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The news came quickly and brutally (especially if you were a ZG investor):

@mortgage_yack #zillow #PINKHolidayRemix #realestate #utahrealestate ♬ original sound – Jack

I jumped on the bandwagon with this:

This just in: The “A” in “Zillow” stands for “Accuracy.” https://t.co/j5ukW1zzA9

— Jonathan Miller (@jonathanmiller) November 3, 2021

And this was a perfect post:

so zillow let a robot buy up thousands of properties, outbidding real buyers and artificially inflating the market, and now will be laying off a full quarter of its workforce and selling off the properties to rental corps like BlackRock at vastly discounted prices. that right?

— Insert Clever Name (@BethLynch2020) November 2, 2021

Now let’s digest this in the context of price accuracy:

While Zillow’s CEO Rich Barton essentially said early on that he didn’t want their iBuying efforts (Zillow Offers) to be seen as gaming the Zestimate like that dumb viral Tik Tok video inferred a month ago.

@seangotcher

#housing

♬ San Tropez – Illect Recordings

Yet it would seem unlikely that Zillow Offers used something completely separate and conceptually very different from their ‘Zestimate’ because it would be quite expensive and extremely difficult to keep a radical new valuation concept a complete secret. All we know at this point is whatever valuation methodology they used was a complete fail. And to go a step further their Zestimate valuation methodology has long been a complete failure in the accuracy department. But it hasn’t been a complete failure in the consumer credibility department at all. In fact, it’s been quite successful – after all, Zillow weened control of the U.S. consumer away from the real estate brokerage industry who had enjoyed 100 years of gatekeeper status.

This is why the real estate brokerage industry pays Zillow substantial fees to be featured on a search page in their “Pro” offering, using the source data provided to Zillow by them. Its quite diabolical.

So if we consider the Zestimate to be a proxy for the Zillow Offers valuation tool that failed, it gets worse….

The national median accuracy rate of the Zestimate is 2%.

Because they are using “median” and that term is largely ignored by consumers in the phrase “median accuracy rate” that 2% sounds pretty darn accurate. Yet there is no fine print here. The phrase literally means that 50% of the time the Zestimate is within 2% of actual value and 50% of the time it’s not.

And it gets worse…

The median accuracy rate is only within about 2% if the property being Zestimated is currently listed for sale. But if the property is not currently listed for sale, the median accuracy weakens to 7%.

For the Zestimate to move from 7% to 2%, they are reliant on the broker expertise involved to price the property and get it on the market.

Said another way, in order to get the median accuracy rate from 7% to 2%, they need the brokerage community to price the property to get that touted accuracy rate.

To summarize this point:

The brokerage industry gives all their data to Zillow because Zillow marketed to and won the consumer.

The brokerage industry pays Zillow to market them on the Zillow platform because they gave Zillow all their data.

Zillow became a brokerage firm and therefore a direct competitor to the brokerage industry, something they promised early on would never happen.

Zillow uses the brokerage industry to inaccurately price properties, placing them in an adversarial position with the consumer who wants to sell their home.

Yeah, I get it.

Tags: Zillow, Zestimate Forecast, Rich Barton, Zillow Offers, Accuracy

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To all members of the Appraisal Institute:

Before I start, I wanted to share what the Appraisal Institute’s MAI designation is referred to by many of its members. I learned these two from an MAI instructor years ago (pre-merger) who told our class (as if to motivate us?) that MAI stands for:

MORE ANNUAL INCOME
MADE AS INSTRUCTED

And now…

MORE AMORIN INFLUENCE

Over the last five years, I have frequently been writing about the corruption and self-dealing of the largest appraisal trade group in the U.S., whose membership has fallen by a third over the past decade. Since 1997, the leadership has been largely comprised of the same people moving in and out of leadership positions, enjoying lucrative teaching contracts, enjoying compensation as much as double the market rate, expense reimbursements not consistent with corporate and competing organizations, lots of first-class plane flights to Europe, Asia, and other locations with their spouses, all paid for by the hard-working membership who is not clear about what is happening in Chicago headquarters because they are not told.

There is currently another sham petition process underway to prevent Steven Stiloski, the thoroughly vetted choice of the NNC (the second year in a row this sham petition process was utilized), from becoming Vice President. Steven is representing the choice of the membership. Sandra Adomatis, who by entering the election, no matter what her intentions were, can not be blind to the political poison of this sham petition process and becomes an FOJ by default, no matter how qualified she or her backers say she is.

Remember that the sham petition process places the thoroughly vetted NNC candidate on EQUAL FOOTING with someone Jim Amorin puts into the sham petition process or even someone that self-nominates. Incredible.

Smartly, CEO Jim Amorin chose to limit the exposure to the membership by placing it at the end of the membership newsletter in June (I wrote about this several weeks ago in an earlier version of Appraiserville). And I’ve been told it also appeared in a membership email from the president on June 25th.

So I thought I’d explain one of the things that FOJs (Friends of Jim Amorin) are trying to dismantle because of their eagerness to serve at the pleasure of the current CEO, Jim Amorin.

Let me define what an FOJ (Friends of Jim Amorin) on the Board of Directors is in case the membership is not familiar with this term I coined:

• FOJs are resume builders only, actively running the once-proud organization into the ground for their own personal enrichment.
• The current FOJs on BOD have not filed a single motion – in other words, they do nothing but the bidding of the CEO Jim Amorin.
• They don’t represent diversity, especially the actions of all the women who signed the sham petition process to push for Sandy because it will result in less diversity – remember that the CEO scuttled the diversity committee run by Bob Stevens in 2015 because it was a threat to his hold on power.
• FOJs don’t bring any new ideas to the board or to leadership – they are only on the board to vote “no,” so they will get their committees and puff up their resumes.

