Growth and Development

For the next 30 days I have decided to keep a log of my appraisal
work day. Something like a  dairy.CREA, CompleteREA, Real Estate
I will be keeping a log of the good things that happened that day and will log what bad
things happened that day.

After 30 days I will compare what the good and bad things were. How many good things and
bad things happened during this 30 day period of time? I will notice whether
there are repetitious good and bad occurrences; if so I will take notice of
what they are and I will question why they occurred.

Hopefully, I can go on and do a quarter of the year as a next step.

My objective with this is to help with the growth and development of my business.

I argue YOU too to join me, partner with me in this endeavor. At the end of the
month we can compare all “good” and all “bad” which happened, brainstorm
together on how to eliminate the “bad” and have better “good” for the rest of
our business careers and lives.

Is it possible? Is it viable? I do not know, but I would like to try.

…and yes, I will be one day behind, so that the day should have passed, in
order to evaluate the particulars my business day.

Follow my blog to cheer up! Life is easier when one has a partner.

Nana
_______

AMC Appraisal Perspective Through Rhetorical Misdirection

Spot on. Unfortunately this is about to get even more surreal when Fannie rolls out their big data Collateral Underwriter Tool. Again, if this data is so awesome, why won’t they share it with the appraisers?

FNMAFanniemae, completeREA, CREA, Nana Smith, 203-212-3788

Part below is a blog from the MatrixBlog of MIller Samuel Inc. Real Estate Appraisers & Consulting, I came across this morning once my frustration with AMCs companies came to climax!

——

“As much as I think I held their attention for the entire hour allotted, my presentation fell short of getting audience adrenaline pumping like the Jordan Petkovsky, the Chief Appraiser of a TSI Appraisal, a large national AMC and affiliated with Quicken Loans. I still wonder how beneficial this public relations could be by talking to the industry like a politician – as if residential appraisers were clueless to the “incredible benefit” that AMCs provide our industry.

Here are a few of the questions (paraphrased) posed to an audience comprised of heavily experienced residential and commercial appraisers:

Q: “I realize there is friction between AMCs and appraisers. What has to happen to solve this problem?”
A: Someone in audience: “Someone has to die” followed by a burst of laughter from the entire room.

Q: “We spend millions on powerful analytics. Wouldn’t it be great for appraisers to get their hands on this technology?” (repeated 2 more times slowly for effect).”
A: Someone answered: “You have to spend millions on technology because the appraisal quality is so poor you need to analyze the markets yourself.”

Q: “How do we attract new appraisers into the business?”
A: My answer “Until appraisers are fairly compensated when banks are made to be financially incentivized to require credible reports, nothing will change.”

Q: “How do you think banks feel about the reliability of appraisals today? They don’t feel the values are reliable.”
A: My answer “Because AMCs pay ±half the market rate, they can only mostly attract form-fillers (aka “corner-cutters”). They don’t represent the good appraisers in the appraisal industry.”

Q: “We focus a tremendous amount of effort on regulatory compliance on behalf of banks and boy are they demanding! We even have a full time position that handles the compliance issues.”
A: My comment – that’s a recurring mantra from the AMC industry as a scare tactic to keep banks from returning to in-house appraisal departments. Prior to 2006 boom and bust cycle and the explosion of mortgage brokers with an inherent conflict of interest as orderers of appraisals, the profession was pretty good at providing reliable value estimates. The unusually large demands by regulators (if this is really true and I have serious doubts) is because the AMC appraisal quality is generally poor. If bank appraisal quality was excellent, I don’t believe there would be a lot of regulatory inquiries besides periodic audits.

What I found troubling with his presentation – and I have to give him credit for walking into the lion’s den – is how the conversation was framed in such an AMC-centric, self-absorbed way. I keep hearing this story pushed by the AMC industry: The destruction of the modern appraisal industry was the fault of a few “bad actors” during the boom that used appraisal trainees to crank out their reports. That’s incredibly out of context and a few “bad actors” isn’t the only reason HVCC was created – which was clearly inferred.

Back during the boom, banks closed their in-house appraisal centers because they came to view them as “cost centers” since risk was eliminated through financial engineering – plus mortgage brokers accounted for 2/3 of the mortgage volume. Mortgage brokers only got paid when the loan closed, so guess what kind of appraisers were selected? Those who were more likely to hit the number – they were usually not selected on the basis of quality unless the bank mandated their use. Banks were forced to expand their reliance on AMCs after the financial crisis because the majority of their relationships with appraisers had been removed during the bubble – the mortgage brokerage industry imploded and banks weren’t interested in re-opening appraisal departments because they don’t generate short term revenue.

