Here is the thing, The appraiser needs a consistent method of measurement when comparing an element of comparison. 1, If your method of measurement for your comparable sales and listings can be done as detailed as you seem to be measuring this particular subject property then you are probably living in “Never Never Land” and I hope you make it back safely. In Maine we have properties built in the 1700’s and our MLS doesn’t have a place to discuss ceiling height. If you’re a buyer for a property built in the 1700’s than you are aware that some ceilings are low, floors are slanted and walls are not plumb. Hopefully you realize that this particular submarket has a looser definition of gross living area then the submarket looking for a newly constructed home. Just as you probably realize that your market is more particular than the market looking for a seasonal hunting camp. So when considering consistency you need to look at your market and submarket. Most secondary data sources were generated for other purposes not completing Fannie Mae appraisals. 2, Once some form of consistency is established the appraiser then need to determine an appropriate adjustment. The appraiser might be using “price vs square foot of GLA graph” or possibly even using the “price per square foot of GLA” or some fraction of price per square foot determined to be reliable and reflective of the market’s reaction. Some use a price per square foot and change it until the adjustment prices tend to be consistent with one another. So we are working with two variables that tend to have some flexibility “not the greatest word I grant you” to establish a contributory value and typically resulting in estimating fair market value. Now Fannie Mae says levels need to be 7 feet in height to be considered GLA… and that any area must be 5 feet in height to be considered GLA. Although I would tend to agree with that definition in my market area and all my submarkets. There are exceptions and I sometimes have explain why I not strickly adhering to Fannie Mae standards. That said … sometimes I am told tough cookies! The client sometimes demands that I “do” or “do not” included area as part of the GLA. Then I simply make an appropriate statement in the report. Lastly it should be recognized that each appraisers bring unique set of qualifications to the completion of a report. My history is appraising for 35 years, a past real estate agent & insurance agent as well a general contractor with some secondary education in energy efficient homes. I sometimes have to give this information out to my client so they recognize that I did not just fall off the turnip truck in “Never Never Land” for them to give me the benefit of their doubt.

Houses or buildings can be measure in different ways for different reasons. Gross Building Area is different than Gross Living Area, then Gross Floor Area. Sometimes they come out the same sometimes different depending on the criteria and purpose for which they are being determined. Fannie Mae has a criteria that needs to be follow when that supplimental standards apply. I would not include your first floor area in the GLA ... that is not to say that I would not give equal value consideration in the finished foundation area. As to if the valuation is accurate that is not for me to say... but I can say if you feel uncomfortable with the out come you can order a second appraisal. If that one is consistent with the other than maybe the valuation is well supported. If the valuation differs greatly than you have reason to request a refund on the first appraisal. I recently did a review with the first appraisal $360,000 the second 6 months later for $285,000. Stuff like this happens. As for Zillow it came up with over $500,000 for my house and I know its not worth more than $250,000 so Zillow is not always a reliable indicator. Sorry for your problems... I sure your lender is working with you to find a solution

Frank, Good job, well presented. I applauded your presentation, although I think I would have added a couple of things. 1, AMC have been around for a while… this is not new to the industry, and has been going on for some time. It’s just now that real estate agents are seeing and being effected by some of the things that always existed. 2, Lenders are in control of the situation, some of the major lenders own the AMC’s it is their choice to utilize AMC’s to increase profit margins not due exclusively to the HVCC 3, Real estate agents should consider local lenders for their mortgage business as oppose to the larger banks. 4, The history of blaming real estate appraisers by the government and public for over inflated properties is one reason the HVCC was created. I would mention comp checks, not paying for appraisals if they did not meet value request and other things that were used to manipulate the appraiser. These things were done by mortgage brokers, lenders, AMC’s and Real Estate Agents, and those industries help create the problem that has result in the development of HVCC. 5, Part of the increase might be because of the new 1004MC form and the additional requirements of the secondary market. So could the HVCC be revised, should it at least have the quality control part in place before it was put in place? Sure that is a good argument. Yet if I was going to inform people of what has happen due to the HVCC I would also explain why many appraisers felt it was necessary and why kind of business practices were going on prior to it implementation. At least understand the entire problem before discussing possible solutions. My two cents..

