111 Appraisers Attend ICAP’S 2013 Springfield Seminar
ICAP Update Seminar-2013 Springfield,IL
As the name implies, attendees of the ICAP’s Springfield Seminar on July 15th, were brought up to date on a wide range of topics.
George Opelka of ACI, began the seminar with a discussion of the history and future of appraisal software and technologies. George developed a time line from the beginning stages of standardized appraisal forms in 1962, right here in Illinois.
Subsequent changes lead to the Polaroid camera and instant pictures in the 1970’s and eventually the personal computer in the 1980’s. The next big change was the advent of Microsoft DOS and eventually windows. The advents of windows lead to the development of digital imaging, electronic signatures and electronic report delivery (EDI). More recently, the onset of the internet era allowed better and quicker access to information on the web and the integration of that data with adobe software, location maps, flood maps and cost approach programs. Appraisers have become proficient in various technologies and most are not EDI ready.
So where the future of appraisal does related technologies lie? Your smart phone. Phones today enable internet access anywhere. Smart phone apps continue to grow and the presence of social media such as Linked In, Twitter and Face Book are well known.
Peter T. Christensen, General Counsel for LIA Administers and Insurance Services, spoke in the late morning session. Peter focused in on several case studies of appraisals which involved litigation. Current claims have spiked up 95% in the 2006-2012 period due to the mortgage crisis and increase in foreclosure activity. That means the odds are 1 in 24 for a residential appraiser. He acknowledged that mistakes will and do happen in the preparation of real estate appraisals. The majority of his time was spent identifying the most likely areas of problems with an appraisal report and how to prevent a demand letter.
-Use plain English
-Proof rear the report
-Keep strong work files
-Follow your gut instinct
-Reference your limiting conditions in your engagement letter
-Keep your work files at least five years, longer if possible
-Make sure you square foot measurements are accurate
-Make sure you represent the sewer or septic system accurately
-Be careful with fire damaged property and foundation problems
The early afternoon session was a presentation and discussion of the economy by David Oppedahl of the Chicago Federal Reserve Bank. David presentation was titled “Recovery Under Construction”. Beginning in 2009, the Federal Funds rate was lowered to 0.0% to .25%, in an effort to counter the economic recession which began in the Fall of 2008 by increasing demand. Lower mortgage rates have eased the household budget pressure. At the present time fully 1/3 of the average house hold budget is spent on food and health care.
Housing is perceived to be a major economic driver in the economy and the good news is that housing starts, nationally are forecasted to nearly double in the next three years. Housing prices tanked until 2012. Consumer confidence has remained low at the same time. Federal debt amounts to $53,000 for every man, women and child in the country.
What is the playbook the Federal Reserve following? Watch the following economic thresholds. If unemployment falls to below 6.5% and the inflation rate is greater than 2.5%, look for the Fed to tapper quantitative easing. What does that mean? Well basically, the Fed will allow interest rates to rise by limiting its bond purchases. How much are they doing now? Approximately $85 Billion per month currently. What would interest rates climb to? The federal discount rate is anticipated to be .25% for 2014 and 2015. In 2016 the Fed expects the rate to have climbed to 1%. This will mean mortgage money will cost more, possibly in the 5 to 7% range for 30 year loans.
The later afternoon segment of the seminar dealt with the popular topic of legislative updates by T.J. MaCarthy, SRA and Jim Blaydes, SRA and an overview of current activities of the IDFPRF by our very own Appraisal Director, Brian Weaver. Legislatively, recent and ongoing changes were presented as to Jurisdictional Exception, Administrative Code and Rules Changes. The issue of supervisory and trainee appraiser requirements were addressed and guidance offered for trainers.
This year being a renewal year for Illinois Appraiser’s, the continuing education lookup online was highlighted. For the appraiser wondering how much more CE they might need for renewal. Education credits may take a month to show up on the site.
Brian Weaver focused on the Appraisal Management Company regulation which will require any AMC doing business in Illinois to register with the state. There are approximately 200 AMC’s in the country, 125 of those are national. Here in Illinois, we have approximately 75 active AMC’s. He emphasized the need for AMC’s currently doing business in IL to register and do it soon. The date 08/30/2013. And yes, this is 30 days before the appraisal licensing renewal on 09/30/2013.
So appraiser’s, as of 08/30/2013, any appraisal completed for an AMC must include the following statement: The name the AMC , registration number 558.XXXXXXX and expires on 12/21/2014, is the client. This information will be required on all AMC ordered reports. If the AMC is not registered, decline the order or risk a rules violation with the state board.
Formalizing the ordering process, Brian suggested the following;
-Assignment Conditions: scope of work to be spelled out. The extent of research and analysis completed, to be identified and agreed to.
-Identify the problem to be solved; pay attention to the physical, functional and locational issues of the property being appraised.
-Turnaround time to be agreed to.
-Client specific requirements; interior pictures, different values based upon marketing time, etc.
-Completed sales contract for sale transactions.
The issue of frequency of payment by AMC’s brought the most interest from the gathered appraisers. There will be no set “pay in x days” in the rules. Each AMC will negotiate this individually. They will however be accountable for what is agreed to or is stated in their engagement letter.
Overall, the seminar was very informative on many fronts. Join ICAP for the next seminar and be exposed to relevant and timely information and networking opportunities they offer.