Las Vegas Multifamily Housing Sector Will Remain Strong

The multifamily housing sector in Las Vegas, Nevada can expect to see continued growth and low vacancy levels for quite some time.  So what is creating the high demand for multifamily housing in the Las Vegas area?  Two things: foreclosures and short sales.

The Las Vegas market is saturated with distressed properties and individuals who require housing. While foreclosure rates continue to rise, previous homeowners and their families are moving into multifamily rental properties. An astounding number of Las Vegas homeowners who are upside down in their mortgage are now turning to more proactive solutions, such as short sales. As short sales become a more common alternative to foreclosure, many of those individuals will also be transitioning into multifamily housing.  In both foreclosure and short sales, many times the homeowner has ceased paying their mortgage for several months, maybe even years. This allows the homeowner turned renter, to save money for moving expenses, rental deposits, utilities, and other living expenses.

For the last several years, due to the lack of employment many adults have moved back home with their parents and vice versa. Once the Las Vegas valley begins to experience a restoration of job growth, those individuals will have the means to seek affordable housing thus resulting in added demand for rental housing. While renting, tenants have a great opportunity to focus on rebuilding their credit and re-establishing their savings.

Although the high demand for rentals is great news for those in the multifamily housing sector, for renters there could be some bad news headed their way.  With demand on the rise and supply low, renters could see a climb in rental rates, less concessions, and fewer signing incentives. Any chance of new construction projects of multifamily dwellings appears to be slim to none. Renters will have to do their best price comparison when looking to sign a lease. In the meantime, the Las Vegas market will continue to see an increase in renters and a decrease in homeownership.  

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
9811 W. Charleston Blvd.
Suite 2-652
Las Vegas, NV 89117
Direct Phone (702) 824-1614
Toll Free (888) 867-9763

Email: A.hyden@amcofsouthernnevada.com

Website: www.amcofsouthernnevada.com

Twitter: http://twitter.com/AMCofSNV

FHA Adopts the Uniform Appraisal Dataset (UAD)

The Federal Housing Administration (FHA) has announced on August 22, 2011, that they will adopt the Uniform Appraisal Dataset (UAD) requirements. Mortgagee Letter 2011-30, released on August 22, 2011, specifically states that UAD requirements will be mandatory for all case numbers assigned on or after January 1, 2012 and for all appraisals performed on HUD real estate owned (REO) and Pre-Foreclosure Sale (PFS) properties with an effective date on or after January 1, 2012.

Mortgagee Letter 2011-30 does not address or change the required UAD Compliance Deadline of September 1, 2011, for non-FHA appraisals on forms: 1004, 1073, 1075, and 2055.  This letter solely addressed the adoption of the UAD by FHA for specific FHA compliant appraisal reports.

FHA does encourage lenders, appraisers, and appraisal management companies to begin utilizing the UAD standards prior to the mandatory deadline. For a copy of Mortgagee Letter 2011-30 http://portal.hud.gov/hudportal/documents/huddoc?id=11-30ml.pdf

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
9811 W. Charleston Blvd.
Suite 2-652
Las Vegas, NV 89117
Direct Phone (702) 824-1614
Toll Free (888) 867-9763

Email: A.hyden@amcofsouthernnevada.com
Website: www.amcofsouthernnevada.com

Twitter: http://twitter.com/AMCofSNV

Cash Buyer? Get An Appraisal

Based on the rumor mill regarding the Las Vegas real estate market, many would assume that the Las Vegas real estate market is dead. This shows just how out of touch so many people are with the current market conditions. As of August of this year, the Greater Las Vegas Association of REALTORS reports that Las Vegas is seeing lower sales prices, short sales accounting for more than 20 percent of homes sold, and more than 50 percent of the buyers are cash buyers.  If you are fortunate enough to be one of those cash buyers, the market is anything but dead. The amount of cash buyers in today’s market is phenomenal.  Being a cash buyer is by far a great advantage from being a borrower. As a cash buyer it is important that you are taking the correct precautions to ensure a solid real estate investment.

