REALTOR. Appraisals and Appraisal Management Companies. Main Article EL PASO THE VOICE FOR REAL ESTATE IN EL PASO AUGUST 2010

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1 EL PASO REALTOR THE VOICE FOR REAL ESTATE IN EL PASO AUGUST 2010 Appraisals and Appraisal Management Companies Main Article

2 We ll Help Put Your Clients In The Right Home. Right Away. When it comes to providing safe and sound mortgage loans for your clients, GECU is still going strong. Just like we ve been doing for more than 50 years. We ll find the right mortgage loan that your clients can afford, and then walk them through the lending process with fast, caring service. It not only makes your clients happier, it makes your job easier, too. GECU offers your clients: GECU loans: Conventional, FHA and VA Simplified mortgage loan pre-qualification Competitive, low interest rates Lower closing costs To find out more about our services, call the Mortgage Loan Department at or log on to SmartBranch at Subject to credit approval. Anyone living or working in El Paso County or Doña Ana County not more than 25 miles from our 1500 North Resler office is eligible for GECU membership. (left to right from back) Eddie Lopez, Lorenzo Reveles, Sandra Lujan, Jose A. Avila, Jr., Terry Vargas, Pamela Herron, Araceli Aguilera, Monica Gonzalez, (front) Lettie Ramos

3 08/10 Welcome Good news for El Paso this month includes: June sales of 736 was the highest monthly number in almost four years and we continue with 3,028 sales through June 2010 compared to 2,515 in the same period of This represents an overall 20% increase for this year! El Paso received more than 10 million dollars in state and federal grants to fight crime and combat gang activity, in addition to our already having one of the lowest crime rates in the nation in our population category. Thousands of El Paso property owners no longer must buy flood insurance due to new levees in the lower valley with expected similar relief in the Upper Valley soon. Final passage of the National Flood Insurance Program extension through September 30, 2010 also covers retroactively the lapsed period since June 1, 2010 when there was no authorized coverage for home buyers. Nationally, thousands of buyers had not been able to close due to the lapse. NAR had worked with the senate and house leaders tirelessly to enable this to be passed. And most wonderful of all as you probably know by now, El Paso was honored by being named an All American City. This is truly the highest recognition for our city in many years. It means that city Doug Hamilton President Greater El Paso Association of REALTORS leadership on many fronts has done a superior job. How did we get this Award? Here is part of the criteria for selection: This award recognizes communities whose citizens work together to identify and tackle community-wide challenges and achieve uncommon results. Recognition and involvement of diverse segments in community decision making. Creative use and leveraging of community resources. Clear demonstration of project results. Participation of public, private and nonprofit sectors in decisions. Projects that address the community s most important needs. Projects which tangibly improve the lives of children and youth. When selling El Paso, we want to be real ambassadors for our city in getting the good news out to new and prospective residents. Doug Hamilton Association Officers Doug Hamilton President Linda Bastraw President-Elect Jennifer Stroh Secretary/Treasurer Suzy Shewmaker Hicks - Immediate Past President Sharron Ramirez, C.E.O. Association Directors Frances Moran Jim Howard Elizabeth Golden Yolie Stanton Al Jurado Association Directors Susan Craig Caroline Camfield Andrew Haggerty Mackie Sue Gilchrist Douglas Van Nortwick MLS Directors Patti Olivas - President Bill Stanton - Vice President Angel Ochoa - Secretary/Treasurer Rick Snow Robert Lozano Dolores Guevara Jesus Barraza Andrew Gomez Angelo Amoriello NAR Director Michael Bray TAR Directors Sonja Van Nortwick Linda Bastraw TAR Nominating Committee Elizabeth Leal TAR Regional Vice President R. Scott Kesner TAR TREPAC Trustee Karen Porter 6400 Gateway East Blvd El Paso, Texas Political Involvement Committee Jennifer Stroh Committee Chair Jennifer Stroh, Budget & Finance Alma Miller, Education Cheryl Williams, Fair Housing/Equal Opport. Yoli Chavez, Govermmental Affairs Socorro Cochran, TREPAC Yolie Stanton, REALTOR /Builder 3