The speaker spent a lot of time talking like a politician – “we all have to work together to solve this problem” “appraisers have to invest in technology.” When asked whether his firm had an “AVM”, he responded almost too quickly with “No” and then added “but you should see our analytics!”

The residential appraisers in the audience were largely seething after the presentation based on the conversations I heard or joined with afterwords.

It’s really sad that appraisers don’t have a real voice in our future. We’ve never had the money to sway policy creation and we can’t prevent the re-write of history.

See full article bellow

MatrixBlog

———

 

Phone: +1 203 858 6727

Office: +1 203 212 3788

Complete Real Estate Answers, Inc.
27 Fifth Street, 2nd Floor, Stamford CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

C.R.E.A. – comment using this form to be in touch :

 

 

 

 

 

Cap Rates vs Yield Rates in the Income Approach

synopsis, crea, completerea, nana smith stamford ct

Synopsis  In the income approach analysis of real property value, there is often confusion as to which rates to use and what these rates represent. In the direct capitalization approach, the cap rate is merely the ratio of stabilized net operating income to sales price – i.e. the property dividend rate.

In discounted cash flow analyses or other yield capitalization techniques, future cash flows are discounted by use of a discount rate which is a true yield rate – which can be directly compared to other before tax, unleveraged return rates such as stock and bond yields, etc.

discussion, crea, competerea, compete real estate, answers, nana smithDiscussion The premise of the Income Approach is that the value of a property is the present value of future benefits of property ownership. All of the Income Approach techniques discount or translate, in some fashion, future net cash flows to a current property value. This is usually done on a before tax, before financing basis and usually deals with the net income stream from the real estate – before financing charges, depreciation or taxes – what appraisers call Net Operating Income (NOI).

dirrect capitalizationDirect capitalization is simply applying an appropriate overall capitalization rate to next year’s stabilized NOI. This cap rate is the property dividend rate or, more popularly, simply the ratio of next year’s NOI to sales price – usually supported by direct market evidence gleaned from other market sales.

cap rate, completerea, CREA, compete real estate asnwers, nana smith, appraiser, stamford, ctProperties that have high demand and / or low risk have cap rates in the low end of the range. Properties that have high risk and / or low demand have cap rates in the high end of the range. Put another way, savvy investors try to pay high cap rates (i.e. relatively low price relative to NOI) while retail type buyers for popular properties have to pay low cap rates (i.e. demand bids the price up for a given income stream).

The strength of Direct Capitalization is its simplicity and familiarity with market players – particularly for smaller commercial properties. A variation of this approach is also used in small rented residential properties – where a gross rent multiplier is applied to stabilized rents. The gross rent multiplier is simply the sales price divided by next years’ stabilized gross rents. Obviously, to be used effectively, the appraiser must know the terms of the lease – i.e. who pays what and also what the likely occupancy will be next year.

Loan Real Estate Stocks
Cap/Dividend Mortgage Constant NOI/Sales Price 1/PE Ratio
Yield/Discount Rate Interest Rate Discount Rate Dividend rate + Price Growth Rate

In other words, the discount rate is the property yield rate and includes a component related to annual income (read an annual dividend with stocks or, alternatively, NOI with real estate) and appreciation at resale (future stock price with stocks or, alternatively, future sales / reversion price of the property at the end of the investment term with real estate). The above discussion reflects property yields that are appropriate for the overall property cash flows. Obviously, a similar analysis could be done for only the equity component of future cash flows (i.e. NOI less debt service) – the resulting present value of the equity would then be added to the mortgage amount to arrive at an indicated property value.

inally, support for cap rates is usually direct market evidence from other sales and these market cap rates are not adjusted but simply used to bracket or select an appropriate cap rate for the subject property. Remember, next year’s NOI is usually used for the subject and therefore should be used on the comparables.

Support for yield rates is usually from market indices such as published yield rates on real estate from surveys of national lenders or from investor interviews or from yield rates required from other alternative investment options.

This article presented By Thomas A. Steitler, MAI

—-

Phone: +1 203 858 6727

Office: +1 203 212 3788

Complete Real Estate Answers, Inc.
27 Fifth Street, 2nd Floor, Stamford CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

C.R.E.A. – comment using this form to be in touch :

 

USPAP Standard 1-6

 

Standards Rule 1-6

In developing a real property appraisal, an appraiser must:

(a)

reconcile the quality and quantity of data available and analyzed within the approaches used; and

(b)

reconcile the applicability or suitability of the approaches used to arrive at the value conclusion(s).

Comment: See the Comments to Standards Rules 2-2(a)(viii), 2-2(b)(viii), and 2-2(c)viii) for corresponding reporting requirements.


5.

See Statement on Appraisal Standards No. 9 (SMT-9), Identification of Intended Use and Intended Users.

6.