A way to ensure you are making a sound investment is to obtain a real estate appraisal on the subject property. Although on a cash purchase, an appraisal is not required, it is the best and only way to establish the property’s current “market value.” Just because you can afford to pay cash for the property, doesn’t mean you can afford to over pay for a property.  Remember, banks make the appraisal an essential element of the transaction for a good reason. As a buyer it is vital to know the true market value of real estate.

What is “market value”?  Market value is the likely sales price a property would bring if offered in an open and competitive real estate market. When a buyer obtains a loan to purchase a property, the lender will require an appraisal be performed. The lender weighs heavily on the appraisal to guarantee their investment and that the property would resell in the open market for at least the amount loaned.

As a cash buyer, your real estate agent will likely provide you with a Comparative Market Analysis (CMA).  A CMA typically contains a list of recent comparable home sales, active listings, pending sales, withdrawn listings, and expired listings. Agents often use CMAs in an attempt to show their clients the property’s value. CMAs used properly should only be used as an indication of a price range to list a property, and not an indication of market value. Unfortunately, even the most experienced agents cannot provide you with an actual opinion of value. On the other hand, an appraiser’s report is detailed, extracts and examines comparable recent sales, and provides specific information and data related to the valuation of the property.  It’s important to note that banks do not accept CMA’s as opinions of value when deciding whether or not to finance a loan.

The differences between a real estate agent who provides a CMA and an appraiser who provides a real estate appraisal report are vast.  Appraisers complete rigourous hours of valuation coursework, training, and internship hours, prior to being licensed by individual states. Their focus of study is specific to market analysis, supply and demand, highest and best use, the valuation process, and the approaches to value. Appraisers by definition are an objective third party in the transaction. Unlike the real estate agent you may be working with, the appraiser has no financial interest in the sale or sales price of the property.

 Keep in mind that a homeowner can set any listing price they desire on their property. Are you willing to  hand over your hard earned cashed based off the CMA a real estate agent shows you? The bank isn’t. It’s your responsibility as a buyer and investor to safeguard your investment. These days an appraisal completed by a licensed certified appraiser will cost you a few hundred bucks. This is a small fee to affirm that you are paying a fair sales price on real property.   If negotiated, you can even get the seller to pay for the appraisal. So before investing a thousand dollars or a hundred thousand dollars into real property, establish that you are paying market value.  Obtain a real estate appraisal.

 

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
9811 W. Charleston Blvd.
Suite 2-652
Las Vegas, NV 89117                                                                               
Direct Phone (702) 824-1614
Toll Free (888) 867-9763

Email: A.hyden@amcofsouthernnevada.com
Website: www.amcofsouthernnevada.com

Twitter: http://twitter.com/AMCofSNV

 

 

The New Uniform Appraisal Dataset’s 61 Required Fields

On the surface the new Uniform Appraisal Dataset (UAD) requirements appear to be fairly simple.  The GSEs feel that the current format of residential appraisals contain inconsistent data across the industry, the GSEs are not capturing adequate amounts of the appraisal data, and that the majority of the data is not machine readable.  GSEs main goal is to create consistent reporting and definitions in the appraisal industry, while being able to capture that information electronically. So what does this mean for real estate appraisers?

It means that appraisers will have to re-train themselves on how they currently define and input certain information in their appraisal reports. Sounds easy?  According to Fannie and Freddie, there will be a total of 61 data fields that will require specific information.   GSEs goal to reach appraisal data standardization will initially affect 4 appraisal forms: 1004, 1073, 1075, and 2055.

The two primary changes that will lead standardization:

1. Standardizing the inputs for numeric values, including dates, dollar amounts, and others
2. Standardizing the inputs for specific property characteristics (ex. condition, quality of construction, etc.)

 

Some examples of data fields that will be standardized:

Address – must conform to USPAP

Subject Offering Dates and Prices – required for completeness

Sale Type – will have a drop down menu with options

View from the Property – will have a drop down menu with options

Condition of Property – will be required to rate property from C1 to C6

Quality of Construction – will be required to rate property from Q1 to Q6

On September 1, 2011, appraisers must begin to comply with UAD requirements.  If the appraiser fails to correctly input data in the new UAD fields, the report will not pass the UAD compliance check. It is vital that appraisers begin to familiarize themselves with the new terminology, rating level definitions, and data format features as soon as possible. UAD requirements apply to all single family residential loans that are sold to Fannie and Freddie. Fannie Mae has provided a UAD Specifications Handbook for appraisers to use as a learning tool and guide. For more information visit https://www.efanniemae.com/sf/lqi/umdp/uad/index.jsp

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
9811 W. Charleston Blvd.
Suite 2-652
Las Vegas, NV 89117
Direct Phone (702) 824-1614
Toll Free (888) 867-9763

Email: Amelia@amcofsouthernnevada.com
Website: www.amcofsouthernnevada.com

Twitter: http://twitter.com/AMCofSNV

What is an Appraisal Management Company?

