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Posts Tagged ‘Hicks on Sticks’

[Hicks on Sticks] When I Grow Up

February 12, 2007 | 10:00 am |

Butch Hicks is an appraisal veteran that hails from Northern Virginia. I first met him when he was the President of RAC (Relocation Appraisers & Consultants) and was struck by how he got straight to the point, and peppered it with a southern drawl. He is a leader in the appraisal industry and has an affinity for crunching housing market data like I do. In this post for his Hicks on Sticks column in Soapbox, Butch never tires of asking the question: “What Do I Want To Be When I Grow Up?”
…Jonathan Miller

I picked up the phone recently to find a good friend and fellow appraiser on the other end of the line. Calling me from Walter Reed Hospital, a little bored of waiting around (and having already polished off the Washington Post, Washington Times and the Wall Street Journal) after subjecting themselves to various medical tests and waiting on yet others, they had reached out and ‘touched someone’ (I didn’t bother to inquire as to how many numbers they dialed before someone came on the other end of the line).

A little background is in order. My fellow appraiser has been around a long time, has served in almost every position in a number of local professional organizations and a few minor ones in national ones. Like me, they have seen and suffered the tremendous changes in the appraisal business bought about by technological innovations as well as a change in the attitudes of the appraiser’s historic client base. Several years ago, this appraiser’s spouse, also an appraiser, made the decision to exit that part of the real estate business and embark on another career by purchasing an existing real estate brokerage franchise. The timing could not have been more perfect as the change in profession coincided with a historic burst in the local realty market that began in 1999. In short order, the purchased franchise was more than tripled in size (measured by number of licensed agents) and a small building that had served as its headquarters was razed and replaced by a much larger multi-tenant office building as well as the imminent opening of a second building in yet another territory. As a consequence, my appraiser friend found themselves increasingly drawn into the spouse’s ‘brokerage’ end of the real estate business, earning first their sales license and then their brokerage license, all the while picking up more ‘managing’ duties that come with a growing business. As one might expect, my friend’s appraisal business suffered in the interval and they became more discriminating in the type of appraisal assignments that they accepted as their days were increasingly filled with the daily affairs of a realty brokerage office (not to mention their own increasing ‘realty’ business).

After relating the story of from where they were calling from (and why), my friend then started talking about the conflicting emotions they had suffered of late relating the conflicts in their professional life. My friend enjoys certain aspects of their ‘new’ life and not one bit do they miss portions of the old. Certain aspects of their new life on the other hand are ones that they could do without. I find myself increasingly wondering, my friend said, “What do I want to be when I grow up”?

After some 30+ years of professional life this may seem somewhat of an odd question to some. But, if a story in the February 11 issue of the Washington Post is any indication, perhaps not. The story revolved around the issue of a “new retirement”, speaking to recent trends that indicate many potential retirees, as they reach their 60’s in the next couple of decades, are likely to forego the “rec room at Leisure World” and instead opt for a new life combining a mix of work and pleasure. In a recently completed study by the Vanguard Center for Retirement Research, the conclusion was that perhaps this trend wasn’t so new. The report, titled “Six Paths to Retirement”, concluded that many older folks are already engaged in some type of work at traditional retirement ages, that in fact, the baby boom generation will not be introducing new notion, but rather continuing past trends.

I don’t believe it is a surprise to anyone that an older individuals health (mental and physical) is enhanced and life prolonged by the involvement of the mind and body in more challenging settings than some of us like to think of when envisioning the date when we finally put the clipboard down and pass along the tape measure to another generation. The good news, I concluded some time after my phone conversation ended, was that my appraiser friend was well on their way to an even healthier lifestyle because they have already overcome the challenge of not having anything to do after leaving what had been their ‘calling’.

Someone once said, “May you live in interesting times”. In my lifetime, I have seen the computer go from room size to one that fits in the palm. I have seen music storage go from roughly 10-16 songs on a disk about one foot in diameter to the ability to store an entire collection on a device not much larger than a credit card. Such times present us with opportunities that we would have never dreamed of in our youth. The present also allow us, if not compels us, to exercise both our minds and our body in ways that previous generations, at this point in their lives, might have found a littleeccentric. But, as someone else is quoted as saying, “you are only as old as you act”.