See Statement on Appraisal Standards No. 9 (SMT-9), Identification of Intended Use and Intended Users.

7.

See Advisory Opinion 19, Unacceptable Assignment Conditions in Real Property Appraisal Assignments. References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

8.

See Statement on Appraisal Standards No. 6, Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions. See also Advisory Opinion 7, Marketing Time Opinions, and Advisory Opinion 22, Scope of Work in Market Value Appraisal Assignments, Real Property. References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

9.

See Statement on Appraisal Standards No. 3, Retrospective Value Opinions, and Statement on Appraisal Standards No. 4, Prospective Value Opinions.

10.

See Advisory Opinion 2, Inspection of Subject Property, and Advisory Opinion 23, Identifying the Relevant Characteristics of the Subject Property of a Real Property Appraisal Assignment. References to the Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

11.

See Advisory Opinion 17, Appraisals of Real Property with Proposed Improvements. References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

12.

See Advisory Opinion 28, Scope of Work Decision, Performance, and Disclosure, and Advisory Opinion 29, An Acceptable Scope of Work. References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

13.

See Statement on Appraisal Standards No. 2, Discounted Cash Flow Analysis.

14.

See Advisory Opinion 24, Normal Course of Business. References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

15.

See Advisory Opinion 1, Sales History.  References to Advisory Opinions are for guidance only and do not incorporate Advisory Opinions into USPAP.

Original content was published in The Appraisal Foundation site.

—-

Contact C.R.E.A.

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

 

USPAP Standard Rule 1-3

 

Standards Rule 1-3

When necessary for credible assignment results in developing a market value opinion, an appraiser must:

(a)

identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends; and

Comment: An appraiser must avoid making an unsupported assumption or premise about market area trends, effective age, and remaining life.

(b)

develop an opinion of the highest and best use of the real estate.

Comment: An appraiser must analyze the relevant legal, physical, and economic factors to the extent necessary to support the appraisers highest and best use conclusion(s).

Original content was published in The Appraisal Foundation site.

—-

Contact C.R.E.A.

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

 

How to Built Your Real Estate Bussines

CompleteREA, Crea, Complete Real Esatate Answers, Inc.Becoming an established name in the real estate industry is a tough road to go down, but the best in the business know exactly how to market themselves and find clients. For those that are just starting out, however, it can be challenging to build that same network of potential listings.

Even so, there are a number of ways a professional can find success in real estate. At its core, the job is about getting these listings – and that is achieved via relationships. Nothing is more frustrating than having a possible client decide to go work with a competitor, but thankfully this scenario can be avoided with a few simple steps and a smart plan.

In order to get started, here is how real estate agents often lose clients, and a few recommendations to prevent that from happening again:

  1. Never lose touch with clients
  2. Always be on the lookout for clients

Read the original article hereComplete Real Estate Answers, Inc. CREA, ComplteCREA

And here are few tips which I learned when I stared my real estate career:

  • Always wear your Realtors’ pin. Make it attractive and unusual looking. It will become a subject of conversation and once a conversation has started, a connection has been made.
  • Have a very small mailing list (no more than 100 names), to start your marketing, but do it repeatedly, once every 6 weeks.
  • Use holidays to softly market yourself as a “knock on the door.”  Scenario; It’s the Fourth of July, you knock on the door, while holding a small potted flower with the American flag sticking out of the pot, along with your business card, who wouldn’t want that?!
  • Learn and master your elevator speeches to present yourself as quickly and self-assured as possible.
  • Newbies, if you’re asked: “How long have you been in business?”- There is always a true answer: “Seems like forever!”  Try it
  • Do not be afraid to try, to be creative nor to be different – there is no failure, just experiences.

Share with us what is or was your experience in starting your real estate career?

Another great links and helpful information are bellow:

  1. 5 reasons to loose client
  2. 1st month in real estate business

Contact C.R.E.A. and Nana Smith

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

The Cost Approach

complete real estate answers, inc. crea

Beyond its use as independent method to determine property value, the cost approach presents a highly effective way to verify market and income-based valuations, project construction costs and adjust estimates to account for unique physical property features.

As an independent valuation method
An essential valuation method, the cost approach is crucial to various appraisal assignments, including when appraising new or proposed construction, when lack of market activity limits the effectiveness of the sales comparison (market) approach, when land value is well supported, when improvements represent the best use of land, and for special purpose or specialty properties not frequently exchanged.

Develop an opinion of market value
Based on the reasoning that a buyer will not pay more than what it would cost to reproduce or replace the subject property, the cost approach enables the appraiser to develop an opinion of market value based on the current costs of labor, materials, related fees, and any entrepreneurial profit or incentive. Marshall & Swift provides the cost data needed to determine this value.

