Complete Real Estate Answers

Where Do Appraisal-Related Adjustments Come From?

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Appraisal:

By: McKissock

appraisal adjustmentsAppraisal-related adjustments are not just guesses by the appraiser or “rules of thumb.” Nor are they calculated numbers used to mathematically force a preconceived adjusted market value estimate in support of a value conclusion for the subject property. We tend to think of appraisal-related adjustments, as they pertain to residential appraisal assignments, as usually having to do with the sales comparison approach. However, it may become necessary to also provide cost approach adjustments and/or income approach rental adjustments that are not only necessary, but also appropriate, defensible, and reasonable.

Keep reading to learn about specific guidelines for adjustments, where appraisal adjustments actually come from, and a real-life example of adjustments in action.

Common adjustment factors

Adjustment factors that frequently occur with residential properties include:

  • Real property rights conveyed
  • Financing terms
  • Conditions of sale, such as motivation
  • Market conditions affecting the subject property
  • Location
  • Physical characteristics for both the land and improvements
  • Various types of depreciation
  • Use considerations, such as zoning, water and riparian rights, environmental issues, building codes, and flood zones
  • And other factors that may affect the market value of the subject property

What adjustments are not supposed to be used?

The July 26, 2016 Fannie Mae Selling Guide provides some guidance pertaining to what Fannie Mae expects an adjustment not to be. Fannie Mae’s position is summarized as follows:

Fannie Mae does not have specific limitations or guidelines associated with net or gross adjustments. The number and/or amount of the dollar adjustments must not be the sole determinant in the acceptability of a comparable. Adjustments must reflect the market’s reaction to the difference in the properties. Appraisers should analyze the market for competitive comparable sales and apply adjustments with no arbitrary limits on adjustment sizes.

Freddie Mac has stated that adjustments must be sufficiently discussed by the appraiser. Also, without statistical or paired sales analysis, adjustments tend to be subjective and imprecise. If appraisers make precise adjustments to a comparable sale or rent—1, 2, or 7 percent, for instance—sufficient data or discussion should be provided to support their analysis.

So, just where do appraisal-related adjustments come from?

Most, if not all, adjustments should come directly from the real estate market affecting the subject property. The Uniform Standards of Professional Appraisal Practice (USPAP) require appraiser familiarity with the market area where the subject property is located and competence to complete the required appraisal process as stipulated in USPAP. However, there are those occasional unique properties that require the calculation and/or extraction of reasonable adjustments through extraordinary means.

A real-life example

Several years ago, I and another appraiser had taken very separate approaches to determine the actual market value adjustment caused by the removal of 30 beautiful, mature fir trees (50–80 feet in height) bordering an entrance driveway into a 10-acre home site with a high-end, 5,000-square-foot, 3-year-old, excellent-quality residence located thereon.

The trees on the east side of the entrance driveway were thought to be located on the 10-acre tract by the 10-acre tract’s owner. The property owner of the contiguous 50-acre tract argued that the line of trees were on his property. Two independent surveyors were hired to survey the 10-acre property and agreed that the trees were actually on the 10-acre site.

One day, upset, and not believing the surveyors’ findings, the owner of the 50-acre property decided to fell all of the trees in dispute while his neighbor was at work, leaving the stumps, but having the felled trees hauled away the same day to a lumber mill.

The adjustment problem here was that, according to professional tree growers, the only trees that could be used as replacement trees could not be greater than 20–30 feet in height. Trees of greater height could not be safely transported or successfully transplanted.

The question for me and the other appraiser was how could we support the market value adjustment for the now missing trees when it was impossible to replace the removed trees with equal-in-size-and-value trees?

Further complicating the appraisal process was the reality that no comparable sales existed within the subject property’s market area that could be used to extract an adjustment using paired sales analysis.

As stated earlier, two separate adjustment calculation approaches were used. The other appraiser had concluded that the trees should be treated just like the forestry industry considered similar trees being harvested from a stand of similar-in-height-and-quality trees. He stated that the adjustment should be equal to the stumpage value of the trees that were hauled off to the mill and nothing more.

By contrast, I had concluded that the trees lining the entrance driveway had contributed substantially greater value to the property as mature, growing, beautiful fir trees lining the entrance to a very nice property. But I couldn’t prove that opinion using paired sales that did not exist in that market, or some sort of statistical data which might prove up my position. Unfortunately, such documented statistical data didn’t exist either.

What did exist were six very experienced real estate brokers within the subject market area who agreed to provide me with their independent broker’s price opinions of the 10-acre property hypothetically being sold with the previously tree-lined entrance contrasted with the value of the property as a stump-lined entrance. To that statistical average price difference, I added the cost of the removal of the stumps plus the cost of the planting of the much smaller replacement trees that several local horticultural arborists had agreed with the maximum height that could be transplanted being 20–30 feet in height.