While you comments are appreciated Bryan, and I see the rational, I not sure they makes any common sense. As appraisers we are responsible for meeting our client demands, and our client may require more that what is indicated in the Fannie Mae Guidelines. So arguing will just get us kick off someone's list. If we are truly going to have the tail stop wagging the dog, then the dog needs to be accountable to something more than ideals. Ideals although written out (USPAP, Fannie Mae), still subject to individual interpretation (client or appraiser). We have to start regulating ourselves, which would make us responsible professional quality standards, and create some consistency as to the expectations of the industry. Recently I read that one independent nonprofit organization that is affiliated with the mortgage industry requires all work to be submitted to a central place and from that, 10% of all work is desk reviewed. In addition 1% of all work over a 2 year period is field inspected and reviewed. Then Quality Control officers are reviewed and there are checks and balances, with an interactive group. What do we have? We have lenders and borrowers that interpret our work, and if they feel it necessary to report their concerns to the local state board. A state board which is not accountable to the appraisers it was meant to protect. This is not a proactive process, this is a process based on fear and does not do anyone any good “in letting the dog wag its own tail” To take control of the tail, we must regulate ourselves, and be responsible for our work to each other. Until then, HVCC, AMC’s, Mortgage brokers and lenders, will be controlling us.

Scott, I don’t want to seem argumentative but you don’t seem to have all your facts. I believe once you review all the information, I am sure you will conclude that appraisers could not be held responsible for a home meeting RENET standards. You can find out more by going to www.resnet.us As you may know RESNET is basically responsible for standardizing an energy rating system for the mortgage industry and developing IRS tax credits. Energy Auditors a trained and certified in the field and if you took an energy audit course, you would realize that appraisers could never be expected to be responsible for an energy audit. Just as they are not responsible for determining water quality, septic systems, air quality, and etc. RESNet is not new; it has been around for a long time. You will find energy addendums available to the appraiser for some time. See Fannie Mae Form 1004A dated 6/89. You can further obtain more information on the HUD program and the Rural Housing program websites. So this is nothing new and like you the senate could review documentation as it relates to the Cap and Trade bill that has been available as early as this past spring and appears to be part of the stimulus bill. I say that because there are several documents on a national level I have read, and in my state, the state senate passed several bills to become more energy efficient. These bills related to the use of stimulus money that was going to be provided to the state of Maine. There has been some talk not just on a state level, but a national level about giving out coupons, providing grants and low cost loans to anyone making cost effective improvements to a residential property. Cost effective means dollar for dollar savings over a relatively short period of time (typically less than 5 years). In fact I took a class back prior to the first of the year, which the state of Maine paid half of the tuition cost, to gear up for becoming more energy efficient and the money that was going to be disbursed through Maine State Housing Authority. Now a smart appraiser would not be looking at this change in a negative way, but consider the fact that Energy Auditors get $500 to $1,000 for an energy audit. An energy audit takes less time to do than a real estate appraisal, and energy auditors unlike appraisers are able to develop a client based, as oppose most of them that seem to be restricted to working as vendors for national AMC’s. Now you are right, an energy auditor needs equipment, but an infrared camera is not required, however most recommend them. You will need a blower door and a few other items. Some equipment you probably already have, and certainly you have good basic skill set to be part of this industry. Oh you would have to get more education, something we have to do every two years anyway, so why not a little more?. Software would be essential. But that is typically less than $500.00, far less that the cost of you real estate appraisal software. I would like to disclose that I have spoken to Apex software, who has assured me they are developing a sketching program to work with energy auditors. I have reviewed cost typical cost associated with making a property meet the HERS Index and it is not that expensive to bring most homes up to a recommended standard. So is this a bad situation for appraisers. NO absolutely not … It is an opportunity to expand are expertise. Primarily since all energy raters for RESnet must be independent third parties to the transaction. I spoke to one energy auditor who was an airline pilot in New Hampshire, he said he was making so much more money doing energy audits, that he was going to give up being a pilot and do audits full time. So Green Reeper is not appropriate… unless you mean making MONEY. We should not be against this new bill, but supporting it. We should be finding ways we to capitalize on our existing strengths and contacts in this new field of expertise.

