Beverly Bayer

In November 2008 the median home price in America (per NAR) was: $181,300

In December 2008 the median home price in Moreno Valley, CA was: $146,500 per dqnews.com

The average Moreno Valley home listed for sale now between $145,000 and $148,000 is:

1666 square feet in size

Built in 1986

on .20 acre lot

with 4-bedrooms, 2+ baths

Now that's affordable ........

Beverly A. Bayer, SRA (appraiser)

Looking the the list prices of the pending sales from November 2008 and list prices of homes that sold in August 2008 - I am finding that prices on average (about) have been lossing value at the rate of $250 per day. Right now you can buy twice the house for $200,000 (2200 to 2400 square feet) as you could have 1-year ago - when homes on average 1070 square feet went out at $200,000. DataQuick reports that between October 2007 and October 2008 - Moreno Valley home prices on average went down: 49.9% (from a $341,500 median in October 2007 to a $171,000 median in October 2008).

Home prices per square foot now are at number were seeing in 2002. In September 2008 the unemployment of Riverside / San Bernardino County residents was at 9.1% In Sept 2007 the unemplyment percentage was at 6.3% and for all of 2006 at and average of: 4.9%

For all of 2007 there were 34,278 Notices of Default filed in Riverside County for the first 3 quarters of 2008 there have been 44,331 notices filed - compared to 2004 when for the total year only 6187 notices were filed. Needless to say the foreclosure problem is running the local real estate market.

Per my calculatons the largest number of homes in or on the way to foreclosure are homes between 1400 and 1600 square feet in size - a great catagory for rental properties; where the rents should exceed the mortgage payments. However, investment lending is restricted and downpayments are high - this needs to change to stop the bleeding caused by the mass of foreclosure homes and falling home prices.

Beverly A. Bayer, SRA

www.AppraisingMorenoValley.com

So if you go to realquest.com you can type in a zip code or city - and find the number of "Notices of Default", Notices of Trustee Sales" and REOs". So I did that for 6 cities or a combination of cities, coming up with a total of NODs, NOTs & REOs.

Next I found the current populations of those cities and divided that number by 4 (guessing a family of 4 - average per house). Next I divided the 1/4 population by the foreclosure total - coming up with ranges of 10 to 15%. Did I do that right? The percentages seems very high - and this is NOT total REOS, etc. just what is in the pipeline now - or at least that is what I think I have.

I have been watching REOs, etc to the number of active listings and find that shocking also, for it seems that there are so many more foreclosures coming to an MLS near me (or maybe you).

As an appraiser I find almost all the sales in my area in Southern California are of REO homes; most homes headed to default are never even listed "for sale" prior to the foreclosure.

If the flood of forelosurers continues - our home prices might settle at 25% of prior prices from the summer of 2006. A $400,000 house selling for $100,000 - is that a crazy buyers market or what? Now in all honesty that $400,000 price tag from 2.5 years ago was not a realistic price (based on average area family income), but I guess the lenders planned to rely on appreciation and make up for risk with volume. O' ya that didn't work so well - did it...

For all you non-California agents - tell you clients who have always wanted to live in California - our home prices are finally "affordable" You can now buy most 1800 to 2000 square foot houses (most under 20 years old) in Moreno Valley for under $200,000.

Beverly A. Bayer, SRA

One week ago: 11/14/2008 Fannie put out an addendum that appraisers will need to include in their appraisals starting April1, 2009 (no kidding).

It will be asking for the number of comparable listings and sales for the past 3 months; 4-6 months back and 7-12 months back; their median days on the market; median list & sale prices and median ratio of sales price to list price. The numbers of standing inventory and the absorption rates - all for 3 groups of time (current to 3 months; 4-6 months and 7-12 months).

The trends from the listed data - either as increasing, stable or declining.

Plus questions of REO activity; sales concessions, financing assistance.

