real estate Archives - Page 3 of 3

When it is slow…

The blogosphere is ablaze with tales of woe, with appraisers saying how little work they have and how slow it is in their areas. It is amusing (in a sad way) when one thinks of the past couple years push towards lightening requirements to become an appraiser. This was done because of a perceived shortage. Many appraisers were saying there is no shortage, and the current lack of work in much of the United States is part and parcel the effect of that truth. This is not a piece about the reduction in requirements for become an appraiser, but instead one about what we can do that is constructive, during this slow time.

Slow times happen. Having been in the appraisal profession since 1989, I personally have experienced at least three very slow times. One time was so bad, that I was fortunate to be able to procure a couple of assignments per month. Others were not so bad, but definitely put a stress on finances and being able to pay for the necessities of life. One of the very real problems with slow times, is that we tend to have little reserves set aside that we can use to improve ourselves, but there are options that do not involve a lot of money. Some of the things we can do during these slow times are expensive, but also help set us up for better positions when the market improves.

What are the things we can do when we find ourselves twiddling our thumbs for lack of work?

We can consider learning how to become a public speaker. Toastmasters is a great way to start. There are many opportunities for appraisers to speak in the public realm, from talking with Realtors; to meet and greets with lenders; to attorney function; to teaching courses. Toastmasters offers a structured environment to practice and advance through a series of assignments and feedback that help polish the presenter. Afraid of public speaking? Most people are. Start small. Start with groups of real estate agents in a more informal setting. We may find that this is not something that we want to pursue, but it does open doors to different types of work.

Read – Read appraisal texts that outline a problem that you have encountered in the past and want a better way to solve. There are many excellent appraisal texts that are available, including the extensive library found at the Appraisal Institute. There are also countless articles that are found online that can be printed and saved for later reference. Never underestimate the enjoyment that can be found in reading something that is not real estate or appraisal related as well. Now might be the time to tuck into a good novel or two.

Pursue a designation – No one comes out of the womb knowing how to appraise. We all have something to learn. Many designation paths are very education intensive, and put the candidate to the test of really being able to show what they know, and what they do not know. Consider buckling down to a course of study that will be intensive, frustrating, but ultimately extremely rewarding. Some that have considerable study materials and course work are the Appraisal Institutes designations, and also the American Society of Appraisers. Take a look at the resources at the end of this post and consider doing what it takes to earn a designation.

Blog – Appraisers are writers. We are technical communicators when all is said and done. We take a problem, complete an analysis that helps us solve the problem, and then express in writing what we did to solve it. If you like to write, consider blogging. There are so many topics that can be tackled, such as giving market updates in your specific area of expertise, writing about a particular problem or observation, or any of a myriad of ideas that can pop into your head. Blogging can be fun and is inexpensive, and a great outlet for those who are slow with work but want to write about what they see.

Take classes – Expand your knowledge base. Did you always want to learn about solar energy and how to value solar panels or other high-performance improvements? There are classes for that. Did you want to learn how to expand your services into doing expert testimony? There are classes for that too. Interested in doing eminent domain work? You guessed it, there are classes for that as well.

Vacation – It seems whenever we schedule time off, the flood gates open and work comes rushing in. I am not saying that we schedule something in order to have work come in, but Murphy’s Law does seem to come into play with this for some reason. We are often too busy to take time off, so when it is slow, why not? Even if we lack the funds, there are small vacations that we can take close to home. How about a day trip into wine country? Fancy craft beers? What about having a designated driver take you and a few friends to the different breweries within a few hours drive? How about a museum tour at the local university? Maybe rent a cabin in the woods for a couple of days and simply unplug?

Help each other – I was recently a casualty in a reduction of force. Because of that I have very few clients, and trying to get on panels in a down market is like pulling teeth. Many appraisers I know are helping me by referring me to their contacts at different lenders in order to provide that personal touch. Others are referring work they do not want to take. This is one way to help each other. Another way is to be available to bounce ideas off of, or even walk somebody through a problem. I had a very kind man help me sort out where I should focus my efforts in marketing, and in developing a new business model. Be there for other professionals. It always returns in spades.

When it is slow, sometimes we resort to behaviors that may not be wise in the end. It can be very difficult to remain positive when assaulted from all sides, particularly negative press in the media, and the whittling away at appraisal fees from clients.

Too much whining – a bit of whining does not hurt. It feels good to commiserate with others, but try to keep it to a minimum. Also, try to keep it off the internet if possible. Admittedly I am guilty as charged about whining, but am aware of it and try to stop it. It is tough out there, and it is hard to come to grasp with spending an entire professional career to improving yourself, only to see that some clients do not care. Instead of worrying about them however, find the clients who do care. They are out there, and part of the work we need to do when it is slow is identifying them and making the introductions.

