Not all markets are doing bad

A recent article on yahoo.com published some interesting facts. That with all the downturn in the real estate market the reality is not all areas are doing poorly and some are actually increasing in value. This is very important information to know when marketing for your company due to the appraisal value being such an issue that its necessary to really know whats going on.

So what areas are still going up?


Lancaster, Penn.

Population: 498,465
Median home price: $206,000
12-month change in home value: +1.6%
Affordability index: 3/10
Homes sold this year: 1,166
Home value vs. national average: Same
Top employer: R.R. Donnelly & Sons publishing company

Known as an Amish cultural hub, the city is also home to a diverse group of industries, including printing and food processing. This helps keep the local market stable and unemployment low, as losses in one sector aren't devastating to the overall economy.

Locals say Lancaster is a conservative lending market, which limits foreclosures.

Clarksville, Tenn.

Population: 265,062
Median home price: $130,000
12-month change in home value: +1.4%
Affordability index: 3/10
Homes sold this year: 2,081
Home value vs. national average: -37%
Top employer: Trane Corporation

Clarksville offers an affordable alternative to nearby Nashville but is close enough that residents can enjoy the larger city's attractions.

The housing market is kept active by Clarksville's proximity to Fort Campbell. Traditionally a manufacturing town, the city also offers a robust retail economy, driven in part by Austin Peay State University.

Albuquerque, N.M.

Population: 832,774
Median home price: $172,000
12-month change in home value: +1%
Affordability index: 3/10
Homes sold this year: 7,100
Home value vs. national average: -17%
Top employer: Intel

While other midsize cities have fallen prey to rampant speculation, Albuquerque has hovered below the national real estate radar and largely avoided the subprime mortgage debacle. An influx of tech companies such as Eclipse Aviation, Hewlett Packard and Intel has helped fuel this Southwestern city's economy and attracted a young creative class.

Active retirees and immigrants have also migrated to the area, ensuring a well-rounded housing market. Experts project 9% population growth between 2006 and 2011, compared to 6% nationally.

Burlington, VT

Population: 145,360
Median home price: $250,000
12-month change in home value: +1%
Affordability index: 4/10
Homes sold this year: 592
Home value vs. national average: +21%
Top employer: IBM

On the shores of Lake Champlain, Vermont's largest city focuses on retaining its high standard of living rather than growing its population. Strict zoning standards make homebuilding difficult and discourage speculators.

Burlington's small-town mentality ensures that home lenders maintain personal relationships with their clients and help them stay within their spending means. Technology, health care, and education drive the local market.

Pittsburgh, Penn.

Population: 2,355,712
Median home price: $137,000
12-month change in home value: +.1%
Affordability index: 2/10
Homes sold this year: 7,634
Home value vs. national average: -33%
Top employer: University of Pittsburgh Medical Center

Although Pittsburgh home sales have dipped 16% this year, the properties have retained their value. This "Pittsburgh paradox," as it's called by locals, is attributed to the city's steady population growth and the construction of new, high-value homes.

Despite its reputation as a gritty city of industry and steel, Pittsburgh is now driven by the health care and technology sectors.

Johnson City, Tenn.

Population: 193,554
Median home price: $120,000
12-month change in home value: -.4%
Affordability index: 3/10
Homes sold this year: 1,134
Home value vs. national average: -41%
Top employer: East Tennessee State University

Demand in this Northwest Tennessee city's market is largely driven by East Tennessee State University, as well as new retirees. These "halfbacks" used to spend summer in the north and winter in the south but are now making Tennessee their home year round.

Education, health care and manufacturing provide the bulk of Johnson City's jobs.



What areas are overall stable?

The good old United States Government is always are sure bet and at the top of the stable markets is the Washington D.C. metropolitan area. Besides New York, the nations capital and surrounding areas is the only place that experienced all of the bomb of the previous 5 years but none of the crash. Properties which were purchased in 2003 - 2006 are worth about what they were then and from the activity of the market it looks like its going to stay that way. Not this is not implying that ALL
real estate around Washington D.C. is going well but from our experience the vast majority is still holding somewhat strong. This is very important as their are many seniors and homeowners with untapped equity in their home that can be utilized for debt consolidation reverse mortgage or home improvement.

