AMCs and Appraisers: Be on Your Best Fee Behavior

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Appraisal management companies are an essential element in a fully compliant mortgage industry. While many appraisers currently chafe at the idea of sharing revenue with these firms, many of the same appraisers were calling for help when appraiser pressure was making it difficult for them to fulfill their responsibilities. There are many reasons for the existence of the AMC. I'm not here to debate that.

Having established that AMCs perform an essential task, we should agree that they deserve to be paid. I'm not here to advocate for one business model over another. There are a number of ways it can be done, but if they perform a useful function, as we must agree that they do, the AMC deserves to be paid.

The question at hand is how much AMCs should be paid.

This isn't the first time this question has been asked. As the CEO of an AMC, I've fielded this question many times over the years. In every case, the question has come to me from working appraisers who are eager to keep more of their fee. I respect that. We have, as a company, supported the efforts of the various states to set minimum fees for working appraisers, and expect to see more states do so in the future.

This question is more interesting, however, from the perspective of the home loan borrower. The lender places the order and is the true client of the AMC and the appraiser, but the Consumer Financial Protection Bureau's TILA-RESPA integrated disclosures rule has put the appraisal report into the hands of the borrower. The cost has always been passed on to the borrower, which is why lenders don't often pressure the industry for lower appraisal fees.

If an AMC can convince an appraiser to work for a lower fee, either through the promise of future work or by threatening to take future work away, should those savings be passed back through to the party that actually pays this fee? Is the AMC doing more work to deliver an accurate and fully compliant appraisal report to the lender? If not, how can the AMC justify pocketing those savings?

AMCs were not established as a mechanism to enable some parties to profit from arbitrage on a service the consumer is forced to pay for without the benefit of vendor selection.

I don't know the reasonable amount for an AMC to earn on an appraisal report, but if we don't find a way to prevent certain bad actors from bilking both appraisers and borrowers out of money, a legislator or regulator will be happy to step in and do exactly that for all of us.

Frank Danna is the co-founder and CEO of the appraisal management company Appraisal Logistic Solutions

Making Case for an Appraiser’s Judgment
By Tim Andersen, MAI

It is common for USPAP instructors to hear this question: “I know my adjustments are supposed to have market-support. However, what should I do if there just is not any market support for a particular adjustment? Should I not make it even though an adjustment for difference-X really needs to be made?”

Since the imposition of collateral underwriter (CU), it is clear that an adjustment in an appraisal report must have market support. For those of you who have taken the 2016-2017 7-hour USPAP update class, you know that the idea of support for adjustments is woven throughout the class. It is also clear that The Appraisal Foundation (TAF), as well as all of the national appraisal societies, have bought in to this conclusion. The problem is that term “market-support” has no structured definition. Therefore, neither boots-on-the-ground appraisers nor state appraisal boards have any definition for the term “market-support.”

Yet, despite this lack of a standard definition, state appraisal boards charge their appraisers with failure to support their adjustments routinely. Those boards then discipline their appraisers for failure to comply with a non-defined standard. To be clear, that appraisers need to support their adjustments is beyond question. That states need to discipline appraisers when they do not properly support their adjustments is also clear. Unfortunately, what is not clear is when an adjustment is necessary or what constitutes market-support.

Case in Point
An appraiser contacted me recently relative to making a floor height adjustment in an appraisal of a mid-rise garden-type golf course-front condominium. The subject was on the fifth floor, while an excellent comparable, with the same east/golf course view had a second floor location. So, for three floors difference, was an adjustment even necessary?

Part of the problem is the subject’s fifth floor location. Because these units also have pitched ceilings (the same units on lower floors do not), in addition to great views, their owners tend to hold on to them since they are unique. Because of this, while there were sales of units with the same floor plans on lower floors, there were no other fifth floor sales to use as comparables.

So, we went back in time. That last sale equivalent to the subject was three years ago (which was the market support for the conclusion that owners tend to hold on to them), so it did us no good. We looked in other buildings in the same general area. However, individual condo projects are generally too dissimilar to one another to use as comps. Eventually, we were able to pair-out an adjustment of about $2,500 per floor. Those data, however, came from a far superior high-rise building, with a far superior ocean-front location.

So, while it was possible to pair-out an adjustment from comparable sales data (which is both the strength and basis of market support) both the applicability and the reliability of the results of this process/adjustment were rightly open to question, since the data sources were not really comparable.

So, what to do?

Competence and Judgement
Eventually and ultimately, the question came down to a matter of the appraiser’s judgment. Use the $2,500 per floor adjustment? Use something else? Guess? Not use an adjustment at all but round the final value conclusion to account for whatever influence floor height differences might cause?

In such an instance, an appraiser must be able to use his/her judgment in making and applying adjustments. Yet, for various reasons this is a slippery slope. Why? Let’s face it, the judgment of some appraisers is superior to that of others (as a function of experience, training, and education). Yet, USPAP teaches us that competency is a function of judgment and execution. State appraisal boards assume appraisers are competent (i.e., understand the proper uses of judgment and execution) until they are proved otherwise.

Thus, to deny that an appraiser’s judgment should be part of how much of an adjustment to use in any given situation is to deny that appraisers can be competent. A competent appraiser promotes and maintains a high level of public trust in appraisal practice in part via the exercise of his/her judgment. Therefore, judgment is at the core of what we do and who we are as appraisers.

