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COVID-19 and the Utah Market

This morning I felt the need to update my “Market” template. I have been adding some commentary about COVID-19 but I thought it best to relook and all my statements and see if they were still relevant.

It seems like every other day there is a new webinar updating or explaining the COVID-19 Appraisal process. I have participated in many but not all. It is clear that Fannie and Freddie both expect appraisal reports to clearly and accurately report the current market, and the expected impact on the subjects specific market in the near future.

I am seeing more active inventory, more canceled contracts, more withdrawn listings, more price reductions in most of the markets I work, all indications of a softening market. As I talk to homeowners there is less confidence in the future. I have not seen the typical spring “bump” we usually get. So how do I separate these impression and anecdotal conversions from the facts, and then report them to my clients?

I know that I am spending more time analyzing the each specific market and trying to use and rely on the most recent sales (30-45 days) and lastly sticking to my opinions when challenged.

So, how will COVID-19 impact the Utah market. Those of you that attended our March UAA spring symposium were introduced to several sites and tools to help report the up-to-date market accurately. Here is some published insights by Jim Wood.

POTENTIAL HOUSING IMPACTS By: Jim Wood, Ivory-Boyer Senior Fellow

The global spread of COVID-19 has pushed mortgage rates to the lowest level on record, 3% or less. Through refinancing or home purchase, these low rates offer an unprecedented opportunity for homeowners and homebuyers to capture sizeable long-term savings on their housing costs. The best strategy for current owners would be refinance with a 15-year low interest mortgage. In this case, the term of the mortgage is shortened while taking advantage of exceptionally low rates. The economic uncertainty will very likely dampen housing price increases in the short-term. Slower price increases combined with the record low interest rates enhances the economic environment and potential savings for the home buyer. Low mortgage rates will cushion the homebuilding industry from the worst impacts of the global spread of COVID-19.

Here is a report (link) from the Kem C Gardner Policy Institute at the University of Utah.

https://gardner.utah.edu/wp-content/…/BusinessCycleTable.pdf

Also a great web-page to bookmark for the latest economic, demographic and public policy info. This is more of the economic impact and not the number of confirmed cases.

https://gardner.utah.edu/covid-19/

Other links to relevant reports.

https://gardner.utah.edu/wp-cont…/uploads/COVID-19-Brief.pdf

I am not really sure if this will help but thought I would pass along.

Be safe and wash your hands….. and don’t touch your face. 😀

Advisory Opinion 37 (AO 37), A Primer

Previously posted at http://www.datamasterusa.com/advisory-opinion-37

Advisory Opinion 37, Computer Assisted Valuation Tools will be included in the 2018-2019 version of the Uniform Standards of Professional Appraisal Practice (USPAP). So, what does it mean for you? AO-37 clarifies the scope of computer assisted valuation tools related to appraisers and their responsibilities. These tools gather and analyze market data, and when used correctly, can add credibility to completed appraisals. AO-37 also reminds appraisers of their responsibility for the entire valuation process. Appraisers cannot use software or valuation tools to shield themselves from scrutiny.

History
The history of Advisory Opinion 37 starts way back in 1997 when the Appraisal Standards Board (ASB) adopted Advisory Opinion 18. This AO set forth guidance for the use of Automated Valuation Models (AVMs). AO-18 clarified that appraisers can use AVMs as the basis for appraisals, although the output alone is not sufficient as an appraisal. AO-18 went into effect in the 1998 version of USPAP. As the ASB reviewed AO-18 for the upcoming version of USPAP, they considered replacing it. However, after receiving feedback from key stakeholders, they decided against replacing because it is specific to AVMs and still applies.

They decided to issue a new advisory opinion to address a broader range of technologies. The new AO became Advisory Opinion 37, Computer Assisted Valuation Tools. AO-37 clarifies appraisers’ responsibilities while completing an appraisal using online or stand-alone software tools. AO-37 cites fourteen sections of USPAP, advising appraisers on more sections of USPAP than many other Advisory Opinions. Here are some important takeaways.

Use this tool to see the rules related to AO-37.

