August 2009

FHA SET TO REMOVE ALL NON-CERTIFIED APPRAISERS FROM ROSTER

On October 1, all appraisers who are currently approved to perform FHA appraisals and licensed, but not certified, will be removed from the FHA Appraiser Roster. HUD officials say that the Housing and Economic Recovery Act of 2008 forced this requirement upon them. Last October, HUD stopped taking applications by licensed, but not certified appraisers, wishing to be placed on the FHA roster.

“This is a statutory requirement that does not provide for grandfathering and cannot be waived by the FHA,” read an announcement from HUD on the subject. “However, appraisers that subsequently meet certification requirements may apply for reinstatement to the FHA appraiser roster.”

AUCTIONS CALLED ‘FASTEST GROWING NICHE IN REAL ESTATE’

Real estate sales have been going through tough times, but according to prominent real estate writer Ken Harney, one facet of it is growing at a rapid pace. In a recent article he wrote for Realty Times, Harney reported that the sales volume from real estate auctions has increased 48% in the past five years.

The real estate auction business does well when real estate prices are rapidly escalating and when they are declining, according to Alan Kravets, president of Sheldon Good & Co., one of the largest real estate auction firms in the United States. When prices are falling, “you use auctions to cut your losses,” he said.

Deputy Executive Director Chris Longley of the National Auctioneers Association said live auctions are used in areas where there is a lot of distressed property “to quickly establish true market values in environments where people aren’t really sure what the values are.”

The National Association of Auctioneers reported that $59 billion in real estate was sold at private live auctions in 2008 and that number should rise in 2009.

“Consider adding auctions to your strategic game plan if you need to sell into a down market,” Harney advised real estate investors at the end of his article. “They’re not a panacea, but they work.”

OFFICE VACANCIES RISE, RENTS FALL

As in the case of most commercial real estate, the market for office space is still in a tailspin. According to Colliers International, a leading real estate information firm, office vacancies in the United States rose 1% to 15.45% in the second quarter of this year.

Office rents have continued to decline and are, on the average, over 10% below what they were at the beginning of the year.

Chris Moore, director of economic research at Colliers, expects this trend to continue for the rest of the year, as he said, “Firms have little appetite for expansion and instead remain focused on reducing costs and watching their bottom lines.”

FED AND TREASURY TO EXTEND TALF

The Federal Reserve Board and the U.S. Treasury Department have announced the extension of the Term Asset-Backed Loan Facility (TALF). Created in the wake of last year’s financial meltdown, this program was slated to end December 31.

“To promote the flow of credit to businesses and households and to facilitate the financing of commercial properties, the Federal Reserve and Treasury approved extending TALF loans against newly listed ABS (asset-backed securities) and legacy CMBS (commercial mortgage-backed securities) through March 31, 2010,” the Federal Reserve reported in a press release. “Because the new CMBS deals can take a significant amount of time to arrange, the Federal Reserve and Treasury approved TALF lending against newly issued CMBS through June 30, 2010. “

The Fed stated it did not expect to expand the variety of collateral eligible for this program, but that could change in the future. In fact, the TALF program could be extended further, according to the press release, which said, “The Board will continue to monitor financial conditions and will consider in the future whether unusual and exigent circumstances warrant a further extension of the TALF to help promote financial stability and economic growth.”

WATERGATE HOTEL FAILS TO SELL AT AUCTION

The famous Watergate Hotel is going through more tumultuous times these days than it was in the 1970s when the most notorious political scandal in history was brewing and named after it.

Actually the Washington, D.C., hotel had an inauspicious beginning. The groundbreaking in 1963 was followed by zoning and other controversies, which delayed its opening for several years.

The break-in of the Democratic National Committee headquarters on its sixth floor in 1972 and the subsequent arrests lead to resignation of President Richard Nixon and the imprisonment of many of his key officials. That infamy gave the hotel a status that led to it becoming a fashionable place to live. As time moved on, however, the hotel fell into a state of disrepair and was closed two years ago.

Monument Realty, which bought the Watergate in 2004 for the purpose of renovating it (at a $170 million price tag) and selling it unit-by-unit as co-ops, fell behind on its mortgage payments, and the famous hotel went into foreclosure.

PB Capital Corp. tried to sell it at auction last month, but stopped the proceedings when no one met the opening bid of $25 million. The German bank is still working to sell it.

“A lot of people are going to be visiting PB Capital to see if they can make a deal,” said Washington-area developer Robert Holland.

ASK MARTITIA

QUESTION:  Does the Home Valuation Code of Conduct allow an appraiser to talk with the real estate agent involved in the sale of the property that is being appraised?

MARTITIA: Yes, but the appraiser must independently research and verify any information given to him or her by a third party.

Martitia Mortimer, Elliott’s executive vice president, answers appraisal questions on a regular basis in Elliott Real Estate News.

QUOTES

“A man can fail many times, but he isn’t a failure until he starts to blame somebody else.”
                                                                                                                      -- John Burroughs

“The greatest felony in the news business today is to be behind, or miss a big story. So speed and quantity substitute for the thoroughness and quality, for accurateness and content.” -- Carl Bernstein


“Many a small thing has been made large by the right kind of advertising.” -- Mark Twain

“You should never have your best trousers on when you go out to fight for freedom and truth.” -- Henrik Ibsen

 

Newsletter Editor: kevin@elliottco.com
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