The difference between the two approaches to calculating the necessary adjustment for each appraisal report was substantial. The matter was finally resolved by a civil court judge over one year later, with the decision being in favor of my non-textbook adjustment methodology.

Many years earlier, as a new appraiser, I was taught that generally it is better to remove thorny thistles from your garden bed using a dull hoe instead of your bare hands—when that is all that is available. This adjustment example reminds me of that sage advice.

Even with very creative approaches to extracting adjustments from the market, it is a best practice to always carefully study and then extract the necessary adjustments from the current real estate market affecting the subject property. It is time to set any left-over adjustment “rules-of-thumb” or “guesses” aside—forever!

Article by Robert Grafe.

 Robert Grafe is a Texas Certified General Real Estate Appraiser. Robert began his appraisal career on Kodiak Island Alaska in 1971 while the Owner/Broker of R.E. Grafe & Company Real Estate. He has served as a deputy county assessor/appraiser, as the chief appraiser for two national banks, and as the managing appraiser for Valuation Service Company. Robert has an extensive background in arguing both sides of county and state property tax appraisal appeals. He specializes in real property litigation support, valuing commercial properties in transition, and real property tax assessment consultation, with over 40 years of experience. Visit his website at valuationservicecompany.com or email reg@valuationservicecompany.com.

Commentary on the the U.S. Appraisal Market – Change is Coming

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John Mathis June 13, 2018

This article was first published in the Harbor View Advisors.

About John Martins

John is a Partner and Co-Founder of Harbor View Advisors. He brings over 20 years of experience as an investment banker, investor, equity research analyst and management consultant. John leads Harbor View’s Catalyst for Corporate Development practice where he helps clients fuel growth through acquired innovation. Prior to founding Harbor View, John was a Vice President in the Technology Research Group at Goldman, Sachs & Co. in New York. As a publishing analyst, John’s research spanned companies with a total market capitalization of $100 billion across five industries including payment processing, financial services, travel services, business process outsourcing and business intelligence. Companies under coverage included Accenture, Amdocs, Automatic Data Processing, ChoicePoint, EDS, First Data Corp, Fiserv, Hewitt Associates and Sabre. John’s experience also extends to the “buy-side” as a Partner at Camelot Capital, a hedge fund with targeted investments in public and private software and services companies. John led the investment decisions involving 80 companies in ten industries including business and financial services, payment processing, telecom services and security. Prior to joining Goldman, John worked as Principal for A.T. Kearney in Chicago where he managed global consulting engagements in the U.S., Australia, Brazil, Denmark, Sweden and the United Kingdom. John’s practice expertise included international supply chain, global sourcing, process reengineering and strategic planning. John was active in helping A.T. Kearney establish new offices in Australia and Brazil and facilitated the integration of a consulting firm acquisition in Denmark. A sample of his client engagements includes Visa, Sears, Rolls Royce and General Motors. John received a Bachelor of Arts degree from DePauw University and a Master of Business Administration (MBA) from The University of Chicago. Outside of Harbor View, John is an Ironman, part-time triathlete and a father of three.

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The Appraisal world is under intensifying pressure that will likely accelerate the pace of M&A consolidation.  We see the new “registry” component of the Dodd Frank rollback as another potential catalyst for consolidation in the fragmented appraiser and Appraisal Management Company (“AMC”) arenas.  In this note we highlight where the market is pricing transactions given recent notable deals, including CoreLogic’s high water mark of 13.5X EBITDA. While the larger captive AMCs appear to have satiated their acquisition appetite for now, we see newcomers gaining ground, particularly those with private equity backing, including LenderLive and Class Appraisals or public companies like Altisource (NASDAQ: ASPS) and Real Matters (TSE: REAL).  Further, the savvy independents are sure to make a play at accelerating growth through acquisition including Clear Capital, Dart Appraisal, LRES, Pro Teck and The William Fall Group.

Appraisals Rising

Beware of “small” rule changes

An executive at a leading MortageTech company once told me, “Beware of a seemingly small rule change in a highly regulated market like mortgages.  The impact can be deadly.”  The Appraisal world is facing one of these changes.  We see the new “registry” component of the Dodd Frank rollback as a potentially massive catalyst for consolidation in the fragmented appraiser and Appraisal Management Company (“AMC”) worlds.  The forces bashing this industry have been relentless:

  • Appraiser population demographics leading to supply “shocks”
  • Low margins and limited pricing power has advantaged only the largest providers
  • Domineering government sponsored enterprise rule changes (GSEs – Fannie, Freddie)
  • A fundamental change from a form-driven industry to more data-driven value proposition
  • Looming disruptive technology innovations from drones to mobility

As every AMC tries to navigate these headwinds, along comes the “registry” change whereby an incremental fee is about to hit every AMC’s panel of appraisers.  The larger providers are better positioned to absorb these new requirements and fees, however, basic math for the smaller AMCs suggests a new expense burden with no direct beneficial offset.  Further, each state is likely to implement differently, potentially creating a complex, expensive and risky compliance environment for the AMC industry.

