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Automation haunts many discussions about the future of work, employment, and the economy. But technological advances may soon hit homes in an unexpected way: could real estate appraisers be replaced by robots?
That’s the conclusion of a recent article in Bloomberg, which discusses how advances in big data and computing are helping automate this knowledge-based job, perhaps a harbinger of how advances in machine learning mean an ever-widening circle of professions are at risk.
The future of the profession has become a topic due to a recent decision by Fannie Mae and Freddie Mac, two institutions that facilitate the flow of funding for home loans nationwide. In the past, both of these entities have occasionally allowed appraisal waivers when evaluating low-cost loans. But recently, they’ve changed their stance, starting up a program earlier this year that would waive the new appraisal requirement for homes where the loan-to-value ratio is low. Instead, they’ll accept any appraisals on file from the last five years. In June, Freddie Mac said it would start accepting automated valuations for some refinancing loans.
“There’s no replacement for an appraisal in most cases,” Amorin tells Curbed. “Many of the computer models use public information that hasn’t been verified. Even Zillow will tell you it’s an estimate, not an appraisal.”
A profession already feeling pressure
These policy shifts come during an unfortunate time for a profession watching its workforce slowly shrink. Today, there are currently 78,000 licensed appraisers in the U.S., says Amorin, whose organization represents roughly 20,000 of them. That is a steep drop from the 120,000 that performed the job five years ago.
Part of the decline is due to appraisers requiring extensive training and apprenticeships to become licensed, and part is due to diminishing fees, a result of the growth of appraisal management companies that work with lenders and take a portion of the final fee. The median age of an appraiser is roughly 52-55, says Amorin, suggesting the workforce is aging, retiring, and not being replenished.
“If numbers continue the way they are, there may not be enough appraisers to meet the needs of the marketplace,” says Amorin. “We worry about how the automated models will serve the needs of consumers.”
Computer estimates are closing the gap
At the same time, the technology now being cast as competition for appraisers is getting better and better. According to a Zillow engineer, the company’s Zestimate tool uses algorothms, machine learning, public records, MLS data, and information from brokers and users to create increasingly accurate value estimates. The models are continuously being trained on a daily basis to become more sophisticated; some are examining external imagesto better determine the “curb appeal” of a home Zillow even launched a $1 million Zillow Prize in May, similar to the Netflix Prize, to entice data scientists and researchers to improve the company’s algorithm and devise a more accurate method of estimating home values.
Zillow representatives noted multiple times they believe appraisals are valuable and in no way seek to replace the need for an appraisal.
Amorin believes that automated appraisals still focus too heavily on public data and often miss the little details and true picture of a property that creates an accurate value estimate. He believes you get what you pay for with automated models, and the work of an impartial appraiser is key to a functioning, transparent market.
But that doesn’t make him anti-technology. Amorin believes the future is in a marriage of man and machine, where humans and computer models combine for more accurate estimates. Appraisers get data that saves them time, while their estimates can be fed back into the algorithms and machine learning systems to make the estimates more accurate.
“If appraisers believe they can move forward doing what they’ve always done, they’ll go the way of the one-hour photo shop,” he says. “We have to adapt.”
By Patrick Sisson
With a narrative style, the reporter does have more flexibility in the structure of the appraisal report and more flexibility in how the information is presented.
But even still, there is a method to the madness of the narrative format, and generally speaking, it follows this format: the first part of the report is the introductory part. The second part is the part where the appraisal problem is identified, discussed, and presented. The data is presented, and then analyses and the conclusions are presented. Finally the addenda is presented, which contains any and all supporting information.
TRUE or FALSE?
Mortgage application activity roared out of the gate in the first week of the New Year, as the country got back down to business. Much of the week’s gain could probably be attributed to consumers catching up after the usual holiday induced December slowdown. Applications for both refinancing and home purchasing were up substantially during the week ended January 5. It was, in fact, the strongest week for refinancing applications since mid-July.
