Real Estate Appraisal, Myth and Reality

1. Francois K. Gregoire, IFA,Francois K. Gregoire, IFA,
RAARAA
State Certified Residential Appraiser #142State Certified Residential Appraiser #142
Myth and RealityMyth and Reality

2. Bartow - © 2009 Frank Gregoire2
PREPARED FOR:PREPARED FOR:
BartowBartow
Board ofBoard of
REALTORSREALTORS
©©

3. Bartow - © 2009 Frank Gregoire3
aboutabout
Frank………...Frank………...
• Licensed since 1976Licensed since 1976
• Realtor® since 1977Realtor® since 1977
• Appraising since 1977Appraising since 1977
• State-Certified ResidentialState-Certified Residential
Appraiser since 1989Appraiser since 1989

4. Bartow - © 2009 Frank Gregoire4
aboutabout
Frank………...Frank………...
• Real Estate License Law and AppraisalReal Estate License Law and Appraisal
Instructor since 1977Instructor since 1977
• Member Florida Real Estate AppraisalMember Florida Real Estate Appraisal
Board February, 2000 – February, 2008Board February, 2000 – February, 2008
• Qualified Expert Witness - PinellasQualified Expert Witness - Pinellas
County Circuit Court, United StatesCounty Circuit Court, United States
Bankruptcy Court, Division ofBankruptcy Court, Division of
Administrative HearingsAdministrative Hearings

5. Bartow - © 2009 Frank Gregoire5
TODAYTODAY
• AppraisersAppraisers
• License CategoriesLicense Categories
• Applicable LawApplicable Law
• Applicable StandardsApplicable Standards
• Applicable GuidelinesApplicable Guidelines
• AppraisalsAppraisals
• Myth and RealityMyth and Reality

6. Bartow - © 2009 Frank Gregoire6
TODAYTODAY
• New DevelopmentsNew Developments
• Fannie Mae 1004MCFannie Mae 1004MC
• Home Valuation Code ofHome Valuation Code of
Conduct (HVCC)Conduct (HVCC)

7. Bartow - © 2009 Frank Gregoire7
Appraiser - Licenses andAppraiser - Licenses and
QualificationsQualifications
• Registered TraineeRegistered Trainee
• Licensed AppraiserLicensed Appraiser
• State-Certified Residential AppraiserState-Certified Residential Appraiser
• State-Certified General AppraiserState-Certified General Appraiser

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Appraiser – Applicable Law -Appraiser – Applicable Law -
RulesRules
• Chapter 475, Part II,Chapter 475, Part II,
Florida StatutesFlorida Statutes
• Chapter 61J1,Chapter 61J1,
FloridaFlorida
Administrative CodeAdministrative Code

9. Bartow - © 2009 Frank Gregoire9
Appraiser – ApplicableAppraiser – Applicable
StandardsStandards
• Uniform StandardsUniform Standards
of Professionalof Professional
Appraisal Practice,Appraisal Practice,
January 2008January 2008
Edition (USPAP)Edition (USPAP)
• Incorporated intoIncorporated into
Chapter 475, Part IIChapter 475, Part II
• Incorporated intoIncorporated into
Chapter 61J1, FACChapter 61J1, FAC

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Appraiser – ApplicableAppraiser – Applicable
GuidelinesGuidelines
• Freddie MacFreddie Mac
Seller/ServicerSeller/Servicer
GuideGuide
• Fannie Mae SellingFannie Mae Selling
GuideGuide

11. Bartow - © 2009 Frank Gregoire11
Appraiser – ApplicableAppraiser – Applicable
GuidelinesGuidelines
• HUD 4150.2HUD 4150.2
Valuation AnalysisValuation Analysis
for Single Familyfor Single Family
One – Four UnitOne – Four Unit
DwellingsDwellings
• M26-2 ConstructionM26-2 Construction
and Valuationand Valuation
Policies,Policies,
Procedures, andProcedures, and
MethodsMethods

12. Bartow - © 2009 Frank Gregoire12
MYTH OR REALITY?MYTH OR REALITY?
• Since the Borrower paid for theSince the Borrower paid for the
Appraisal, the Borrower Owns ItAppraisal, the Borrower Owns It
• Appraisers are Prohibited fromAppraisers are Prohibited from
Discussing the Appraisal with the AgentDiscussing the Appraisal with the Agent
• Appraiser is required to use Short SalesAppraiser is required to use Short Sales
and Foreclosures as Comparable Salesand Foreclosures as Comparable Sales
• Sales Price/SF is a Good or ReliableSales Price/SF is a Good or Reliable
Indicator of ValueIndicator of Value

