Zone Data Systems is a collaboration of two hundred thirty nine appraisal offices representing hundreds of appraisers across the United States. Each of the member offices has invested in the Valytics valuation technology developed by Zaio incorporated, a Canadian company for which the ZDS has the exclusive U.S. licensing rights. The technology employed by the ZDS in developing and reporting values on an extremely large number of properties is based on regional responsibility of its appraisers who have the responsibility for becoming the expert in their owned or assigned zones.
ZDS is the largest national appraisal company in terms of our partner and zone appraiser count. We already cover a large percentage of major metropolitan areas and will be expanding in all the major market areas in the near future. Our exclusive Valytics technology provides us the ability to correctly model market conditions into track residential real estate values on an extremely large scale in any different point in time.
The Valuation Research employed has been independently tested for its accuracy and is organized into one concise database. This database can provide retrospective appraisal values, current appraised values, provide the ability to map value trends and form the basis developing reflective exhibits such as GIS base data maps. ZDS can generate individual appraisal reports already pre-researched by professional appraisers. The technology supports a very accurate market modeling supported by local, professional appraisers working in familiar geographic areas.
One of the more recent developments of the Valytics technology is a subscription based product termed portfolio viewer and represents the peak of the cascade of possible products. Portfolio viewer provides the ability to address and monitor a selected inventory providing current value opinion, total value of a given portfolio and value trends. A value summary may also be added. This top of the line portfolio viewer provides the opportunity to download a number of variations of former ports developed from the database.
The valuation technology can be employed to isolated variable such as waterfront properties and compare them to similar properties that do not have water views. Values from coastal areas that have other economic factors can similarly be compared. ZDS can also provide comparisons overtime within specific areas.
Parallel forecasting can be applied for impacted versus not impacted control markets to establish a longer term projections as to value catch up or not.
Using Valytics technology homes can be grouped by common elements, location, size, style, etc. All sales within the market are reviewed and modeled within the database using GeoScoring, subject properties can be properly valued in comparison to existing known competitive sales. The GeoScore is the sum of values that each zone appraiser applies to each critical element with five as an average rating, each component of value can be raided and the totals will determine the relative ranking of each comparable home. The contributory value of each component results in an opinion of value that mirrors the ranking.
A subject property can be GeoScored in its rank will position the property within the overall market group. People have credit scores, now real estate has GeoScores. The homes are scored based on the above illustrated key attributes.
I’d like to go outside value wise as far as property landscaped, does that make a difference if it’s landscaped versus just, you know, when I say landscape, the real landscaping, the lighting, specimen trees like that.
Landscaping here is a good question because you can see people spend fifty, sixty thousand dollars on landscaping and then they may think that’s going to add up much value. Again, what’s typically in common for homes in that area. A lot of bushes, trees, they may not necessarily maple tree, may not just simple maple tree, it adds an over-all appeal to the entire property and many times that would be one of the fact is that make or break a deal. It is very, very hard for appraiser to look at landscaping and try to dissect that and say how much contributory value that actually add to the property.
What if the subject property has no bushes, trees, plants, very basic and then the neighborhood has for most part really managed the lawn, is that a factor?
That’s what we call a frontal utility of the site. It’s typically seen as the negative. Again, it should be brought up to the neighborhood’s standard.
Okay, what about swimming pools?
Swimming pools, that’s a sixty four thousand dollar question. Swimming pools, you have to remember again the climatic conditions. Some parts of the country, we’re in New York here, and many instances we may get three good ones of use of a swimming pool that depend upon how the weather is. You go to some parts of the country, like for Florida for example, you can’t sell a house without a swimming pool. If you go to North Dakota, swimming pool really doesn’t have any contributory value. We also have to take consideration of what the size of the parcel is has about, when you get in to some of the urban areas and say for example if you go to the Bronx, and you have thirty hundred possible length, well if you put a round pool in your backyard, you will used up the entire yard and there’s no land left for other recreational facilities where you get a property, say or Westchester acre and acre and a half, that takes up a small part in the entire property.
So, is there a difference between a ground pool and above ground pool as far as an expert appraisal goes?
Above ground pool is typically seen as personal property, we do not give any value, however, if the above ground pool now has deck on and the deck on is attached to the home by a matter of attachment that now comes real property.
So, they appraise differently?