The Mortgage Bankers Association said its Market Composite Index, a measure of loan applications volume, increased 8.3 percent on a seasonally adjusted basis and rose 46 percent compared with the week ended December 29 on an unadjusted basis. The week’s report included an adjustment to account for the New Years Holiday. MBA said there was also a revision of unspecified degree to the December 29 report.
There was a 5 percent increase in the seasonally adjusted Purchase Index compared to the previous week while the unadjusted index was 44 percent higher. The unadjusted index was down 1 percent relative to the same week in 2017.
The Refinance Index increased 11 percent from the previous week. The share of applications that were for refinancing increased from 52.1 percent to 52.9 percent.
The FHA share of total applications increased to 11.1 percent from 10.8 percent the previous week and the USDA share declined to 0.7 percent from 0.8 percent. The VA share was unchanged at 11.4 percent.
New and higher conforming loan limits went into effect on January 1 and were reflected for the first time in this week’s report. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with loan balances of $453,100 or less increased to 4.23 percent from 4.22 percent. Points declined to 0.35 from 0.37 and the effective loan rate was unchanged from the prior week.
The average contract interest rate for 30-year FRM with jumbo loan balances higher than $453,100, rose to 4.16 percent with 0.23 point from 4.14 percent with 0.22 point. The effective rate also increased.
Thirty-year FRM backed by the FHA had an average rate of 4.16 percent, down 1 basis point from the previous week. Points increased to 0.42 from 0.40 and the effective rate moved lower.
The average contract interest rate for 15-year FRM rose to 3.66 percent from 3.64 percent and points moved from 0.34 to 0.42. The effective rate increased from last week.
The share of applications submitted for adjustable rate mortgages fell from 5.3 percent the previous week to the lowest level since mid-November 2016, 5.0 percent. The average contract interest rate for 5/1 ARMs decreased to 3.50 percent from 3.53 percent, with points decreasing to 0.51 from 0.53. The effective rate decreased from last week.
MBA’s Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.
Prime real estate: Amazon now delivers tiny houses
by Dani Vanderboegh Staff Writer
Got a pesky, post-college millennial living at home who just won’t let you be an empty nester? Or what about a parent who doesn’t want to live with you, but can’t live alone?
As seen over on the website Apartment Therapy, Amazon and MODS International have the answer for you, just in time for Christmas: a 320-square-foot shipping container home you can order right from Amazon’s website, alongside your paper towels and bulk kitty litter. For $36,000 plus $4,500 for freight shipping, you can kick your relatives to the curb and give them a home to live in.
Reminiscent of the Sears Catalogue homes of the early 20th century — except tiny — Amazon will ship this tiny home, complete with appliances, bath fixtures and plumbing, water and electric hookups — all you have to do is add it to your cart.
Just don’t look for a discount on Prime Day, as this 7,500-pound send will take longer than two days. Check it out for yourself in the slideshow below
Last night futurist, journalist, prognosticator, and author Malcolm Gladwell told pretty much the most data-driven marketing technologist crowd imaginable that data is not their salvation.
In fact, it could be their curse.
“More data increases our confidence, not our accuracy,” he said at mobile marketing analytics provider Tune’s Postback 2015 event in Seattle. “I want to puncture marketers’ confidence and show you where data can’t help us.”
The Snapchat problem
The average person under 25 is texting more each day than the average person over 55 texts each year, Gladwell says. That’s what the data can tell us.
What it can’t tell us is why.
“The data can’t tell us the nature of the behavior,” Gladwell said. “Maybe it’s developmental … or maybe it’s generational.”
Developmental change, in Gladwell’s story, is behavior that occurs as people age. For instance, “murder is a young man’s game,” he said, with almost all murders being committed by men under the age of 25. Likewise, dying in a car accident is something that just “statistically doesn’t happen” over the age of 40. In other words, people age out of developmental changes — they are not true long-term lasting shifts in behavior.
Generational change, on the other hand, is different. That’s behavior that belongs to a generation, a cohort that grows up and continues the behavior. For example, Gladwell said, baby boomers transformed “every job in America” in the ’70s as they demanded more freedom, greater rewards, and changes in the boss-employee relationship.
The question is whether Snapchat-style behavior is developmental or behavioral.
