Posts About Appraisal and Appraisers written by the staff of The Robinson Real Estate Appraiser Group, Maryland.

What is a Hybrid Appraisal?

A hybrid appraisal is a valuation completed by a Licensed/Certified appraiser that is very similar to a desktop appraisal. It is a shorter appraisal form than the traditional appraisal and is performed by an appraiser who typically never visits the property. However, a hybrid appraisal includes an exterior observation of the property, sometimes including an interior inspection by a third-party: this third party inspection could be done by a real estate agent, a property inspector or even another real estate appraiser.


The use of this type of “hybrid”  appraisal for lenders boils down to reducing turn-times for appraisals and lowering fees. Fast and cheap….doesn’t sound too reliable when you break it into simple terms. Appraisers typically  earn an average of $50–$100 per assignment, which is substantially less than the average fee for a typical full appraisal. The hybrid appraisal is designed so the appraiser can complete the valuation in 30–60 minutes. An alarming aspect to me as an appraiser is that another person is involved in the valuation and/or outcome of the report. There is a reliance on third party data that is very concerning, the data that has been compiled by another person could be inaccurate and/or misleading.


A major concern regarding the hybrid appraisal would be the level of risk and liability. Performing an exterior inspection is not new to the appraisal field, the 2055 form has been used in past years, the main difference is  the hybrid appraisal is when a third-party inspector does an external or interior inspection on which the appraiser relies on the data.  A variety  of companies offer hybrid valuation products, they have their own forms, statement of assumptions and limiting conditions, certifications and additional information that is provided to the appraiser and/or included in the report. Some hybrid appraisals have an exterior only inspection, while others include an interior inspection. With all of these different factors regarding the hybrid appraisal the levels of  risk and liability are heightened. Typically, anything that receives value would be the responsibility of the appraiser.  It seems as though appraisers continue to be asked to adapt to changes in forms and regulations but any change should strive to enhance and produce a credible product for lending purposes. 


If this form does gain momentum and used more in our field, this would be an advantage for the aging demographic of real estate appraisers.  This form may be a possible solution and benefit for appraisers who still want to continue appraising into their “golden” years, but due to health and/or limited mobility are no longer able to physically inspect homes. In these instances, hybrid appraisals allow experienced appraisers to continue to apply their expertise without leaving the house.


Personally, I do not feel this appraisal alternative is a viable replacement for a credible appraisal assignment. Change and adaptation is a constant in the appraisal business, whatever the direction the hybrid appraisal may lead to, all of the appraisers at Robinson Appraisal Group will continue to perform credible appraisals to achieve market value on properties within our area of Baltimore City, Baltimore County, Cecil County, Carroll County, Anne Arundel County and Howard County. We look forward to providing you with reliable appraisal assignments.

Baltimore Trends and the Outlook for 2019

Buyers and sellers are in for another nail biting year of making predictions regarding the Baltimore metropolitan market. There seems to be a slightly harder road ahead than last year due to the future of the Federal Fund Rate. Interest rates are projected to rise from its current 5% to 5.5% by the end of 2019. The rate hike will be based on data from the overall economy growth. If the economy does not move forward with the growth as expected, the hikes will likely be delayed.

The Baltimore market is projected to have slightly more inventory with an overall 2% increase in housing prices in 2019.. so on the horizon there will be more inventory, higher prices and a raise in rates. This combination is making it more difficult for the first time home buyer to secure a home. Millennials make up the largest demographic of new home buyers which will be heading into a year where home-ownership looks to be a little tougher than the past few years.

There are other factors coming into play this next year on a national level that is new territory for all of us. The tax bill that was passed at the end of 2017 was in effect for the full year of 2018. This reform is new so the outcome is unknown of the positive or negative effects on the 2019 economy. The reform includes changes in standard deductions for married couples and for singles: you’ll need to take a close look at that this year to be sure you will still be itemizing because the standard deduction is much higher. There is also a limited tax advantage on mortgages: mortgage interest is still deductible, at least in principle (pun intended), for the vast majority of homeowners. However, whether they actually receive that deduction or not will depend on a multitude of other factors. This is yet another scenario in the economy that a simple answer does not apply.