Yes. Because if it doesn’t have permanent deck on basically personal property, the seller of the property can take that away, and a lender, looks at that as not in collateral to the real estate.
Robin, when we get to the outside of the property, we start looking at the field of the site, for example here, this property is located at the end of the turnaround, which is location great because there is no full traffic on the street. And you could see also we take into account a part of it, it has a slight of slope which is still useable and here at the front we have a flower garden which is seasonal flower garden. This is what we look at site charachteristics. Now, we come to building improvement, as I said, this is by level, make known of the construction material, wood siding, aluminum gutters, national chigger roof. And as we said earlier, this lower level here is below grade. So, this is not counted as part of the gross living area. Its value has a finished basement. So, we have six rooms, two baths upstairs as the gross living area and the remainder is basically see as amenity, finished rooms and the other side of the house. We have the two car building garage.
We’re at the house here what we know here is the central air-conditioning unit and also a deck, this wall is the dining room. Again the deck, has the portion we place, because the entertaining from the dining room, kitchen, you want to go to the deck.
And as you can see here, this property offers some privacy here. There are trees, offering rear property line and another some roadways down there. But if you can see only a cheer basically blocks.
This is wonderful, we really appreciate everything.
Today, we’re going to talk about appraisals and your real estate transaction. If you’re driving and can’t take notes, not to worry, you can find all of our links to topics and guest that we have on our show at RREA.com/radio. If you can watch the videos of our segments and you have questions about the, you can always call in our question line and we will answer those on air for you, that number is 281-882-8088.
We have great show line for you today. We’re very excited to have Mike Brubaker here in the studio with us. He is a local appraiser in Houston area and he has been for over thirty years and he owns Brubaker and Associates. You may have heard of him. If you need an appraisal done, you can find out more about Michael’s company at brubakerandassociates.com. So, welcome to the show, Mike.
Thanks for having me. So, lots of appraisal questions out there I know some consumers get confused about the difference between an actual inspection and an appraisal and they’re very different.
Very different. Most appraisers are not licensed real estate inspectors. Inspectors in the state of Texas have to be licensed. Appraisers are looking more at the value of the property. We don’t necessarily go and turn on ovens and stoves and air conditioners and things of that nature.
But you do go in?
We do go in. There are some appraisal products that can be done on a drop by basis. Some mortgage lenders will do and it’s technically calling exterior only appraisal. And I get questions about that because of me a call and say, well, somebody gave me your he never came in the house, actually a gentleman appraisal product.
So, when would you need an appraisal? I mean, does every transaction require an appraisal?
Not every transaction. Certainly if you’re paying cash for the property, you don’t need an appraisal. But I will tell you, all for cash buyers these days are calling our office to get that confirmation that they get from appraisal that they’re paying decent price for the property.
So, it’s really just to check out the value?
It’s to check out the value. Most lenders, if you’re borrowing money, most lenders are going to require an appraisal.
A few years ago, some things changed with appraisals and I know a lot of it because the lending issues that were going on and some new regulations came, can you tell us a little bit about those and how things have changed over the last few years?
Well, it’s gotten semi-complicated years ago. Lenders used to have a pool of operators that they picked on their own. Folks would call me because they like our customer service or quality or something on that nature. Back in because of really it’s a dodd frank act if you want to get technical about it. Most lenders or mail required to have to pool of appraiser that is more random selected. The lender can’t choose an appraiser for specific job anymore.
But they can choose their pool of appraisers, is that right?
Yes, and there’s a difference. Some lenders have a very, very large pool of appraisers that they choose from. Some lenders, let me back up, there’s no requirement on the size of the pool as long as there is enough people in the pool to guarantee random selection. He couldn’t have just two people or one person in the pool. So, an awful lot of lenders these days are limiting the size of their pool, they’ve discover that having a large pool with a variety of quality and capability of an appraiser really didn’t work to their advantage.
So, is there a minimum for that pool of appraisers that the lender needs to have?
There’s no legal definition. I think just by aiming and telling you a minimum of three.
If you have different appraisers on that pool and one specializes in condos and one specializes in certain part of town and then you’re giving a random appraisal, you may have someone from Galveston to appraise the house in Woodlands, is that correct?
That’s correct, that sort of the downside of this random pool selection.