“In the answer to that question is the answer to whether Snapchat will be around in 10 years,” Gladwell said.
The Facebook problem
Facebook is massive, amazing, and almost literally incredible: a social network connecting over a billion people. That’s what the data can tell us.
What it can’t tell us is what it will become — what its full upside potential could be.
Facebook is at the stage that the telephone was at when they thought the phone was not for gossiping — it’s in its infancy,” Gladwell said, referencing that the early telephone marketers thought the phone was only for business. “We need to be cautious when making conclusions … we can see some things now, but we have no idea where it’s going.”
The diffusion of new technologies always takes longer than we would assume, Gladwell said. The first telephone exchange was launched in 1878, but only took off in the 1920s. The VCR was created in the 1960s in England, but didn’t reach its tipping point until the 1980s — over and above the vociferous opposition of the TV and movie industry, which was convinced it would destroy their business.
And that’s for technologies that are just innovative.
Technologies that are both innovative and and complicated, like Facebook, take even longer to really emerge.
“Any kind of new and dramatic innovation takes a long time to spread and be understood,” Gladwell said. “If we look at history, it tells us that the Facebook of today looks almost nothing like what it will tomorrow.”
The Airbnb problem
The sharing economy, featuring companies like AirBnB, Uber/Lyft, even eBay, rely on trust. And they’re growing and expanding like wildfire.
And yet, if you look at recent polls of trust and trustworthiness, people’s — and especially millennials — trust is at an all-time low. Out of ten American “institutions,” including church, Congress, the presidency, and others, millennials only trust two: the military and science.
That’s conflicting data. And what the data can’t tell us is how both can be true, Gladwell said.
“Data can tell us about the immediate environment of people’s attitudes, but not much about the environment in which they were formed,” he said. “So which is right? Do people not trust others, as the polls say … or are they lying to the surveys?”
The context helps, Gladwell said.
That context is an massive shift in American society over the past few decades: a huge reduction in violent crime. For example, New York City had over 2,000 murders in 1990. Last year it was 300. In the same time frame, the overall violent crime index has gone down from 2,500 per 100,000 people to 500.
“That means that there is an entire generation of people growing up today not just with Internet and mobile phones … but also growing up who have never known on a personal, visceral level what crime is,” Gladwell said.
Baby boomers, who had very personal experiences of crime, were given powerful evidence that they should not trust. The following generations are reverting to what psychologists call “default truth.” In other words, they assume that when someone says something, it’s true … until they see evidence to the contrary.
Whether that’s true or not, however, is extremely important to the future of the sharing economy.
Why marketers have a job
The deficiencies not only in data but of data are the reason marketers have a job, Gladwell said. In fact, it goes deeper than that:
“The reason your profession is a profession and not a job is that your role is to find the truth in the data.”
And that’s a significant challenge.
Style icon and fashion designer Vivienne Westwood once said that your life would be more interesting if you wore impressive clothes.
You can apply that principle to content marketing — your brand will be more attractive if you can create impressive content.
Don’t get me wrong; real estate blogging is great and can help you brand your business, but there are other ways to create valuable, shareable content.
To ensure that your content stands out from all of the standard formatted, dry blog posts on the Web, why not use a different approach? Frame your content in a new way.
There are many different ways that you can differentiate the message of your brand and engage with your local prospects. We have compiled 12 of the most creative media formats below.
1. Frame the content in the form of a quiz.
Why not create some shareable content in the form of a viral quiz? It’s a great way to segment your audience and create a viral buzz focused on you and your website.
Check out sites such as Qzzr.com and TryInteract.com for ideas on quizzes you can deploy in your market. It doesn’t have to be real estate-related all the time. You can create quizzes about your local area or city and target local homeowners in your city with a Facebook ad.
2. Hold a Q&A on Twitter.
Tweeting isn’t all about one-offs. You can release a block of questions and answers on Twitter and interact with people in your city. Later, you can repurpose that content into a curated blog post.
3. Ask a “yes or no question” in a text.
If you want a customer to give you a straight answer, then ask them a straight question. It is easy to get a simple response via a text message by using SMS applications. This type of content drives not only readership but also engagement.