I tend to agree with the previous posting, the HVCC was meant to protect the consumer, the public, and the appraiser. I am not surprised that NAMB or Alamode feels that the HVCC threats their financial interest. As noted by the appraisal institute publication “home valuation code of conduct - myths and realities” It is the lenders choice if they want to utilize AMC or not. If they choose not to order in house, and use an AMC they can pass on the cost to the consumer, and have the consumer or whoever pay more. I can say one thing about working with those lenders that are implementing the HVCC by utilizing a staff person to assign reports or utilizing an AMC. The results are that I am not getting the pressure that I once was, to make a predetermined value if I want to continue to get work, I not being asked to do comp checks 6 times a day, I am getting paid for my work, and I not constantly be requested to over look things such as unfinished items and etc. It is not a question if this industry (mortgages and appraisals) need regulation. It is imperative that appraisers need regulation, if we are going to be a viable industry in the future. Organizations such as NAMB should not be the industry of “NO regulations” or “NO HVCC”. It might be improved, changes might be appropriate. However it is a misrepresenting the HVCC when they make such statements The NAMB has issues that it should be addressing such as fraud and etc in its own industry. I would debate that the HVCC has increased cost and hurt the consumer, however an increase in cost is essential if we are going to provide credible results and protect the public. In part, appraisal cost are increasing due to the increase demands of the new forms, enforcement of some existing regulations, and demand for additional support such as listings and multiple or comparables that sold in 90 days. Costs to the borrower are not increasing because lenders have to use AMC’s. Cost can be absorbed by the lender if they set up a system of monitoring and ordering appraisal reports in house. So it is the lenders choice to use an AMC, to pass on the cost to the consumer, not a requirement of HVCC. Keep in mind that appraisal fees have not increase in this industry for 25 years. Now why would that be? I certainly know the profitability of being in this profession has dismissed, and I feel that the quality of report has diminished as well. But let’s talk about protecting the consumer from excessive fees. Have you looked at a HUD statement lately? Broker have more fees than you can shake a stick at, processing fees which run from $250.00 to $750.00, shared commission on title insurance premium 80 to 90 percent of the premium charged and part of it is going back to the lender or broker in most cases. Why do you think companies like First American Title owns a company like Eappraise-It an AMC? That is why affiliated business relationships are set up so they can share in the profit. The list can go on…. It is not the consumer that the NAMB is concerned with. It is business as usual, and it is their profit margins. So would debate any party that the HVCC has hurt this industry, its implementation might be causing problems, but that is not the fault of the appraiser. Appraisers should be wary of anyone supporting the elimination of the HVCC. There should be special attention to those who have been making a profit from exploiting the appraisal industry in the past.

Fred, You will find all the sources you and Brian have indicated give some insight into marketing. Yet you will also find they give a very general explanation as to what can be expected from your marketing efforts. Specifically when it comes to dollars spent in time, energy and real dollars what is the return on the expenditure. Any marketing program that you work diligently on, will most like bring some results. The bigger question is, are the results high enough to out way the expenditure? I have read many of Ann’s books in the past have did subscribe to her newsletter. I have reviewed Alamode material, and have even taken some of their suggestions. Alamode integration your desk top software with x-Sellerate is a great feature. Yet Alamode is not marketing your business, they are in the business of marketing their software. Keeps that in mind with anyone or any company offering you free advice or something for $19.99. Neither Alamode nor Appraisal Today nor etc are the answer, but they are a good place to start. You have to take their information with a grain of salt, and then apply your own experiences and knowledge of the market into consideration. There is no quick fix in marketing, no pot of gold lingering on the internet, no cheap way to make money. It takes planning, hard work and some money. This is based on the people and companies that interviewed over the years that are successful in marketing and increasing their business. My suggestion is to start at the basics. That would mean interviews, a business plan, and etc. My method has worked for those I have spoken to, I not sure about the others. If it is right for you; you will need to make that determination.