I’m making a phone call tomorrow to my friend, telling them how envious I am of their ‘start’. None of us, I suspect, look forward to growing old. But all of us, I hope, plan to make the best of it. And a good start, it seems to me, is to wonder what I want to be doing in ten, twenty years. In short, I hope I never tire of hearing myself ask, What Do I Want To Be When I Grow Up?

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[Hicks on Sticks] End Of Year Musings

January 14, 2007 | 9:37 am |

Butch Hicks is an appraisal veteran that hails from Northern Virginia. I first met him when he was the President of RAC (Relocation Appraisers & Consultants) and was struck by how he got straight to the point, and peppered it with a southern drawl. He is a leader in the appraisal industry and has an affinity for crunching housing market data like I do. In this post for his Hicks on Sticks column in Soapbox, Butch recaps the appraisal world for the year just completed.
…Jonathan Miller

As the end of the year draws nigh, I find myself (as I always do at this time of year) reflecting on things that have impacted (or might) that little world that I find myself in (the residential realty market of Northern Virginia) on a daily basis (like all self-employed folks, I never really escape thoughts of my ‘work’ life). As I reflect back on the year that was 2006, a few topics, likely to impact 2007, spring to the front of my mind.

Real Estate Bubble

The bursting of the real estate bubble, long predicted in some quarters, must have turned into a slow leak in many markets as there simply is little in the way of press attention to that subject. But an attempt to convince folks in my local market (Northern Virginia) that the bubble never burst would probably fall on deaf ears. Since the late spring of 2005 values in some submarkets have fallen almost 30%, not an insignificant number. Admittedly, I’m not sure that what ‘number’ would constitute a burst bubble and I can’t recall ever having seen one defined in all the 2005 press clippings I reviewed regarding such, but 30% is not an insignificant one. In many local submarkets, anyone who bought in 2005 with a high loan to balance ratio is now ‘upside down’ (a term used to describe those situations in which current value is exceeded by the existing mortgage balance). Perhaps your market just lost a little air and the burst bubble was just a slow fizz; but as in politics, I suppose, all is local.

The Coming Impact of Risky Mortgages

The Center for Responsible Lending (a nonprofit group that opposes predatory lending) in Durham, NC recently released a report that indicated the Washington region is likely to be hit hard by increasing foreclosure rates of homeowners with high-interest mortgages. Even the National Association of Realtors chimed in with a supporting opinion, when Pat Vredevoogd Combs, president of that organization, said that “Far too many families are at risk of losing their homes to foreclosure.”

In recent years, high-rate lending has grown rapidly, and this type of lending has been credited, in some quarters, with helping to boost homeownership levels to near record levels. In 1999, about 5% of mortgage loans were described as high-interest but by the end of 2006 that number had quadrupled to about 20% (one of five). Analyzing about six million subprime mortgages made from 1998-2004, the Center for Responsible Lending concluded that should the real estate market remain weak, foreclosure rates in Northern Virginia could more than double for loans made in 2006.

The Center for Responsible Lending report came on the heels of a quarterly study released by the Mortgage Bankers Association, which found that about 948,000 households with high-cost loans were either behind in their payments or were already at some point in the foreclosure process. Officials at that trade group however indicated that the center’s report was overly negative because many of those homeowners in trouble would be able to refinance or sell their homes.

But, speaking locally, can they? I’ve had several discussions recently with various Northern Virginia agents that present a far more likely scenario. Each of these agents was working with a client facing several hard choices. Their client (seller, or potential seller) had purchased a property late in the sellers market of 2000-2004 and as such had paid top dollar for their home. These homes were financed with a high loan to balance ratio mortgage (interest only or adjustable with low teaser rate) that came with a three year bump that is now coming due. The homeowner cannot afford the expected rise in monthly payments (more than 50% in each case) and is unable to sell the property for more than the current loan balance. It doesn’t take one very long to figure out the most likely scenario for homeowners in this position.

A Warning to Mortgage Lenders

In late September, federal banking regulators issued an advisory to the lenders they supervise, telling them that they should not make non-traditional mortgage loans to borrowers who may be unable to repay them (I suppose making traditional loans to such borrowers is okay???). Almost immediately, six states had issued similar warnings to their own lenders, a number that had grown to 19 and the District of Columbia by year end. In Virginia, Edward Joseph Face, commissioner of financial institutions, was hopeful that the state corporation commission would decide on it’s version of a warning. “I don’t think we’ve ever seen this many adjustable interest-only loans on the books in all of historyI am concernedThere are so many out there and when the rates start adjusting, it’s not clear that borrowers will have prepared themselves” Face reported.