So what other city's made the list of Safe Havens for real estate

What areas to avoid?

Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September.

In the weakest market, Phoenix, the 12-month loss came to 31.9%. Las Vegas prices plummeted 31.3% and San Francisco recorded a 29.5% decline. The best performing markets, Dallas and Charlotte, N.C., still posted drops - 2.7% in Dallas and 3.5% in Charlotte.

With San Francisco and Las Vegas, the other members of the 10-city index are: Miami, down 28.4% year-over-year; Los Angeles, down 27.6%; San Diego, down 26.3%; Washington, down 17%; Chicago, down 10.1%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%.

In addition to Phoenix, Dallas, Charlotte and the cities in the 10-city index, the 20-city index is made up of: Detroit, down 18.6%; Tampa, Fla., down 18.5%; Minneapolis, down 14%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, Ore., down 8.6%; and Cleveland, down 6.4%.

Foreclosures continue to take a heavy toll, with sales in some cities dominated by properties repossessed by banks and then put back on the market, often at bargain prices. In Las Vegas and Cleveland, for example, about half of all homes for sale are bank-owned properties, according to the real estate Web site, Trulia.com.

"Foreclosures are clearly a part of the market now," said Blitzer.

He added that the national index price trends tend to be more moderate because they encompass many more exurban and rural areas, where, in many cases, home prices never skyrocketed as they did in some of the hotter, urban markets.


Worst Markets:

California Central Valley

12-month change in home values:
Merced: -42.3
Stockton: -40
Salinas: -38.7
Modesto: -37.9
Riverside: -36.8
Vallejo: -34.5



Conclusion:

There is always opportunity regardless of what type of market or the so called "recession" be one of the companies that chooses not to participate in the recession by going where the market is still stable. The good thing as a national company we can handle anything that you need and will be sure to provide you with exceptional customer service. Please give us a call at 888-485-1999 or e-mail at info@coesterappraisals.com and see how Coester Appraisal Group can help you.


Brian C. Coester

Things to be thankful for.

During the holiday season its easy to get caught up in the hustle and bustle of the day to day and forget about all the things that we are so blessed with. Reflection gives us insight to the past and insight gives us direction for the future. Here's a small list of the most obvious but the least recognized things we can all be thankful for. This is not a complete list but just some thoughts.

Things we can all be thankful:

1. We are in America - Regardless of what anyone says America is the greatest country in the world. In America if you want something you can get it. If you want to be an entrepreneur their is a business you can start. If you want to be a teacher their is a student you can teach. If you want to help the needy their is somewhere you can volunteer. This is the only country in the world where their are virtually no limits. The only limits you place in America are the limits you place on yourself. If you know what your worth, you can go get what your worth and America is the country to be.

2. Your Heritage - My original last name was De Costar, my direct lineage was Louis II the king of Spain. The story of my last name is that Louis II had two son and when it came time to gift the brothers the kingdom they divided the land equally. One wanted the land "by the coast" which is Spanish is De Costar and thus the name was born. After the king was overthrown they relocated to Germany and took the last name Koester which was pronounced "Kester" in Germany as in a butt. So they ended up changing the name to Coester and hence the Coester Family was born.

Their are very few Coester's in the world I have never ever met someone or heard of someone that had that name that wasn't related.

That is just the tip of the iceberg to a long heritage of the Coester Family. The history is amazing to think about what others done before you have done. And if they could do it you can do it also.

3. The economy and the market - I know people aren't happy with the economy but it is still an amazing place. Right now you can buy shares of some of the largest companies in the world at bargain prices. Think about how much work was put into your business, or current job? And now think about all the hours of work it has take to start and grow a company like General Electric or Proctor Gamble, and to get in as a partner its less the $50.00 AMAZING!! Right now we are more fortunate that any other time in the world and should be acting as if we had just won the lottery because we really have.