Is there any way that a certain type of appraiser can be requested like if you have a large pool of appraisers, can you just excuse from the pool of appraisers who are in the spring area or just that part of the pool of the appraisers that are in the Woodlands, can a lender do that?
That can be done certainly. Now, they want to clarify that this sort of selection process with appraisers is specific to mortgage lending. It has nothing to do with, if somebody needs an appraisal on property for a divorce, for in a State because they want to know what the value of the house because they want to sell it to their brother, they pick up the phone and call us directly.
These are lenders that they’re having to go by these rules and regulations that have come down? That’s correct, these are all lender regulations. How did this new changes affect the industry for appraisers?
You know, it’s a game changer for a lot of appraisers and also a lot of appraisers had a, you know, they had a client based that our company for example, by a thirty year client base folks who we work with for many, many years, who grew like us, we like them. And then, now all of a sudden that client base was worthless.
Yeah, that’s not good. That wouldn’t good. It was really a game changer for an awful appraiser.
Did the fee structure change at all? Because sometimes I hear that appraisers are getting paid less by the lenders and so you have the pools cut down, you don’t necessarily have the best appraisers out there in that pool that the lenders use.
You know, there is a group of folks came in that work, basically what they did is they went to the lenders and said we will create a pool for you. Generally they’re called IMC, it’s an appraisal management company. A lot of those guys and what they did is they went to the appraisers and said we’re going to do everything that you used to do as far as soliciting clients will take, they call that portion out of your hands and all you have to do is appraise your work. But for that, we’re only going to pay you a smaller portion of the fee and get a hundred percent of what used to be which he used to get. So, some of those fees, they varied, there’s an awful lot of as in any business. So IMCs are better than others.
Are you working under any IMCs or do you steer clear of those?
We steer clear, I say that, but we wouldn’t created our own, so that was something that we decided, you know, we could do better than most others. A lot of the IMCs are national IMCs and I’ve discovered that, I’m really not that good on Arkansas or Louisiana, so we stick with our core bas which is to Houston, Austin, Dallas, Texas triangle.
You go pretty far as a company? We did.
Now, what if you are a seller at selling your home and the appraisal at the lender does for the buyer comes in low, you know, if you agreed upon the price of one sixty in the appraisal comes in at one sixty five, what happens?
You know at that point, it’s really tough. It used to be again, the lender could go to the appraiser maybe provide some information, everybody knew the appraiser work because there was a sort of discussion, maybe education the appraiser some that process now is an awful lot tougher because the whole point of dodd frank was to insulate the appraiser from being influenced by other entities that are involved in the transaction. So, there is an appeal process. I have to tell you I have not found it very satisfying and I’ve got a lot of calls from realtors that I haven’t found it satisfying either.
Yeah, I can tell you as a realtor I haven’t find it satisfying at all. It’s been quite an issue for some real estate transaction when the home doesn’t appraise.
Yeah. And I have to tell you, my phone rings an awful lot of phone calls from frustrated realtors, you know, we had the property on the market, it’s sold in five days for back up offers on it and an appraiser came and appraise for less than contract price. My attitude is been, I think by responding in same problem, you know, give him forty eight hours to fix it and sell it to the next buyer.
Now can the lender request another appraisal to go out?
That becomes a little bit tougher because that starts to look like fraud. It starts to look like a lender is cherry picking the appraisal that they want.
So, the buyer would actually have to go to a different lender and then not lender order an appraisal? That’s pretty much the best when you do it. All right, and sometimes the seller and buyer can negotiate the difference as well, is that correct?
Yeah, and I’m not a fan of that, I have to tell you, I’m very fond of saying that there is no such thing as a divine value, you know, godson appraiser, he’s barely too busy doing other stuff. If we sent ten appraisers to the same property and there were no contract price to current go by, I guarantee you would get ten different appraised values.
Sir, absolutely, it’s just an opinion.
It’s just an opinion. And the opinion is based on the capability, the character that day and I hate to tell you, state certification I remember it was 1990 or 1991 all appraisers are required by the state achieve certification. The highest level of certification offer by the state of Texas is only requires two years of experience.
Well, that’s a low barrier of entry for sure for the industry. It really is, it really is.
All right, we are going to come back right after a commercial break. If you’re streaming us on RREA.com/radio, we appreciate you for tuning in from all over the country and from different parts of the world. We’ll be back right after this to talk more with Mike right after this commercial break.