Personally, I believe it’s all too clear.

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[Hicks On Sticks] Comp Check Battles

November 27, 2006 | 11:32 am |

Butch Hicks is an appraisal veteran that hails from Northern Virginia. I first met him when he was the President of RAC (Relocation Appraisers & Consultants) and was struck by how he got straight to the point, and peppered it with a southern drawl. He is a leader in the appraisal industry and has an affinity for crunching housing market data like I do. In his first post for his Hicks on Sticks column in Soapbox, Butch deals with the ethics and practicality of doing comp checks (which in their pure form, completely violates USPAP). I am thrilled to have him contribute to Soapbox. …Jonathan Miller

“Bill Hicks my friend (if he was a friend, he would have called me Butch), how are you doing? My name is Slick E. Lender and I’m with AllQualify Mortgage. We have just begun an expensive ad campaign in Virginia and anticipate a lot of appraisal work for you as a result and I’d like to establish a relationship with you as the sole appraiser for our use there.”

And so begins yet another phone request for a comp check.

“Ok,” I respond, “what comp do you want me to check?” This, my ‘old’ response, usually resulted in a pained and questioning “huh” from the other end of the phone line. “You asked for a comp check,” I reply, “so which one do you wish me to check?”

These requests for comp checks, whether made by phone or fax, have increased dramatically with the advent of the internet, the slowing of the realty market and rising interest rates that have all but chocked off the refinancing deals of the recent past. Like all appraisers, I assume, I take a different attitude toward such requests from my regular clients as opposed to those like Slick E. but of late my patience has worn a bit thin on all of them.

I’m not going into a discussion here of how providing comp checks in order to lasso an appraisal request might place the appraiser in jeopardy as regards USPAP; I assume all appraisers are aware of such, though the evidence might indicate otherwise (on numerous occasions, I’ve been told by requestors that I’m the first to ever have bought that issue up). Also, I must admit, it’s a little difficult to get terribly angry with those making such requests because I recognize that a primary reason they are doing so is because so many of my fellow ‘professionals’ easily accommodate them.

Worse, to some degree, are those faxed requests that eat up otherwise clean paper. I’ve begun a collection of the worst offenders (another subject for later), you know, the ones with the Appraisal in Appraisal Request crossed out and replaced with a handwritten “Comp”. Lenders, having now caught on the fact that some appraisers (like myself) do not provide comp requests, have now resorted to blast faxing such to every appraiser in a given market. Experience tells them, I suppose, that someone will bite and the chase for ‘the number’ is on.

There was a time when I would respond for such requests by simply sending all sales in a subject neighborhood to the requestor and letting them decide at that point whether or not to proceed with a formal appraisal request. It’s not that difficult to do with my current MLS system but it does take a little time. Time is money however and for that reason I eventually halted even that process. But, what the heck, I’m in the appraisal business and I earn a living by collecting a fee for such, so my new view is to take advantage of a technology that is in some fashion, competing with me. is now my friend. Since appearing on the scene, I have taken to measuring its performance against mine on actual sale cases. How, you may ask, do I do that? Simple! Since I do a lot of relocation work, I have something to measure my own performance against. By capturing Zillows value, along with my own on every relocation assignment and tracking the history of the subject as it goes to settlement, I have concluded that in most cases, the Zillow value is in excess of my value estimate and the eventual sales price (in fact, of late, the Zillow value is generally higher than even the subjects initial list price).

Back to earning the fee part earlier noted (not to mention saving myself the aggravation), I have devised a new tactic. Now, when I get that call from Slick, I simply point him to the Zillow website. If, after obtaining a ‘value’ there, he wishes to proceed, fine, I can accept the assignment with no problem and a very clear conscience.

Coming in ‘low’ is not a problem; the value is what it is. I don’t worry about irate phone calls from anyone (borrower or lender) any longer; experienced appraisers learn to develop a thick skin.

Experienced appraisers also learn which battles to fight and ones involving comp checks are no longer a priority of mine.

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