Merger activity is heating up

Expect continued consolidation within the AMC world, and given the permanent economic impact of “registry”, there may be further pressure on sellers to realize the valuation multiples of recent transactions.  A review of recent AMC acquisitions suggests the market is pricing these assets between 6X – 8X EBITDA, with the exception of CoreLogic’s transactions as they were considerably above this range, continuing to set the market high water mark.  In our client work, the key valuation drivers have been scale, diversity of services and technology leverage.  See the table below for recent transactions:

Forces are driving greater scale and technology innovations

U.S. real estate assets are marked to market through a unique mechanism – the appraisal.  While much has been written about the aging population and brain drain among the 40,000+ U.S. residential and commercial property appraisers, little attention has focused on the key node in the system, the AMC.   The AMCs include large captives of loan, title or data service providers and more independent, often regional, companies.

Scale and technology forces will continue to define the landscape of players.  We expect the strong AMCs to strengthen further while the middle market is more likely to consolidate the smaller players.  We also expect technology advancement in key areas like mobility and analytics.  The GSE’s are likely to drive accelerated adoption of these technologies and more efficient approaches – further accelerating industry consolidation.

Expect consolidation to pick up in the middle market

The larger captive AMCs appear to have satiated their acquisition appetite for now and we don’t expect to see much from CoreLogic, ServiceLink or First American in the near term.  However, we see newcomers gaining ground, particularly those with private equity backing, including LenderLive and Class Appraisals or public companies like Altisource (NASDAQ: ASPS) and Real Matters (TSE: REAL).  Further, the savvy independents are sure to make a play at accelerating growth through acquisition including Dart Appraisal, LRES, The William Fall Group and Pro Teck. We have summarized the AMC market segments below:

No, Dodd-Frank was neither repealed nor gutted.

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Editor’s Note:

This report is part of the Series on Financial Markets and Regulation and was produced by the Brookings Center on Regulation and Markets.

The largest legal change to financial regulation since passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 just occurred. This new law neither repeals nor replaces Dodd-Frank as House Speaker Ryan claimed nor does it ‘gut Dodd-Frank’ as some of its opponents argue. Here are five false narratives promoted about the new bill, along with a surprising ramification of what passage of this legislation likely means: Dodd-Frank is here to stay.

False narratives:

1. The bill repeals and replaced Dodd Frank.

To the contrary, the legislation leaves intact the core Dodd-Frank framework: increasingly tougher regulation on larger banks, new authority and discretion for the Federal Reserve, enhanced authority for the federal government to unwind a failed financial institution, and the creation of new federal regulators, including the Consumer Financial Protection Bureau (CFPB). The legislation itself does not touch the CFPB, a key requirement for Democratic congressional support.

The House of Representatives did consider a true repeal and replace, the CHOICE Act, which passed the House with no bipartisan support in June 2017. The core of that legislation was rejected by the Senate, which reached a different bipartisan deal that attracted the support of 17 Democratic Senators.[1] The Senate bill passed verbatim by the House, where almost all Republicans joined 33 Democrats to pass this law. Congress rejected the CHOICE Act’s repeal and replace and instead embraced the Senate’s modifications of existing law.

2. This law ‘guts’ Dodd-Frank.

The major change cited in this argument is the increase of the so-called ‘Bank SIFI’ threshold, which increases the size at which a bank is subject to enhanced regulation by the Federal Reserve. Dodd-Frank set this line at $50 billion, unindexed for inflation or economic growth. The law raises this figure to $250 billion, with an important caveat that the Federal Reserve retains the discretion to apply enhanced regulatory standards to any specific bank greater than $100 billion, if the Fed feels that is warranted.

Dodd-Frank attempts a difficult balancing act in regulating large banks. The idea is to internalize the negative externalities that a large, complex financial institution creates through the imposition of higher regulatory scrutiny, specifically through higher capital standards and other forms of enhanced regulation. This was Dodd-Frank’s solution to the debate raging at the time, between nationalizing and breaking up the largest banks or allowing the market to determine proper bank size. Dodd-Frank delegated, largely to the Federal Reserve, the important task of how to set the scales to achieve this balancing act. The new legislation goes further down this path, granting the Fed greater discretion in how to set those scales for institutions between $100 and $250 billion, including providing the option of essentially no penalty for size. Congress is changing the weights on the scale, and is empowering the Fed even more, but it is continues the Dodd-Frank structure.