We currently enjoy the benefits of businesses we didn't start, school's we didn't found, and laws we didn't create. We enjoy the benefits of books we didn't write, problems we didn't solve and we have access to all of this. In today's world their is nothing out of reach to a person looking. You want to become a doctor go for it. You want to become President go for it.

Start from poverty, start from despair, start from nothing, ghetto, and become the next great American success story all by using the resources that are already available and within reach. All you have to is go for it.

4. Teachers and Authors - Someone spends 30 years of their life in a career you are interested in and they write a book. How much is the book? $40,000 NO only about $19.95 and its free at your local library. How could you not invest your time in learning from the past, how valuable would that information be? You cant put a price tag on.

Right now I am taking martial arts at Yamaski academy in Rockville,MD and they charge $150.00 per month. Someone might say "$150.00 per month that's allot".Think about what you are getting. They have world class instructors daily, they have a huge facility that's over 10,000 sq ft. They have the mats, the bags , the weights, all the necessary tools for you to become the best you want to be all for $150.00 a months its AMAZING!! You could spend 10 years of your life their and be a world renowned martial artists all for under the price of a car. The market and economy is an amazing place!


5. The miracle of the world - They say God is the only one that has the ability to create, but humans have an ability to do something almost God like which is re-create. God has the ability to make a tree, but humans can plant the seed and grow a forest. God has the ability to make wood but humans can use that wood and make a chair, or a home or many other things. Imagine if God told you that you had to make the tree?

The miracle of the world is to take just simple things and make them work together. They can now run an automobile off of corn, or bird poop, or grass, or trash, or water, or just about anything now. Their are limitless possibilities. The world is a very simple place everything just works together so perfectly and you can enjoy all of this FREE!!

5. Friends and Family - The miracle of friends and family. They say friends are the people who know everything about you and still like you. Be blessed for all the great friends you have, because they are a great resource for you

Appraisals Get New Level of Scrutiny by Lenders

In a recent Washington Post article, reporter Ken Harney asked, "How old can comps be before lenders won't use them?" and found that lenders are placing a greater emphasis on the comparable sales residential appraisers are using today when developing their opinions of value than they were when markets were seeing home values appreciate. Whereas lenders used to allow comps from anywhere between six to 12 months old, today lenders are requiring comps that are not older than 90 days.

Among those Harney interviewed include Appraisal Institute members Pat Turner, SRPA, SRA, Kerry Leiman, SRA, and Tim McCarthy, SRA.

According to Turner, his firm has seen "numerous" cases where using newly mandated 90-day-or-newer comps has contributed to valuations lower than the price on the sales contract. The biggest issue on the appraisal side is finding comps that fall within the 90-day range. Turner noted that he must sometimes persuade realty agents to disclose the prices on pending sales, which otherwise are not reported or listed until closing. Or he must go into the local multiple listing service and statistically derive adjustment indexes for small geographic areas based on the percentage difference between original asking prices and selling prices.

While finding fresh comps can be challenging, Turner, Leiman and McCarthy all agreed that in general, the stricter timeline for comparable sales information improves valuation accuracy for lender purposes.

To read Harney's full article,

Apprasial Reviews

With today's market condition's more and more appraisals are getting reviewed. According the National Association of Mortgage Brokers about 50% of all appraisals will get reviewed at some point either at the origination stage or when its sold in the secondary market.

Big lenders like Chase, Citi, Flagstar, Wachovia, Countrywide, ING and Provident do some form of review on every single appraisal at the origination stage. It may be as simple as utilizing a website like realquest, sitexdata, realtor.com and yes even zillow or as extensive as a desk review, field review, sending it to a collateral risk analysis or requiring a second full appraisal.

When a review is done its usually never a good thing; why? because the review is always looking for what's wrong with the appraisal as opposed to an accurate independent judgement of the property. Secondly its allot easier to figure out what another appraiser did wrong as opposed to what you would of done initially without the aid of the previous report.

As my father Timothy Coester put it "its like playing cards where the other player already knows your hand".

I use to work for Wells Fargo as a review appraiser and we were specifically instructed to try and find whats wrong with the appraisal and see if a lower value was justified, and since the appraisal is an opinion how easy is it to have a different opinion then someone else?