CU and USPAP must accept that, when on rare occasions and under unique market conditions it is clear that an adjustment is necessary, it may also be clear that the market does not speak loudly enough as to the contributory value of a unique item. Reviewers will need to develop the intestinal fortitude to understand that an appraiser’s judgment is a function of countless analyses of the components of various markets over many years. In other words, unless the reviewer has some killer data to which the appraiser was not privy (or which the appraiser blatantly ignored), the reviewer has no reason to second-guess the appraiser’s judgment. Again, judgment is part of competency. Once a state certifies an appraiser, that state assumes the appraiser is competent (with all that word implies).

In other words, the appraiser must be able to put in a report language such as this without fear of reprisal or penalty:

It is clear the subject is on the top floor of a mid-rise building, whereas the comparable sales are not. An analysis of the subject’s market going back three years did not indicate the arm’s-length sale and purchase of a property such as the subject. It was possible to pair-out a floor height adjustment from other sales, in other buildings, in other projects. However, the appraiser concluded these data were insufficiently similar to the subject to use them reliably to conclude a floor height adjustment in the subject building.

Therefore, the conclusion not to adjust the comparables for their floor height differences with the subject had its basis primarily in the appraiser’s experience and judgment, rather than clear and convincing sales data from the purchase and sale of other, similar units in the subject’s building. The appraiser’s conclusion to make a -$0- floor height adjustment is also the result of an analysis of the market, which currently is silent as to this adjustment. It is the appraiser’s judgment that such a silence indicated a -$0- adjustment is one the market currently justifies.

Please understand this is not to advocate appraisers should be free to make adjustments willy-nilly. They must justify their adjustments and then support them from the market. That step will serve to promote and maintain the Public Trust in what it is we do.

Nevertheless, TAF, Fannie Mae, and appraisal reviewers must understand that there are rare circumstances when there is no market support for an adjustment, yet that adjustment still needs to be made. In those cases, these parties must recognize the appraiser’s judgment will have to suffice (accompanied by a detailed explanation of what the appraiser did to discover there were no applicable data from which to deduce an adjustment).

Otherwise, not only are so many appraisers mere form-fillers but are merely filling the form with the data the client is willing to approve. That is not appraising- this is something else that is often called the world’s oldest profession.

 

Why an appraisal should be part of every agent’s pricing strategy

Agents, how’s your listing presentation?

It’s important for real estate agents to go into their listing presentations with a good idea of how they will price theirAppraisal Pricing Strategyclient’s home. I’ve heard that one of the top reasons, if not the #1 reason, for a home not selling is because it’s priced too high.

By encouraging your sellers to get an appraisal as part of your listing presentation you’ll avoid the negative consequences of a bad pricing strategy.

Several things can happen if a home is priced too high. If a home is not priced to the market it probably will not get any showings. The excitement a seller has for having their home listed for sale will turn to frustration if buyers don’t want to look at it, and a lack of showings will definitely hinder a house from being sold.

Any offers that the seller does get may be considered low ball because they will most likely be well below the asking price. If this continues to happen the seller may start questioning your ability as an agent. You have to see the situation from the seller’s perspective, and all they will see is that they’re not getting many offers, and the offers they do get are low.

Buyers may start to get a negative perception of the home. They may get the idea that it is priced too high or that something is wrong with it. Other agents, who may be working for buyers, may steer them clear of the home until the price is dropped. This may result in the home being on the market for an extended period of time. When the price is dropped you may get offers but they may be lower than normal since they see the seller as desperate.

If you are able to get an offer on the home you still have to get past the mortgage appraisal. Just because a buyer is willing to pay you a certain price this does not mean that is really what the home is worth. What if the buyer is not familiar with the area or what if they like the home so much that they are willing to overpay for it? I have seen these situations many times in my 25+ year career as an appraiser.

The sad thing is that most people feel that if the seller is willing to sell their home for a certain price, and the buyer is willing to pay that price then there won’t be a problem. If the buyers were paying cash it would be ok, but most buyers have to get financing.

When a buyer wants to borrow money to buy a house, the bank will get an appraisal. The appraisal will be completed to make sure that the house is actually worth the money that the bank is loaning. If it is not, then the deal will fall through or it will need to be renegotiated down to the appraisal value.

Appraisals reflect market value

These types of situations can be avoided by pricing the home to the market. By that, I mean that the list price will need to be based on what other similar homes have recently sold for as well as what other homes are actively listed at. If this is done correctly the home should sell within a reasonable amount of time, and for market value.

If the comps used were the most recent and similar available then when the mortgage appraisal is performed the appraiser will most likely use the same or similar comps, and the value they arrive at will be very close to the contract price and the likelihood of the deal falling through is diminished.

While many agents may be able to accurately price a home there may be newer agents or others that may not be familiar with the market. In situations like this including an appraisal as part of your pricing strategy can add more credibility to your listing presentation because it provides a clear course of action to price the home to get it sold.

Many agents may not feel the price of an appraisal is worth it, but when you consider how much additional money you spend in marketing the home when it is overpriced the cost of the appraisal is a no brainer. Most of the agents that I do pre-listing appraisals for don’t even pay for the report themselves because after they explain the value of the appraisal to the seller they pay for it.