Advisory Opinion 37 Interpreted
AO-37 cites issues appraisers face when relying on software or online resources to complete their appraisals. The AO addresses two broadly-used technologies — Regression Analysis and Multiple Listing Services — to illustrate the role of software tools in the valuation process. The main message of this AO is that technology can build credibility in appraisals as long as appraisers apply it correctly to support their decisions. Conversely, they can hurt credibility and valuation results if used incorrectly.

Supporting Adjustments
As mentioned in the AO, tools can support adjustments if appraisers are aware of the information used as the input and how to properly apply the output. Some tools offer data analysis or data visualization to assist appraisers in the valuation process while providing support for their decisions and conclusions.

Scope of Work
One major responsibility for appraisers is determining the scope of work for the appraisal assignment. Because of this, appraisers must understand the assignment to make informed decisions regarding the process required. Appraisers must control the process, selection and input of information based on their knowledge and experience. If appraisers allow their software or tools to control the entire process the output may result in less credibility and/or misleading and unreliable results. Instead, appraisers should control determination of the process, data selection, parameter analysis and interpretation of the output.

Competency
According to the USPAP Competency Rule, appraisers must identify the problem being addressed; maintain the knowledge and experience to complete the assignment; and recognize and comply with laws and regulations that apply to the appraiser or the assignment.

Multiple Regression Formula
Multiple Regression Formula

The AO states that the Competency Rule applies to appraisers’ familiarity with specific types of property or assets, market, geographic areas, intended use, specific laws or regulations, or analytical methods, etc. Appraisers must also understand how to apply their knowledge with or without computer assisted tools. Basically, appraisers must understand the basic tenets of appraisal. Appraisers must be able to use tools properly. Luckily, appraisers don’t need to know the formulas used by their tools or any algorithms and/or proprietary information about, or contained in it. AO-37 states “However, the appraiser should be able to describe the overall process and verify that the computer assisted valuation tool is consistent in producing results that accurately reflect prevailing market behavior for the property that is being analyzed.”

Responsibilities
Appraisers are responsible for selecting the input parameters AND for affirming the inputs are entered correctly. This demonstrates that appraisers understand the market and has tested the software to make sure it works. Appraisers must also understand how to apply the results of the calculations. For example, appraisers must be able to determine what constitutes a strong relationship between variables from supporting materials such as graphs and tables. Appraisers cannot simply rely on the results of a given software or other tool unless they have reviewed it to ensure its reliability.

Terminology
Appraisers must understand terminology used by their computer assisted valuation tools. Terms like standard deviation, coefficient of variation, degrees of freedom, etc., have specific meanings and specific applications. The best-case scenario if you use terms like these incorrectly is loss of credibility. The worst-case scenario is incorrect or unsupported value conclusions and reports. One review appraiser recently told me that he often sends reports back to appraisers because they use terms incorrectly or in a misleading way.

Conclusion
When using computer assisted valuation tools make sure the outputs or results make sense with respect to prevailing market behavior. They’ve got to pass the eye test. Remember, no software can replace your knowledge or experience. The AO states “Regardless of the tool chosen, the appraiser is responsible for the entire analysis including…controlling input, the calculations, and the resulting output.”

Rush Appraisals

RUSH and SUPER-RUSH service is available for most of our appraisals.

Please understand that not all properties are eligible for this service and our existing commitments may limit our ability to provide the rush service for you.

You must also disclose any unusual circumstances when ordering a rush service, such as damage, differing actual living area than public records, views, etc.

Our RUSH service guarantees that your appraisal report is electronically delivered to you within 48 hours of the property inspection (including holidays and weekends) and typically adds a 25% charge to our normal appraisal fee.

Our SUPER-RUSH service guarantees that your appraisal report is electronically delivered to you within 24 hours of the property inspection (including holidays and weekends) and typically adds a 50% charge to our normal appraisal fee.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Home Measurement Services

In today’s highly competitive real estate industry, there has never been a greater need for accurate reporting of a property’s true living area as all too often the gross living area reported on public records differs from what actually exists.