Spiraling into negativity – this is part and parcel of the same problem of too much whining. One of the problems with the various Facebook groups and internet forums is that we read conspiracy theories (some of which may well be true) and put our own thoughts into them which can turn into a death spiral of negativity. Cut that out!!!!

Cutting fees – everyone does what they need to do to survive, but in my 29 plus years as an appraiser, I have never found cutting fees to get work to be the answer. There is always someone willing to go lower, and it becomes another form of death spiral, plus it is hard to pull back out of when things improve. Figure out what your time is worth and charge accordingly.

Having been through several cycles of decline in workload, I can offer the glimmer of hope, that it is a cycle we are in. The market in general goes in cycles, and we are likely at the top of a long upward climb in prices and activity. Interest rates had been held low for such a long time, that when they started ticking upward as they needed to do, a lot of work simply ceased to be. Prices may end up ticking downward, which could then spur more activity, and we will be busy again. People sell, and need appraisals. Homeowners take new jobs and relocation work picks up. We all die, and estate appraisals are needed. People do not always get along, and dissolution appraisals are required. At some point we will all be so busy that we will again be turning away work. Until then, do something to advance your career. Good luck with everything, and stay positive.

Resources

Toastmasters https://www.toastmasters.org/

Appraisal Institute https://www.appraisalinstitute.org/

American Society of Appraisers http://www.appraisers.org/

Competency in Relocation

Am I competent to complete this relocation assignment? Who on earth wants to ask themselves that question? Who on earth thinks they may be incompetent? We have to remember to ask ourselves whether we have the competence to complete an assignment, or whether we can gain the competency to do so by the time we deliver our appraisal report.

The Uniform Standards of Professional Appraisal Practice addresses competency as its own rule, which stresses how important this rule is. The appraiser has to be competent to perform the assignment, or if lacking, acquire the necessary competency to perform the assignment. The appraiser must inform the potential client before accepting the assignment about any lack of competency as well as address it in the report and what they did to become competent. If the appraiser will not be able to perform in a competent manner, they have to decline or even withdraw from the assignment. It does happen occasionally that in the midst of an appraisal, a problem arises that the appraiser will not be able to solve. At that point, they will either need to get assistance or withdraw.

What happens when the property type and location are something that we have familiarity with, but there are assignment elements that we do not? How about accepting a relocation assignment without understanding that the definition of Anticipated Sales Price is not Market Value, and that there are steps that are involved in this type of assignment that are not found in a mortgage report?

Relocation work is fascinating, and allows the appraiser to apply their knowledge of the market, and what drives value in a very detailed manner.

Being in touch with trends within your own community related to what buyers want in various market segments is key, as well as understanding supply and demand, and the fact that the past may not dictate the future is important. Understanding and being able to measure what is happening in the market, right now, as well as what is likely to happen in the very near future related to the listings that are on the market and competing with your property are critical. At the very least, an appraiser who takes on relocation work who has not taken classes or learned the process, needs to disclose this to their potential client. Let the client decide if they want to use the appraiser, or chose someone who does understand this work and has the experience to do it properly. Relocation work does allow the appraiser to gain competency while working on the assignment, as long as the report is competently completed by delivery.

There are appraisers who have made this type of work one of their primary specialty, and most are happy to help someone who sincerely desires to learn and understand the vagaries of the product type. The first place to start if you have not completed this type of work, is to visit the Worldwide ERC website and sign up for the Relocation Appraisal Training Program https://academy.worldwideerc.org/relocation-appraiser-resources/the-relocation-appraisal-training-program/. There is a cost for this program, but if the desire is there to take on a different type of assignment, this is a small price to pay, and a good foundation of knowledge. In addition to the training above, WERC sells the guide for relocation appraisal, found at https://erc.org/Resources/USRealEstate/Pages/Relocation-Appraisal-Guide.aspx. The cost for the guide is $95 for members and $195 for non-members, but is a “must-have” for the new relocation appraiser. Another option is to go to the ERC 2010 form report itself, and study the first page. This first page lays out the requirements of the form and helps the appraiser understand the process.

Asking relocation appraisers for help is another great way to learn, but please be respectful of their time as well, as they are likely helping without any compensation. Much of what we need to become competent in this type of work is readily accessible, and there are articles written addressing the differences between Market Value and Anticipated Sales Price, and elements that may be important in a relocation assignment. Some things to watch for related to this work is that we do not use UAD language; condition and quality is relative, not absolute; floor plans are cross-examined by a peer appraiser’s work; and colors, modernization and property oddities might be extremely important here, as well as general upkeep. Anticipated Sales Price does require the analysis of forecasting, and listings and pending sales are very important in the relocation process. Where the subject property is positioned in relation to the listings is something to consider and address, and the appraisal report WILL be compared to another appraisal report (or two).