On a more local level, the economy of the Baltimore Metropolitan area (in part) will soon feel the benefits of the recent decision of the new Amazon Headquarters in northern Virginia. The second Amazon headquarters is going to go by “HQ2.” The company says that this won’t be a satellite facility, but rather an equal to its current headquarters in Seattle, Wash. It also notes that it will be investing $5 billion into its creation. Located approximately 30 miles outside of Washington DC, Loudoun County is part of a burgeoning tech corridor. The employees would live in Loudoun County or commute from one of the surrounding counties, Maryland (directly to the north), or West Virginia (due west). So with the influx of jobs and the need for housing the opportunities for an economic boost for the Baltimore area looks to be quite positive.

The economy is multi-faceted, multi layered, temperamental and always changing; home prices follow this trend. Robinson Appraisal Group can offer you their services on determining the value of your home in an ever-changing climate. We offer home appraisal services in Baltimore County, Baltimore City, Harford County, Howard County, Carroll County, Anne Arundel County and Cecil County.

An Estate Sale Appraisal Process

An Estate Sale Appraisal Process

After 25 years of handling estate sale appraisal in the Baltimore Metropolitan area I have seen my fair share of estate sales. But what is an estate sale? An estate sale means a person has died and the party/parties that inherited the property are selling it.  Estate properties usually are priced well to reflect that fact that they need work. Another  possible issue is that if there are multiple parties involved, they may not always agree on what price or terms they’ll accept and there may be delays  due to the need to negotiate among each other, though hopefully that is not the case.

As an appraiser there are multiple ways to appraise a property that belongs to an estate. One method is the traditional appraisal process of determining the most recent and appropriate comparables in the market area surrounding the property.

Many times we are asked to evalauate the property’s value as of the date of death of the deceased owner(s). This is typically a private appraisal for an attorney or for one of the parties who will be part of the estate looking for the market value. When establishing the value on the date of death  the sales comparables must have occurred prior to the date of passing, so if I was doing an appraisal on a house where the  deceased passed 12 months ago, the sales would had to have sold prior to that date, say 13 or 14 months ago. You cannot use sales that occurred after the date of passing: this is called a retroactive appraisal.

The appraiser can not be biased or allow recent circumstances in the market to affect the value after the retroactive date…say the market plummets or prices have increased substantially due to high demand… the estate appraisal should reflect what the market was on the date of the passing, not anytime after.

A big part of maximizing what you leave behind is minimizing taxes. Federal taxes on gifts and estates can be among the highest assessed on any financial transaction. In addition, some states levy their own estate or inheritance taxes.

An appraiser,  an attorney and a tax advisor can aid in the process of estate issues. As an appraisal company we can provide one of the services needed in regards to your estate and real estate valuation.  Robinson Appraisal Group covers the areas of Baltimore County, Baltimore City, Harford County, Cecil County, Carroll County, Anne Arundel County and Howard County. Having a professional appraisal gives the parties involved a reputable report to work with in meeting IRS and state agency requirements. It would be our pleasure to work with you during this arduous process.

Enhanced Property Inspection Waiver

Fannie Mae has a new automated underwriting system called the “enhanced property inspection waiver” program. Fannie Mae’s no appraisal offer applies to refinance loans on single family homes or condos up to $1 million and Fannie Mae must have a physical appraisal for the same property with the same borrower in its database.

So where is the data or valuation coming from? Oddly enough it is our own reports that we send in through the Uniform Collateral Data Portal. This is a database where lenders enter appraisals for mortgages submitted to Fannie Mae or Freddie Mac; this was implemented just over 4 years ago. Imagine the large pool of data gathered by appraisers fed into this database that can now be used for developing automated appraisals. It is unnerving to think our industry has required us to give information to aid in our own possible extinction.

An argument is made to the effect that an additional program was needed to expedite the appraisal process due to the lack of appraisers in the industry and turn around time on reports are longer than expected. There are less appraisers in the workplace due to a large amount of appraisers hitting the retirement age and the minimal influx of new appraisers coming into the industry. This minimal influx is mainly due to current license and/or certification requirements. The Appraisal
Institute noted that the number of active appraisers has fallen approximately 9% since 2012 and expected a continuation in decline in the future. There has been lobbying toward the Appraiser Qualifications Board for a reduction on some of its college level education requirements in an effort to attract more people to the field.

Under the “enhanced property inspection waiver” program the loan applications that come through its automated underwriting system could increase to 10% for qualifying loans: formerly this was 3%.