Read Full Article Here

Appraising Summer Mornings

I love appraising early summer mornings. One goes on the field and one may see wonders.  This summer morning, in Greenwich, CT “back county” neighborhood has a special beauty in it. Roads are back roads that are quiet in the early mornings, it roams large, and is kept in a natural way… where one can spot a deer running through the fields.

This is what I saw yesterday while appraising in Greenwich, CT back county.

Complete Real Estate Answers, Inc. Greenwich, CT

complete real estate answers, inc, greenwich ct

 

Fellow appraisers comment on what do you like about being on the field using form bellow:

Contact C.R.E.A.

Email: info@CompleteREA.com

Phone: +1 203 858 6727

Complete Real Estate Answers, Inc.
453 Webbs Hill Road
Stamford, CT 06903

Nana G. Smith, Proprietor

Web & Blog: CompleteREA.com (you are here)
Facebook
Twitter
Google+

~ ~ C.R.E.A.

IMPORTANT DEFINITIONS FOR THE PROVISIONAL APPRAISERS

Simple vs. Leasehold | Complete Real Estate Answers Inc.

This morning while training provisional appraiser I came across the necessity of explaining the difference between Fee Simple ownership and Leasehold ownership. It was natural way to end up putting the definitions into the blog form. Fee simple ownership versus leasehold ownership may affect the value of real estate. There are some sates in USA which are leasehold states and some states do not exercise this form ownership much. Example will be Hawaii, New York, Florida – they are leasehold states.

IMPORTANT DEFINITIONS FOR THE PROVISIONAL APPRAISERS.

Most people only know of one type of real estate ownership; fee simple, also known as freehold.  There are a handful of states that have another form of ownership known as leasehold.

The difference in these two types of land tenure is very different and affects the value of the real estate.  It is important to know the difference, especially if you’re buying real estate in a leasehold state (i.e. Hawaii, New York, Florida).

What is the difference between leasehold and fee simple? 

FEE SIMPLE: Fee simple ownership is probably the most familiar form of ownership to buyers of residential real estate. Depending on where you are from, you may not know of any other way to own real estate. Fee simple is sometimes called fee simple absolute because it is the most complete form of ownership. A fee simple buyer is given title (ownership) of the property, which includes the land and any improvements to the land in perpetuity. Aside from a few exceptions, no one can legally take that real estate from an owner with fee simple title. The fee simple owner has the right to possess, use the land and dispose of the land as he wishes–sell it, give it away, trade it for other things, lease it to others, or pass it to others upon death.

LEASEHOLD: A leasehold interest is created when a fee simple land-owner (Lessor) enters into an agreement or contract called a ground lease with a person or entity (Lessee). A Lessee gives compensation to the Lessor for the rights of use and enjoyment of the land much as one buys fee simple rights; however, the leasehold interest differs from the fee simple interest in several important respects. First, the buyer of leasehold real estate does not own the land; they only have a right to use the land for a pre-determined amount of time. Second, if leasehold real estate is transfered to a new owner, use of the land is limited to the remaining years covered by the original lease. At the end of the pre-determined period, the land reverts back to the Lessor, and is called reversion. Depending on the provisions of any surrender clause in the lease, the buildings and other improvements on the land may also revert to the lessor. Finally, the use, maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.

Important Leasehold terms to know: 

Lease Term – The length of the lease period (usually 55 years or more)
•Lease Rent – The amount of rent paid to the Lessor for use of the land
•Fixed Period – The period in which the lease rent amount is fixed
•Renegotiation Date – Date after the fixed period that the lease rent is renegotiated
•Expiration Date – The date that the lease ends
•Reversion – The act of giving back the property to the Lessor
•Surrender – Terms of the reversion
•Leased Fee Interest – An amount a Lessor will accept to convey fee simple ownership

[Link to Original Article…]

C.R.E.A. – comment using this form with your thoughts:

Seen on Facebook

ON HOME OWNERSHIP

National-Capitol-Building-Washington-DC

Don’t let Congress take away your Home Interest Deductions!

Right now, there is a discussion going on in Congress that could have a huge impact on your home and your wallet.

How? Congress is considering eliminating income tax deductions for our homes.

If some lawmakers in Congress have it their way, we could see big changes not only to federal income tax deductions for mortgage interest and property taxes, but also a change to the homeowner’s capital gains exemption. What that means is that current and future homeowners would pay more taxes every year!

In these tough times, we can’t afford to lose important deductions. By signing our petition and sending a letter to your representative, you can tell Congress to keep our home interest deductions intact.

Read full story here:

http://www2.homeowneraction.org/site/PageServer?pagename=moadv_petitionpage&autologin=true&s_subsrc=HID_fbnf2

%d bloggers like this: