My New Blog

I get a lot of the same questions from Lenders on how the appraisal business did in 2007.  I would assume for most appraisers who do work mostly for lending transactions (which would be the bulk of our business), the answer is generally "probably the same as your business".  When the mortgage shakeup really hit around last May or June, our business volume dropped by about 50%, overnight, and lasted this way for about three months.  The last quarter of 2007 saw an increase in business, but still short of what it was the first two quarters of 2007.  I would speculate that the increase in volume in the last quarter, despite the holidays, was because lenders got the learning curve behind them on what type of client to market to, and what loan product would work, in light of all of the loss of subprime lending, and tightening of underwriting guidelines.  This is only speculation on my part though. 

As far as a more in depth disclosure on lending competition goes, there has been a significant drop, and those of you still in business have lost a significant amount of competition-which is great if you are sticking it out.  Quite a few of our clients from the beginning of 2007 no longer are in business.  Case in point: while delivering presents to our clients before Christmas, I was surprised to show up at several offices to deliver the present, only to find that it was vacant, or reoccupied already.  Additionally, collection accounts have gone way up, and this is unfortunate.  We never had to take anyone to court prior to this month for non payment.  This month alone we have 5 past clients scheduled for court dates, and most of them are for small amounts, but are over 6 months delinquent.  Please understand that this is disconcerting to me, as I understand that a lot of us are still reeling from a significant drop in income this year.  The really unfortuate thing is that all these clients have/had to do was to respond to our calls and letters and work it out, instead of ignoring us altogether.  If there are any lenders out there who are reading this, please understand that most appraisers are in the same financial boat as you are and are more than happy to make payment arrangements that will work.  I personally would rather keep positive relationships in tact, and it is not all about the money.  I will speak for myself and say that we are not like a credit card company, we won't raise the interest rate, we won't sock you with late fees, we won't hammer your credit, etc., etc. If we can communicate, we will show you some heart.

Well, hopefully that will enlighten some on an appraiser's point of view.  Looking forward, I hope 2008 is not as cataclysmic as 2007 was.  I will just report on what is currently going on out there.  Currently, here in Northern Utah, things are pretty flat.  The price ranges from 400 to 1 mil. has seen some significantly longer times on the market, with values coming down slowly.  Price ranges below 400k are still rising, or relatively flat, depending on the county.  Buildable lots have seen significant decreases in value, and increases in inventory and market time.  I have not interviewed all county planners, but it appears that the application for subdivisions has gone down-which is a good sign, as this will allow existing inventories to be absorbed, and a stabalization in market values, and decrease in marketing times.  I know we in Utah are fairing much better than the folks down in Arizona.  I personally have had a condo, priced at 139k, in Phoenix for sale for over 4 months, and the volume of traffic and calls has been almost nothing.  It is competitively priced, has been gutted and remodeled, and is in an attractive area.  I am just at a loss on how something this low priced is taking so long to create interest, let alone sell.

Till next time, as one of my mentors always said "keep your head in the clouds, and your feet on the ground".