4. Instead of thinking website, think document.
Go bigger by offering downloadable content. A discrete document, such as an e-book, white paper or PDF frequently is perceived to have a higher value. This tactic is great to create as a lead magnet for a landing page.
GO BIGGER BY OFEERING DOWNLOADABLE CONTENT – AN E-BOOK, WHITE PAPER OT PDF
. Use infographics and charts.
Infographics and charts are a great way to map out the data of your local real estate market. You can use sites such as infogr.am and Piktochart to create highly engaging images. Be sure to add your logo to the image — infographics can be great content that people love to share.
6. Review a recent case study.
Do you have a product that you need to present? Focus in on imagining how it was used by one ideal buyer or seller client to solve their problem. When you can be specific, it frequently has general appeal and helps with encouraging people to purchase work with you.
7. Set it up like a comic strip.
Everybody loves comics. If you can say what you need to in the form of snappy one-liners, you can always present them with sequential panels, stick figures and bright colors. Bitstrips can help you get started.
8. Use a shared space to place content.
Scrapbook sites such as Pinterest are excellent for pulling together related content and having it all in one place. Take lots of pictures as you tour and list homes, and build a significant following. You can also start a conversation in Reddit.
SCARBOOK SITES LIKE PINTERST ARE EXCELLENT FOR PULLING RELATED CONTET IN ONE PLACE.
9. Consider video marketing
Video is taking off and will continue to grow. You can easily shoot video content when you are out in the real estate field. You can also record on-screen presentation on tools such as ScreenFlow and Camtasia.
10. Interview an expert and do a podcast
Craft your content in the form of questions that your audience might ask, along with answers provided by an expert. Maybe you are the expert, or you can collaborate with a lender, home inspector or another agent on your team. You can even turn this interview-style content into a real estate podcast.
11. Write a glossary or FAQ
It isn’t just great for SEO. Reference pages such as glossaries are a type of evergreen content that will get the attention of real estate buyers and sellers now and years from now.
REFERNACE PAGES WILL GET THE ATTENTION OF REAL ESTATE BUYRS AND SELLERS NOW AND FOR YEARS.
Think of frequently asked questions, and start building a database of answers. What are the average days on the market? How long is the escrow period? What are the average closing costs?
12. Keep an eye out for more unusual content opportunities
Captions, ALT text, rollover text — these forms of microcontent can all be customized and add interest to your content. It will not only optimize your website — it will also make you appear very knowledgeable about your material.
Those are 12 real estate content ideas. You can find even more by just thinking about what attracts you eye when you’re reading content. Is it color, captions, sidebars, audio or video? They all provide you with clues for the next content marketing project you do that isn’t just a simple blog post.
The price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. It is calculated as the ratio of home prices to annual rental rates. So, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. That’s determined using the formula: $200,000 ÷ (12 x $1,000).
Price-to-Rent Ratio by City
Using U.S. Census data, SmartAsset calculated the price-to-rent ratio in every U.S. city with a population over 250,000. Applying that ratio, we also calculated a projected average home price for a house or apartment that rents for $1,000 in each market.
Note that actual home values will vary based on factors such as proximity to commercial centers, access to transit and home size—rentals tend to be smaller (and therefore less expensive) than for-sale properties, so these values may overestimate true market prices.
Renting vs. Buying
The cities with the highest price-to-rent ratios are San Francisco, Honolulu and New York City, which means that they are least friendly to buyers. San Fran’s price-rent ratio of 45.02 is reflective of a market that is highly unfavorable to buyers, although with rents soaring that may soon change.
In NYC, an apartment that rents for $1,000 should cost around $433,920. That, however, represents the entire market—all five boroughs. In Manhattan and Brooklyn, the numbers look even worse. Here are the price-to-rent ratios for the five New York boroughs individually (prices for $1,000 rental in parenthesis):
Manhattan – 49.98 ($599,760)
Brooklyn – 42.31 ($507,720)
Queens – 30.05 ($360,600)
The Bronx – 32.54 ($390,480)
Staten Island – 35.83 ($429,960)
Based on its ratio of rental costs to home values, Manhattan is probably the most expensive place to buy a home in the country. At the other end of the spectrum are places like Houston, San Antonio and Dallas. These Texan markets are very favorable to home-buyers, with ratios below the national average price-to-rent ratio of 18.92.