As a Realtor, the MLS as well as your Broker-In-Charge requires you report an accurate and detailed summary of your listing when you enter them into the MLS so there are any number of reasons to get a professional measurement on your listings. The home may be a large or complex measurement assignment that you’re simply not comfortable measuring yourself. As an agent, you don’t want to be held liable for the square footage as listed in the MLS.

Here at J. Leland & Company we offer two types of home measurement services. Our home measurements and floor plans are legal documents that have many uses ranging from individual home sales to tax protests.

  • Home Measurement: This is the most popular type of home measurement service requested to date. This service is designed to provide our clients with an accurate and affordable solution for determination of a home’s GLA (gross living area). This basic service can be instrumental in assisting homeowners or realtors with the listing of their homes. Having the correct GLA in your listing can save you time and money and help expedite the sale of your home!
  • Floor Plan Recreation: Perhaps your needs are more comprehensive than a simple verification of the subject’s GLA? A Floor Plan Recreation is an accurate and affordable tool for marketing your home! The Floor Plans we provide show accurate GLA of the home with approximate locations of interior walls, doors, appliances and plumbing fixtures. The Floor Plans also illustrate basic room dimensions to give potential buyers an idea of each major room. This service can be very useful when attempting to sell your home or looking to make additions or changes.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Pre-Listings & FSBO’s

Today’s market can be challenging. Whether you’re a homeowner selling your property on your own or a seasoned realtor trying to establish a fair list price it’s often difficult to sift through all of the market data to determine a true value for your home.

So it’s common for homeowners and realtors to rely on appraisers for assistance when establishing a list price for the sale of their home.

That’s where J. Leland & Company comes in as we have a long history of working with homeowners trying to selling their own home as well as realtors needing additional support for their own listings (or to prove to their clients the true market value of a property).

At J. Leland & Company we can provide you with a professional 3rd party appraisal, which is far more accurate than a realtor based Comparative Market Analysis (CMA). A pre-listing appraisal ensures both you and your agent have an accurate description of your home’s features and a detailed analysis of the most recent and comparable sales.

In addition to helping you set a realistic selling price so your home will attract buyers, a professional appraisal:

  • Provides an effective tool for negotiating with potential buyers and their agents
  • Helps instill confidence in potential buyers since you have written proof of your home’s value
  • Highlights upfront any obvious repair problems which helps eliminate last-minute repair hassles that might delay closing
  • Decreases the chances of sales falling through due to unforeseen problems

Keep in mind that overpriced homes attract far fewer buyers, which means fewer and possibly no offers, wasting valuable time, money, and efforts while an underpriced home can result in a lower selling price and you leaving substantial money on the table.

Getting a pre-listing appraisal will help you and/or your realtor determine a true list price for your property as well as maximize your chances of selling quickly for top dollar. In addition, we can help you determine what, if any, improvements would be the most cost effective in adding additional value to your home.

A full appraisal may or may not be needed depending on what it is you’re looking for. Often times a more limited valuation or market analysis report is entirely appropriate, whereas other times a full interior and exterior valuation may be necessary.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Tax Assessment Appeals

Due to the recent downturn of home prices over the past several years a large percentage of homes in the Ogden area are still being ‘taxed’ based on much higher property values prior to this decline. So there’s a very good chance you’re paying more than your fair share of property taxes!

Sometimes, matters like this can be resolved with a phone call. However, if after discussing your assessment with your local taxing authority you still feel as though your property has been overvalued, a professional, independent, third-party appraiser is often your best bet in proving your case.

That’s where J. Leland & Company comes in. There are a lot of different procedures for appealing tax assessments so it’s important to enlist the help of a professional appraisal company that’s experienced and trained in the ins and outs of the appeal process.

Prior to hiring an appraiser it often makes sense to do your own research before determining whether to move forward with a property assessment appeal, especially before making the decision of hiring a professional appraiser.

Keep in mind, according to the Uniform Standards of Professional Appraisal Practice (USPAP), we as appraisers are not allowed to take “shortcuts” — i.e., your research – and use it as face value as part of our independent evaluation. When you hire us for an assessment appeal, you’re commissioning us as an independent, third-party to perform a professional appraisal report.