Remember that Jim Amorin makes over $500k, and using comps of CEOs at reasonably similar organizations, his salary is nearly double the market rate – and membership is forced to pay that. And consider his FOJ enablers like past president Jeff Sherman, who whined in a board meeting against suggestions that the organization begins to stop paying travel expenses of spouses (which is NOT done by corporate America, incidentally). Finally, remember that FOJs need the CEO to remain in power to get their perks and, basically, to hell with the membership.

Jody (Super-Duper) Bishop gets to select the incoming open positions (about 50) and invite the membership to look at those he selects. Because if Jim Amorin wins this sham petition process and Jody selects all FOJs, then the Appraisal Institute will have zero diversity in the future, and both Bishop’s and Schley’s legacies will be tarnished for the remainder of their professional careers.

Significant diversity initiatives are coming from the new presidential administration, and social mores are shifting too. Current president Rodman Schley has been driving the AI’s presence in the discussion, which keeps AI relevant. All that is for nothing if the sham petition process succeeds in keeping the NNC vetted selection from being duly placed in leadership.

The NNC (National Nominating Committee) is comprised of one member from each of the ten regions. The chairman of the NNC is the immediate past president but has a non-voting role. If there is a tie, the executive committee gets to be the tiebreaker with three votes (Super-Duper Bishop, Craig Steinley, and selection after the sham election process is decided).

The NNC is one of the good governance things that happens in Chicago. This committee is Kryptonite to CEO Jim Amorin, and he has worked hard to weaken it but has failed so far. In the past, he has made the following attempts to weaken the NNC:

• Narrow the number of leaders
  
• Narrow the number of regions
  
• Propose focus on other sources of future leaders
  

The beauty of the NNC structure is that members of the Board of Directors have to wait six years after they roll off the board before they can serve on the NNC. This has been problematic for Jim Amorin because he can’t get his FOJs onto the NNC easily (it takes too much time) to do what they do now on BOD and live a dishonest professional life of quid pro quo. Of course, in turn, for doing Jim’s bidding, they get lots of perks.

The practice of Jim doling out choice positions in return for an FOJ’s ethical soul – they’re not much different than a sociopath in my book – because FOJs have no moral compass and think that outsiders can’t see what they are doing. By definition, FOJs do not care about membership or the direction of the institution. It’s all about getting what they want because they are aligned with the person who does things to keep themselves in power at the membership’s expense. The CEO is very skilled at that.

And to the handful of FOJs that have reached out privately and given me crap about calling out this malpractice of the organization, don’t worry, I will always honor my agreement to keep your name out of this conversation as promised. I am a man of my word. But remember, every one of you is only doing it to preserve the benefits you get from keeping Jim Amorin in power. You have no moral ground beneath you in this debacle. FOJs have placed their self-interest above the membership and the future of the organization. And with that, many FOJs don’t seem to understand how the sausage is made, so they are even more vulnerable to manipulation by the CEO.

And this toxic hypocrisy has seeped into RNC (regional nominating committee) process too. Take Region V, for example. There was a bitterly close election on July 9th. The region selected an FOJ back in April to be in line to be considered for the NNC eventually. And then Jean Gannon, a non-FOJ, threw her hat in to compete with the FOJ candidate, much like the sham petition process I talked about. But this time, the shoe is on the opposite foot for FOJs. Because the Non-FOJ candidate was a threat to the FOJ candidate, two of the “Hateful 8” FOJs, Region V Chair Claire M. Aufrance, and Region V Vice Chair Heather Placer Mull, fought against the regional petition process because they said they believed in (paraphrased) “the sanctity of regional integrity.” LOL.

In other words, the leaders of Region V believed in the “integrity” of the regional nominating process but could care less about the national nominating process. Why? Because it was convenient (and essential) to their role as FOJs. Their hypocrisy should not be lost on you as it is clearly lost on them. They readily can push aside a non-FOJ candidate but then sign the sham petition process at the national level. These are two of the FOJs who play the game well – they do as they are told by the CEO and appear to be there purely as FOJs and not as leaders to move the organization forward.

The hypocrisy that Aufrance and Mull have shown begs the question: Is this the type of people that should be anywhere near a Board of Directors position or regional leadership?

Oh, and it gets worse.

Board of Directors member Trevor Hubbard has been working the room to get the Appraisal Institute to get rid of its residential members. No one I know has any idea why. I find his efforts consistent with the disrespect and lack of attention that residential membership has experienced since the Jim Amorin era began in 2007. After all, we’re still waiting for any feedback from the sham residential appraiser committee that Jim Amorin formed to help diffuse the anger of their 2016 money-grab to take all chapter funds.

Ironically, I’m told Trevor pushed Sandy, a residential appraiser candidate (even if she self-nominated) to offset the NNC vetted commercial appraiser candidate because her credentials checked the boxes that might not get the same pushback as a male commercial appraiser candidate. The hypocrisy here is that this Uber FOJ was so desperate to prevent the NNC vetted selection from being finalized that he had to use a residential appraiser to do it, despite his disdain for them – to get rid of them from the organization. This is Hubbard’s second time on the sham petition process rodeo. His actions show his extreme desperation to remain relevant in the Appraisal Institute. He was willing to be a hypocrite in the sham petition process to keep himself relevant and get rid of residential appraisers.