4 Survey Name: Agent ID: Phone No. : GEPAR Your association wants your input. We are looking for better ways to serve you the REALTOR. So we are asking you to feel out this quick survey and mail it back to us or drop by the GEPAR office before August 18, The great news is upon completion of this survey you will be given the chance to win a Free MCE course. 1. What would be your preference when receiving your copy of El Paso REALTOR magazine? o An blast to your computer and post on to GEPAR website o A hard copy that would be mailed to your office o Both o Suggestions 2. How many Editions would you like to have yearly? o Quarterly o Monthly o Weekly o Suggestions 3. When viewing the articles in the magazine what kind of articles do you like or would like to see more of? You can also give suggestions. o Educational pieces Ethics/ Realtor Related o Governmental Affairs pieces National / State/ Local o Guest Column o Association Events and News o Suggestions 4. What type of advertisement would interest you in the REALTOR magazine? o Mortgage lenders o Realtor services o Personal services o Suggestions For question call Upcoming Events August 2 9:30 am CIBA Governing Board Meeting 12:30 pm Toastmasters August 3 9:00 am EXIT Progressive Realty Office Meeting 12:00 pm CIBA Monthly Meeting 1:30 pm Education Committee Meeting August 4 8:00 am Orientation August 5 8:30 am RCA Weekly Meeting 1:30 pm Gov. Affairs Committee Meeting 2:30 pm TREPAC Committee Meeting August 9 12:30 pm Toastmasters 4 August 11 9:00 am Success Realty August 12 8:30 am RCA weekly Meeting August 13 4th Quarter billing notice will be ed. August 16 12:30 pm Toastmasters August 17 8:00 am MCE 9:00 am EXIT Progressive Realty Office Meeting August 18 8:00 am MCE 1:30 pm Budget & Finance Committee 2:00 pm Education Committee Meeting August 19 8:30 am RCA Weekly Meeting August 20 1:00 pm Ambassador Series Emma Wollschlager Schwartz President, Medical Center of the Americas (MCA) Foundation August 23 12:30 pm Toastmasters August 25 8:30 am MLS Board of Directors Monthly Meeting August 26 8:30 am RCA Weekly Meeting 6:00 pm TREPAC El Paso Rocks!!! August 27 8:30 am Board of Directors Monthly Meeting August 30 12:30 pm Toastmasters August 31 1:00 pm CIBA Governing Board Meeting 4th Quarter payments are due.

5 GEPAR QUARTERLY BILLING SCHEDULE 4TH QUARTER BILLING 8/14/2010 NOTICE WILL BE ED 8/31/2010 4TH QUARTER PAYMENTS DUE 10/01/2010 SUSPENSION AND $50.00 RECONNECT FEE 11/01/2010 SUSPENSION OF OFFICE IF MEMBERS ARE PASTDUE W/ACTIVE LICENSE. 12/01/2010 TERMINATION OF OFFICE IF MEMBERS ARE PASTDUE W/ACTIVE LICENSE. WE SERVE BREAKFAST DAILY Served All Day COCINA MEXICANA Karate is Great for Kids! Ranked third in the world by National Black Belt League Discipline Respect Confidence Self Steem Goal Seeting $100 Rebate Towards Tuition 1613 N. Zaragoza, Ste 104 & ODESSA, TX 4000 Grandview & 42nd / (432) EL PASO, TX 1178 Hawkins / North Loop #98 / N. Yarbrough ste O / North Loop & Horizon /

6 Appraisals and Appraisal Management Companies Steve Carvalho, CRS GEPAR New Member Ethics Instructor New York Attorney General Andrew Cuomo introduced legislation in the fall of 2009 that took the ordering of appraisals, including choosing appraisers, out of the hands of lenders and placed it in the hands of Appraisal Management Companies. The purpose of this legislation was to attempt to lessen mortgage fraud, thanks in large part to the mortgage lending debacles of the past few years. The perception was that lenders had a financial stake in making sure the loans they closed met the sales price and loan to value ratios, and by doing so, the mortgage broker was taking self serving actions to ensure their financial interests (commissions) were protected. The thought process was that appraisers would be more likely to do a better and more honest appraisal if they were accountable to the appraisal management company instead of risking disfavor with mortgage brokers and even real estate agents who would choose the appraisers more likely to meet the sales price. Like many things, it sounded pretty good in theory but as we all know theory versus practice can be two entirely different matters. I personally experienced some major flaws in this theory within the last month and have talked with other agents who have experienced the same thing. On one property I sold, acting as a buyer s agent, the appraisal came in a staggering $100,000 below the appraisal. I asked the lender if I would be entitled to see a copy of the appraisal and it was forwarded to me. What I discovered was that true comparables were not used. The homes were not comparable in quality and were not on lots anywhere as large as the home I sold and nor were they on view lots. I was allowed to supply comparables that were not used and the appraiser accepted them but would not change his valuation. My client, the buyer, told me he felt the mortgage company just wanted to protect their interest in the property and felt that perhaps this appraiser was encouraged to provide a low appraisal. The second home I sold appraised $18,000 below the $300,000+ sales price and when I was sent the copy of the appraisal, it was apparent that no value was given for it also being on a large lot with a resort-like back yard with a view. None of the comparables had views and the back patio and back fence were within spitting distance of each other unlike the home I sold which was almost on a double deep lot. This out of town lender would also not allow for a second appraisal to be done. In another case, where I was the listing agent, the lender (who was a local lender) called and told me the appraisal was falling short but even they were not told by how much. I was told to submit two comparables to the lender who forwarded them to the appraiser. Being that one was the identical floor plan and had sold almost $50,000 more than the sales price of my listing, this appraiser did change the value, because he accepted the accurate data he had been provided. There is a great deal of disparity in these situations. Some lenders refuse to 6