Pre-listing appraisal and pricing strategy

A pre-listing appraisal provides numerous advantages over a traditional CMA. By suggesting a pre-listing appraisal to sellers as part of the listing presentation you promote the following positive factors

  1. The pre-listing appraisal will provide accurate square footage. Have you ever considered the effect that incorrect square footage can have on a list price? If the homes square footage is off by 100 square feet, and homes are selling for $100 per square foot, the list price can be off by as much as $10,000. Does the cost of an appraisal make more sense now?
  2. As I noted previously, by getting a pre-listing appraisal the likelihood of the deal falling through decreases dramatically. The comps used in the pre-listing appraisal will very likely be the same ones as the appraiser doing the mortgage appraisal will use. Because of this, the value should be similar, making the transaction smoother and quicker.
  3. An appraisal by a third party unbiased person can provide support for an agents list price. Have you ever arrived at a list price only to be shut down by the owner who thinks their home is worth a whole lot more? A pre-listing appraisal that is similar to the list price you arrived at can provide support and add credibility to your value and even take the monkey off of your back. The seller will discover that if they want to sell in a reasonable amount of time, and for market value, they will need to lower their unreasonable expectations.
  4. A pre-listing appraisal will make the listing more competitive with other homes currently for sale. Rather than passing your listing up because it is priced more than all the other homes it will get more showings because more buyers will see that the asking price is reasonable.
  5. A pre-listing appraisal can clear up confusion with price per square footinaccuracies. The price per square foot metric can be useful in some situations but most of the time it is not a good figure to use to help estimate a list price.
    If the home is in a cookie cutter style neighborhood where all of the homes are very similar, such as a one level garden home built on a slab, then knowing the price per square foot can be helpful. Because the houses are very similar in square footage the price per square foot range will be narrow and more accurate.
    What happens more often is that a couple of sales are looked at to get their price per square foot, not paying attention to the physical difference between the subject and sales, and then apply that figure to the subjects square footage. This flawed process usually leads to mediocre results and an inaccurate list price.

By informing sellers of the benefits of a pre-listing appraisal during your listing presentation you communicate to them that you are serious about getting their home sold for the best price in the shortest amount of time.

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BUILDER

BRING ON THE PERFECT BABY BOOMER BATH

Building for the NEXTadventure means incorporating some key features.

The trend in bathroom design today favors a large walk-in shower over the garden tub/small shower combination. The same holds true for the 55-plus market. Many conclude that the reason these buyers are skipping the tub is their fear of falling or difficulty getting in and out. I’ve found that these experienced NEXTadventure buyers have also figured out that they don’t actually use the tub, so why waste valuable space with one when there are great alternatives?

Let’s design a spectacular shower large enough for two with multiple showerhead options. I love the frameless glass enclosures and the feeling of space they provide. In many examples, the shower is so large, you don’t need a door. However, I prefer one to trap in the steam and keep the shower warmer. Some homeowners have showers with showerheads at each end to ensure that each has the ideal height, water temperature, and spray intensity.

Shiel Residence, 8059 Hollyridge Road, Jacksonville, FL  32256.  Renovation by Deryl Patterson, Housing Design Matters, Inc.  904-237-8557.
Housing Design MattersLarge showers are replacing garden tubs in popularity among 55-plus buyers.

The shower is among the top places in a home where a homeowner risks injury. Including a grab bar (or at least blocking in the wall for a future grab bar) is a no-brainer. Eliminating the threshold in the shower and incorporating a single, lineal drain are both elegant and practical touches. Including a hand-held showerhead is not only convenient for the non-ambulatory bather, it also simplifies cleaning the shower. A seat in the shower is a must, but not necessarily for sitting—it's better used as a shelf for the gals to prop up their legs when shaving. If a seat is needed for bathing, separate shower chairs are actually preferred.

Now, let’s talk about the vanities. As experienced homeowners, these 55-plus buyers understand the value of personal space. Separate vanities are simply good for the marriage. Now that we have jettisoned the grand tub, there is plenty of space for it. If there is room still, consider a knee space for the woman to put on her makeup. Instead of a wall mirror, install a window in front of the knee space. As we age, we need more light to see up close and natural light is ideal. A simple magnifying mirror on the counter is more effective than a wall mirror.

Finally, there is the toilet room. You may want to start with a comfort-height toilet, which is a couple of inches taller than standard models. Thinking ahead and including blocking for grab bars is always a good idea. Make sure to keep the door at least 32 inches wide to accommodate various forms of walking aids.

When designing the master bath for 55-plus buyers, there are many things to keep in mind. This space takes on the role of a personal spa to refresh and rejuvenate any homeowner. It must be functional without being institutional. It must be luxurious, but it also must be equipped to adapt to the homeowner's safety needs. A master bath that withstands the test of time will give any 55-plus home buyer the confidence they need when buying their NEXTadventure.