This new program would be for “limited cash-out refis”. Fannie Mae’s director of credit risk, Zach Dawson, estimates that 25% of limited-cash-out refis could qualify for the new program. Loan amounts vary by region and the loan- to- value ratio cannot exceed certain limits.

As an appraiser in the field everyday I realize the importance of entering into a home and seeing with my own eyes the condition, the improvements, the deferred maintenance, working systems, presence of mold and/or recent dampness within a property. These are just a few items that could never be seen by dated data that was entered through an electronic portal years ago.

Everything is not always black and white or cookie cutter. Homes are like people, no two homes could ever be the exact same. Our current world is driven by technology without the need for interpersonal skills being admired or even needed due to programs assembling the most advantageous bottom dollar for big business. As appraisers we collectively enter and report on billions of dollars worth of of “big business” property, we state our findings, give valuations and provide support for the structure and integrity of this industry. Replacing our inspections/appraisals with a streamline program in an effort to save a few hundred dollars in a multi-billion industry in my opinion is like shooting yourself in the foot….you may inadvertently undermine your own interests.

Listing Shortage!!!

Already this year we have seen a shortage in the supply of homes on the market. With the beginning of the spring season upon us buyers are waiting with bated breath ready to pounce on the purchase of their new home. Comparing active listings from last March (2016) to this March (2017) in the Baltimore Metro Area housing market (which includes the City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County) the results are undeniable. The number of active listings declined by 15.8% to 9,453, the 19th consecutive month of declining year-over-year inventory levels and the lowest March levels in a decade.

Although this listing shortage seems to be problematic for buyers, there is an upside for the sellers. The basics of supply and demand states that when the demand for real estate is high, prices rise. When the number of available properties increases, prices usually drop. With anxious buyers waiting in the winds, a beneficial opportunity presents itself for the sellers.

With a shortage of homes in the market the homes typically spend less time on the open market with sellers receiving quick  offers close to the list price and some even higher to ensure the offer is accepted. The average percentage of original list price received at sale in March was 95.1%, the highest March level in a decade, exceeding the previous high set in March 2014 and 2013 of 93.2%. The median days-on-market was 42 days, down from 63 days last year, and at the lowest level in a decade.

Due to listing shortage, the homes that are available on the market are getting scooped up. Sales across the Baltimore Metro area was up 21.7% from last year to $923.8 million. March closed sales of 3,288 were up 16.8% compared to last year and set a record high for the decade.

This data was compiled by the Multiple Listing Service (MLS) data in MarketStats by ShowingTime’s database based on listing activity from MRIS (Metropolitan Regional Information Systems, Inc.).The Baltimore Metro Area housing market includes the City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County in Maryland.

Low inventory, a strong demand for homes and springtime are a wonderful combination for a seller’s market. This is coupled with the fact the homes are typically on the market for less time than past years and the increase in sales makes this one of the best times to sell…in almost a decade! Listing inventory has not been this low in the peak spring season in quite a long time, if you are a seller or thinking about selling, this may be the best time to put your home on the market.

Interest rates, global events, inflation and tax reform are just a few economic variables that could help or hinder the future of the real estate market. The real estate market is constantly changing but the current storm of circumstances puts the seller in an advantageous position, one that may not last very long.

The New Home Dilemma

Buying new construction has decision making every step of the way…what floor plan to choose, what options, what trends will last and should I wait and upgrade that myself rather than paying the builder such a premium? From an appraisal perspective the viewpoint is a bit different: our job is to prove that the price of the newly constructed home is supported by the neighborhood and area. The largest hurdle in appraising a newly constructed property is when the dwelling is the smallest in the neighborhood with the most amount of upgrades. Typically there is an average amount of options the typical purchaser chooses within the dwelling (upgraded cabinets, flooring, sunroom, luxury master bathroom, etc.) and then there are the buyers that want ever bell, whistle and customization that the model home has and then some. Couple the vast amount (and large price tag) for all of these options and the fact it is within the smallest floor plan available….this is not a good combination. A property like this one runs the risk of being over improved for the neighborhood and has a good probability of having difficulty with the appraisal. The contract price needs to be supported by other homes of similar design and SIZE with the presence of upgrades: keep in mind that not all upgrades will give you a return on your investment. There is a ceiling to the amount of upgrades that the typical buyer will pay, diminishing returns is how we express that there will be a limited return on the additional improvement cost beyond what is typical. As the upgrades go beyond the typical amount the return on the added investment will continue to decline.

