July 2010

ELLIOTT® ANNOUNCES PERSONAL AND BUSINESS
PROPERTY EVALUATION SERVICE

ELLIOTT® & Company Appraisers has for a long time promoted the fact that it performs all types of real estate appraisals, as well as other evaluations, research, consultation and representation on real estate issues. The company announces that it also handles appraisals in areas besides real estate, including appraisals of industrial and office equipment, office and home furnishings, business valuations, appraisals of estate properties and insurance replacement evaluations.

“In our 30 years of real estate valuation, we have acquired the expertise of utilizing our skills outside of real estate,” said Charlie Elliott, MAI, SRA, ASA, president of ELLIOTT® & Company Appraisers. “As in the case of our real estate work, ELLIOTT® can perform non-real-estate work in any county of any state in the United States, as well as most foreign countries.”

For more information visit our Web site at www.appraisalsanywhere.com or call our Client Services Department at (800) 854-5889.

FANNIE WILL REQUIRE MORE INTERIOR PHOTOS

Beginning September 1, Fannie Mae will require that photographs of specific rooms and interior areas be included in appraisal reports when the appraiser makes an interior inspection of the property. This new rule is part of Announcement SEL-2010-09, issued June 30 by John Forlines, Fannie’s vice president and single-family chief risk officer.

Also in the announcement, Forlines stated the GRE’s position of geographic competence of appraisers.

“Lenders are reminded that appraisers must have the requisite knowledge to perform a professional quality appraisal for the specific geographical location and particular property types,” the Fannie VP wrote in the announcement. “The use of an appraiser who has the appropriate knowledge of specific geographical location and particular property types within those markets, access to the appropriate data sources, and experience in appraising specific property types within those markets will help to ensure that valuations are accurate and that appraisal practices are appropriate. Although the Uniform Standards of Professional Appraisal Practice (USPAP) allows an appraiser who does not have the appropriate knowledge and experience to accept an appraisal assignment by providing procedures with which the appraiser can complete the assignment Fannie Mae requires that lenders only use appraisers who have the appropriate knowledge, experience, and access to appropriate data must not be utilized.”

This announcement can be viewed on the Fannie Mae Web site.

CENSUS REPORTS THAT HOME SIZES ARE DECLINING

According to the U.S. Census Bureau, the average size of a new single-family home in this country dropped last year, reversing a trend that had gone on for about 30 years.

“We also saw a decline in the size of new homes when the economy lapsed into recession in the early 1980s,” said David Crowe, chief economist of the National Association of Home Builders. “The decline of the early 1980s turned out to be temporary, but this time the decline is related to the phenomena, such as an increased share of the first-time homebuyers, a desire to keep the energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home. Many of these tendencies are likely to persist and continue affecting the new market for an extended period.”

OIL STRIKES GULF COAST REAL ESTATE MARKETS

Oil has struck the Gulf Coast in a way property owners don’t want. Virtually all property owners would appreciate learning that an abundant supply of crude oil is underground on their land and would therefore inflate the property’s value. Unfortunately, the type of oil striking the property owners is floating in from the Gulf of Mexico in the form of sludge and tar balls, as a result of the explosion of the Deepwater Horizon rig on April 20. Since that mishap, property values along the Gulf Coast, even in areas where spilled oil has yet to be discovered, have dropped. That makes the situation, already affected by the real estate meltdown and rising unemployment that followed, even more complex.

“It’s scaring people off,” Dale Peterson, a Destin, Fla., Realtor, said of the oil spill, which has yet to physically taint the beaches in his area. “It’s a wait and see. It’s the not-knowing that’s the hardest part for us.”

Government leaders along Florida’s Gulf Coast are pushing for a special session in the state legislature to tax property owners on current values instead of the values before the BP oil rig explosion.

“The market value on January 1 is a lot different than the market value now,” said Florida Rep. Dave Murzin of Pensacola. “The potential buyers, just like vacationers, aren’t coming down here because they think the oil is soaked on the beaches.”

If property taxes are reduced because of this, the state would probably ask for compensation from BP to make up for the lost revenue.

“We think we see this train coming down that tunnel,” said Pete Smith, a real estate appraiser in Florida’s Gulf Coast area. “If there is any way we can make it less disastrous, that is what we are trying to do.”

ALMOST A THIRD OF FIRST QUARTER HOME SALES
WERE FORECLOSURES

A June 30 report by RealtyTrac, which bills itself as “the leading online marketplace of foreclosed properties,” concluded that 31% of residential real estate sales in the first quarter of this year were of properties that had been foreclosure. The report, called the U.S. Foreclosure Sales Report, also noted that foreclosed properties, during that quarter, sold at an average of 27% below the average price of homes not in foreclosure.

“First-time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said RealtyTrac CEO James Saccacio. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”

ASK MARTITIA

QUESTION:  A client, who has obtained two appraisals of the same property, asks a third appraiser to review both appraisals and reconcile them, giving the property a single value. Can the third appraiser carry out the assignment under USPAP guidelines?

MARTITIA:  Yes, this type of review assignment is acceptable under the Uniform Standards of Professional Appraisal Practice. Under these circumstances, it would be appropriate for the appraiser to include the results of both reviews, as well as the appraiser’s opinion of value within the same report.  

Martitia Mortimer, Elliott’s executive vice president, answers appraisal questions on a regular basis in Elliott Real Estate News.

QUOTES  

“Liberty, when it begins to take root, is a plant of rapid growth.” – George Washington

 “My chief want in life is someone who shall make me do what I can.” – Ralph Waldo Emerson

 “The heights charm us, but the steps do not.” – Johann von Goethe

 “Self-reliance is the only road to true freedom, and being one’s own person is its ultimate reward.”
                                                                                                                                  – Patricia Sampson

 “The flag is the embodiment not of sentiment, but of history.” – Woodrow Wilson

Newsletter Editor: kevin@elliottco.com
3316-A Battleground Avenue Greensboro, NC 27410	Toll Free 800-854-5889 Fax 336-854-7734