ASB Public Meeting 
 
The Appraisal Standards Board (ASB) invites you to its upcoming Public Meeting on February 3, 2016, in Dallas, TX. On December 7, 2016 the ASB published the Third Exposure Draft of proposed changes for the 2018-19 Uniform Standards of Professional Appraisal Practice (USPAP). Topics under consideration include:
 
  • Definition of Report and Edits to the ETHICS RULE and the RECORD KEEPING RULE;
     
  • Definitions of Assignment, Assignment Conditions, Intended Use, and Intended User, and related edits to the COMPETENCY RULE;
     
  • Definitions of Assumption and Extraordinary Assumption;
     
  • STANDARD 3 – Dividing into STANDARD 3, Appraisal Review, Development and STANDARD 4, Appraisal Review, Reporting;
     
  • STANDARD 6 – Dividing into STANDARD 5, Mass Appraisal, Development and STANDARD 6, Mass Appraisal, Reporting;
     
  • Removing the term Market Value from STANDARDS 7 and 8; 
     
  • Edits to the Personal Property Certification in Standards Rule 8-3 
     
  • Advisory Opinion 37, Computer Assisted Valuation Tools; and
     
  • Edits to Advisory Opinion 21, USPAP Compliance; Advisory Opinion 31, Assignments Involving More than One Appraiser; Advisory Opinion 1, Sales History, and Advisory Opinion 32, Ad Valorem Property Tax Appraisal and Mass Appraisal Assignmnets
 
The Board seeks feedback from government regulators, educators, appraiser organizations, practitioners, and users of appraisal service. 
 
To register for the public meeting, click on the Register Here button to your right. Please visit our website for a list of all events www.appraisalfoundation.org
 
Questions? Please contact: 
 
Aida Dedajic
Standards Board Administrator
This email address is being protected from spambots. You need JavaScript enabled to view it.

What Is a Crawl Space? An Eye-Opening Peek Underneath Your Home

 | Dec 5, 2016

Home buyers rarely give much thought to what’s right under their feet when touring homes, but they should—particularly if they’re strolling on top of a crawl space. When searching for a home, you might very well see that phrase in the listing features. But what exactly is a crawl space, and what do you need to know about it?

A crawl space is essentially a hollow area found under some homes between the ground and the first floor. It’s usually roughly 1, 2, to 3 feet high—just high enough for someone to enter by crawling, as its name implies.

Aside from elevating your home off the ground, a crawl space is a convenient and inconspicuous place to contain the “guts” of the house, such as its air conditioning and heater, duct work, plumbing, and electric wiring. Crawl spaces also provide some benefits beyond the usual alternatives—which include having a solid concrete foundation or a basement—along with a few drawbacks.

So whether you own a home with a crawl space or are considering buying or building one, here are the pros, cons, price, and more.

Benefits of a crawl space

Typically a crawl space is preferable to a concrete slab foundation because it allows you unrestricted access to all those “guts” we just mentioned: plumbing, electrical wiring, and heating and cooling systems.

“Issues like pipe leaks that would have otherwise required an excavation are much easier to resolve with a crawl space,” says Larry Greene, president of a home design and remodeling company in Indianapolis.

And while a basement also gives you unrestricted access to these systems—not to mention much more usable space—crawl spaces are cheaper than basements.

“When you’re building a home, a crawl space can cost as little as $8,000 to $25,000 for an average-size home,” says Greene. That’s much less than you’ll cough up for a basement, which Greene tells us can range from $75,000 to $150,000.

Crawl spaces are also preferable to basements if you live in a damp location that experiences a lot of rain or is prone to termites.

“Crawl spaces are most suited for areas with high moisture or in coastal areas with sandy soil, where excessive water can build pressure against a full basement and find its way into cracks,” says Scott Brown, owner of a home inspection company near Syracuse, NY.

Crawl space maintenance made easy

Keep in mind, however, that proper ventilation of a crawl space is essential to protect the structural integrity of your house—not to mention your health. Without ventilation, crawl spaces can give way to the “stack effect,” a process where moisture moves from the ground up through cracks in the floor into the home. A crawl space with excess moisture can be a breeding ground for mold, fungi, termites, and potentially even rodents.

So if you’re buying a home, it’s important to have your home inspector check out the crawl space before you sign on the dotted line.

To ventilate a crawl space, you have to install a vent to pump in air from your HVAC system, as well as an exhaust fan to move air from the crawl space to the outside. If your region is particularly wet, you can also install a dehumidifier.

Should you build a crawl space?

If you’re building a home and wondering if you should have a crawl space, know that the climate in your area largely decides whether you need to.

“Natural conditions such as frost line, soil type, drainage, slope, and water table depth usually lead construction best practices to one type over another,” says Brown. When in doubt, consult an engineer to know if a crawl space is right for you.

Natalie Way is the associate editor at realtor.com. She write news and advice stories about home buying, decorating, celebrity real estate and more

Appraiser Qualifications Board Q&A

Vol. 8, No. 2 December 2016

The Appraiser Qualifications Board (AQB) of The Appraisal Foundation establishes the minimum education, experience and examination requirements for real property appraisers to obtain a state license or certification. The AQB Q&A is a form of guidance issued by the AQB to respond to questions raised by appraisers, enforcement officials, users of appraisal services and the public to illustrate the applicability of the Real Property Appraiser Qualification Criteria and Interpretations of the Criteria in specific situations and to offer advice from the AQB for the resolution of appraisal issues and problems. The AQB Q&A may not represent the only possible solution to the issues discussed nor may the advice provided be applied equally to seemingly similar situations. AQB Q&A does not establish new Criteria. AQB Q&A is not part of the Real Property Appraiser Qualification Criteria. AQB Q&A is approved by the AQB without public exposure and comment.

TRAINEE / SUPERVISOR REQUIREMENTS

Question:

I’m a state certified appraiser and I’m considering bringing on one or more trainees into my practice. I know the AQB revised certain requirements for Supervisory Appraisers on July 1, 2016, but I have a few questions:

1) Is a Supervisory Appraiser required to have three years’ experience immediately prior to taking on a Trainee Appraiser?