The Nevada Revised Statue defines an Appraisal Management Company (AMC) as follows:

NRS 645C.034 “Appraisal management company” defined.
1. “Appraisal management company” means a person, limited-liability company, partnership,association or corporation which for compensation:

(a) Functions as a third-party intermediary between an appraiser and a user of real estate appraisal services;
 
(b) Administers a network of appraisers performing real estate appraisal services as independent contractors;

(c) Enters into an agreement to provide real estate appraisal services with a user of such services and one or more appraisers performing such services as independent contractors; or

(d) Otherwise serves as a third-party broker of appraisal services.

AMC of Southern Nevada is a licensed and registered appraisal management company as defined by the NRS. We maintain state and federal compliancy.

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
Direct Phone (702) 824-1614
Phone (888) 867-9763
www.amcofsouthernnevada.com

New Dodd-Frank Act Threatens Appraisal Management Companies and Appraisers

The newly signed Dodd-Frank Wall Street Reform and Consumer Protection Act will soon be replacing the Home Valuation Code of Conduct (HVCC). The Dodd –Frank Act prohibits lenders or loan originators from pre-valuation requests and the passing of any expected value to the appraiser. Loan originators may not engage in coercion, briery, and other similar acts, which can influence the appraiser’s independent judgment.  This is very reminiscent of the HVCC guidelines in reference to creating a “firewall” between the lender and the appraisers.

What is new to the Dodd-Frank Act is the introduction of Appraiser Independence. Appraiser Independence requires that appraisers be compensated at a rate that is “reasonable and customary” for appraisal services in the market area of the property being appraised. Many appraisers have been disgruntled over low fees paid to them by some Appraisal Management Companies (AMCs).  The new Appraiser Independence guidelines have many appraisers extremely excited with anticipation of higher appraisal fees to be paid to the appraisers. What a large number of appraisers and mortgage professionals are failing to realize is the Dodd-Frank Act implementation of the registration of AMCs in all 50 states. This state registration requirement has immense potential to diminish AMCs, and independent appraisers.

The Dodd-Frank Act calls for AMCs to register in each individual state they provide appraisal vendor services. The registration fee is based on the number of appraisers working or contracted with the AMC in such state the previous year.  The AMC will be required to pay anywhere from $25 to $50 per each appraiser. Once registered with the state, the AMC registration license is valid for only one year. Once the license has expired, the AMC must register within such state again.  AMCs will be required to pay appraisers higher fees resulting in profit loss, and forced to contract with a minimal amount of appraisers due to high registration fees. AMCs will no longer actively recruit due to it not being economically feasible. This negatively impacts the AMCs and the independent appraisers who rely on AMCs for their livelihood. The only AMC’s that are exempt from state registration are the Bank Owned AMCs.

Nationwide AMC’s will face possible tens of thousands of dollars in registration fees.  This will result in countless AMCs not being able to maintain their current coverage areas.  AMCs that specialize in single or minimal states may have a better chance of being able to financially obtain their state registrations by only needing to register in the one or few states they plan to provide vendor services. AMCs may find they will have to network among themselves to combat high operating expenses. Others will opt to cease providing appraisal vendor services in states that are feeling the market crash the most, such as Nevada, California, Arizona, and Florida. Unless the AMC registration standards of the Dodd-Frank Act are revised, countless AMCs will have to come up with alternate business models to reinvent themselves. If not, many appraisers and AMCs will find themselves struggling in this already wavering economy. 

Author

Amelia R. Hyden
President & CEO
Appraisal Management Company of Southern Nevada
www.amcofsouthernnevada.com