The city with the lowest ratio in the United States is Detroit, with a price-to-rent ratio of 5.60. That means that a $1,000 rental in Detroit should sell for just $67,200. Indeed, Wayne County, in which Detroit is located, is the best county for buyers in Michigan.
Historical Price-to-Rent Ratio
National and city price-to-rent ratios have risen and fallen over the years depending on the state of the housing market. In the years before the housing crisis, as the housing market heated up, the national ratio rose from 22.73 (in 2005) to 24.50 (in 2007). Then, however, after the real estate market turned, as home prices fell and rentals grew more expensive, the ratio began to fall, dipping below 20 in 2011, down to the current rate of 18.92.
Before the housing bubble and subsequent crisis, the average hovered somewhere around 15. That indicates that we are still in a time period that is more favorable to renters than buyers from a historical perspective.
What Price-to-Rent Ratio Says About Affordability
While the price-to-rent ratio is useful for comparing buying to renting, it does not reflect the overall affordability of buying or renting in a given market. In theory, a place where renting and buying are very expensive could have the same price-to-rent ratio as a place where both renting and buying are very cheap.
Take San Francisco for example. San Fran has the highest price-to-rent ratio in the country, which indicates that renting should be more affordable than buying in the City by the Bay. However, as we all know, rentals in San Francisco are very expensive. The city’s high price-rent ratio is only reflective of the fact that buying is relatively more expensive than renting. It does not saying anything about absolute affordability of either buying or renting in that city.
(for a $1,000 Rental)
|San Francisco, California||45.02||$540,240|
|New York, New York||36.16||$433,920|
|Los Angeles, California||34.69||$416,280|
|San Jose, California||34.56||$414,720|
|Long Beach, California||32.62||$391,440|
|San Diego, California||29.52||$354,240|
|Chula Vista, California||26.02||$312,240|
|Jersey City, New Jersey||24.75||$297,000|
|Santa Ana, California||23.97||$287,640|
|Colorado Springs, Colorado||22.02||$264,240|
|Raleigh, North Carolina||21.83||$261,960|
|Albuquerque, New Mexico||21.53||$258,360|
|Newark, New Jersey||20.85||$250,200|
|Greensboro, North Carolina||20.44||$245,280|
|Virginia Beach, Virginia||20.38||$244,560|
|New Orleans, Louisiana||19.97||$239,640|
|Oklahoma City, Oklahoma||19.17||$230,040|
|St. Paul, Minnesota||18.93||$227,160|
|Charlotte, North Carolina||18.12||$217,440|
|Kansas City, Missouri||16.92||$203,040|
|Las Vegas, Nevada||16.4||$196,800|
|St. Louis, Missouri||16.09||$193,080|
|Fort Wayne, Indiana||15.29||$183,480|
|El Paso, Texas||14.71||$176,520|
|Fort Worth, Texas||14.18||$170,160|
|San Antonio, Texas||13.96||$167,520|
|Corpus Christi, Texas||13.09||$157,080|
|Buffalo, New York||10.73||$128,760|
Top ten reasons why it is great to be an appraiser:
1. Dazzle your friends with your knowledge of external obsolescence.
2. Enjoy the wonderful world of rats, bats, and spiders.
3. Join the profession blamed for the collapse of the financial world.
4. See places in people’s houses that usually require a search warrant to access.
5. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.
6. Get a chance to irritate annoying real estate salespeople.
7. Walk around holding a clipboard just like “Skipper” at the Jiffy Lube.
8. Spend hours researching comps to justify the market value of a property you decided on when you pulled into the driveway.
9. Find out that some people really do hang black velveteen pictures of Elvis in their living room.
10. Be one of a handful of people who know that USPAP is not a medical term.”
By Kimberly Tanzer-Schneider
Chino Hills, CA •