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Editor’s
Note: Appraisers who broaden their skills and knowledge of the systems of
a home are finding their efforts paying off. Read one appraiser’s story
here and find more in the upcoming print edition of Working RE Magazine,
scheduled to mail in early February. Subscribe here: www.workingre.com.
Fannie’s
Expanded Reporting: How to Cope and Thrive
In a recent Q&A, Fannie Mae’s Mark Simpson,
Director Property Standards, Single-Family Credit, makes clear that the
word “inspection” on the new forms is Fannie’s clear intent and will
not be changed- despite concerns that it can mislead homeowners into
thinking they are getting a home inspection rather than an appraisal, and
rumblings from appraisers who warn that they are not qualified to handle
the new demands.
In
addition to the trend toward “niche” appraising, which requires
specific expertise, new expanded reporting responsibilities placed on
appraisers by FHA and Fannie Mae increase what appraisers are required to
know about the physical characteristics and condition of a property. (See
Fannie Mae verbiage below.)
Home
and environment inspection and other related fields are a natural for
appraisers to explore, just like 10 years ago when a slumping real estate
market convinced many to leverage their contacts and expertise into new
areas. Many have done so successfully over the years.
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Diversify
and Conquer: Appraising & Inspecting
For this reason and others, appraisers are broadening their knowledge
about the systems of a home and finding increased success as appraisers and
home inspectors.
Donnie Shevlin, a
licensed inspector in Illinois
for four years, became a licensed appraiser two years ago. He says that
while start up of his home inspection business was not easy, by the second year
it had taken hold.
He says appraising caught his eye because it looks easy. “I
learned soon enough, of course, how much time and hard work there is
involved in appraising,” he said.
According
to Shevlin, understanding structural and building issues is paying off
handsomely for his appraisal business.
"Knowing building quality helps me evaluate the subject and comps much
better,” Shevlin said. “I am able to defend my choices with
underwriters, who appreciate my knowledge and tell me that my descriptions
of the subject and comps make sense, where those of other appraisers do
not.”
The result for Shevlin is a booming appraisal business as satisfied
underwriters keep coming back because of the quality of his product. He
adds that his expanded knowledge also has been his ticket to FHA and VA
work and a new special “Buy-Back” program from HUD.
Fannie Reporting Requirements
As noted, the trend in recent years is to place greater responsibility
on appraisers for the “physical” inspection of a property. The
following is from a recent Fannie Mae Q&A, available at www.workingre.com
(or Fannie Mae site).
"We believe that an accurate description of the physical condition of
the subject property is a critical element in arriving at a supportable
opinion of market value, as well as in the prudent underwriting of a
mortgage loan. The appraiser is responsible for noting in his or her
report any adverse conditions (such as, but not limited to, needed
repairs; deterioration; the presence of hazardous wastes, toxic
substances, or adverse environmental conditions; etc.) that were apparent
during the inspection of the property or that he or she became aware of
during the research involved in performing the appraisal. The appraiser is
expected to consider and describe the overall quality and condition of the
property and identify items that require immediate repair as well as items
where maintenance may have been deferred, which may or may not require
immediate repair.” (story
continued below)
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Knowledge
is Confidence
“Do you know how tell if a foundation is failing? Or if a roof is in
satisfactory condition? Do you
know how to tell if the plumbing and or electrical systems are in need of
replacement or repair,” asks Jessica Camara, marketing coordinator at
American Home Inspection Training (www.ahit.com).
"A good school like AHIT will teach you how to identify these things and
will provide everything you need to step your business up to the next
level. Taking training will help you be more knowledgeable with your
appraisals and will help reduce your risk,” said Camara.
Marketing
Muscle
Home inspection and other services such as environmental testing offer the
opportunity to leverage established contacts– homeowners, agents and
mortgage brokers, into referral business. While few do both the appraisal
and inspection on the same home, many professionals “partner up," referring work back and forth. Many have formed companies offering all
these services under one roof.
Shevlin
said he benefits from cross marketing, earning many appraisal referrals
from his home inspection clients. (It can not work the other way around,
however: USPAP does not allow appraisers to solicit or complete home
inspection work on properties they appraise.)
Home inspectors don’t face the relentless pressure for values and speed
either, though some report losing agent referrals when a deal is blown due
to problems revealed in the inspection. Generally, inspectors are
considered the “good guy” of the transaction because their
homebuyer-clients want to know what’s wrong.
Shevlin says there is one drawback. “I’ve been so busy my family
doesn’t know me anymore,” he said.
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(story continued)
Learn More
For the finest schools specializing in
training and support, see the next issue of
Working RE Magazine or visit www.orep.org
(click benefits). Many offer OREP members and Working RE Magazine
subscribers reduced fees on training and products.
If you enjoy WRE Online, please
forward to a colleague
using the link below..
Your Comments, experiences and suggestions are
welcome dbrauner@workingre.com
New:
Help
Wanted/Available - Trainees-Mentors (bulletin
board)
Advertising: David Brauner, Editor. dbrauner@workingre.com
Working RE Home
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