Legal Update
-HVCC turns to AIR
-State Laws
-UAD & UCDP
Appraisal Update
-What listings tell us in the current market
-Unpermitted Space
-Concessions
-Reduce re-inspection fees
-Appeals process
2. Agenda
Data Update
Legal Update
HVCC turns to AIR
State Laws
UAD & UCDP
Appraisal Update
What listings tell us in the current market
Unpermitted Space
Concessions
Reduce re-inspection fees
Appeals process
Questions & Answers
4. Listings &
the Principle of
Substitution
• Non real estate example:
o Yesterday I bought bread for $3.50.
o Though I did not purchase it, today the store is selling bread for $3.25.
o What is the cost of bread?
• Listings create ceilings in declining or volatile markets
• Principle of Substitution: a buyer will pay no more for a
property than the cost of an equally desirable
alternative property
6. Average Home Prices
Contra Costa County
300000
350000
400000
450000
500000
550000
600000
650000
2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2
average sold
average list
19. Home Affordability
Trends
Data for Fence Sitters
o Payment as a percent of Income:
• National Average was 21.7% in 2007 and is 15%
in 2012 (NAR)
o Home Affordability Index
• Highest levels since 1970s
o Housing Opportunity Index
• Highest since its record keeping began in 1992
o Rates
• Remaining low
21. Home Value Code of
Conduct
• Replaced by AIR
o Appraiser Independence Regulations
o Minor changes – Lenders still determine appraisal
ordering process and must certify that no one in
production had a role in selecting the appraiser or
appraisal management company.
There must be separation of a Seller’s sales or Mortgage
production functions and appraisal functions. An
employee of the Seller in the sales or Mortgage
production function shall have no involvement in the
operations of the appraisal function.
22. State Laws
No person with an interest in a real estate transaction
involving an appraisal shall improperly influence or attempt
to improperly influence, through coercion, extortion, or
bribery, the development, reporting, result, or review of a
real estate appraisal sought in connection with a
mortgage loan.
does not prohibit a person with an interest in a real estate
transaction from asking an appraiser to do any of the
following:
(1) Consider additional, appropriate property
information.
(2) Provide further detail, substantiation, or explanation
for the appraiser’s value conclusion.
(3) Correct errors in the appraisal report.
23. Uniform Appraisal
Dataset
• It’s about reporting & validating
• Approves or denies an appraisal based upon computer
submission and rules – limited in focus at this time.
Uniform Collateral Data
Portal
• It’s about standardization
• Quality & condition ratings are key
24. Reasons for UAD
• No common set of definitions among all
stakeholders in the appraisal process
26. Unpermitted Space
• Bad News
o Additions in which there is no evidence of finaled permits can not be
included in the GLA and will be given very little if any value on the grid.
• Good News
o Some lenders will lend on properties with unpermitted space if some or all
of the following criteria are met
• Done in a workman-like manner
• No apparent health or safety issues
• Typical for the area as evidenced by three-like comparables with
similar unpermitted space.
• Does not violate zoning ordinances
• Minimal cost-to-cure to remove the space.
• Bad News
o MLS reporting field for unpermitted rooms???
27. Last thoughts on
additions
• Anytime the home’s square footage varies from
public records, the appraisal process slows down.
• Consider researching and providing the appraiser
with permits or explanation of the space on the
front-end.
• Non-contiguous space must also be counted
separately.
28. Sales Concessions
• Example:
o A model match comparable home sells for $200,000 with $10,000 credit
back to buyer from seller. Does the $10,000 adjust off the grid so that the
final adjusted value is $190,000?
• Answer:
o Maybe
• Determining factors:
o Typical for the market
o Purpose of the concession
o Amount and impact of the concession
o MUST BE REPORTED