Trevor’s public anti-residential appraiser stance showed that he would happily do the bidding of Jim Amorin even if it meant using a residential appraiser to do it. There is a lot at stake here. Losing this sham petition process to Steve would jeopardize the position of all FOJs, including Trevor, whatever his beliefs about the residential versus the commercial future of the Appraisal Institute happen to be.

You can see why Trevor’s idea could have legs given the big fall-off in residential membership during the Amorin era and how much SRAs have been ignored and looked down on as second-class citizens. As of now, there are only about 3,000 SRAs out of the roughly 17,000 total members. Pathetic.

Bottom Line: The FOJ gravy train stops if Sandra (FOJ backed candidate) loses and Steve (NNC vetted choice) is confirmed – to FOJs, their actions indicate they care nothing about the dues-paying hard-working membership. The CEO gravy train is all FOJs care about.

Membership has to stop the FOJ gravy train by loudly speaking out against this sham petition process right now – loud and proud. Remember that Jim Amorin scrubbed the regional contact page of all phone numbers and emails for this very reason. He knows the scrubbing was done because he and the board reads every one of my posts about The Appraisal Institute. The AI tech people report to him directly and he has chosen not to return the contact information to the website, thus demonstrating the ethics of the operations leadership of AI is basically zero.

Remember that the complacency of AI membership in the past allowed FOJs to remain in power and get quite financially comfortable. Strong action by the membership today gets FOJs out of power and the organization on the road to recovery and back to relevancy.

The Appraisal Institute is in the hands of membership now – they need to choose the right path for the future of this once great organization. Please make this moment count – it’s your last chance to make yourself heard.

And here’s a quick shoutout to FOJ Jeff Harris who says my writing is garbage. What can I say? I’m an outsider. If you have an issue (I’m not stopping my efforts), feel free to let me know what I got wrong – happy to keep it in confidence if you wish. AI was once an important industry player and I’d love to see it return. The transgressions in recent years have been a distraction from the mission and it impacts appraisers outside the tent too. That’s what I take issue with.

Tags: Appraisal Institute, Board of Directors, Jim Amorin, NNC, RNC, FOJ

3 Comments

Over the past year, beginning with this NY Times piece: Black Homeowners Face Discrimination in Appraisals that initiated a rising progression of news stories covering discrimination in the appraisal of houses. And most recently, this CNN piece: When a Black homeowner concealed her race, her home’s appraisal value doubled.

So I looked at U.S. labor force data from the U.S. Bureau of Labor Statistics [BLS], which ranked the top 400 occupations by sex, race, and Hispanic or Latino ethnicity. I’ve been an appraiser for 35 years and it’s been very clear that there is nominal diversity in my profession. For users of the industry’s services who have constantly complained about “appraisal shortages” (translated: a shortage of appraisers willing to work for 50% to 75% below the market rate) – here is your opportunity for action to expand our ranks.

The appraisal industry is aging out because it is hard to bring in youth. It is one of the only professions that require new entrants to have a mentor for their first two years and often without making a living, financially. One of the key reasons for this is because most financial institutions won’t accept a “trainee” until they are licensed or certified with two years of experience. A “trainee” is a derogatory term applied to an appraiser that is not licensed yet. While the GSEs like Fannie and Freddie are fine with “trainees” signing reports prior to their two-year experience threshold, most banks are not. Existing appraisers are all for the difficult entry because supply and demand are in their favor. Few other professions have this two-year mentorship period before an entrant can make a living.

Accountants don’t require a two year mentorship program before they can make a living. Free market conditions should let those with more experience make more money, but not zero.

As a result, entry into the appraiser profession via a mentor system essentially requires appraisers to have relatives that will hire and train them. Given the beginnings of the housing industry as explained next, you can see the problem with this approach.

The housing industry we know today was built on a foundation of racism by the federal government

…and racial covenants. No wonder why there is essentially no diversity in the appraisal profession.

[CNN: click on image]

These BLS numbers for 400 occupations show an incredible lack of diversity within the appraisal profession. In fact, U.S. appraisers were ranked dead last for diversity in the list of 400 occupations tracked by BLS with white appraisers comprising 96.5% of the industry. Here are some appraiser ratios from BLS.

And here are the 20 least diverse occupations. The appraisal industry is even less diverse than farmers & ranchers.

While The Appraisal Foundation [TAF] was created and enabled by Congress to maintain appraisal standards (ASB) and minimum qualifications (AQB) for entry into the appraisal profession, it was also created to protect the public trust. The Appraisal Foundation’s attempt to address diversity has largely been in the form of “checking a box” to be able to say they are working on it. Yet the only actions they have taken were the result of recent public pressure by people like myself and others to call them out. The most glaring tone-deaf situations at TAF demonstrate how inappropriate it would be to allow TAF to lead any diversity efforts in the profession:

• An African-American had never held a board seat on the Appraiser Qualifications Board (AQB) until 2021. In other words, for more than thirty years, the organization has existed in a racial bubble.
• There have only been three women who have served on the AQB in the past 30 years.
• The head of the just-formed “diversity commission” is white and male.

Since TAF has not been able to see the problem for more than three decades until outsiders pointed it out and they have continued to make decisions that demonstrate their disconnect, TAF leadership is essentially the starting point to resolve the lack of industry diversity problem. Top-down is how this gets fixed if the stakeholders in the industry actually want it fixed. We have no leadership on this issue within the industry and solving this problem has to be top-down or it won’t ever be resolved.

And the news is getting worse for the appraisal industry as more and more stories like this are published yet TAF remains rudderless on diversity.

It’s time for Congress to step in.

Tags: The Appraisal Foundation, Appraisal Management Companies, AMC, TAF, trainee, diversity, BLS, U.S. Bureau of Labor Statistics, discrimination, race

6 Comments

As I’ve chronicled in the Appraiserville section of my Housing Notes newsletter since 2016, the scale of Appraisal Institute bureaucratic self-dealing of the executive committee and some members of the AI Board of Directors is breathtaking. Over the past decade or more, AI National has been able to keep a lid on the membership backlash by threatening to remove a member’s credentials for speaking out. Membership has been reluctant to risk losing something they worked hard for in both time and money that they have remained quiet – until the past few years. With the significant devaluation of the SRA designation and growing signs of the MAI designation’s devaluation, more are coming forward.

The FOJs (Friends of Jim Amorin) have been using that freedom from oversight to act with impunity. They are more openly corrupt now than ever because that’s the only institutional memory they possess. However, we are seeing some signs that more AI Board of Directors aren’t interested in rubber stamping FOJ efforts, as illustrated in the previous board meeting results.

The next board meeting is coming up tomorrow and Friday, and it is a seminal moment for the Appraisal Institute. It is where the BOD gets to vote on Jim Amorin’s new contract that the entire board has not seen. As a reminder to board members: your job is to represent your membership, not the executive committee. You can’t vote in favor in good conscience, if you haven’t seen it or been exposed to the key terms. Your role as a member of the AI Board of Directors is critical to the Appraisal Institute’s future and your responsibility is real.

The Appraisal Institute has an IRS nonprofit tax code designation: 501(c)(6) “Defined as Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions.”

At this point, it is hard to see this organization as “created for the improvement of business conditions.” Given the long-time failure of organizational leadership as measured by the empirical data extracted from the 990s tax filings in public record shared below, this organization needs a complete makeover immediately. It starts with the current CEO.

I hope some in AI membership will use the information shared below to bring an inquiry to the U.S. Attorney’s Office for the Northern District of Illinois.

Over the past few days, a detailed analysis of the Appraisal Institute’s performance from 2006-2019 has gone viral within the industry. The anonymous author(s) analyzed AI National’s 990 tax filings in a series of charts and tables by “Concerned Members,” and you can download it here: The Appraisal Institute as Told by the 990s [click on each to expand].

The results should send an alarm to membership and the AI Board of Directors on the organization’s future. The FOJs have poisoned the leadership culture, which has damaged the value of the designation brands and the organization’s credibility to the business world. None of this would have been possible if designated members weren’t vulnerable to the threat of losing their designations if they chose to speak out. But with the perceived value of membership declining, the fear of the threats by the organization has been diminished.

Here is my favorite chart of the 990s presentation. Current CEO Jim Amorin was made president (for the second time) in 2017. Now, look at the chart.

The following pages are the same found in the full pdf document.

Here are what the numbers tell me, as an outsider to the organization:

• To offset the steady long-term membership decline (-29.2% from 2008-2019), membership dues as a percentage of total revenue rose steadily over the same period. This action kept revenue coming in. With all that newfound revenue, the FOJ AI executives and AI Board of Directors viewed this as an opportunity to lavish high salaries on all.
• The data table on page 10 shows that expenses are remarkably flat, yet membership has fallen sharply over the same period. If membership falls another 7,500 over the decade, will expenses continue to remain the same?
• Jim Amorin has made $1,725,003 from 2007 to 2019, yet membership has fallen 22.7% over that period. Why would his compensation increase, and why is he paid about 50% more than his peers in other organizations? I’ve presented these numbers in past Housing Notes. So many questions.
• Revenue emphasis is shifting to rely more on dues while education programs, once a promising and prestigious revenue stream (and a cash cow for a handful of instructors that were FOJs), are losing their importance because of virtual continuing education programs. Who has been in charge during this erosion in education revenue, once a key branding strength of the Appraisal Institute?
• In 2016, I got quite upset with the proposed “taking” of chapter funds, and I became an activist, yet I’m not even a member of AI. Jim Amorin made it happen in 2017 when he became president. Now given all the big salaries and excessive travel, etc., where did all that money come from? I keep thinking about all the chapters who had saved money over decades to the tune of hundreds of thousands of dollars, even more. We should be asking AI National: Since the 2017 “taking,” how many times did AI National dip into chapter funds to plug the deficit? What is the current status of their reserves compared to before the taking? The AI Board of Directors must have the answers to these questions. Membership should demand it.

There has not been a publicly shared strategy to stem the decline in membership. Announcements of committees (like residential appraisers) were faked to quell the discord among residential members, and FOJs had no intention of taking action.

Marketing and branding have been the same old, same old, every year blah, blah, blah, which means that the organizational leadership has filtered out nearly everyone that is not a like-minded FOJ. Look at the last election debacle where the sham petition process was overtly used again by Jim Amorin to get his FOJ “Tank” installed instead of the duly nominated candidate Craig Steinley. Yet, membership pressure on the board stopped it. There is great danger to membership who are here for their designations within an organization with everyone in power being subservient to one person – a monarchy. Any new and creative thinking is not just discouraged; it is impossible.

I hope that ALL on the AI Board of Directors remember that their responsibility is to the membership and to sustain the organization’s future, not the FOJs. I can only assume there may be future legal action on this overt institutional taking, and each current and past board member is exposed. If you want the Appraisal Institute to pivot in the right direction and stop the executive committee’s self-dealing, please do the right thing and DO NOT extend Jim Amorin’s contract. It’s time to hire a CEO to lead the organization in the right direction, responsibly, ethically, and properly. If you do nothing as a board member, this will be your professional legacy as viewed your peers.