As such, we do our own evaluation from beginning to end. If you’re correct that your property has been overvalued, an independent report such as ours will be more persuasive than any other evidence you can provide on your own. But once again it does depend on our ability to do the work independently.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Pre-Foreclosure & Short Sales

J. Leland & Company is a leading provider of real estate appraisals for REO foreclosures and short sales. Our Company appraises real estate throughout the greater Ogden area.

We provide high quality appraisals with detailed opinions of fair market value for mortgage banks, and mortgage servicing clients as well as “quick sale” forecasts that consider your specific timeline.

Our foreclosure and short sale appraisal services cater to the needs of homeowners in default, banks with real estate owned properties (REOs), mortgage lenders, HUD, FHA, law firms, loan service companies and other financial institutions that make personal and commercial loans.

For commercial real estate in foreclosure and bank owned real estate (REOs), owners and banks alike need to know the difference between “fair market” value and “quick disposition” value in order to determine the potential equity position or charge-off liability. Regardless of whether the real property is residential or commercial the fair market value in an ever changing market is crucial to reducing non- performing inventory of REO real estate.

Owners of real estate which are in foreclosure are faced with many challenges. Some are unwilling to allow an inspection of the property or if they’ve already abandoned the property, they may have neglected care of the home for a period of time, or even purposely caused damage.

We have both the knowledge and experience to deal with the specific aspects of foreclosures and short sales, which is why you can rely on our reports to minimize your losses.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

PMI Removal Appraisals

PMI, the acronym for private mortgage insurance, allows individuals to purchase their home with less than a 20% down payment. If you are paying PMI, the question you need to ask yourself is; “Is it time to stop paying monthly PMI into an escrow account and instead start putting that money into your pocket?”

Every month, if you’re like most of us, you dutifully make your mortgage payment. Have you ever given any thought to exactly what makes up your monthly payment? For most of us, the mortgage payment not only pays off the mortgage loan, but a portion also gets put into an escrow account to pay for real estate taxes and a variety of different types of insurance (homeowners, hazard, flood, PMI, etc).

If you purchased your home with conventional financing and put less than 20% down, it’s likely you’re paying PMI. Private mortgage insurance protects the lender or investor against loss if a borrower stops making payments. Often, homeowners mistakenly pay this insurance years after it’s no longer needed and as a result end up paying thousands in useless insurance premiums.

Here’s the good news that many homeowners don’t realize – Once you’ve reached 20% equity in your home by appreciation, improvements made to the home or by paying down the principal balance of the mortgage (or any combination of the three), you can force the lender to cancel the private mortgage insurance. All you have to do is request in writing that the private mortgage insurance be canceled (most lenders have a brief form which must be filled out) and provide the lender with proof of sufficient equity over 20%.

In most cases, the necessary proof is a state certified appraisal. Recent legislation (the Homeowners Protection Act) requires servicing lenders to make homeowners aware of the existence of any PMI they might be paying for and the requirements necessary to have it cancelled. Fortunately, you don’t have to wait for the lender’s notification to rid yourself of PMI. In most cases, if you have equity of 20% or more you’ll be able to cancel it almost immediately.

PMI is not required in all instances. The general rule is that if a homeowner has put down less than 20% down on a home purchase (single family), mortgage insurance will be required. Homes purchased with a down payment of at least 20% should have enough equity to cover any potential losses by the lender, so PMI is generally not required. There has been a surge in the mortgage insurance industry because of the popularity of purchasing homes with less than 20% down. MICA claims that because of mortgage insurance making up for the down payment difference, over 15 million Americans have been able to purchase homes over the past four decades.

PMI does not protect a homeowner against loss, so a borrower that’s required to purchase it will probably never deal with the mortgage insurance company itself. All dealings concerning mortgage insurance are usually handled by the lender. It’s also the lender (or the eventual purchaser of your mortgage loan, if any) who has the ultimate decision when it comes to mortgage insurance, meaning how much and when the homeowner has built up enough equity in the property to drop the insurance. Therefore one must remain in contact with the lending institution which services their mortgage (collects the monthly payments) to inquire about this type of insurance and the requirements necessary to have it cancelled.