2) Does a Supervisory Appraiser have to be state certified in the same state as the Trainee Appraiser?

3) Must a Supervisory Appraiser accompany the Trainee Appraiser on all physical inspections of properties?

 

Appraisal Institute Seeks Candidates for Committee Chair

The Appraisal Institute Board of Directors soon will elect a chair of the Strategic Planning Committee from the date of election through Dec. 31, 2017. Candidates may apply through the following process.
 
Appraisal Institute professionals interested in running for this position must:
• Indicate their interest in this position in the Leadership Resources Registry by Dec. 14 (log-in required), unless they already have done so;
• Be an Appraisal Institute Designated Member in good standing;
• Hold the status “continuing education program completed;” 
• Be adept at and possess technical capability for prompt internet communication, including the ability to access and respond to email; and
• Not have been subject to a publishable disciplinary action, as defined by the Regulations of the Appraisal Institute, within the five years prior to appointment or election. 
 
Additionally, candidates may submit a statement of qualifications and a statement as to why they are interested in and are qualified for the position to Joan Barngrover, Appraisal Institute Board secretary and special assistant to the CEO (This email address is being protected from spambots. You need JavaScript enabled to view it.), by Dec. 14.
 
The Strategic Planning Committee monitors issues, trends, opinions and other factors that affect or will affect the Appraisal Institute and the appraisal profession; recommends to the Board of Directors short- and long-term strategic and operating plans, including, but not limited to, mission, goals, strategies, priorities and adjustments thereto; and performs such other duties as may be assigned to it by the Board of Directors.
 
The Strategic Planning Committee chair oversees the preparation of the agenda for meetings; chairs committee meetings; assigns matters within committee jurisdiction to members of the committee, as appropriate; monitors progress on committee assignments and goals established by the Board of Directors; ensures that the committee completes the assignments and achieves the goals established by the Board of Directors; serves as spokesperson regarding the committee’s activities, recommendations and decisions within the Appraisal Institute’s governance structure; and ensures that committee activities, recommendations and decisions are reported to the Board of Directors.

TUESDAY, NOVEMBER 29, 2016

Dear Mr. Trump & Dr. Carson:

America’s 80,000+ licensed and certified real estate appraisers are collectively holding their breath right now, concerned over their own future and the future of the housing market.

We’ll get right to the point and say it in under 140 characters (yay Twitter!): Appraisers have a central and irreplaceable role in facilitating proper risk management in mortgage lending.The hearing on November 16th by the Subcommittee on Housing and Insurance did not adequately bring out this point.  In fact, the “Key Takeaways from the Hearing” in the news release afterward ominously stated (emphasis is ours):

“The current appraisal regulatory regime is stuck in a 1980s model and does not reflect the advancements of a 21st century marketplace.

The appraisal regulatory structure should take advantage of advancements in alternative home valuation methods.

The Dodd-Frank Act’s impact on the appraisal industry has not enhanced the system for appraisers, consumers or stakeholders.

The decline in the number of professional appraisers is reflective of burdensome qualifications and a changing marketplace”.

Unquestionably, there are many problems with the current system which lead to a declining number of qualified, professional appraisers willing to workfor longer hours at reduced fees as appraisal management companies (AMCs) skim a high percentage of the fee allocated for appraisals, a fee oftentimes disproportionate to the relative importance of the role they play. We will not delve into the role of AMCs in our comments today; please feel free to read past issues of AppraiserNews.com on our website (or just call any appraiser!).  What is important to emphasize right now is that so called “alternative home valuation methods (AVMs)” are unreliable and dangerous by themselves: their role is to assist in information gathering and analysis by professional, licensed and certified appraisers.

In her testimony at the House hearing, Joan Trice of Clearbox noted that: “The events of the presidential election offer a cautionary tale. Big data failed. Models failed”.  While there may be many changes during the next four years, the presence of professional, independent, licensed or certified appraisers helps to provide a “backstop” for those changes that might be ill conceived.  

8 Cheap Kitchen Remodels for $500 (or Less)

 | Nov 11, 2016

Your kitchen is calling from 1988, but your bank account doesn’t want to answer. We get it: According to Remodeling Magazine, a minor kitchen makeover averages $20,122, while a major renovation can hit a you-gotta-be-kidding-me $60,000.

If you’re looking for something a whole lot more budget-friendly, a mini kitchen makeover for about $500 can go a surprisingly long way. Check out these eight cheap remodels to get your kitchen renovation cooking for a whole lot less.

1. Declutter the counter space

Kitchens tend to collect tons of stuff—like Mr. Coffee coffee makers, George Foreman grills, and weird canisters of wooden spoons—on countertops. An easy way to dramatically transform a kitchen is to simply put all that junk away. For around $490, you can install two separate shelving units to transform the dead space in that cabinet under the sink that no one ever uses.

“Glide-out shelving can get around obstructions like pipes or disposals and make the kitchen a more useful space,” says Nina Ward, interior designer and regional director for ShelfGenie. Plus, the shelves can hold up to 100 pounds of kitchen detritus—that’s a whole lot of paper towels.

2. Paint just about everything

A chorus of experts says the most affordable and transformative kitchen makeover is to paint, paint, paint—and not just the walls, points out Tracy Kay Griffin, lead designer at Express Homebuyers, a real estate investment company based in Springfield, VA.

