Summary: Lack of time, information, and resource has made it difficult for appraisers to factor green building into their valuations. Now, the Northwest Energy Efficiency Alliance has released a means for appraisers to gatherincremental green cost data locally. The National Association of Appraisers calls NEEA’s Cost Data Addendum as “a significant step forward in providing data to residential appraisers about local incremental costs to install energy-efficiency and green features.”
While residential appraising still relies heavily on the market or sales comparison approach, green building and particularly energy efficiency is now recognized in some areas as a new market influencer. With this, appraisers need verifiable and credible secondary evidence to support an adjustment to the primary approach. Where can appraisers go for this secondary evidence?
The Appraisal Foundation has drafted a white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).
The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.
Comment Deadline: December 31, 2013
Send Comments to: firstname.lastname@example.org
Respondents should be assured that each comment will be thoroughly read and considered.
The Appraisal Foundation announced that the Appraisal Practices Board (APB) has adopted the following Valuation Advisories:
APB Valuation Advisory #4: Identifying Comparable Properties
APB Valuation Advisory #5: Identifying Comparable Properties in Automated Valuation Models for Mass Appraisal
The APB is an independent Board of The Appraisal Foundation, which is responsible for developing voluntary guidance on recognized valuation methods and techniques.
Questions? Please contact Staci Steward, Practices Administrator, at 202.624.3052.
The next public meeting of the Appraisal Standards Board will be held on Friday, October 18, 2013 from 9:00am to 12:00pm in Washington, DC.
Doubletree by Hilton
1515 Rhode Island Avenue, NW
Washington, DC 20005
On July 19, 2013 the Appraisal Standards Board (ASB) held a public hearing on the future direction of the Uniform Standards of Professional Appraisal Practice (USPAP). The ASB heard oral testimony on the direction of USPAP from a total of 20 individuals representing five different panels, including Federal Government Agencies, State Appraiser Regulators, Appraiser Organizations, Users of Appraisal Services, and Litigators and Litigation Appraisers.
The ASB received valuable feedback from the panelists and seeks continued input regarding the future direction of USPAP. The ASB would like to discuss next steps, as well as give a detailed overview of the feedback that was received, including topics on:
• USPAP educational needs an the practical application of USPAP
• Need for new and revised definitions
• Possible changes to the RECORD KEEPING RULE
• Drafts, Interim Communications, and Revised Reports
Please Note: In an effort to “go green,” The Appraisal Foundation will be posting all pertinent meeting material on its website for downloading. Registered meeting participants may print their own copies if desired. Please do not rely on TAF to provide copies of all meeting information.
You may make a reservation with the Doubletree by Hilton by contacting them directly at (202) 232-7000. Please note that The Appraisal Foundation no longer reserves “room blocks” for meeting attendees. Therefore, meeting attendees are responsible for making their own lodging arrangements at the best available rates.
Kudos to Florida REALTOR® magazine for its substantive look at how to deal with appraisal issues that come up during a sale. The article quotes National Association of REALTORS® Real Estate Valuation Committee member Francois “Frank” Gregoire. Gregoire told Florida REALTOR®’s Richard Westlund that salespeople can be a valued source of information. “As soon as a property is under contract, start gathering information to support the sales price. Be sure to include information that may not be readily available from other sources, such as offers and how quickly the property went under contract,” he said in the article.
The article also cites the new suite of appraiser tools available to NAR members through the Realtors Property Resource®. To learn more about RPR and its use in appraisals, visit: http://blog.narrpr.com/appraisers/.
The Appraisal Practices Board (APB) has issued the following exposure draft:
First Exposure Draft – Valuation of Green Buildings: Background and Core Competency
Issued on July 15, 2013
Written comments requested by September 20, 2013
Send comments to: APBcomments@appraisalfoundation.org
DEADLINE APPROACHING: August 1, 2013
FOR IMMEDIATE RELEASE
July 11, 2013
Paula Douglas Seidel
The Appraisal Foundation
direct phone 202.624.3048
Washington, DC– The Appraisal Foundation has begun its annual search for qualified candidates to serve on the Appraiser Qualifications Board (AQB) and the Appraisal Standards Board (ASB). There are three vacancies on the AQB and two vacancies on the ASB. Completed applications for these vacancies must be received by August 1, 2013.
Background and Qualifications:
The Appraiser Qualifications Board (AQB) is responsible for setting minimum qualification criteria for state licensure and certification of real estate appraisers and has established voluntary qualification criteria for personal property appraisers. Familiarity with appraiser qualifications is a prerequisite of service on the AQB, and a minimum of ten years of appraisal experience is required. The AQB meets up to three times per year for approximately six days in total and individuals serving on the board are compensated for their time and reimbursed for travel expenses. Those selected for AQB positions will serve a term of up to three years commencing January 1, 2014.