Here is a snapshot to memorialize the 2021 Appraisal Institute Board of Directors:

These are the individual pages of the full pdf document.

Tags: Appraisal Institute, Jim Amorin, Corruption, 990, Nonprofit

2 Comments

The New York Times got the market nuances right in their epic end of year The Real Estate Collapse of 2020.

And including epic charts makes it even better.

I noticed that the Streeteasy median rent chart used in the piece shows the same pattern as my recent chart in Bloomberg. That drop in rent is gigantic.

[Source: Bloomberg – click image to open article]

Tags: New York Times, StreetEasy, Bloomberg News, NYT Real Estate, 2020, Stefanos Chen, Vivian Marino

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I recently completed a quick interview with Stuart Elliott, Editor In Chief & CEO at The Real Deal who asked me questions with a uniquely mellow intensity. The Real Deal is required reading for anyone in the real estate profession or interested in real estate. Fun.

Tags: The Real Deal, Stuart Elliot, Youtube, Quick Question

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This post previously appeared in the July 24, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

Here’s a shoutout to Jim Amorin and Leslie Sellers as you are reading this right now – – here’s a refresher on Appraisal Institute history…

Like Craig Steinley, the 2007 victim of the unethical petition process I’ve covered over the previous two weeks, Anne L. Johnson was selected by the nominating committee to be Vice President after being vetted against a number of candidates. This sham petition process was implemented to get Leslie Sellers (he voted for himself after not making the cut with the nominating committee) on track to later become President and then led AI to exit TAF without a legitimate explanation – it caused me to quit and accelerated the deterioration of the once-great organization, essentially screwing its own membership by fostering its growing irrelevance.

To be clear, I want the Appraisal Institute to either thrive or get out of the way of the appraisal industry. This corrupt behavior is going to continue and the operations executives will keep overruling the voice of the membership, so that leadership can keep enjoying high pay and expensive perks, inappropriate to an organization that has lost a third of its membership over the decade, a steeper decline than credentialed U.S. appraisers. There is one thing they are doing now that should be good for appraisers – more on that next week. But any good continues to be overshadowed by current behavior that is corrosive to organizational credibility.

Unless this petition process is removed from the bylaws, the deterioration in credibility will continue.

To current Board Members, please pick one:

Are you:

A. simply sheep that sit on the board to pad your resume and remain afraid to make any move that gets the operational executives mad? or
B. an industry leader who knows right from wrong and can see the corruption right in front of you and are willing to do something about it to rebuild long-term organization integrity?

But I digress again…

Anne L. Johnson lays the situation out in her July 21, 2020 note that was sent in support of Craig Steinley, the current (only legitimate) nominating committee choice. I’m sure all board members are aware of this dark moment in Appraisal Institute history more than a decade ago and now is the time to start asking questions and demonstrate integrity. Fingers crossed.

So I’ve made my case. Now here is how members of the Appraisal Institute can take action NOW.

A plan of action has been laid out professionally by the North Texas Chapter and is not being critical of the Board of Directors.

Clicking on the image will take you to the CALL TO ACTION web site.

[click on image to go to the CALL TO ACTION link]

Tags: Appraisal Institute, Jim Amorin, Leslie Sellers, Craig Steinley, petition process, AI Nominating Committee, Anne L. Johnson

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This post is an excerpt from my July 3, 2020 Housing Note newsletter. You can signup for these weekly emails here.

_________________________________
July 4th UPDATE
When the Board of Directors convenes in August they need to:
– Discuss the current sham petition process and should either remove it from the bylaws altogether or modify it by raising the petition process requirement from 6 votes to a supermajority (2/3) of the Board of Directors. A simple 50% vote requirement to invoke the petition process would under-represent and undermine the efforts of the 11-person nominating committee who work hard to vet the candidates.
– Discuss the transparency of the petition process: Why do the board votes on the petition process get to be concealed? Given the self-dealing that has occurred three times due to the lack of transparency, the votes made for the petition process need to be 100% transparent to convey credibility to the membership that is absolutely required.
– Discuss the potential damage to the candidate’s reputation: The process of leaving a publicly announced and thoroughly vetted nominee to twist in the wind while this petitioning process is invoked is completely unethical and unprofessional. Why would a professional organization allow something like this to happen to its own members when it can damage and humiliate a candidate who is the best the organization has to offer? It is unconscionable to me that the organization has allowed the petition process to exist without significant protections to the determinations of the nominating committee and without ANY protections to the selected candidate? How will the organization be able to attract standout candidates in the future instead of self-serving political hacks who don’t care about the membership?
_________________________________

One of the most unethical actions against AI membership is about to take place (for a third time), and the uproar is just beginning. I’ve had many appraisers reach out to me over the past week, conveying how upset they were. I’m not even affiliated with the Appraisal Institute, and I’m furious because it brings down the entire industry in the eyes of others.

Back in 2016, I unleashed a flurry of commentary criticizing the Appraisal Institute executives who had a plan to take all chapter funds for no justifiable reason. The membership reacted by calling leadership to task, which is a challenging, scary thing when they are threatened by leadership and might lose their designations, which could impact their livelihood.

Now we are facing something much darker and maybe the final downfall of the Appraisal Industry as an organization.

Here is what someone said about this election sham:

“Why not next year instead of this year, why are you doing this when you know that in the middle of a pandemic and that it will tear the Institute apart from the top?”

A well-regarded and nationally-known appraiser and Appraisal Institute member, Craig Steinley, won the backing of the national nominating committee, and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee. The confirmation is supposed to take place in the first week of August (more details later on).