Americans have been over beating on real estate of at least five years. We’re going to take a couple of minutes what the heck an appraisal is and how to make it work on your benefits.
Hey, it’s your buddy, it’s your mortgage guy, Jamey Milheiser here.
The mortgage industry is a whole today is clouded with misinformation, mysteries and confusion. And if there is one mortgage industry that has the most confusion surrounding it, it’s got to be that real estate appraisal.
Homeowners of today are subject to appraisals coming way lower than they think their house is worth or people are trying to buy homes for more what they appraised for. So, today’s installment, we’re going to take a couple of minutes, so you get the 411 and you what an appraisal is and how to make it work.
So, first of all, what is an appraisal? It’s a report structured by licensed and certified real estate appraisal. Commonly this licensing and certification granted by the State that the real estate located in. This report can be used to document people’s asset statements or most commonly the purpose of this video is an instrument to perform a mortgage loan.
So, here’s a six hundred-pound gorilla in the room, how the heck is that person figure out the value of your property. Expert real estate appraisers are pretty hamstrung by the rules/guidelines in which how they derive the value of your property. Commonplace guidelines among the mortgage industry today are to used 3 comparable sales, not listing but home actually close within the last six months within roughly three miles away of you property. If you’re in an urban setting, we can be talking as little as a mile, more rooms, we’d be talking five miles if not twenty miles. The essence of the expert real estate appraisal today is 3 homes and accountable years that is sold recently in your neighborhood. This can obviously get real clunky when we’re talking about how hot the foreclosure market is and sold properties in your area that might go for twenty cents on a dollar.
Now, that one sale won’t necessarily hurt your value. But if there’s a lot of foreclosure going on in your district, guess what, we’re not going to look at green old paper.
Hey, Milly, give me some tips on how to keep my property value up? Keep in mind first and foremost, you are not in control the market. The real estate market is bigger than me, bigger than you, it’s bigger than all of us. So, if you’re up against the comparable sale, don’t sweat it too hard, you can always check your value again maybe at six months and see what’s sold, but you’re basically powerless to what might be going on with homes in your neighborhood. Always keep your property up to date and maintain. A home captain, good condition will always appraise better than one that need some work.
Also, keep in my mind that I don’t like having this conversation with people if you put ten grade windows or ten graded for a new roof that does not need house just to appraise for ten thousand more than what of before the project.
Those things are considered regular maintenance and grant that they will help you sell the property and do help the overall condition standpoint but you will never get dollar for dollar on the remodels that you do, getting your basement fixed up does not count of the same amount of value as the main floor or what’s considered GLA, gross living area above ground. You have a discounted per square footage for your basement advantage. Do not be overly obsessed with what your house being assessed at for the good or for the bad. Also, don’t get too overly outnumbered with zoe, Julia or teh other websites, they give an online value of your property.
The only true way to gain what your property is worth is to do what expert appraisers has to do and use the approach the call sales and compare approach, what homes like yours and your neighborhood selling for recently.
Remember the old adage, it’s only what you can get for it. And the sales comparison approach is the best way we know to tell you that answer. Now, the other thing to consider is age and economic life of the property. We want to live our clients we have a forty year old home and trying to compare to a five year old home in your neighborhood, it doesn’t work like that. You have to look at properties that are comparable in age and what’s called economic life.
And the angel that still hold its true, one of the three most important words in real estate, location, location, location, depending on where you property is at especially like in my market, the fast city, then value reflection weight greatly. Keep in mind, we’re talking about what’s worth in neighborhood.
So, there you go, quick, fast and hurry, some appraisal 101 so you don’t live yourself in frustration or possibly buy your property that’s not going to appreciate the way that it should. I’m Jamey Milheiser, you can help the flowing of interest rate, make sure your loan is locked in disclose.
Zone Data Systems is a collaboration of two hundred thirty nine appraisal offices representing hundreds of appraisers across the United States. Each of the member offices has invested in the Valytics valuation technology developed by Zaio incorporated, a Canadian company for which the ZDS has the exclusive U.S. licensing rights. The technology employed by the ZDS in developing and reporting values on an extremely large number of properties is based on regional responsibility of its appraisers who have the responsibility for becoming the expert in their owned or assigned zones.
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