After a homeowner has built up 20% equity for a single family owner occupied residence (a few banks may require as much as 25% equity – check your loan documents to ascertain what applies in your situation) in the home, they may begin to initiate steps towards canceling the mortgage insurance. The first step is to contact the lending institution to where you send your mortgage payments (loan servicer). This may or may not be the lender who gave you the loan originally. Your loan servicer will be able to help you with the cancellation procedure and will also be able to tell you exactly how much your remaining mortgage balance is. Every loan servicing institution can have different policies regarding this procedure. Ask your servicing lender to provide in writing their specific requirements to cancel PMI insurance.

Keep in mind it’s the servicer’s ultimate decision and they’ll take many factors into consideration including the borrower’s payment history over the life of the loan before allowing you to drop this insurance. This factor alone could alter the servicer’s decision.

Although mortgage insurance may have allowed you to purchase a home, there will come a time when this added monthly expense will no longer directly benefit you. Therefore, it’s in your best interest to keep the provisions surrounding it’s cancellation in mind because no one is going to cancel it for you.

You are, ultimately, your own financial advisor, and even the smallest expenses should be eliminated if at all possible. By continuing to carry PMI which is no longer required, nor needed only decreases the amount of money you have available in your pocket or your bank account.

Most lenders require a real estate appraisal by a state certified appraiser as the primary proof required to eliminate unnecessary PMI insurance. At J. Leland & Company we specialize in helping people just like you rid themselves of unneeded and unwanted PMI insurance.

We offer a free initial consultation and will help you to determine if you have sufficient equity in your home to enable you to cancel your PMI.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Horse & Specialty

J. Leland & Company is uniquely qualified to appraise equestrian properties of all sizes. Our experience includes equestrian properties that are private use as well as properties that are income producing.

In most ways, horse properties are very similar to any other residential property as many of the same theories and techniques apply in the appraisal process. Often time’s buyers and sellers care more about the number of horses that can legally reside on the premises than anything else about the property.

Our staff of appraisers includes an actual horse owner and lifelong equestrian which when combined with our vast appraisal experience and knowledge of horses allows us to specialize in the valuation of equestrian properties. In addition, we provide appraisals for agricultural production, recreational use properties, and we have the experience to appraise farm and ranch properties as well.

With the ever changing landscape of the greater Ogden area as well as its continued growth, the line between urban, suburban and rural property is continually changing. This change is also reflected in the per acre value of your farm or ranch.

Whether you’re selling, buying, refinancing, or going through estate planning, let our professional hands on experience and knowledge assist you in the process of determining your property’s value.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.

Financial Plan & Trusts

Financial and Estate Planners are often relied upon by their clients to provide sound, well-informed advice. J. Leland & Company has worked closely with a long list of Financial & Estate Planners over the years to assure they have the information needed to develop the best and most effective strategies for their clients.

Real estate holdings are often at the center of the plan as they’re usually the client’s largest assets. Whether you need an appraisal for a single property or multiple appraisals for an entire portfolio we understand the process involved. We’ve provided appraisals for Estate Planners throughout North Utah Area for a variety of trusts, estate purposes, tax planning, asset update purposes, and more.

Over the years J. Leland & Company has distinguished itself as one of Ogden’s premier providers of appraisals for estate and financial planners and we’re acutely aware of the detail, skill and attention necessary to properly value these type of properties. We also assure complete discretion and are sensitive to the needs and privacy of those who reside in these homes.

If you’re a senior, it’s also important that you get your affairs and estate in order as you transition into your retirement years which include knowing the value of your properties. There’s no reason to feel overwhelmed during this process as we’ll fully explain the appraisal process up front and when the report is finished we’ll personally go over the report with you to answer any questions you might have.

Estate Planners throughout the Ogden area have come to rely on our appraisal services to create the foundations of a sound financial plan for their clients and we welcome the opportunity of working with you as well.

Give us a call today with any questions you might have and also check out our ‘Praise‘ page and see what others are saying about Jared Preisler and J. Leland & Company.