 

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The Wall Street Journal

 

You can also paint the kitchen cabinets (NuVo Cabinet Paint Kit in taupe, $70), laminate countertops ($22 a gallon), formica countertops (Rust-Oleum Light Base Satin Cabinet Resurfacing Kit, $75), or even old appliances (12-ounce stainless-steel appliance paint kit, about $25). In short, you can make an old kitchen look like new, proving that beauty is only skin-deep.

3. Add an island

Add food-prep space as well as seating with an island.
Add food-prep space as well as seating with an island.

chuckcollier/iStock

If a kitchen lacks an island, consider adding this popular workhorse.

“An island not only increases the use of the space and offers storage, but it also creates a wonderful social hub,” says Amy Bell, an interior decorator with Red Chair Home Interiors in Cary, NC. A good option is Wayfair’s Dorothy Kitchen Island With Wood Top because it “offers lots of functionality at a reasonable price” of $324.99.

4. Make the dishwasher pop

Colors such as orange or red immediately “spice up” your kitchen, says Sean Juneja, co-founder and CEO of Decor Aid. A new Viking red stove can cost upward of $5,000. But a stove panel that’s easy to install can quickly and easily cover your existing dishwasher. It costs about $500 and comes in vibrant shades like cherry red and pink lemonade. It’s like a quick shot of decor adrenaline.

5. Amp up the lighting

One of the single most important elements that have a profound effect on any space is whatever devices are holding the humble lightbulbs.

“Changing out fixtures can not only update your space but also provide ambiance,” says Juneja. “A new pendant upscales the kitchen instantly and provides the biggest bang for the buck.” He likes this West Elm pendant style for a sleek yet warm look, or you could go for a bit of drama with this bundle of glowing orbs from CB2. Handy? Buy black cables from your local hardware store and hang generic lightbulbs for approximately $100 plus an electrician (maybe another $100 to $150) to make sure everything is safe.

6. Reface upper cabinets with glass

Open up the kitchen space with glass cabinet doors.
Open up the kitchen space with glass cabinet doors.

YinYang/iStock

There are some things in your kitchen you definitely want to hide, like that family-size bag of Cheese Balls. Other stuff you want people to see: the vintage barware you scored at a garage sale. Swap out the heavy wooden doors on your kitchen cabinets for ones with glass to display your cute dishes and glassware.

“It instantly modernizes and opens up a kitchen,” says Juneja. It costs approximately $500 for an average-size space.

7. Update tired flooring

“If you have outdated vinyl or linoleum flooring in your kitchen, a fresh wood-looking floor can make a huge difference in the overall appearance of the room,” says John Horner, founder of Central Ohio Home Buyer.

 

Depending on the size of your space, a nice wood laminate can easily be put in for about $500 in material.

“Many of the laminate flooring found in your local home improvement store is either click together or stick down, and very simple to install yourself.”

We found some options that start at about $2 a square foot.

8. Replace outdated countertops

Another inexpensive way to transform your kitchen from something “dull into something amazing” is to install new laminate countertops from your local home improvement store, which often carries its own brands.

“New countertops can drastically improve the look of your kitchen for a very reasonable price,” says Horner. “For a medium-size kitchen, they can cost around $500 and installation is easy.”

Typically, you’ll have two to four different styles of laminate countertops and colors to choose from. 

Congress Hears Appraisal Institute’s Ideas to Modernize Regulation

CHICAGO (Nov. 16, 2016) – The Appraisal Institute today told a Congressional hearing there is a “better, less-complicated approach” that would modernize the U.S. appraisal regulatory structure by improving quality, reducing costs and addressing fundamental concerns that drive appraisers from the profession.

In Capitol Hill testimony before a subcommittee of the House Financial Services Committee, the Appraisal Institute suggested that Congress realign the appraisal regulatory structure with those of other industries in the real estate and mortgage industries. As the nation’s largest professional association of real estate appraisers, the Appraisal Institute recommended using as a model the National Mortgage Licensing System cooperative among state agencies.

“Appraisers are being choked by rules and regulations in nearly every facet of their business,” Bill Garber, Appraisal Institute director of government and external relations, told the Housing and Insurance Subcommittee in written testimony. “Appraisers’ professional lives have become extremely complicated, more expensive and less productive due to a dated and archaic regulatory structure. As a result, consumers suffer from increased turnaround time, delays in loans and potential higher costs.”

Noting that the federal regulatory structure for real estate appraisal essentially has been untouched since 1989, the Appraisal Institute’s written testimony said regulation is “overwhelming” appraisers and proving to be “counter-productive” for the profession and for users of appraisal services.

“Real estate appraisers face a ‘layering effect’ of rules and regulations that creates a disincentive for potential entry into the profession, while also diminishing the profession’s profitability,” the Appraisal Institute said in its written testimony.

As examples of these rules, the Appraisal Institute cited background checks with no federal mandate or efficient processing system, and unappealing supervisor-appraiser and trainee-appraiser requirements, among others.

“Presently, real estate appraisers pay for the operation and maintenance of the regulatory structure in a variety of ways, including imposing license renewal fees, course requirements, and mandates to purchase rules and regulations. After almost 27 years, it is time to make the appraisal regulatory structure and process more efficient and responsive to the needs of practitioners and consumers,” Garber told the subcommittee at the hearing.

