March 2010

ELLIOTT® ASSISTS CLIENTS IN MEETING FHA MANDATES

Through the expansion of its Compliance Plus program, ELLIOTT® & Company Appraisers now offers an appraisal firewall service for financial institutions that need to be in compliance with the FHA appraisal guidelines that recently took effect.

Compliance Plus was established by ELLIOTT® in 2008 in anticipation of the Home Valuation Code of Conduct that was adopted by Fannie Mae and Freddie Mac early last year. The FHA loan process has never been affected by the HVCC, but the new FHA guidelines on home appraisals involving FHA-backed loans have adopted some of its characteristics.

"It is part of our job to keep up with appraisal guidelines as they are enacted," said Carlyle Holt, client services director of ELLIOTT® & Company Appraisers. "Whether appraisals are involved with Fannie, Freddie, the FHA or any other institution, we take steps to ensure that all of our appraisals meet all necessary regulations."

For further information, contact the Client Services Department of ELLIOTT® & Company Appraisers at (800) 854-5889.

INVESTORS ARE BUYING VACANT LOTS

While real estate sales remain slow overall, one type of real estate has become a hot commodity, particularly in the western part of the United States. The real estate meltdown of 2008 left a lot of developed residential lots without homes built on them. These vacant lots are getting snapped up by investors.

These lots, many of them foreclosed upon as large numbers of developers fell into financial difficulty, went back on the market at fractions of their original prices. Often these lots are selling for less than the costs of developing them.

While the bargains are out there, the national home builders that survived the last couple of years are under pressure from their stockholders not to build up a large inventory of land. Going after these low-priced developed lots are investors, particularly well-funded investor groups.

"About 80 percent of what we're doing is finished-lot investing," said Scott Clark, president of Americap Development Partners, an investment company out of San Ramon, Calif. "We are concentrating on buying at below finishing costs, leaving virtually no land cost whatsoever. We want to get as many of those finished lots as we can because, as demand begins to rise, the need for housing will become painfully obvious."
 

GOVERNMENTS ARE SELLING THEIR REAL ESTATE

In order to balance their budgets and find cash to operate, state and local government entities throughout the United States are selling their real estate, and this goes well beyond government auctions of seized properties.

California recently auctioned off the Orange County Fairgrounds. State officials were hoping for more than a $100 million return on the 150-acre site in Costa Mesa, but had to settle for $56.5 million, a drop in the bucket considering experts predict a $20 billion budget deficit between now and June of next year. The Golden State is also trying to sell 17 of its buildings, valued at about $2 billion, and hopes after selling them to negotiate a 20-year lease with the buyers so that it can continue its
operations within these buildings.

The state of Arizona has issued $5,000 bonds, backed by some of the real property that it owns. The state of Connecticut has hopes of raising $60 million over the next two years through the sale of its government property.

"[When government entities sell their real property], usually there is a crisis," said Dan Fasulo, managing director of Real Capital Analytics. "Part of that crisis is caused by an economic downturn, which means they wind up getting lower prices when they actually do sell."
 

CAGE VEGAS HOUSE SELLS FAST
AT FRACTION OF ITS FORMER VALUE

The former Las Vegas house of actor Nicholas Cage sold the first day it was on the market at a figure close to its asking price of $4.95 million. Cage, who has since fallen into IRS-related financial problems, purchased the 14,306-sqare-foot home on Spanish Heights Drive for $8.5 million in September 2006. Like homes he owned in California and New Orleans, the luxury house had been in foreclosure.

"I've been preaching to all of my potential buyers, who are waiting in the wings, the same message over and over; if you have the wherewithal now is the time," said Kenneth Lowman, broker and owner of Luxury Homes, a Las Vegas real estate agency. "Conventional homes move in relation to unemployment. The luxury-home segment moves in relation to the stock market. The market is back."

ASK MARTITIA

QUESTION: Must a review appraiser be licensed in the state where the subject property is?

MARTITIA: The Uniform Standards of Professional Appraisal Practiced do not cover requirements for appraisal credentialing, but its Appraisal Subcommittee (ASC) issued a statement on the subject late last year.

"The ASC has concluded that for federally related transactions, so long as the review appraiser does not perform the technical review in the state within which the property is located, and so long as the review appraiser is certified or licensed by another state, that appraiser need not be registered for temporary practice or otherwise credentialed by the state agency where the subject property is located," the statement read. "With
that said, state law may be more restrictive than federal law and may require a temporary practice permit or other credential."
 

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

QUOTES  

"I don't jump over seven-foot bars; I look around for one-foot bars that I can step over." –Warren Buffett

"The most terrible job in warfare is to be a second lieutenant leading a platoon when you are on the battlefield." –Dwight Eisenhower

"What the country needs are a few labor-making inventions." –Arnold Glasow

"The trouble with jogging is that the ice falls out of your glass." –Martin Mull

"The big print giveth and the small print taketh away." –Tom Waits

 

Newsletter Editor: kevin@elliottco.com
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