13. Bartow - © 2009 Frank Gregoire13
MYTH OR REALITY?MYTH OR REALITY?
• Comparable Sales must be within OneComparable Sales must be within One
Mile of the Subject PropertyMile of the Subject Property
• Comparable Sales must have soldComparable Sales must have sold
within the Past Six Monthswithin the Past Six Months
• Appraisers Require Repairs to theAppraisers Require Repairs to the
PropertyProperty
• Comparable Sales must beComparable Sales must be
ComparableComparable

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NEW DEVELOPMENTSNEW DEVELOPMENTS
• Fannie Mae 1004MC –Fannie Mae 1004MC –
Market Condition FormMarket Condition Form
• Documents ReasoningDocuments Reasoning
for Date of Sale/Timefor Date of Sale/Time
AdjustmentsAdjustments
• Increases Cost ofIncreases Cost of
AppraisalAppraisal

15. Bartow - © 2009 Frank Gregoire15
NEW DEVELOPMENTSNEW DEVELOPMENTS
• HVCCHVCC
• Restricts Selection andRestricts Selection and
Retention of AppraisersRetention of Appraisers
• Establishes Standards forEstablishes Standards for
Appraiser IndependenceAppraiser Independence
• Applies to Fannie Mae –Applies to Fannie Mae –
Freddie MacFreddie Mac

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HVCC - EffectsHVCC - Effects
• Higher Appraisal FeesHigher Appraisal Fees
• 64% of Realtors report increased64% of Realtors report increased
appraisal feesappraisal fees
• Fewer Loan OptionsFewer Loan Options
• Increased Time to Receive AppraisalIncreased Time to Receive Appraisal
• Over 75% of Realtors report longerOver 75% of Realtors report longer
wait for appraisal – most say increasewait for appraisal – most say increase
of 8 days or moreof 8 days or more

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HVCC - EffectsHVCC - Effects
• Delayed Interest Rate LocksDelayed Interest Rate Locks
• Increased Use of Out of AreaIncreased Use of Out of Area
AppraisersAppraisers
• 70% of Realtors report higher70% of Realtors report higher
instancesinstances
• Lengthened Loan Approval ProcessLengthened Loan Approval Process
• Possibility of Multiple Appraisals andPossibility of Multiple Appraisals and
FeesFees

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COMPETENCECOMPETENCE
• what license do you hold, what is thewhat license do you hold, what is the
number?number?
• when did you first obtain your license?when did you first obtain your license?
• are you a licensed or certifiedare you a licensed or certified
appraiser, or are you a traineeappraiser, or are you a trainee
appraiser?appraiser?
• where are you from?where are you from?
• when was the last time you appraised awhen was the last time you appraised a
property in my neighborhood?property in my neighborhood?

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COMPETENCECOMPETENCE
• do you know any of the local Realtors ordo you know any of the local Realtors or
Agents in this area?Agents in this area?
• do you have access to the local Multipledo you have access to the local Multiple
Listing Service?Listing Service?
• please give me a general physicalplease give me a general physical
description to enable me to recognizedescription to enable me to recognize
you at the appointmentyou at the appointment

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NAR EFFORT -NAR EFFORT -
RESOURCESRESOURCES
• H.R. 3044 – 18 Month MoratoriumH.R. 3044 – 18 Month Moratorium
• REALTOR.ORG/HVCCREALTOR.ORG/HVCC
• NAR HVCC Myths and Facts FlyerNAR HVCC Myths and Facts Flyer
• Appraiser Active BlogAppraiser Active Blog

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22. Bartow - © 2009 Frank Gregoire22
Francois K. Gregoire, IFA RAAFrancois K. Gregoire, IFA RAA
State Certified ResidentialState Certified Residential
Appraiser #0000142Appraiser #0000142
Gregoire & Gregoire, IncGregoire & Gregoire, Inc
Realtor - AppraiserRealtor - Appraiser
727-344-3393727-344-3393
francois1@tampabay.rr.comfrancois1@tampabay.rr.com