major pain and none of our clients were going to pay extra for adding this required form. I did a few by hand and spent an extra hour each time doing the calculations.

Don saw a need to automate this process. He spent a couple of weeks building the first of his Excel workbooks, the 1004MC Calculator, and released it free. Filling out this odious form went from an hour of work to 5 minutes. First version was for my local MLS system and we loved it. As word spread, Don received requests to customize it for other MLS systems across the country. He has 42 different versions on his website.

Don included a couple of sale charts in the workbook to help those who didn’t know how to run a trendline. He built other tools including a scheduler, lot adjustment calculator, PSF adjustment calculator, plus additional market analysis tools. After several years of offering his tools for free, he finally came up with the 1004MC version 5C that packaged a lot of calculators into one workbook for a modest $50.

Word spread last month that Don had retired and was planning to move to the northern Arizona desert with his lovely wife to devote time to astronomy and finding more comets. He’s found 11 so far and is the most successful living visual comet discoverer in the world. Find out more about Don’s astronomy activities on his personal website, http://donmachholz.com/.

I’m so happy for Don and thankful for his generosity. Unsurprisingly to everyone who knows Don, all of the tools he developed are now free on his appraisal website, https://donsappraisals.com/.

Thanks Don for all you have done for our profession.

Below are photos from his retirement party at Moonraker Brewing in Auburn, CA.