Here is a rough overview of how the nominating process works:

• The ten regional areas of the Appraisal Institute provide recommendations of individuals that wish to be considered for the national chain of command, beginning with the Second Vice President, the Vice President, and then President, who serves one term. It is the track to become the national President. The national nominating committee vets the recommendations that are submitted by the membership and announce their recommendation, followed by a board confirmation.

Here is how the sham ‘petition process’ bylaw works:

The key to the petition process is to disregard the nominating committee recommendation. This was inspired by at least four former presidents more than a decade ago: there are only 6 national board member votes needed to override the nominating committee recommendation. With those 6 votes, Amorin, the current CEO, can control the future presidents and officers indefinitely. Doesn’t that seem to be against the interest of the membership? The Board of Directors needs to close this unethical loophole if there is any hope of the Appraisal Institute rising again to claw back the greatness it once possessed.

By the way, the current Appraisal Institute national Board of Directors is comprised of 27 members, with 23 men but only 4 women. Twenty of the board members are the chair and vice-chairs of the ten AI regions. Only 6 board members are needed to vote in favor of the petition to insert a new Amorin lackey to enable lavish expense accounts and travel as I’ve previously written about, funded by hard-working appraiser members who have invested a considerable amount of time and money for their Appraisal Institute designations.

First Time Petition Process – created and implemented
Now there is uncertainty on Craig’s nomination because the petition process that was created back more than a decade ago when a female from Wyoming was publicly nominated like Craig and was replaced by a board choice through the petition maneuver, ignoring the nominating committee results.

Leslie Sellers was on the board then and was quite upset that he did not get the nomination but was able to vote for himself using this maneuver. Industry feedback suggests that AI Presidents from 2007 to 2010 seem to have been behind the petition process, inserting it in the bylaws to get Sellers into the ladder to ascend to the presidency two years later. I’d invite any of these former presidents, to refute this with credible, verifiable evidence to counter my own experiences and what many members have told me over the years.

Then 2010 president Leslie Sellers was the reason I disassociated with the Appraisal Institute in 2010 after he withdrew AI from the Appraisal Foundation for no stated reason that made sense. My tipping point was that he had posted a video saying to the effect that he was thrilled about the future opportunities that awaited the organization. Well, a subsequent 30% drop in membership, over the next decade, a steeper decline than licensed/certified appraisers in the national registry, and a collapse in credibility in Washington seems to refute that.

Second Time Petition Process – Was Implemented

Jim Amorin became the first two-time President in the Appraisal Institute’s history using the petition process election maneuver to bypass the nominating committee’s decision. There were other very worthy candidates who were not considered at all. He went on to somehow obtain his current CEO position without a real effort by the organization to look outside when the former CEO essentially left in the middle of the night – I knew one highly qualified CEO applicant that wasn’t seriously interviewed – when the Appraisal Institute was bleeding relevance and needed to bring in new blood.

Third Time Petition Process – Being Implemented

• This year the three names were Craig Steinley from South Dakota, Michael Tankersley from Tennessee, and Mark Linne from Colorado.

Craig Steinley earned the backing of the national nominating committee and his name was submitted publicly because confirmation is essentially a rubber stamp. Craig was thought to be the best choice this year by the national nominating committee.

AI CEO Jim Amorin ($450K/year) disagreed and used the petition process to make Michael Tankersley the Second Vice President and doesn’t have to give a reason. Mark Linne stepped away from being considered. In other words, the membership nomination process that is supposed to be separate from the executives running the organization is wildly compromised. I am not critical of Michael Tankersley as an appraiser because I know nothing other than his credentials, but I am certainly disappointed that someone with outstanding professional credentials would be willing to circumvent the membership-driven process for personal advancement.

The following text is the email that was sent by National to members about the election. Notice how they do not explain that the petition process occurred and how the TWO candidates came about? Shameful.

Greetings:

On August 6-7, 2020, the national Board of Directors will elect the 2021 Vice President of the Appraisal Institute from two nominees, Craig Steinley and Michael Tankersley. You submitted a communication to the National Nominating Committee regarding one or both of those nominees. The purpose of this email is to ask whether you would like us to provide a copy of your communication to the Board of Directors for consideration. The nominees, even though they serve on the Board, will not receive a copy of the communication if you choose to release it to the Board. Please respond to aielection@appraisalinstitute.org letting us know of your wishes by July 13, 2020.

We look forward to hearing from you.

Jeffrey E. Liskar, Esquire
General Counsel
Appraisal Institute

To recap this election petition process sham:

The national membership submits candidates to their regional heads for the three-year path to the presidency of the Appraisal Institute. The national nominating committee, which is supposed to be separate from the operations executives for ethics concerns, vets the nominations and selects the one they feel is best qualified and then announces the choice to the public. The petition process created and inserted by former AI presidents over a decade ago subverts the word of the membership by only requiring 6 board votes and can include board members who can vote for themself, to what can only be viewed as self-dealing, violating the separation between operations and annual appraisal executives as well as shaming nominated executives – the best and brightest the membership has to offer – for their own self-dealing.

This is the problem with the current AI leadership and something I have been writing about since 2016: The national leadership is not thinking about their members, and they need to be, or the organization will die faster than it already is. I hope this is a wake-up call to current board members to do something about this internal corruption.

I want nothing less than for the Appraisal Institute to return to its former glory or get out of the way to stop damaging the livelihoods of its members and the industry’s reputation.

How to do something about this
If you want to do something about that, please reach out to the regional heads who are also board members to voice your dissatisfaction and be heard. Either let your voice be heard about this sham election or agree to let this mark the end of what was the gold standard in property valuation organizations before the pivot circa 2007.

