Tag Archives: #appraiser

The 5th Annual Northern California Residential Appraiser Conference Recap

Thanks to the Northern Solano County Association of Realtors for hosting us

Thanks to everyone who came to the 5th Northern California Residential Appraiser Conference jointly hosted by the Real Estate Appraisers Association (REAA) and the Northern California Chapter of the Appraisal Institute last week. While attendance was somewhat lighter than in past years, it was great to see so many in person. We had fantastic speakers, starting with Sandra Adomatis, SRA, 2024 National President of the Appraisal Institute.

AI National President Sandy Adomatis

Sandy gave us an update on current industry trends and the Appraisal Institute. I enjoyed hearing about PAREA, the training program alternative to the traditional appraiser apprenticeship, and am hopeful to see younger folks entering the profession. She shared a slide showing most states ready to accept PAREA now or very soon.

Of the 70,000 appraisers in the US at present, 4,000 are SRAs, 8,400 are MAIs, and another 1,400 hold reviewing designations. She also mentioned how the AI will be pushing back on the trend of using property inspectors in appraisals and the misperception of appraisers as mostly biased.

Heather Sullivan, NAA Appraiser of the Year

Next up was Heather Sullivan, head of learning and development for Aloft Appraisal, and the National Association of Appraisers Appraiser of the Year! Congrats Heather!

Heather’s talk was applying the business book classic Who Moved My Cheese? to the current state of the residential appraiser industry. Because of PTSD from my past life working for a rapidly growing music wholesaler, I can’t recommend the book, but I can recommend her talk. She discussed the changes coming and the overall process of accepting change, leaning heavily on WMMC. If you’ve been in the appraisal industry for any length of time, you’ve seen many changes (typewriters, 24-hour photo, MLS books for data, the 1004, UAD, online data availability, etc.). We’re about to see more change with property data collection, new automated tools for analysis, and new appraisal “forms.” Clients are pushing for faster production and if we’re going to serve those clients, we’ll need to adapt.

Heather shared a breakdown of the new appraisal report coming soon to a lender near you. There will be one report instead of the 15 or so different reports we deal with today with options to show sections as they apply. You start by selecting the type of property to be appraised, then the software will display required sections for every report (summary, assignment information, subject property, site, sketch, etc.), with optional sections able to be added by the appraiser as needed (energy efficiency and green features, manufactured home details, rental information, income approach, cost approach, etc.).

Side view of Jeff Bradford

Heather handed over to Jeff Bradford, CEO of Bradford Technologies. Jeff continued the discussion about the new forms coming soon and likened it to filling out your taxes with Turbo Tax. Not the most exciting description. He went into detail about the difficulties developing the new software and some challenges the industry might see. Both Heather and Jeff see the appraiser’s role in this new world to evolving even further into data analysis.

Jeff sees a problem with splitting the data collector role from the duties of the appraiser with a potentially lower income in the future the outcome. His solution-build software to help the appraiser preserve relevance in the residential lending valuation process. We then saw a demonstration of Bradford Technologies solution, NightHawk. Jeff showed us how this tool, in development, would allow for fast analysis with lots of ways to search and analyze competitive sales data, plug into an appraisal, and quickly report the results. I can’t wait to see NightHawk roll out.

From Left: Jon Reiter, Susan Reiter, Stephanie MacLean, and Amy Bolton-Christopherson. The panel was organized by Lou Rusert, standing far right

After lunch, we shifted gears to a panel of local builders. We heard from Amy Bolton-Christopherson, president of Christopherson Builders, Stephanie MacLean, CEO/President of Blue Mountain Enterprises, LLC, and Jon and Susan Reiter, owners of Reiter Fine Home Building.

This panel was especially interesting because each builder occupied a different market segment. Blue Mountain is a production home builder with communities across Northern California. Christopherson Builders is based in Santa Rosa and aims for the custom, higher quality market. I recognized Christopherson because they have rebuilt homes destroyed in the LNU Complex Fires north of Vacaville, one of my prime markets. Reiter Fine Home Building is a top of market spec builder in the Wine Country, with homes starting at $15,000,000 going up to more than $65,000,000.

Amy from Christopherson emphasized the difficulty in building new homes in California because of regulations and high indirect costs. Her example of a 1,200 sf accessory dwelling with a base price of $558,600 was eye-opening.

Stephanie from Blue Mountain reviewed the process her company goes through for developing a subdivision, from conception through feasibility, acquisition, marketing, and selling. She highlighted a new subdivision in Elk Grove with entry-level homes at $400,000, very reasonable and attainable for many in the Sacramento region.

Reiter Fine Home Building is different. Jon Reiter described their model of staying current with the latest trends in the very top tier of new homes in the US, designing and building one at a time. He discussed the importance of site selection for privacy and views for those who can afford a $65,000,000 home and emphasized that home size is less in demand in the top tier. He also discussed evolving tastes and how his company moved from Mediterranean to barndominium to modern.

All three panelists were kind enough to answer questions at the end of their presentations.

Yours truly in the deadliest slot, last

The final section was a discussion of short-term rental properties. Seth Carlsen, a Sacramento-based real estate investor, shared with us an introduction and lessons learned in acquiring and managing his 21 short-term rental properties. He reviewed AirDNA, the primary data source for short-term rentals, and provided comparisons to data provided about his properties by AirDNA and the actual data. He warned us to be careful to compare properties with similar amenities and maximum guest count, and to use multiple data sources.

I wrapped up the day with a comparison of short-term rentals to the standard rental properties residential appraisers deal with on a regular basis and warned about the relatively common request appraisers receive from lenders to provide a “rent survey” for short-term rentals. I encourage everyone interested in the topic to read John Dingeman’s article about the issues regarding lender rent survey requests and short-term rentals.

Thanks to host Northern Solano County Association of Realtors for allowing us to use their excellent facility. Thanks to all of our speakers who traveled near and far to share their wisdom and expertise. Thanks to Lisa Estes from the Appraisal Institute for managing the logistics so well. And thanks especially to my fellow committee members Lou Rusert and Chris Daniels, SRA for their work in planning this event.

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

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

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

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.