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.

Gallup: Many Americans looking to government for foreclosure solution

Nearly 60 percent of Americans are hopeful that the federal government will intervene to help solve the residential foreclosure crisis in the United States, according to a poll from Gallup.

Approximately one-third of consumers disagree and prefer the markets work themselves out. However, the consumers who are insistent on government action on the topic could be concerned about the decline in home values, the poll noted. More foreclosures can severely damage the market for home values, and close to 20 percent of homes purchased during the third quarter of last year were in some state of foreclosure.

Of all Americans, 51 percent were worried about home values being damaged, according to the poll. However, when specifying homeowners, 57 percent showed concern.

President Barack Obama recently noted that a new plan he has drafted will be presented to Congress to try to ease the foreclosure problems in the residential market. However, a multitude of programs have already been passed, and these have not had the intended impact.

It's Mustache Day at Title Source!

Mustache: (as defined by Urban Dictionary)
A universal icon representing the epitome of authority and raw **manhood. It graces small children the chance to believe in a hero and causes evil-doers to second guess their existence. There are very few things in this world that could ever achieve the divine status that each individual hair is birthed into. Resting just above the upper lip, the mustache is a beacon to all mankind that there is hope for this world and a bright future for all who have been gifted with this treasure from God himself.

** I used manhood as a majority observation. No disrespect to the women of this world that wear their mustache with pride.

At Title Source, the clever and creative folks of the T-Source Force (Awesome team members who volunteer their time to plan workplace fun) just thought it would be a hoot to make everyone don a mustache in order recieve a tasty root beer float!  Check out all the fun we've had with Mustache Day!!

With home buying on the rebound, apartments could take a hit

More consumers becoming homebuyers may put some pressure on the rental market, according to an article by CNBC.

Rental demand has boomed as of late, and vacancies have plummeted due to a lack of supply, causing prices to spike. However, the residential housing market is slowly gaining its footing, which could hurt rental demand. More renters may be becoming more financially comfortable with the possibility of purchasing a new home.

"While 2012 should be another good year for apartment REITs, there is concern amongst some investors and managements that market expectations may be hard to beat," analysts at Sandler O'Neill told the news source. "Based on discussions with managements, revenue growth should match sentiment but expense growth may be the wildcard."

The consensus is that the rental market may struggle to match its impressive figures from 2011, the report noted. This was supported by the recent increase in mortgage applications, as the MBA noted the figure jumped 23 percent for the week ending January 13.

However, cities may not be as affected by the switch back to homeownership, the report added. This is because these areas typically don't have as many foreclosures compared to the suburbs, and there is more of a demand for rentals.