The subcommittee’s hearing on “Modernizing Appraisals: A Regulatory Review and the Future of the Industry” took place in Room 2128 of the Rayburn House Office Building. Representatives of the Appraisal Subcommittee, The Appraisal Foundation, Clearbox, the National Association of Home Builders and Mountain State Justice, Inc., also were scheduled to testify at the hearing.

Read the Appraisal Institute’s testimony here.

Freddie Mac Planning Appraisal-Free Mortgages

Giant mortgage investor Freddie Mac plans to dispense with traditional appraisals on some loan applications for home purchases, replacing them with an alternative valuation system that would be free of charge to both lenders and borrowers. The company confirmed to me last week that it could begin the no-appraisal concept as early as next spring. Instead of using professional appraisers, Freddie plans to tap into what it says is a vast trove of data it has assembled on millions of existing houses nationwide, supplement that with additional, unspecified information related to valuation, and use the results in its assessments of applications.

For consumers, the company believes, this could not only eliminate appraisal expenses — which typically range from $350 to $600 or more ­— but could cut down on current closing delays attributable to appraisals. It could also relieve lenders of their current burdens of responsibility for the accuracy of appraisals — a major sore point with banks that sell loans to Freddie subject to potential "buy back" demands if significant errors are later found in appraisals.

But critics argue that Freddie is headed down a perilous road. Doing away with formal appraisals by trained professionals could massively increase the company's exposure to future losses on defaults, they say, and would likely end up being paid for by American taxpayers. Reliance on publicly available data without careful physical inspections of properties verges on "craziness," said Joe Adamaitis, residential lending manager for Insignia Bank in Sarasota, Fla. "We would never allow it here."

Not surprisingly, appraisers who know about the plans are up in arms. The Chicago-based Appraisal Institute, the largest professional group in the valuation field, has written to Freddie Mac's regulator, Mel Watt, director of the Federal Housing Finance Agency, urging him to take a hard look.

Freddie Mac's "decision to veer away from fundamental risk management practices appears to harken back to the loan production-driven days in the years leading up to the 2007-2008 financial crisis" ­-- abuses that "turned out to be disastrous for the entire economy," the group wrote.

Veteran appraisers such as Pat Turner of Richmond, Va., believe that abandoning traditional valuation practices will leave Freddie Mac essentially "flying blind" in many instances.

In a phone interview, he said he has inspected houses where the interior damage and neglect have been so extensive — none of it on public records or visible to automated systems — that the differences in market value arrived at by a computer compared with a trained professional are potentially catastrophic for any investor. Similarly, without an inspection, an automated valuation might not reflect whatever significant improvements you've made that are not on any public records.

For years an outspoken critic of the popular but frequently inaccurate automated valuation systems offered free by Zillow and other websites, Turner asked: "When was the last time a Zillow computer walked into your house?" Computerized estimates "can't tell you everything you need to know about value," said Turner.

But Freddie's idea has strong defenders in the mortgage industry. Jay Farner, president of Quicken Loans, headquartered in Detroit and the second largest retail mortgage lender, told me "we're in support of doing something to alleviate the situation today," where appraisal delays can cause rate locks to expire and closings to be postponed.

Though "a large percentage of loans do require an appraisal," he said, others could be safely underwritten with a combination of strong previous valuation data on the property, possibly combined with a "walk-through" inspection.

Where's this all headed? We'll begin to know in a few months. But don't expect appraisers to suddenly disappear. The best of them add essential value to the process of telling a lender or investor what a house is truly worth, based on up-to-the-minute market information and a hands-on physical inspection — services no computer can perform, at least not yet.

How appraisers can use Google Calendar to streamline their appraisal business

Using Google Calendar in my appraisal business

Would you like to know how to use the FREE Google Calendar in your appraisal business? This useful but simple appgoogle-calendar-appraisal-scheduling can help you do the following:

  • Schedule appointments
  • Map out inspection
  • Create a task list to help you stay organized
  • Create notifications
  • Deliver a daily agenda via email

If you’re anything like me you like to save money. Over the last several years there have been numerous apps that have become available to help appraisers in their business but they cost money. While each one may not be that expensive by themselves, if you use a couple of different ones the price can add up.

 Advanced Analytics Replace Real Live Humans

Kenneth R. Harney
Kenneth R. HarneyThis email address is being protected from spambots. You need JavaScript enabled to view it.The Nation's Housing

 

Can computers, big data and advanced analytics replace real live humans when it comes to accurately valuing the home you want to buy? One of the two largest financial players in U.S. real estate thinks so and is preparing to introduce changes that could prove momentous — and highly controversial.

ABA Responds to Proposal to Combat Appraiser Shortage

 

As the shortage of appraisers continues to be a priority issue for bankers, particularly those in rural markets, ABA last week offered feedback on a recent proposal by the Appraiser Qualifications Board to change the qualification criteria for real property appraisers. While the association supported several of the proposed changes — including those to remove or change certain educational requirements needed to obtain real property appraisal credentials — ABA urged the board to continue exploring solutions that would allow prospective appraisers to use relevant experience gained in other professions to help meet certification requirements.

ABA noted that many individuals in related careers have valuable experience with property valuations, such as bankers that are involved in real estate transactions. Taking this previous experience into consideration could help attract qualified talent to the appraiser profession, the association said. ABA also encouraged the board to continue working with appraisal professionals to reach consensus on proposed adjustments to specific course guidelines and experience-hour requirements that would help ease current entry barriers to the appraiser profession. For more information, contact ABA’s This email address is being protected from spambots. You need JavaScript enabled to view it..