Since I am not a member I don’t have access to the ten regional chair contact info to voice your complaints but you can see them on the Board of Directors landing page. There truly are a lot of good people on this board and they need to hear your voice and stop this corruption of the election process.

Incidentally, here is the letter that went out to the Board of Directors. Note that 492 signed the letter, 392 AI people, 6 of the 10 NNC members, and Mark Linné (3rd Candidate).

Tags: Appraisal Institute, Jim Amorin, Leslie Sellers, Craig Steinley, petition process

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This piece was taken from my new Forbes column. I’m testing the platform to spread the word and you can help me by going here and then clicking “follow.”

Keeping Housing Market Results From The Public Is Never Justified: An Expansive View

Transparency is always the right strategy

When the Covid-19 crisis began halfway through March, the Manhattan housing market was placed on “pause,” as were many housing markets around the country. New York State “Shelter in Place” rules prevented the in-person showing of a property by a real estate broker. That was the beginning of the problem this crisis posed for the industry that lives and dies on sales and rental transactions. Then a startup agent trade group (NYRAC), made up of some of the most productive agents in the market and includes many of my long-time industry friends, pushed to hide the days on market metric from the public for what turned out to be a self-serving reason. I love what they stand for, but this was a strategic error that I could not support.

While I have been a real estate appraiser and market analyst for 35 years, I dipped my toe into real estate as a sales agent in Chicagoland for six months in the mid-1980s.

Lesson learned

From my experience there it was clear to me that the accuracy of the information our office possessed was critical to all parties for the market to function. I still have my old monthly MLS books and remember logging on to the MLS from one ancient (even then) terminal in the office – talk about delayed market information!

Days on market during Covid-19

The days on market (DOM) metric is significant to sellers because they don’t want their home to be perceived as overpriced if it sits unsold too long. DOM can be measured in several ways, but the one I see used the most is the average number of days between the last price change, if any, and the contract date (or today’s date if it has not sold.) When a potential home buyer looks at a listing on a public-facing web site, they look at DOM as one way to determine whether the listing price is reasonable. The longer a listing sits on the market as compared to other listings, the more likely it is over-priced. Sellers look at DOM too and become concerned when their listing sits too long relative to the competition, typically blaming the agent for not marketing the property enough. However, the asking price is usually set by the seller who is slow to recalibrate their asking price if the market is weakening. I’ve found it takes one to two years for a typical seller to capitulate on price in a downturn and not feel like they left money on the table.

Hiding DOM as a marketing strategy

When the government ordered lockdown hit New York City, and real estate agents were not allowed to provide in-person showings, market activity immediately stalled. NYRAC pressured various platforms to hide DOM information from listings. They still wanted users to be able to drill down and uncover the details, but at first glance, the DOM information was to be hidden.

Streeteasy (owned by Zillow), the de-facto Manhattan multiple listing system in the eyes of the consumer, and the Real Estate Board of New York (REBNY), the leading real estate trade group with their own platform known as RLS, initially balked at the manipulation but eventually caved to NYRAC pressure. NYRAC made a strategic error that further damaged the long-term credibility of the real estate brokerage industry with the consumer. Not all brokers agreed with this strategy either, but this group placed enough pressure on these platforms to make the change happen.

Only sellers matter?

The incentive to “partially” hide DOM comes down to this:

1) Give the sellers a “break” after two years of softening price trends.

2) Address the sellers’ concerns about extended marketing times during the pandemic.

3) But the primary reason is that real estate brokers didn’t want to lose their listings if the sellers removed them from the market and returned to the market later with a new agent.

Why this effort was wrong

NYRAC and several real estate agents said to the effect, “the buyer or seller can still look at the listing history to know how long a listing has been on the market. That data was never removed.”

I always respond with “Then why hide it in the first place?” To brokers in favor of this temporary rule who wonder why I appear to be obsessing about a nuance I say, it is never appropriate to manipulate data, made even worse by the primary motivation behind this action.

Ignoring the buyers

This “solution” ignores the buyer’s position in a sales transaction and yet last time I checked, buyers are on the other side of every sale. Any effort to partially or fully hide DOM results or any other market metric conveys the wrong message and smacks of the old “information gatekeeper” mentality, no matter the state of the market.

Recently, the official word came down that all days between the shutdown and the reopening will count as “one day” for the DOM calculation presented to the public.

Going forward I have the following questions:

• Are we to anticipate a suspension of DOM anytime there is an unexpected external event that impacts the housing market (9/11, The Lehman Brothers bankruptcy, Super Storm Sandy)?

• Who makes the call to do this? A trade group, a regulatory body, a for-profit platform?

-Do we think that buyers and sellers of real estate are unaware of the 90+ day COVID-19 market shut down? Will a new listing added today as the market opens with 1 DOM will sell differently than an identical property with a 91 DOM listing that sat through the 90+ day COVID-19 lockdown?

The market doesn’t care what the brokerage community thinks (or what I think). The act of intentionally hiding or partially hiding data from the consumer is never justified in any scenario.

Tags: REBNY, Zillow, StreetEasy, COVID-19, NYRAC, transparancy

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[NYC.gov]

One of the pieces of conventional wisdom we have picked up during the COVID-19 crisis is that high-density residential living will be less favored. The city to suburban migration pattern is already beginning in New York City and could last several years. The rising number of suburban single-family rental inquiries from the city has provided the initial evidence of a trend. City residents seem to be looking to test drive the suburbs and commute to their city job when “shelter in place rules begin to ease.”

Unfair Reputation?