This becomes even a bigger problem when the property is in a rural area or is an odd property such as a home with a mother in law suite, a renovated home or in an area that has values at various price points which is typically seen in heavily developed metropolitan areas or markets going throughout a faze of gentrification such as Washington D.C, Baltimore, M.D. or Philadelphia , PA. The reason it poses a problem is because the opinion is so subjective to the opinion of the appraiser and the opinion of the reviewer. You could essentially have difference of opinion of $50,000 and both appraisals look the same on paper.

So what can an appraiser do to help the review?
It is imperative to have the appraiser take the time to explain everything in the appraisal fully and to properly. The days of the appraisal with three comparables are over. In today's market a minimum of 5 comparables is necessary preferably 3 sales 1 contract and 1 listing, why is this necessary?

Because the appraiser should present such an overwhelming argument that the review appraiser double thinks even questions the value because the original argument was so overwhelmingly accurate its inconceivable to justify a lower value.

How bad the market really is....

In today's markets people often want to know how bad it really is. We often hear "Last year there home appraised for $350,000 you mean its only worth $220,000 now?" and sometimes unfortunately the answer is yes. Not all markets are bad but however some are much worse then others and knowing which are good and bad can give you the edge in todays market.

We put together a study to compair real estate prices in key locations comparing over the past serveral years the median sale price every month. You can use this as a gudie as to what to realistically expect when working with a client.

Since are home office is located in the Washington D.C it only makes sense to study the surronding areaa.















These charts are key in knowing where to spend your time marketing to clients. All of these market areas are within 15 - 20 miiles of each other and with the vast differences in prices it could make a big difference in your market and success of knowing where to go and where not to.

Conservative or Agreesive or what?

Clients often categorize their appraisal company or appraiser as being conservative or aggressive and distribute orders based on this criteria with the rational "he will get the number" or "he got me $20,000 more then I needed on my last deal". When using this logic one thing that must come to mind is how is an appraiser conservative or aggressive?

All appraisers basically have the same information and have to go by the same basic guidelines so why did one appraisal company appraise the home for $340,000 and another company appraise it for $375,000? The one for $375,000 must be better!

From my experience the majority of the time this is not the occurrence.

Example: A subdivision of townhomes built about the same time by the same builder with the same basic design.Their are 5 recent sales that are all similar to the home that sold between $330,000 - $350,000 which in most cases is a normal range for a market area.

So what makes the appraisal conservative or aggressive?

NOW THIS IS A TOTAL HYPOTHEICAL SITUATION:

A conservative appraisal would be in the $325,000 - $335,000 range. A clean appraisal would be $340,000 - $345,000 and an aggressive appraisal would be $345,000 - $355,000. All values within a reasonable justification based on the condition amenties of the property and if the appraiser explains it correctly their is no "more right" value.

What is not aggressive and when has the apprasier crossed the line?

If an appraiser appraised the property for $375,000 ignored the closets most similar sales and used town homes from an outside subdivision with much superior design and amenties and didnt mention it or make adjustments. That's not aggressive that FRAUD.

But the bank took it?

Yes that's true and when I was 10 I stole a candy bar from Safeway and didn't get caught. But that doesn't make it right or something that should be looked upon as good. Using an appraisal company or an appraiser that you knowingly inflates values puts you in the same class as someone who took a gun to the bank and robbed it because that's essentially what is taking place with the lender.

Now is their going to be times where the bank takes the overinflated appraisal? YES.
Is teir going to be times where this appraiser saves the deal? YES.
Is this appraiser eventually going to get caught? YES.
Is he going to get sued? YES
Is he going to get blacklisted from all of the lenders your work with? YES.
Are you going to have to get an another appraiser? YES
Is your company going to be associated with bad and fraudulent pratices YES.

At Coester Appraisal Group we have stopped working with clients because of the constant pressure to over inflate values or the client being known for SHADY activity within the market place. On several occasions when speaking with underwriters or account executives they would make comments like "these guys are always trying to get something through","every time I get an appraisal from this broker i look over it very carefully because I know they have bad appraisers" or other similar related statements. So we chose the high road and would rather not do business with them.