3. Major new lending is coming to individuals and small businesses.

This is the argument put forth by many in Congress and within the banking industry. As the Independent Community Bankers Association argues: “The new law will spur greater consumer access to credit and business lending in Main Street communities nationwide.” There is no direct provision in this law that accomplishes this and the argument that reduced regulatory costs for a subset of banks will translate into more lending as opposed to greater profits is just speculation. Bank profits just reached a record $56 billion last quarter, and small business lending by community banks is already growing twice as fast as that by large banks, according to the FDIC. The new tax law and this new bank de-regulation law will continue to help boost profits, what trickles down in lending is less clear.

Consider two provisions of the new law: the repeal of Truth-In-Lending Act protections for certain mortgages on mobile homes, and the exemption of small banks and mortgage lenders from enhanced reporting of data to detect racial discrimination (known as HMDA+).

The mobile home provision does not even touch banks, big or small. Instead it exempts manufactured home retailers and their employees from TILA requirements, ultimately perpetuating “the conflicts of interest and steering that plague this industry and allow lenders to pass additional costs on to consumers,” according to the Center for Responsible Lending.  Mobile home buyers will have less visibility into true costs, making it harder to shop for the best deal. An argument that boils down to the extra profit generated by steering consumers to products not allowed under Truth-In-Lending, may produce more marginal mobile home purchases, is weak.

The second provision targets banks that originate between 100 and 500 mortgages a year, exempting them from collecting enhanced data used to detect predatory and racially discriminatory mortgage lending. Those banks originate only around one out of seven mortgages and are competing with other national mortgage lenders who are subject to this data-reporting requirement. In the scope of a nationally competitive mortgage origination business, with far greater costs and inefficiencies than this additional data, it is hard to see how any savings will translate to borrowers, or how additional mortgages will be made. However, it could allow for greater undetected steering of minorities to higher cost mortgages – which was prevalent during the housing boom – as well as create more false positives where traditional information show discrimination but enhanced data would demonstrate otherwise.

These two provisions are both bad policy and unlikely to spur greater overall lending. Instead, they are likely to generate higher profits for the providers of credit and potentially worse terms for borrowers.

4. This law fulfills President’s Trump promise to ‘do a big number’ on Dodd-Frank.

A bill signing ceremony is a natural moment for a President to say he has delivered on a campaign promise. The lack of major legislative achievements for President Trump and the Republican Congress only compound the pressure to argue that this bill does more than it actually does. This is Congress’s likely only bite at the apple on financial reform.  Dodd-Frank survives Trump’s first two years.

To the Trump Administration’s credit, its thinking has evolved to see the benefits to major components of Dodd-Frank. For example, the Treasury Department’s report on Dodd-Frank’s failure resolution regime (Title II of Dodd-Frank) recommended keeping it with only minor modifications. This stopped efforts in Congress to repeal Title II, which remains in place.

Ultimately, the success of the Dodd-Frank framework depends on the prudence and judgment of the financial regulators who are generally given substantial authority and discretion in applying the Dodd-Frank framework. As Trump finally assembles his regulatory team – the last major piece of which was the Senate’s confirmation of the new FDIC Chair McWilliams on the same day the new law was signed – the efficacy of Dodd-Frank under a new regime will be tested.

Trump may still deliver on his promise, not by legislation, but by the actions of financial regulators he appoints. Appointing his top budget staffer, Mick Mulvaney, as Acting Director of the Consumer Financial Protection Bureau, has resulted in a series of major rollbacks and revisions of key rules and regulations to protect consumers and prevent many of the abuses that were at the heart of the financial crisis. If the CFPB is the cop on the beat patrolling against unscrupulous lending, Mulvaney, as the new chief of police is ordering the force to take a nap.

5. The legislation meaningfully addresses #EquifaxScandal.

The Equifax scandal broke during consideration of the legislation, pressuring Congress to do something. Unfortunately, the legislation does not address the fundamental problems inherent in the credit reporting system, including that 1 out of every 4 readers of this piece has a material error on their credit report. Congress settled on a small provision regarding the right to freeze credit reports without cost, while also providing Equifax and the other bureaus a major victory by limiting their liability for certain lawsuits regarding credit monitoring services they provided.

In financial regulation, scandals are often the drivers of legislation to fix problems both exposed from the scandal and long festering. This bill does neither for credit reporting agencies nor for other recent financial scandals, such as the Wells Fargo fake account scandal.