7 Main Article look at other comparables and some will. I consulted with three highly respected and competent residential real estate appraisers in El Paso whom I have known for several years to discuss the situation with them. Two of the three told me they honestly believe that some of these mortgage companies are either subliminally or directly sending the message to appraisers to come in low on these appraisals for the purpose of better trying to protect the mortgage lender s interest. One of the appraisers told me an appraisal can be protested on the basis of geographical competency that occurs when an out of town appraiser (one from Las Cruces, for instance) is assigned an appraisal in the El Paso market. I was astounded to find that on two of the appraisals, two homes that were active listings were used as sales by discounting the list price by 5% and then using it as a closed sale. One home used as an active listing applying this method had been on the market over a year while the one I sold hadn t even been listed yet. On the first appraisal mentioned in this article, the appraiser attributed the most weight to a pending sale which he thought exceeded the qualities of the subject property. I called the listing agent only to find out it was not pending, had not closed, and that after the buyer could not get approved for the mortgage, the owner had decided to rent it. Why the agent had kept it pending when it was no longer in that status made me very unhappy. Much of the content of my articles stress the correlation of competence in our profession in order to be thought of as professionals. Is there competence in the field of appraising when absolutely no value is given to a view lot? I am not talking about a view from the top of the roof but an actual view lot where you have views of mountains, valleys, and views that go into the horizon. We all know that appraisers do not have as many opportunities as we do to go into many of the homes on the market and to have actually seen them and others in the same neighborhood. It seems to me that an appraiser who accepts the request for an appraisal with the intent of bringing in low values for the purpose of garnering favor with the Appraisal Management Company is no better than the REALTOR who deliberately misleads the seller to as what their home is worth in an effort to get the listing. Also, expect time delays from some Appraisal Management Companies. In two recent instances, the appraiser showed up ten to fifteen days later from the point the appraisal was ordered. Were some reforms needed in the appraisal process? Absolutely! Has the current situation proved effective? Not in my opinion! I welcome your comments and questions to Steve@SteveCarvalho.com 7

8 Association Events Talent Show 2010 Our TREPAC Talent Show was on July 6th at the Comic Strip. Our members had the opportunity to show off their talents. Our fundraising event was very successful, if you did not attend, you missed out on a wonderful time. The MC for the night was Scott Kesner with Century 21 The Edge and our auctioneer for our live auction was Harold Hahn with Rocky Mountain Mortgage. We thank our advertisers and everyone who participated and attended, without your support, our events would not be possible. 1st Place: Monica Terrazas, Armando Rodriguez, Angelo Amoriello, Celina Parada, & Sharron Ramirez (GEPAR Staff and Amore Realty & Appraising) 2nd Place Caroline & J.R. Camfield (Golden Real Estate) 1st, 2nd, &3rd Place: Celina Parada, Monica Terrazas, Angelo Amoriello, Stephanie Phillips, & Caroline Camfield. (GEPAR Staff, Amore Realty & Appraising, Dream Work Realty, and Golden Real Estate) ADVERTISERS Rocky Mountain Mortgage GECU Old Republic Home Protection Jennifer Stroh, Century 21 The Edge FIRST PLACE WINNERS Angelo Amoriello, Amore Appraisals, with GEPAR Staff, Sharron Ramirez, Celina Parada, Monica Terrazas and Armando Rodriguez SECOND PLACE WINNER Caroline Camfield, Golden Real Estate 3rd Place: Stephanie Phillips (Dream Work Realty) THIRD PLACE WINNER Stephanie Phillips, Dream Work Realty GEPAR welcomed Congressman Silvestre Reyes GEPAR welcomed Honorable Congressman Silvestre Reyes, Chairman of the House Permanent Select Committee on Intelligence and Member of the House Armed Services Committee at last month s Ambassador Series on July 9, He discussed and addressed issues that affect REALTORS. Congressman Silvestre Reyes, Sharron Ramirez and Doug Hamilton Congressman Reyes in conference 8

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10 SOLD TOTALS FOR JUNE 2010 GREATER EL PASO ASSOCIATION OF REALTORS JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC Tot JUNE Home Sold Report - Compiled on JULY 15, 2010 Residential Jun-10 Change from 05/10 Jun-09 Change from 06/09-06/010 YTD 2010 YTD YTD New Listings % 1, % 6,097 5, % Sold Listings % % 3,091 2, % Sold Volume $ $111,338, % $78,149, % $459,256,730 $382,843, % Ave. Sale $ $149, % $154, % $148,579 $152, % High Sale $ $681, % $750, % $1,100,000 $1,250, % DOM % % % BREAKDOWN OF LISTINGS New Homes 301 Ave List $ 149,575 Ave/Med Sell$ 149,038/135,450 List/Sell Ratio 100% DOM 96 Resale Homes 416 Ave List $ 159,746 Ave/Med Sell$ 153,154/129,329 List/Sell Ratio 96% DOM 88 Attached Property 28 Ave Sell $ 98,786 DOM 75 Man. & Lot 16 Resale Pending 104 Avg. List $ $175,698 DOM 88 ACTIVES 3,418 Foreclosures for El Paso County for JUNE RealtyTrac Household 1 per household % of households NOD NTS REO Total El Paso 257,073 6, Texas 9,598, ,365 4,802 12,175 10

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