Now some would say who cares its not my license, I don't know anything about appraising as long as they get the value its not my concern. There is some truth to that but by associating yourself with them its puts you in the same class as them and your as bad if you did it yourself because your aware of whats going on.

So what should i look for in an appraiser?

You want someone that is professional, ethical, rational, honest about whats a realistic value for the property and able to support the value even when it comes under scrutiny (because all values conservative or aggressive will come under fire).

If you can find an appraisal company that when the appraisal gets reviewed and cut by $50,000 and your appraiser can get the bank to reverse the cut and go with the original value you have got yourself a good appraiser because that is very hard to do and underwriters hate to do it.

Their are several good appraisals companies you can choose but I have seen what's out there and truly believe Coester Apprasial Group is the best possible appraisal company you can work with.

Being in the appraisal business since 1970 with over 50,000 appraisals completed you could not ask for a better fit. With a in house appraisal staff covering all of Maryland, DC and Virigina and an appraisal Network covering all 50 states Coester Appraisal Group is your one stop shop for all of your appraisal needs.

Please give us a call toll free at 888-485-1999 or e-mail us at info@coesterappraisals.com

Comp Check..What they are and what they arent..

In today's real estate market it's really impractical for the loan officer, processor, manager or appraiser not to do some type of preliminary research on property before proceeding with the full appraisal. With the day to day changes of the real estate market it's unrealistic to assume a homeowner would know with good faith what there home is really worth.

However, at the same time there are also times when a comparable market analysis is not a pratical tool in establishing any type of market value for the property and is misleading to everyone involved in the transaction.

From my experience and the experience of many of our appraiser I have put together a list of some positives and negatives with "comps checks" and what a client should realistically expect when going on Zillow.com, trulia.com, sitexdata.com or even a market analysis done by an appraiser.

What Zillow.com, truila.com and similar sites really are.

There basically data cruncher sites. They get there information from county tax records, homeowners,assessors records and various other sources. They condense all of that information and use it to come up with a value based on specific criteria (i/e square footage within 15%,age within 15 - 20%, bedroom count, bathroom county etc...) they take the tax information of the property compare it with the information they have on properties that recently sold and basically average the whole thing. The problem with this is it creates very inaccurate and inconsistent results. Alot of times it could compair a condo with a townhouse or even a single family house with a townhouse if the physical characteristics are similar. From experience I have played around on the sites several times and the results go from being very accurate to extremely inaccurate I have seen some sites being off by more then $200,000 on a $400,000 house on a regular basis.

So if the sites are so bad then what do we do?

The only way to really know is to get an appraisal. However this is not always practical and thus the "comp check" almost becomes a necessity in current market conditions.

Reasons comp checks are good:
1. If the value of the collateral is no where near it needs to be to provide a loan program it is a waste of every one's time to not know this as soon as possible.
2. It doesn't waste the borrower money and appraisal "bill" problems don't occur as often.
3. Borrowers don't demand a refund even though they have no legal right to do so. (we have contact several real estate attorney's about this and any appraisal refund given is out of the sole kindness and respect for the business relationship, not because the threat of being sued).
4. Saves everyone time and money


Reasons they are bad:
1. Even with modern technology and the vast amount of information on the web it is still challenging to say exactly what the property value is with out a full inspection and analysis.

2. They can be misleading both on the upside and the down side. Sometimes properties are over comped and sometimes there under comped. Over comping is probably the most common in appraising however under valuing properties is also very common and there are plenty of deals that have been killed because the borrower didn't want to do ahead with the full appraisal.

3. The time it takes to really put an accurate assessment together is usually longer then an appraiser will spend on something that they are not getting paid for. Its not that were lazy or ungrateful for your business. It just really takes about 20- 30 minutes of research to come up with an accurate "take it to bank" number. This means that if someone sent over 10 comp checks it would take approximately 5 hours to complete.

4. The borrowers lie about the condition of the property before the inspection. We have gone on appointments where the borrower said its 5,000 sf we a full basement and we get out there and its 3,000 sf with an unfinished basement. Or that its totally renovated and when we get out there its in the process of being renovated. In both cases the value is totally different and no ones happy.