Yellen: Agencies Exploring Ways to Reduce Capital, Appraisal Burdens

 

As part of its response to the recently concluded Economic Growth and Regulatory Paperwork Reduction Act review process, the federal banking agencies are looking to reduce burdens of appraisal requirements and to simplify regulatory capital rules for community banks, Federal Reserve Chairman Janet Yellen told the House Financial Services Committee today. The American Bankers Association has long advocated with regulators to recognize highly capitalized banks as already meeting Basel III capital standards without having to go through the complex calculations.

 

In today's technologically forward era, every day there is less and less human interaction.  Something as simple as going to the grocery store, you used to give the cashier money or a credit card.  You might have even made small talk while you waited for your change or your credit card to go through and to sign off on the receipt once they handed it to you.  You are lucky anymore to see someone say hello or acknowledge the cashier’s existence for a split second, then slide their card through the machine and look down at the machine to follow the prompts.

Improving the review process

 
Exclusive
The word hypothesis is frequently used to describe something that is more than a guess, but falls short of being an established fact. A hypothesis can be disproven, or if evidence can be compiled to support a hypothesis, it can become accepted as a reasonable explanation. In many ways, a real estate appraisal is a hypothesis that tries to explain the value of a property based on methodology that is largely subjective. The value conclusion is more than a guess, but does not rise to the level of acknowledged fact. If it did, the entire industry we know as appraisal review would cease to exist. We accept that the appraisal process is flawed; we must acknowledge that the review process is equally flawed.

The appraisal profession - Looking ahead, the current system needs some enhancements

GUEST AUTHOR: William Pastuszek, MAI, SRA, MRA heads Shepherd Associates, Newton, Mass - See more at: New England Real Estate Journal Network.

Do you remember how you became an appraiser? Did you have a friend in the business? A mentor? A family member? Perhaps someone who brought you into the business? Think about how you would get into the business today if you were starting out.

We like our profession for different reasons. Part of our fondness comes from the fulfillment of carrying out the appraisal process, the mental challenge of solving the "puzzle," the fieldwork, the variety in assignments, the people we meet, the flexibility, and the satisfaction in providing a critical service.

We work for banks, mortgage companies, lenders, the government, corporation, individuals. We work within corporate structures, lending environments, in institutional and governmental settings, in small companies, for ourselves.

APB Valuation Advisory #8

Voluntary Guidance on Recognized Valuation Methods and Techniques:

Collection and Verification of Residential Data in the Sales Comparison Approach

Section II: Scope of Work

The amount of data collected and how that data is verified are directly related to the scope of 16 work. Scope of work1 defines the amount and type of work necessary for data collection,  confirmation, verification, and analyses for each appraisal assignment. This Advisory, however, will only discuss scope of work as it relates to the collection and verification of sales data. 

The SCOPE OF WORK RULE was introduced into USPAP effective July 1, 2006, with three steps: (1) problem identification; (2) scope of work acceptability; and (3) disclosure obligations. Problem identification and scope of work acceptability are covered in this Advisory, while step three, disclosure obligations, is not. 

2.1 Problem Identification

Property Appraiser Says Florida Man's Homestead Claim Is Bogus

That thorn is Pastor Walter Jenkins, a man who may or not own two properties in the county.

One property is a "church," though it is a vacant lot. Located adjacent is another property, which has become the subject of a recent lawsuit.

It's a wooden house Jenkins claims a homestead exemption for, though Property Appraiser Ed Crapo insists Jenkins doesn't live there.

"I just know we've been dealing with this issue for a long, long time," Crapo said. "It just won't go away."

The appraisal profession - Looking ahead, the current system needs some enhancements

GUEST AUTHOR: William Pastuszek, MAI, SRA, MRA heads Shepherd Associates, Newton, Mass - See more at: New England Real Estate Journal Network.

Do you remember how you became an appraiser? Did you have a friend in the business? A mentor? A family member? Perhaps someone who brought you into the business? Think about how you would get into the business today if you were starting out.

Are Appraisers Going Extinct?

Is the real estate appraisal business in jeopardy of going extinct? With all of the changes over the last few years, including appraisal management companies, tighter lender guidelines and increased education requirements to receive appraiser certification, many in the industry believe the answer is yes. Many long-time appraisers have left the industry, leaving fewer qualified to apprentice incoming trainee appraisers. Many real estate appraisal management companies and lenders will not accept an appraisal report with a trainee’s signature. This may eventually lead to rising costs to the borrower. With a scarce number of appraisers to choose from, borrowers, lenders and AMCs will be at their mercy. Aside from higher fees to borrowers, there is a fear of having no choice but to utilize appraisers who complete sub-par work in areas where there are no other options. Maybe it’s time for lenders to allow appraisal management companies and appraisers to utilize trainees, so the profession has a better chance at thriving and remaining competent.

Impact on Property Values

The indoor swimming pool at Hearst Castle. An indoor pool can cost a home owner between $150,000 and over $1 million.
The indoor swimming pool at Hearst Castle. An indoor pool can cost a home owner between $150,000 and over $1 million.

While indoor pools are relatively uncommon amenities, featured only in about 0.7% of luxury home listings in the U.S. according to Realtor.com, home owners who pay their high construction costs highly value them for their shelter and comfort.