 

So, keep in mind, don’t over-customize. Of course, new home buyers want their homes to reflect their personal style and taste. But, it’s important to consider the resale value, as well. While it’s important to make your house satisfy your needs and tastes, just realize not all upgrades will give you a return on your investment.

 

Some features that are good investments are upgrades that will make your kitchen the star of the show. These upgrades include: large center islands with seating and storage, under counter lighting, backsplash, stainless steel appliances and granite countertops (though these have now become standard in many new kitchens).  Another suggestion from an appraisal standpoint is you can never go wrong by adding square footage: it is more effective to pay the builder to make the home larger (bump outs, sun room or great room) while the property is being erected verses being remorseful at a later date wishing you had that extra square footage.

 

Industry experts suggest not putting your upgrade dollars toward these options: specialty driveways, high-end plumbing features and jetted soaking tubs. Cosmetic features in particular, such as paint, landscaping, lighting fixtures, epoxy garage flooring, crown molding, chair rails, window treatments and even certain appliance upgrades can often be made after the closing, particularly by homeowners who have a budget.

 

Remember that the model home you fell in love with may have thousands of dollars of options and that the base home may look very different. With so many upgrades and options available, it’s hard to stay focused on building your dream home. Stay on track to satisfy your needs and tastes but remember a lot of the upgrades can be added to your home after it is purchased. This delayed gratification could be good for your budget and your overall future return on your investment.

The In-Law Suite

We all want to live the “suite” life….but this one involves a change in your life to include your aging parents moving in with you. As the Baby Boomer generation is getting older we see more multi generational families living under the same roof. With more Americans living well beyond their 70s, more adult children are now left in a position where they have to be caregivers for their aging parents.
There are more than 50 million American families having multiple generations under one roof and the real estate market is reacting to this trend. Homes with in-law suite, extra kitchens, multiple master suites, a guest house and/or an accessory unit are offering flexibility when it comes to aging family members. With the rising cost of nursing homes, this multi generational living could be beneficial to all parties.
The restrictions for either adding onto an existing home, modifications within the existing home or building an additional structure (guest house/accessory unit) vary in each jurisdiction. Baltimore County Zoning and Harford County Zoning were contacted to compare restrictions, limits and the overall process. Harford County refers to the addition of the in-law suite (second kitchen being added) as “Cottage Housing” and Baltimore County refers to the addition as an “Accessory Apartment”. The process is overall very similar, the only real difference noted was that Harford County requires at least 2 acres of land to build a separate building not attached to the main dwelling: Baltimore County has no minimum. Both offices note that plans need to be approved regarding the layout/changes and there also needs to be a plan of action to remove the kitchen and return the home to a single kitchen residence. Once the declared person(s) will no longer be using the apartment, guest house, accessory unit the pre approved plan for removal needs to be executed.  For instance, if a separate manufactured home, mobile home or guest house is placed on a property and the declared person/relative is no longer residing in the dwelling the structure needs to be converted into a storage unit or possibly a garage. This check and balance system is maintained by a 2 year renewal process for the in-law quarters. Additional information can be obtained from www.baltimorecounty.gov and www.harfordcounty.gov. If you are planning to build onto your existing home every town (and in most cases every neighborhood) have different rules when it comes to adding on to a property. Find out what is possible through a meeting with the building inspector or planning department in your town and they will be able to say what is allowed when building an in-law suite on your property.
Another sector of the aging population prefer to preserve their independence and choose a manageable home for future years. A ranch style home where everything is accessible on one floor and allows opportunity for independence for years to come.  For the “active adult” there are also age-restricted communities , generally for people 55 and over where maintenance is generally provided and residents live among their peers. Most are rich with attractions to include pools, golf courses and a spa.
So, if you end up being the “suite” child that every parent desires offering multiple generations to live under one roof (or multiple roofs) or taking care of them out of necessity check with local planning and zoning because this multi step process is a bit more involved than a typical addition.