So are the comps accurate?

Yes, they are your best shot at what a professional real estate appraiser thinks the market value of the home will go for. Sometimes they are the exact number and sometimes its more of an educated guess. I think one problem is that most appraisers don't communicate the accuracy and confidence of the number correctly. This is partly due to them being lazy and partly due to the fact that most loan officers want a guaranteed number and will try to find an appraiser that guarantees the number to send the order to. All of the appraisers have the same information so they would rather get the order.

What you should expect.

A decent appraiser should be able to narrow it down to within 5-10% and that's totally reasonable. You might think on a $500,000 dollar house a 50k swing is to much. Sometimes that's true but generally speaking that the range of similar comparables we have to chose from.


In conclusion:

Generally speaking as a whole a comp check is a good thing and very accurate. Individually on a case by case basis it can be very inaccurate. The best thing to do is remember that we wouldn't of went out there if we didn't think it was worth doing and they ultimately you are our client and our job is to serve you in the best and most professional manner.



Brian C. Coester

bcoester@coesterappraisals.com

Foreclosures and the Market Value

There are a few foreclosures on my street does that effect my market value?

YES!

Fannie Mae recently released a statement in regards to using foreclosure sales in an appraisal stating:

"You will not use REO sales for your comps unless they are the market. If REO listings and sales are the market then you need to explain that fact in your appraisal"

Meaning there are accepting the foreclosure value as the actual value now (if its the market).

What does this mean to you or your business or your home value?

It is a little scary to think about how much homeowners have really lost over the past few years due to defaults in there area. Recent studies indicate the loss to banks is approaching the 1 trillion dollar mark, and some market areas have seen a decrease in value of over 40%.

There have been cases where there are no other sales but REO and Short sales within a subdivision and general market area to choose from. This is especially true in newer developments and so called "flipper friendly" markets.

Appraised values will be affected by this move because the foreclosure/REO value is usually about 20% - 30% less then the typical market value.

Its not all bad news:

Another factor which fannie noted is REO sales are typically sold "as is" meaning that bank will not make any type of repairs or warranties in regards to the condition of the home.

We do alot of REO appraisals for banks and typically they are sold in below substandard condition for the area. This makes it very hard to consider using them in an appraisal because the amount of adjustment's necessary to justify a proper market value would be impractical. This makes using foreclosures and REO sales and absoulute last resort.


In Conclusion:
I believe the storm isn't over yet, however by 2009 things will start to look brighter. As speaker Jim Rohn said "there has never been a double night, as scary, long and dreadful one night can be the sun always comes up in the morning".

As bad as the market is now it will come around and get back to normal everyone just has to stay focused and keep working.

Staying Sane in and insane world

Everyone knows the world of appraising and real estate is crazy.

How else could it be?

And personally I wouldn't like it any other way. From the loan officer, to the realtor, the client and the underwriter its all a free trip to the circus.

I am constantly faced with the question. Does anyone really know what there doing?

Its funny because sometimes I cant answer that, but I'm okay with that.

What I found over the years is that everyone is crazy so as long as your just a nutty you will fit right into this business.

Within your appraisal business its just as easy to get a new client as it is to lose and old one, and as long as your okay with that you will be able to sleep at night.

Just like there are 1,000's of appraisers to choose from in a given area. There are also 1,000's of lenders, brokers, attorneys, homeowners and other people who need an appraisal done by you in your area.

What will help you get through the good and the bad is the fact that you as an appraiser get better on a daily basis and that you focus on getting your appraisal business better.


As long as you do those two every day you will be OK.

Another thing that will help you get through the excuses of the "bad market" is understanding there is no such thing as a "bad market" in the sense. Only bad marketing.

Who would of ever thought?

Most people would disagree because it doesn't go with there excuses. However if you are on top of things and see where the market it going you would know that the refi-boom wouldn't last forever and that you would eventually have to change the format of your business to get a realistic approach to marketing and customer service. Its not always going to be an order taking business. When it is take the orders with no excuse however don't expect it to be that way all the time.


Brian Coester.