Relocation work is rewarding and interesting work, but the appraiser has got to be competent in the product, not just the property type and location. If a call comes in to complete a relocation assignment, and you have never done one, let the potential client know. It is possible that they will be fine with someone new to this field, but will want to ensure that the work was completed in a manner that meets the needs of the client. Although it is uncomfortable to admit that we may lack competency in a type of assignment, this is one where we can actually gain it during the process. That is, if we are open to learning.

Thanks to Chip Wagner for the assist on this. Originally posted at the RAC website here

Contemplating a Remodel?

You love your location, but you are growing to hate your home. It is simply too small, awkward and out of date, so you consider moving.

After looking at what is available, and the hassle of picking up to ready your house for sale, let alone finding a suitable house in the price range you are comfortable with, you start entertaining the idea of having your home remodeled and expanded. Who wouldn’t? Of course, before undertaking a large project, getting an idea of where you currently stand in terms of your properties value, and where you will stand after the project is completed, is a good idea. The following is a brief discussion of what to consider.

Renovating and/or expanding your existing residence can be a great idea. You already own the property so do not need to worry about competing with others for another one; you know your neighbors and get along; your taxes won’t go sky-high by moving and uncapping the current rate; you don’t have to get a new mortgage other than perhaps an equity or renovation loan, so you can keep the lower underlying rate. Other than the mess and disruption of living through a construction project, are there other downsides?

The downsides on taking on a large construction project (or even a smaller scale one) are that it is very easy to spend more than you will recoup in the market. In fact, it is good to go into the project with the expectation that you will NOT recoup your costs, but that you are contemplating the project to take a home that you are beginning to hate and turn it into one that you absolutely love.

Do not go into a project expecting it to give you a high return on investment. Logically it makes sense to take a look at the value of your property before the renovations and what it would be worth at the same time with the proposed renovations. This is where a professional appraiser can be your best option in terms of possibly scaling back the plans, or going forward understanding where you stand.

A professional appraiser who knows your market has the ability to both provide a current value, and a value “subject to” the proposed changes. Appraisers approach each problem to be solved in a competent, independent, impartial and objective manner. The appraisal process itself is designed to conclude to an opinion that is logical, and factors in identifying what the problem is the client (you) are trying to solve. There is significant training and experience required to become a certified appraiser. In fact, experience and qualifications for anyone who you hire should be considered as critical, including the architects, designers, and building contractors. Professionals will be eager to provide their qualifications and experience upon request. If you are contemplating any remodeling, approach hiring the professionals with as much care as you would the actual remodel.

Get by with a little help from our friends

The appraisal field is challenging, difficult to get involved with, difficult to succeed at many times, and ever changing.

As appraisers we are often micromanaged, critiqued and criticized. We are often marginalized and put down by others. Sometimes appraisers are more critical of other appraisers than the public or our clients are, and this short piece is about stepping out of that mind-set and trying to help each other out. Not only helping each other out, but actually helping each other grow and succeed.

I was honored to be invited to the Valuation Expo this past week in Las Vegas. At the Expo, I was the recipient of others reaching their hands out to try and help me grow. Chief appraisers and management alike at various entities, all were generous with their time, and the contacts I made will likely benefit me going forward. Being invited to attend itself was a helping hand, and one very kind chief appraiser volunteered me to present a segment that a group worked on together, giving me some exposure that I might not otherwise have had. This is a great example of what we can do to give a little, and possibly make a huge difference in someone’s career. The offer to attend the Expo was the first offer of help, and the nudge to present was another. Just the friendly conversations with many appraisers in and of itself was helpful and I am grateful.

On a daily basis we have opportunities to accept help, as well as provide help. When the review comes back asking for more detail about the sales comparison approach and how the final value opinion was concluded, we can get angry, or we can look at it as an opportunity to grow. If our client does not understand our conclusion, then perhaps we were not as clear as we thought we were. We have to be open to understanding others in order to understand where our weaknesses may be. Discussions on Facebook or LinkedIn, or other networking sites also provide an opportunity to learn new ways of approaching problems, as do reading articles and blogs. Everyone has something to teach us, and everyone of us has something to learn.

So how can we help each other? We can engage in conversations in a non-judgmental manner in efforts to help. We can write articles, we can teach courses, we can take someone under our wing and help bring them along. We can recommend others for jobs, because these personal connections matter very much. We can attend conferences and be generous with our time and be kind to others. We can encourage as opposed to discourage. We can nudge someone along to get out of a comfort zone and speak. There are many more ways to help each other than to discourage or criticize each other.

My hope is that we think of these ways, and pay it forward.