Housing Trends in Baltimore

We have all watched the programs on HGTV to see the transformation of an old space revamped, renovated or remodeled into a new modern space that reflects the current housing trends that yield the highest payoff or return. Awe struck by the change that the properties undergo in a seemingly short time span (in TV world) is inspiring and makes us come back for more. Trends vary depending on the location of the home and the demographics of the area: the choices made after determination of demand in the market would allow the potential to maximize the return on investment and/or appraised value. For instance, Baltimore City and Baltimore County buyers share some popular housing trends but there are trends that are specific to the opposing areas. The two following trends will be highlighted to reflect the differences in the trends and demographics.

Housing Trends in Baltimore

The Rooftop Deck

Where most homes downtown have very small to no backyards, the rooftop deck is a great solution for enjoying the outdoors. Outdoor spaces are essential to most buyers regardless of age. Baltimore City does rank fourth in the nation among cities that are attracting young adults. The combination of a growing job market and relatively low prices compared to other major cities is leading many young professionals to purchase their first homes in Baltimore. One of the leading amenities requested in a Baltimore City townhome/rowhome is a rooftop deck. A popular tradition with Baltimoreans is watching the fireworks over the Inner Harbor from a rooftop deck on July 4th. The rooftop deck can offer water views of the harbor and spectacular panoramic views of the city skyline. The Millennials are flooding Baltimore City for opportunity and their young legs are conducive to flights of stairs leading to the roof. On the flip side Baby Boomers, another demographic with huge purchasing power, are shying away from flights of stairs due to bad knees, bad hips ailing joints and overall aging physiques….getting older is not for the faint at heart.

The In-Law Suite

While the Baby Boomer generation is getting older we see more multi generational families living under the same roof. There are more than 50 million American families having multiple generations under one roof and Baltimore County is tapping into this trend. Homes with “in-law suites“, extra kitchens, multiple master suites, a guest house and/or an accessory unit are offering flexibility when it comes to aging family members. With the rising cost of nursing homes, this multi generational living could be beneficial to all parties. If you are planning to build onto your existing home every town (and in most cases,every neighborhood)have different rules when it comes to adding on to a property. Find out what is possible through a meeting with the building inspector or planning department in your town and they will be able to say what is allowed when building onto your property. Another sector of the aging population prefer to preserve their independence and choose a manageable home for future years. A ranch style home where everything is accessible on one floor and allows opportunity for independence for years to come.  For the “active adult” there are also age-restricted communities , generally for people 55 and over where maintenance is generally provided and residents live among their peers. Most are rich with attractions to include pools, golf courses and a spa.

Baltimore City trends are typically geared to a younger buyer while Baltimore County buyers have a wider range of demographics and demands regarding trends. Among the many trends, the two trends noted above were used to reflect the differences in trends and demographics in Baltimore City and Baltimore County. Now, let’s take a look at some other housing trends that buyers are looking for in the current marketplace:

The Open Concept Floor Plan

The main attraction of an open floor plan is the great room, which combines the living and dining rooms into a larger area that is still in view of the kitchen. Whereas traditional floor plans are divided by interior walls, the lack of walls in open designs creates a visually larger space, and more of it can be used at any given time because it is very flexible.

Quartzite

While granite still appeals, quartzite is becoming the new hot contender, thanks to its reputation as a natural stone that’s virtually indestructible. It also more closely resembles the most luxurious classic—marble—without the drawbacks of staining easily. Quartzite is moving ahead of last year’s favorite, quartz, which is also tough but is man made.

Return to Human Scale

During the McMansion craze, kitchens and homes got so big they almost required skates to get around. The trend is to scale back and return to a more human, comfortable size. Buyers now seem to prefer efficiency and location over square footage.

Smart Homes

There is no escaping technology, it looks to be at your doorstep ready to take over! Touch screen appliances, thermostats controlled by your smart phone from any location, automated lighting system, ismart alarms and vehicle detection are just a few of the trends in this exponentially growing industry of tech products made available to the consumer.

 

Drooling over current trends splattered all over mainstream television is eye catching and tempting. Keep in mind your budget, restrictions and future goals before any project. If you are debating an addition or a move to another residence Robinson Appraisal Group can help with your current value or the market value of a possible new residence. We would love the opportunity to assist you.

FANNIE MAE 2016

What does Fannie Mae have in store for 2016? Fannie Mae is a billion dollar entity that does not directly offer mortgage loans but instead buy the mortgages from banks, credit unions, and other financial institutions so that they, in … read more