Key takeaways from the new financial law

Despite Republican control of Congress and the White House, Dodd-Frank’s structure remains largely intact. If this legislation is the largest change made to Dodd-Frank during Trump’s time in office, then Dodd-Frank will have survived its first major political test. The failure of the Republican Congress to alter significantly Dodd-Frank does not mean that it will remain effective. Personnel changes are a far greater threat to Dodd-Frank’s success than this new law. And just because the law’s impacts are not likely to threaten financial stability does not mean that they are not problematic and will not result in significant problems for certain borrowers (check back for scandals where the CFPB pulled back or in mobile homes in a few years).

Finally, it is important to note that even for those who disagree with many provisions of the new law, there are some that are positive. The law changes a definition by the Federal Reserve on the treatment of certain municipal debt to allow it to count for a regulatory requirement for greater liquidity. It also creates a reasonable parity with the treatment of corporate debt, striking a better balance for the financial system and ultimately allocating more capital to municipal governments. Hopefully they will use to build more infrastructure as it has become clear that is another campaign promise that Trump will not fulfill this year.

 

Original article with original foot notes can be found here

 

This image not mine. Source not known, from internet.

CONDUCT:

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CONDUCT:

An appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.

An appraiser:

• must not perform an assignment with bias;

• must not advocate the cause or interest of any party or issue;

• must not accept an assignment that includes the reporting of predetermined opinions and conclusions;

• must not misrepresent his or her role when providing valuation services that are outside of appraisal practice;11

• must not communicate assignment results with the intent to mislead or to defraud;

• must not use or communicate a report or assignment results known by the appraiser to be misleading or fraudulent;

• must not knowingly permit an employee or other person to communicate a report or assignment results that are misleading or fraudulent;

• must not use or rely on unsupported conclusions relating to characteristics such as race, color, religion, national origin, gender, marital status, familial status, age, receipt of public assistance income, handicap, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value;

• must not engage in criminal conduct;

• must not willfully or knowingly violate the requirements of the RECORD KEEPING RULE; and

• must not perform an assignment in a grossly negligent manner.

The Home Buying Process

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Today we feature our guest blogger, Bret Engle article.

Image courtesy of Pixabay

Many first-time home buyers consider purchasing a fixer-upper. While you may think a fixer-upper is an inexpensive way into your first home, or a fast track to easy money, it could turn into a money pit. Take these points into consideration so you can make a smart choice.

The home-buying process. Before you do anything else, you need to know the ins and outs of the home-buying process. CNN explains the basic steps:

Save for a down payment. Typically this is around 20 percent of the purchase price.

  • Know your credit score. The better your credit rating, the better your chance of getting a loan and securing a good interest rate.
  • Talk with your bank. Your lender can tell you how much you can borrow.
  • Explore the market. Find out what’s available in your price range.

Special funding. Depending on your situation, you may qualify for special loans to buy a fixer-upper. There are government-backed home-renovation loans available through Fannie Mae and the Federal Housing Administration. These loans are determined in part by your credit rating, along with other factors affecting eligibility.

House hunting. You need to research the homes available in your area, becoming familiar with all the local market offers. You should explore what is in your price range, decide if you can afford repairs, and think about whether it’s appropriate to invest your time, money, and energy in a fixer-upper. For instance, homes for sale in Stamford, CT have a median listing price of $570,000.

As Bob Vila explains, if you’re pooling all your funds for a down payment, it may not be reasonable to consider a home you can’t afford to fix right away. Some repairs are cosmetic, and you can live on-site and do the work yourself. In that case, you can probably take your time and make repairs during evenings and weekends. If a house has structural issues or needs major renovations, consider where you will live and whether you have the skills to do the work. When determining repairs, some items may be difficult for a layperson to evaluate. Before you fall in love with property, some experts note it’s wise to pay for appropriate inspections, which may mean hiring more than the traditional certified home inspector. There are specialized inspections for roofs, sewers, pests, and geological issues, and you might even be able to get the seller to pay for them.

Smart decisions. If you elect to take the jump into purchasing a fixer-upper home, you’ll need to invest in appropriate tools and materials. You won’t want to pinch pennies by buying poor-quality items because good tools such as drills, sanders, and jigsaws make your work much easier. Better quality equates to better efficiency and a lighter workload on your part. You also need to prioritize properly. For instance, HGTV notes you want to make any major repairs to kitchens and bathrooms first because those rooms are of high use and value.

Sell or stay? This is a big question, and there are many determining factors. One of the biggest factors in whether to flip your fixer-upper is the expense involved in your renovations. If quick, cosmetic repairs are all that’s needed and a home is located in a desirable location, you can potentially turn a profit flipping a home. However, expensive repairs, a downturn in the market, or a location that isn’t so marketable can all factor into whether your investment will pay off. Some professionals warn that for many first-time home buyers who purchase fixer-uppers, bankruptcy can be the outcome instead of a tidy profit. Weigh the pros and cons carefully before your dream of flipping a fixer-upper becomes a financial nightmare!