The Appraisal Standards Board (ASB) is charged with developing, interpreting and amending the Uniform Standards of Professional Appraisal Practice (USPAP). Familiarity with USPAP is a prerequisite of service on the ASB, and a minimum of ten years of appraisal experience is required. The ASB meets up to four times per year for approximately ten days in total and individuals serving on the board are compensated for their time and are reimbursed for travel expenses. Those individuals selected for a position on the ASB will serve a term of up to three years commencing January 1, 2014.
How to Apply:
Applications for the positions outlined above are now available on-line at The Appraisal Foundation’s website at: https://appraisalfoundation.sharefile.com/d/s90875a8647946a9a.
If you would like to request an application via email or if you have questions, please feel free to contact Arika Cole (email@example.com). When requesting information on the applications via e-mail, please use the phrase “2013 AQB/ASB APPLICATION REQUEST” in the subject line, and please include your full name, email address and phone number.
In March, a joint study by the University of North Carolina at Chapel Hill Center for Community Capital and the Institute for Market Transformation (IMT) found that owners of ENERGY STAR-rated homes are one-third less likely to default on a mortgage than the average borrower. Home Energy Efficiency and Mortgage Risks used a sample of 71,000 home loans from 38 states and the District of Columbia, all derived from CoreLogic’s mortgage database. The sample was restricted to single-family, owner-occupied houses whose loans originated during 2002–2012 and were used for purchase only. The focus of the study was on owner likelihood to default or prepay and not on the contributory value of energy efficiency features.
“We were quite surprised by the numbers,” said Nikhil Kaza, assistant professor of city and regional planning at the University of North Carolina at Chapel Hill and one of the study’s authors. “We thought there would be some association between energy efficiency and mortgage risk, but we did not expect such a large association.”
More research is needed to determine causation, though a recent article from NBC’s Today Show, offers a telling anecdote. The Today Show profiles an Olympia, Wash., couple who paid a premium to make their 2,000-square-foot home energy efficient but were enjoying greatly reduced carrying costs as a result. “They pay a measly $70 a year to heat and cool the place,” the show’s Web site says.
The survey’s finding of a strong link between energy efficient homes and loan performance puts attention on underwriting practices that today don’t account for efficiency, said Center director Roberto G. Quercia, a co-author. “Consumer and industry acceptance of energy efficiency is high. But the lack of broad consideration of potential energy savings in the mortgage underwriting process still prevents many moderate- and middle-income home buyers from fully enjoying the cost savings,” said Quercia. “Since our study findings now show that energy efficiency is strongly and consistently associated with lower mortgage lending risk, lenders and policymakers have one more reason to promote it.”
IMT has been working for several years on the Sensible Accounting to Value Energy (SAVE) Act. The bill is an attempt to develop standards for valuing energy efficiency in the appraisal and mortgage underwriting processes. On June 6, 2013, Senators Bennet (D-CO) and Isakson (R-GA) introduced SAVE in the Senate as S. 1106. The GovTrack website summarizes SAVE as “a bill to improve the accuracy of mortgage underwriting used by federal mortgage agencies by ensuring that energy costs are included in the underwriting process, to reduce the amount of energy consumed by homes, to facilitate the creation of energy efficiency retrofit and construction jobs, and for other purposes.”
The NATIONAL ASSOCIATION OF REALTORS® has worked with IMT over several years to minimize the impact on older homes and worked to ensure that the proposed legislation did not stigmatize or disadvantage older homes in any way. On June 5, NAR send a letter to Senators Bennet and Isakson, applauding their efforts on the bill.
- Don’t restrict the appraiser from making an appointment to inspect the property (if your MLS uses an appointment system, use it. You will be notified of the appraiser’s site inspection).
- If an appraiser calls, be responsive and provide as much information as needed. Return the call promptly even if your listing has closed. (Brokers are the expert source of information on your listing.)
- Be as descriptive in MLS as possible about your listing and include as many photos as your MLS system will allow (include photos of: Front, Rear, Street, and ALL major rooms & property features).
- Don’t use or reference tax records as your source of information. Do the proper legwork on your listing; it builds significant long-term credibility among your peers and local appraisers.
- Distinguish “above-grade” living area from “below-grade” living area in your MLS, particularly the quality of finish in below-grade living area, attics, bonus rooms, decks, porches, and so on.
- Provide an “Appraisers Package” in advance, and have it available at the property when the appraiser is inspecting the property, or meet the appraiser at the property so that you can answer any questions or inform the appraiser of the unique features of the property or neighborhood. Make sure you allow the appraiser the space and time to complete their inspection (Appraisers Package could include plats, surveys, deeds, covenants, HOA documents, floor plans, specifications, inspection reports, neighborhood details, recent similar-quality comparables, detailed list and dates of upgrades and remodels, and energy-efficient green features).