New York City has developed a national reputation as a hotbed of Coronavirus infection because of our higher density. We live a lot closer together than a sprawling suburb in Dallas and have a greater dependency on public transportation such as the subway and buses instead of driving cars. I live in Fairfield County, Connecticut, a bedroom suburb of New York City with a county-wide COVID-19 ratio of 1068 deaths per its 943,332 population. Dallas County, Texas, had 153 deaths per its 2.636 million people. My county has a wildly higher death rate than a county that contains an urban core like Dallas.

Is the city to suburban trend sustainable?

New Yorkers buy into the urban to the suburban narrative, so I believe the push to the outlying NYC metro suburbs could be quite significant in the near term. While the outbound migration began a few years ago, it is not clear whether the trend can continue for more than a few years. The pattern could ultimately be different from what is currently expected including:

• A boost for second-home markets: There might be an influx of demand to areas the Hudson Valley, Northern Connecticut The Hamptons, and the North Fork, to name a few. Consumers made begin to view a second home as an equal asset to the primary home to have similar quality options. This potential trend would be contrarian to other significant economic downturns as second-homes are not considered “second-priority.”

• And because the implications of the SALT tax will remain in place on the other side of the COVID-19 crisis, Florida and Texas can make a compelling pitch to New York City couples with small children cooped up in 1,000 square foot 2-bedroom apartments right now. They are realizing they aren’t as tethered to their work location as they once thought – and schooling via Zoom is not all it’s cracked up to be.

I think that the high-density lifestyle of New York City is what makes living there so great. I’ve lived in or around New York City since the mid-80s. Before we moved to the city, my dad used to proclaim:

Where else can you buy strawberries at 3 am in the morning?!?!?

Placing strawberries aside, I remain skeptical that the urban to suburban outbound migration can be sustained long term. We saw the same outbound pattern after 9/11 and then an inbound return only a few years later.

Density is not the only reason

Urban density is just one reason for the high COVID-19 infection rate that is driving outbound migration. It is not the reason. Other factors influencing the disparity in the infection rate include neighborhood characteristics such as wealth, commute time, and the concentration of multi-generational households.

The map above confirms the argument that it’s not all about density – the highest infection rates are in the “suburban-like” areas of the city including Staten Island and the outer reaches of Brooklyn and Queens. Manhattan, home for many of the tall commercial and residential towers the city is famous for, has the lowest infection rate.

These Manhattan results might help maintain the enthusiasm for that occasional 3 am strawberry run to the corner market.

Tags: Manhattan, NYC, COVID-19, Coronavirus, Urban to Suburban, Strawberry

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Here’s an updated excerpt from my Housing Note newsletter dated October 28, 2016, digging into the median sales price. You can subscribe to Housing Notes and other housing resources for free.

I wrote about the median sales price a decade ago, and the message still holds. A couple of years ago, I whipped up a table that shows how median sales price can perform in a changing housing market. The median sales price is the default price trend indicator of real estate because it eliminates the extreme highs and lows of a data and merely represents the middle number. However, it is also subject to skew by consumer behavior that can overpower the math. So I always provide two to three price trend indicators depending on the quality of available information (average sales price, median sales price, median sales price) for all of the reports in my Elliman Report Series. The relationship between median and average sales price can also tell a story.

Click on the graphic below to expand.

Tags: median sales price, skew

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In our post-Coronavirus world, it is clear that market conditions and our understanding of the future are subject to change every day. In my prior post Establishing the COVID-19 Demarcation Line: From ‘Hanks To Banks’, data that falls after the line represents a different market.

So how do we determine what data falls in after the demarcation line? It’s not as straightforward as it sounds.

Throughout my career, I have seen brokerage firms publish pending/contract reports, touting pending trends as more reliable than reports based on closings. I don’t look at them as better or worse, just a different way to look at the market. The simplistic, uninformed argument for pending sales is that contract dates occur before closing dates, so they are more current. Incidentally, contract prices are not readily shared. I get all of this. Yet I have seen the failure rate of contracts be as high as 40% – in other words, many contracts might not close whereas closing reports are solely based on successful transactions. Still, pending sale trends are useful as long as the reader understands their shortcomings. I plan to develop one someday.

Closing data and contract/pending data lags the “meeting of the minds.“

Meeting of the minds (also referred to as mutual agreement, mutual assent, or consensus ad idem) is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract.

While we know that closing dates lag the “meeting of the minds,” we also need to understand that signed contract dates are lagging indicators, often by 2-4 weeks. During this crisis, I’m speculating the failure rate will be high initially, and the time lag will be on the longer end rather than, the shorter end of this 2-4 week range.

Here’s why contract dates are a lagging indicator and not necessarily more insightful than closing data:

1) The “meeting of the minds” occurs when buyers and sellers negotiate price and terms, usually facilitated by a real estate agent or broker.

2) The price and terms are handed off to transaction attorneys who work together to craft language agreeable to both parties.

3) The contract is signed by both parties and often indicated as such in an MLS-type system.

4) In some markets or marketing periods, especially when a market is cooling, many contracts never close, so their initial inclusion makes pending trends reports suspect.

If there is a four week signed contract lag from the meeting of the minds, and considering the March 15 demarcation line for post-Coronavirus, that means that with us being six weeks into the crisis, we are only able to see two weeks worth of post-Coronavirus data. And even with that reality and current shelter in place rules, many current contracts might have been older deals that were facilitated by the buyer who had already inspected the home in January/February – we are seeing some of that now.

In other words, relevant data on the new market remains extremely limited.

Tags: Contracts, Pending, data lag

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