First-time fixer-upper? If you’re puzzling over whether to purchase a fixer-upper as your first home, it’s wise to be cautious. Understand the buying process and evaluate whether you have the skills and money to make it worthwhile. Weigh the many factors involved if you’re considering attempting to flip the property. Careful considerations are the key to making a smart decision!

Bret Engle Article

If you need help with design for your project, or with buying/selling your home or knowing the value of your home fill up the form below.

How to Share Posts From the Instagram Feed to Stories

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What would you say? Have you used this yet? What do you think about Buffer postings?

Instagram has released a new way for users to easily share feed posts to stories.

More than 300 million users now use Instagram stories daily and this update will enable them to share any post from their Instagram feed directly to stories.

In the feature’s launch blog post Instagram explained:

When you come across something in feed that inspires you — like a post from a friend raising money for a cause or a photo of a new design from your favorite brand — you can now quickly share that post as a sticker to your story for your friends and followers to see.

How to share feed posts to Instagram Stories

To share feed posts to stories:

  1.  Tap the paper airplane button below the post (like you would to send a direct message)
  2. You’ll then see an option on the following menu to “Create a story with this post”
  3. Tap it to see the feed post as a sticker with a customized background ready to share to your story. You can move, resize or rotate the photo or video. You can also use drawing tools or add text and stickers.

Any post shared to a story will include a link back to the original post and include the original poster’s username.

Only posts from public Instagram accounts can be shared to stories. If you have a public account and would like to opt-out from letting people share your posts to stories, you can do so within Instagram’s settings.

In a recent episode of The Science of Social Media, hosts, Hailley and Brian discussed this update (around the 4:45 mark in the below audio):

Want to stay up-to-date with the latest social media news and views? Subscribe on iTunes or Google Play.

How brands can use this feature

Many brands and influencers already use stories as a way to drive attention to their latest feed and promote their latest posts. This update will be a welcome improvement to this process by allowing users to directly link to their latest feed posts, rather than taking a screenshot of a post and manually adding it to stories.

As Brian mentions in the podcast, this could enable brands to use stories as a way to cross-promote their feed posts to their audience on stories — people who may have potentially missed the post in the feed.

“One of the reasons we love stories so much is that it can be used as cross-promote content and now users will be able to go from stories directly to your feed,” he explained.

Hailley also drew comparisons between this feature and Twitter’s quote tweet functionality, where users can share content from the feed, but also add their own thoughts and context around it.

This is another exciting update from Instagram — following the share to stories and live video chat announcements at F8 — and it helps to better connect the feed to stories as well as providing a way for users to re-share some of their favorite Instagram content in a more public way than sharing with a couple of friends via a direct message.

What do you think to this release from Instagram? Will it change how you use Instagram stories for your business? Let us know in the comments 💬

Original article is here

 

 

Voice of Appraisal E200 PARATRICE LOST?!?!

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One Real Appraisal and Six Ways to Support One Adjustment

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Full original article can be found hereAppraisers and real estate agents often ask what adjustments I use and/or how I support my adjustments.  The answer is that most properties require a different adjustment that is specific to its market (e.g. size, location, condition, etc.) and there are many different ways to support any individual adjustment.  No one method for supporting adjustments is perfect.  Appraisers should select the method or methods that will produce credible results for the given assignment and available data.