- Provide a fully executed copy of the purchase contract, with all addenda.
- Explain, to the seller or buyer that the roll of the appraiser is not to confirm the sales price but to provide the lender an independent, objective and impartial opinion of the value of the underlying collateral which the loan would be based on. Provide the seller or the Buyer a copy of the brochure developed by The Appraisal Foundation entitled “A Guide to Understanding a Residential Appraisal,” available from NAR to view or download at http://www.realtor.org/appraisal/a-guide-to-understanding-a-residential-appraisal.
- Real estate salespeople and consumers can be present during the appraisal inspection. Make sure all parties allow the appraiser the space and time to complete their appraisal inspection, uninterrupted.
- Make sure the property condition (inside and outside) is the best possible for the appraisal inspection, and inform the seller that interior and exterior photos (and measurements) must be taken by the appraiser.
The Appraisal Foundation Press Release on the Alliance for Valuation Education:
April 26, 2013
Paula Douglas Seidel
The Appraisal Foundation
direct phone 202.624.3048
Washington, DC — The Appraisal Foundation (TAF) and its Sponsoring Organizations have formed a national education partnership, the Alliance for Valuation Education (AVE), an organization dedicated to providing greater availability of consistent, quality valuation education. The AVE will be composed of TAF and 11 of its Sponsoring Organizations (Alliance Sponsors).
“Having these organizations work in collaboration with one another has been an evolutionary process based on their input and recommendations. It just makes sense,” stated Steven Elliott, Chair of TAF’s Board of Trustees. “This is an important and long overdue first step in combining our resources for the benefit of the entire valuation profession,” he added. Elliott went on to say, “A common complaint heard from states over recent years is the lack of available quality educational offerings. It is our hope that the Alliance will reduce an education provider’s cost to develop certain courses, thereby allowing them to focus more on delivering courses in underserved areas.”
The AVE is the result of the work of the National Education Partnership Task Force, which was appointed by TAF’s Board of Trustees in May 2012. The Task Force included representatives from several of TAF’s Sponsoring Organizations as well as the Association of Appraiser Regulatory Officials.
The AVE will be:
- established as a new 501(c)3 not-for -profit organization, separate from TAF and its Sponsoring Organizations. The Appraisal Foundation’s Congressionally authorized Boards, the Appraisal Standards Board and the Appraiser Qualifications Board, will not be involved in the governance or operation of the AVE.
- governed by a seven member Board of Regents appointed by the Alliance Sponsors and TAF. One of the Regent positions will be an elected at-large seat, open to the general public.
- composed of TAF and Sponsoring Organizations of TAF in good standing who elect to become a Sponsor of the Alliance. The Appraisal Foundation Sponsors may elect to not join the AVE.
- a developer of educational materials, but not a presenter of the education. The AVE will be a wholesaler rather than a retailer, using a model similar to what TAF currently utilizes with the National USPAP Courses.
- providing the education materials to all educational providers.
The initial focus will be real property continuing education, with topics possibly drawn from Valuation Advisories issued by the Appraisal Practices Board. The education developed by the AVE will be voluntary; any educational provider will be able to continue to develop similar education and appraisers would not be required to take AVE education.
In the future, the AVE may give consideration to developing other valuation discipline education, including both personal property and business valuation, basic qualifying education for real property appraisers (e.g.Basic Appraisal Principles and Basic Appraisal Procedures) and remedial real property education.
The appointed members of the Board of Regents will be selected by the Alliance Sponsors and the TAF Board of Trustees at their upcoming meetings in May in Savannah, Georgia. The organizational meeting of the AVE Board of Regents will occur this summer and it is anticipated that the first AVE course could be available in the first quarter of 2014.
The Board of Trustees of TAF would like to recognize the members of the National Education Partnership Task Force for their excellent work, dedication to the profession and vision:
National Education Partnership Task Force
- David Layne, Chair
- Charles Blau, National Association of Independent Fee Appraisers
- Don Dorchester, Royal Institution of Chartered Surveyors
- Mike Evans, Board of Trustees, The Appraisal Foundation
- Mark Grace, American Society of Farm Managers and Rural Appraisers
- Heidi Henning, National Association of Realtors
- Don Rodgers, Association of Appraiser Regulatory Officials
- Magdalene Vasquez, Staff Member, The Appraisal Foundation
- Alice Ritter, Appraisal Subcommittee (non-voting observer)
- Ted Freeman, Appraiser Qualifications Board (non-voting observer)