I have just started putting together listing data in cities where I typically appraise - appraisers who try to appraise everywhere will spend mucho time to collect data - that they may not use or leave big sections of the addendum blank or filled with false information. Please real estate agents - don't provide this information to appraisers - if they don't have access or are too lazy to do the work - THEY SHOULD NOT BE APPRAISING YOUR LISTINGS...in my opinion.

---------

Add to that that sometime next year - lenders may not be able to pick their appraiser or communicate with the appraiser - as the ordering and reviewing of the appraisal will be done outside loan production - to insure appraiser independence.

Many appraisers fear they will need to work for appraisal management companies - for reduced fees.

Because lenders might have no say in who the appraiser is, they will not be able to pre-value a property through "Comp Checks" - as they will have no say in who the appraiser will be - and what appraiser would provide services with no hope of compensation.

Beverly A. Bayer, SRA

www.AppraisingMorenoValley.com

Appraiser Pressure: Real or Perceived

Appraisal pressure has become a hot topic, but what really is it that participants in a real estate appraisal assignment are not allowed to do. Appraisers understand that our lender and real estate clients are in the business of making loans and selling homes, and they understandably do not want the appraiser to kill their deals. However, the "appraiser must perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests" and not advocate the cause or interest of any party or issue". So there is sometimes a conflict between the needs of our clients and the legal requirements of the appraiser under the "Uniform Standards of Professional Appraisal Practice."

I find the most blatant pressure is after the appraisal has been delivered, when the client tries to get the appraiser to up the value estimate or remove (truthful) but negative descriptions or determinations in the appraisal report. Often these requests start out politely, but can become very nasty when the appraiser refuses to comply. Now in the eyes of the client, the appraiser has become unacceptable and a new, more understanding appraiser will be found for future work. Appraisers who have killed deals learn that they might also be stiffed on their fees. The combination of nasty phone calls, loss of clients and revenue follow that appraiser around, causing some to become accommodating appraisers - willing to hit the needed values and ignore things about a property, a neighborhood or the local real estate market to keep future clients.

Because of the baggage appraisers will see "pressure" when it is not intended. For example an owner's estimate of their homes value on an appraisal order is viewed as a "target" value. Other times there is real pressure when the appraisal request asks the appraiser not to proceed unless he or she can provide the needed value (with the implication that no compensation will be provided unless the appraisal is acceptable). "An appraiser must not accept an assignment that includes the reporting of predetermined opinions and conclusions." And "an appraiser must not communicate assignment results in a misleading or fraudulent manner."

In a legal setting when the appraiser concludes at or near a suggested value on the appraisal request and that value is questionable, it looks very bad for the appraiser. Violations of the Uniform Standards are not only used to revoke an appraiser's license, but are also used against the appraiser in criminal cases. Yet, many appraisers gamble daily between mortgage fraud and keeping their clients happy.

A related issue to appraiser pressure is "comp checks". Again appraisers understand loan makers do not want to waste time and money on a loan that will not fund, because the property has valuation or condition issues. So they request the appraiser to give them a heads up if the value needed in unlikely. So as a service (and the potential of an appraisal assignment) appraisers might do some primarily research (using data sources they pay for and their time and expertise) to give a possible range of value. Once an appraiser provides a range of value, a pinpoint guess at potential value or even a benchmark of value ("it looks like the value you need is possible") he has performed a "legal" appraisal under the Uniform Standards of Professional Appraisal Practice. It would be a very limited scope appraisal, but an appraisal never the less, subject to all the requirements of the "Standards". Most appraisers do not go through all the required steps of an appraisal when providing a comp check - and the end results could be misleading (a violation). Every now and then the appraiser does their primarily data search and once at the property realizes that home sales he hoped to use in the appraisal are not reasonable and new ones should be found and the possible value is now different. All this appraiser time and expertise often goes uncompensated. That is not right! In order for the appraisal process to best serve the "public trust" the appraiser needs to be compensated for their time, expertise and professional opinions, not just paid when the client gets the results they want