  1. Paired Sales – Paired sales are a cornerstone of textbook appraisals, but textbook cases of paired sales rarely occur in practice. In a common textbook scenario, paired sales are two sales that are the same in every way except the one factor for which the appraiser is trying to estimate an adjustment. For this reason, it is easy for appraisers to forget that a paired sale can have other differences (although it is important that the differences are minimal and that adjustments for the differences can be supported). In this assignment, my grid included four sales that had very little difference from one another except for GLA. After adjusting for a couple of minor factors, the paired sales all suggested an adjustment of $51 and $60 per square foot for GLA.
  2. Simple Linear Regression – I’ve blogged in the past about supporting adjustments, particularly GLA, using simple linear regression. Linear regression is basically analyzing trends in data.  For this assignment, simple linear regression suggests $53 per square foot when comparing sales price to GLA. Significant variation exists among the data of this sample, but the datum points are spread evenly along the entire regression line suggesting that the indicator is not being skewed by a small subset of outliers. It is okay if the properties in the sample have differences, however it is important to make sure to filter out differences that would skew toward one end of the range or the other. For example, if a larger site size also tends to include a larger home, then it would be important to make sure that the homes in the sample all have similar site sizes or the adjustment could be falsely overstated. Also, it is helpful to the outcome of the regression analysis that the subject property is in similar condition to the majority of the sales in the sample. The following chart shows the linear regression outcome in this appraisal.Simple Linear Regression Support Adjustment
  3. Grouped Data Analysis – This method is closely related to simple linear regression and is essentially many paired sales representing a fast way to estimate an adjustment simply by sorting comparable sales. This can be done using quick searches on the local multiple listing service or using data exported to a spreadsheet. But remember that the same factors that can skew linear regression will also skew grouped data analysis. For best results, it is important to sort out all of the features that might distort the results without sorting to the point where the sample sizes are small and wildly varied. For this assignment, I filtered out all ranch sales in the past two years with a lot size of 7,000 to 9,999 square feet, that feature two baths and three bedrooms, and that were built within ten years of the subject. Sales of homes meeting these criteria between 1,000 and 1,199 square feet have an average of 1,128 square feet and an average sale price of $212,637. Sales of homes meeting these criteria between 1,200 square feet and 1,299 square feet have an average of 1,253 square feet and an average sale price of $220,055. The difference between the average of these two sets is $7,418 and 125 square feet or $59 per square foot. The median could also be compared as well to provide another indicator that is less likely to be skewed by outliers.
  4. Depreciated Cost – The cost approach value in this assignment is consistent with values suggested by recent comparable sales. This suggests that the cost approach is likely valid and could be used as a way to test reasonableness or support adjustments. The subject’s original cost is estimated at $108 per square foot and the depreciated cost is estimated at $81 per square foot. A simple depreciated cost adjustment might not be a good adjustment to apply to comparable sales. This is because the depreciated cost is a straight-line measure from zero square feet all the way to the total area including the kitchen, bath, mechanical, and everything else in the house. For this adjustment, we are just looking for the value difference from a similar-sized comparable to the subject. To obtain this adjustment using the cost approach, I ran a cost estimate for the smallest comparable sale and another cost estimate for the largest comparable sale with no physical changes for anything other than living area (e.g. room count, garage, quality, and all other factors kept equal). The original cost difference between the low and the high came out to $79.53 per square foot. If this number is depreciated based on the cost approach in the appraisal, a reasonable adjustment of $60 per square foot of GLA is estimated.
  5. Income Approach – The income approach was not performed for this appraisal assignment, but if it had been, the income approach could have been used to support another indicator for the GLA adjustment. One way the income approach could be used to support a GLA adjustment is by taking the estimated loss or gain in rent from an additional square foot of living area (can be estimated using any of the above approaches except for cost) and apply a Gross Rent Multiplier (GRM). Critical to this approach is that the multiplier and rent estimates are market derived and that rent might be a consideration for the typical buyer.
  6. Sensitivity Analysis – This method is closely related to paired sales and I think it works best for secondary or tertiary support for an adjustment or helping to reconcile what adjustment is most effective. However, this method is not very useful if adjustments for other comparable sale differences are not accurate. Once all of the comparable sales have been placed side-by-side in a comparison grid and adjusted for all other factors using market derived adjustments, the appraiser can test different GLA adjustments to see what adjustment produces the tightest range of adjusted value indicators. If the appraiser is unsure by simply looking at the data, the Coefficient of Variation (CV) can be applied to each set of adjusted indicators to mathematically test what adjustment is producing the tightest range. The lower the CV, the better the adjustment is working within this sample of sales. Here is a link to a free CV calculator. Just enter your adjusted indicators separated by commas and press calculate. Then test another adjustment and repeat with the calculator. An appraiser could also set up a formula using the Worksheet function in a la mode Total to instantly provide the Coefficient of Variation. For this appraisal, sensitivity analysis helped me reconcile that the simple linear regression adjustment is most well-supported adjustment because it has the lowest CV as seen in the following table.

Paired Sales

Simple Linear Regression

Grouped Data

Depreciated Cost
Indicated GLA Adjustment

$51 or $60

$53

$59

$60
CV

0.00648 or 0.0082

0.00538

0.00734

\0.0082

None of the above methods for supporting an adjustment are without limitations and there are many more ways an appraiser could support an adjustment.  Although this is an example where data sets are particularly plentiful, the example shows that information does exist outside of textbooks for supporting adjustments; and when multiple approaches are combined and reconciled, a strong case for the appraiser’s conclusion can be made.  An appraiser won’t always need to go this far to support one adjustment, but if that one adjustment is crucial to the outcome of the appraisal or the appraiser believes they will be challenged on this adjustment, then the appraiser should expand and explore multiple methods for support.

By Gary F. Kristensen, SRA, IFA, AGA

Full original article can be found here

Tenant’s responsibilities/Landlord’s rights

NanaGSmith Leave a comment

Note: These lists are not ALL of the rights and responsibilities of landlord and tenant.

What are some rights and responsibilities of the landlord and tenant?

Tenant’s responsibilities/Landlord’s rights:

    • Pay the rent on time.

Must be paid by midnight on the ninth day after the day it is due, or the landlord may start legal proceedings to evict the tenant.

  • Keep the apartment and the surrounding area clean and in good condition.
  • Keep noise to a level that will not disturb your neighbors.
  • Repair any damage occurring to the apartment through the fault of the tenant, family members or guests. Notify landlord at once of major damage.
  • Give the landlord permission to enter the apartment at reasonable times and with advance notice to inspect it or to make any necessary repairs.
  • Notify the landlord of any anticipated prolonged absence from the apartment so he or she can keep an eye on things.
  • When moving out, give landlord proper advance notice. Be sure that the apartment is in the same condition as when the tenant moved in and return the key to the landlord promptly.
  • Notify the landlord immediately if the apartment needs repair through no fault of the tenant.
  • For further information view the publication Rights and Responsibilities of Landlords and Tenants, JDP-HM-31 or (en español JDP-HM-31S)

Landlord’s responsibilities/Tenant’s rights:

  • A clean apartment when the tenant moves in;
  • Clean common areas (hallways, stairs, yards, entryways);
  • Well lit hallways and entryways; and,
  • Properly working plumbing and heating (both hot and cold running water).

Original Source

A Typical Work Day For An Appraiser

NanaGSmith Leave a comment

complete real estate answers, CREA, completeREAAppraisers are normally experts at analyzing real estate markets and property value, but appraisers who work from a home-based office or run their own small business may not be familiar with what it takes to manage an office.

It can often be time consuming and confusing, requiring a large chunk of time taken out of a work day (assuming one is working a normal 10-hour day), just trying to handle the small tedious tasks, such as organizing orders, calendar management, and keeping track of submitted orders to AMC companies, and making sure you are being compensated in time, if at all!

Even dealing with some of the AMC companies, is such a tedious task. Between keeping tabs on payment, receiving new orders, updating current orders, and submitting completed orders, often has me scrambling everywhere. Heaven forbid I should have to make an actual phone call to these AMC’s, will have me in a rage between being placed on hold from anywhere between 10-15 minutes, or even trying to communicate the purpose of my phone call (many of these AMC places outsource their staff to foreign countries, and the cultural gap in communication is significant!).

Ah, and I would be remised not to point out the ever so eloquent, Engagement Letters! Reading through one of these letters, often reminds me of those Snickers commercial they played during the Super Bowl a few years back…”Not going anywhere for a while?”.

If I have spent 1-2 hours trying to get through one of these letters would be a generous summation, but often times, that is not the case. Not only must you be careful to comply with USPAP requirements (this is always a given), but you must also be very careful to comply, understand and follow all the various AMC requirements/guidelines as well, and when you are dealing with multiple AMC’s, this can often times get very tortuous.

Every morning I wake up and ponder on how I can make my job/career more attractive, while maintaining a higher quality level, but spend less time on the menial tasks and ultimately make my life more rewarding and less stress full.

My colleague appraisers! Do you have any resolutions for me?

Thus far, what I have come up with is this:

compete real estate answers, CREA, CompteREAPreparation – be ready to handle the work load for the day. Ensuring that all technical infrastructures are in place and adequate (computers, software, phone, internet connections, etc..), which I have come to learn in my years in this business that you have to spend a good portion of your earnings on the technological portion in order to make the business work for you! I have to now think about office space that will allow me the ability to handle the increase in volume that I have been experiencing in just the past few months. Working from home has become a bit of a challenge, due to lack of space and infrastructure needs.

CopleteREA, CREA, Compete real estate ansersOrganization – Staying on top of time management; a) make sure to do your due diligence before going out on the field for inspections (navigate what your day is going to look like when driving between properties, keeping in mind time of day and any traffic concerns), b) Organize your orders mindfully, which often times will require a call to the MC explaining the situation, and you will be quite surprised to hear that they are often times willing to accommodate you.

compete real esate asnwers, CREA, CompeteREAAdministrative Support – A good assistant can make your life so much easier. They help you get more of the important work done, such as, help with calendar management, communicating with the various AMC’s, helping to maintain your high work standards, and also helping to alleviate some of the stress involved in this business.

So to recap; Preparation, Organization, Administrative Support and Marketing, are all crucial elements for a small business to thrive.

I have not yet delved into the marketing aspects on my blog site…..stay tuned for more to come…

Call or email Nana Smith with any questions:

NanaGsmith@gmail.com

203-858-6727

…

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