5 Questions with Chip Wagner for Valuation Review Magazine

Give us an overview of your background. How did you get your start in the appraisal industry? What positions have you held? What is your current status?

Chip Wagner:  I am a third generation real estate appraiser, literally born into the industry.  I worked for my father in grammar school earning money to purchase comic books and baseball cards.  In those days, I was a jack of all trades - emptying waste baskets, copying reports, filing appraisals, transferring comparables from active to pending to closed categories in our office’s “pre-computer” system, going on appraisal inspections with my father and holding the dumb-end of the tape measure.  My favorite was assisting appraisers by drawing floor plans and plot plans on graph paper.  Eventually I was given the challenge to write appraisals, and long before licensing, I wrote my first appraisal on an old Green Hornet form before I had a driver’s license.  Real estate appraising was my summer job throughout high school and college.

Following graduation from Bradley University in 1990, I joined my father’s real estate appraisal firm and took it over in 2000 when he retired.  My grand uncle Percy Wagner, MAI, was the national president of the former American Institute of Real Estate Appraisers in 1960.  My father Alvin Wagner Jr., SRA, RM was one of the pioneers in corporate relocation appraising.  Both my father and grand uncle were always proactively involved in the appraisal industry and encouraged me to get involved.

I earned the SRA designation from the Appraisal Institute as well as the Worldwide ERC’s SCRP designation (Senior Certified Relocation Professional).  I am one of 11 appraisers in the nation who has earned the SCRP designation.  In 2011, I was inducted into the Worldwide ERC’s distinguished “Hall of Leaders.”  I have served as president of the Relocation Appraisers and Consultants (2004) and president of the Chicagoland Corporate Relocation Council (2001). 

Since 2006 I have served as the Worldwide ERC representative to The Appraisal Foundation Advisory Council (TAFAC) and currently serve as the 2011 President of the Chicago Chapter of the Appraisal Institute.

A. L. Wagner Appraisal Group is a residential fee appraisal business with a primary emphasis on corporate relocation appraisals servicing the Chicago metropolitan area.  I was one of the authors of the newly revised Worldwide ERC Summary Appraisal Report form, and developed a 7-hour continuing education seminar on Relocation Appraising which I taught throughout the Midwest and the Northeast during 2011.

Given everything the appraisal industry has gone through where do see the profession five to ten years from now? What will be the major changes? What will stay the same?

Chip Wagner:  Since I started in this profession, I have always strived to be the best that I could be, and have been proactively involved in the industry.  I had long believed that there would be a contraction of appraisers, with the best left standing after the dust settled.  I was right about the contraction, but the best have been leaving the business either through attrition, or unable to compete with the changes that have taken place.  Factors beyond our control have driven many good people out of business, and those same factors are preventing new appraisers to be attracted to the appraisal industry.

Diversification has been the “buzz word” for many years for the residential appraiser.  Those who have diversified away from lending work are surviving today.

The bottom line is real estate continues to be a significant investment for individuals, partnerships and corporations.  The appraiser is the only unbiased party that does not have a vested interest in the transfer of property or the value of the property.

Understanding how the professional appraiser will fit into the process in five or ten years from now is not clear.  Continued government intervention and their unintended consequences are reshaping the way we do business.  Those who are technologically savvy and are analysts (not form-fillers) will survive and thrive. 

What is your biggest appraisal-related challenge today? What are you doing to overcome it?

Chip Wagner:  For me, the greatest challenge I am facing today is the nuances in the marketplace.  It is more difficult than ever understanding what has happened, why it happened, and what the future trends might and/or will be.  The local markets have seen unprecedented declines in value and increases in inventory.  The distressed market competition has flooded many areas of the country, and their presence has lead to serious problems in many sub-markets across the country.  The discussion of the shadow inventory and its impact has yet to be seen.

To do my job correctly, my appraisals are taking significantly longer.  I spend an hour (or longer) per assignment, just in market analysis and comparable selection for confirmation of the data.  Understanding the terms of the sale on the comparables is critical.

Risk is obviously greater to our clients and users of appraisal services.  They are viewing our work with a microscope, leading to additional time on the back-end of the assignment, providing further clarification and sometimes even defending our work.

What has been your most unique appraisal experience? Whether it’s an experience at a property, a bizarre appraisal request or technology snafu that got you in a jam – anything that’s outside the norm.

Chip Wagner: I’ve appraised many unique residential properties, met unique people, and have had unique problems throughout my career.  It has gotten to the point after thousands and thousands of properties inspected that there are few surprises.  Historic properties, celebrity properties, and notorious properties are always a challenge yet enjoyable to do.  The ones that stand out are usually the ones where I learned something new.  But my greatest experiences as a practicing real estate appraiser are when I am instructing to fellow appraisers or clients, as I truly enjoy sharing my knowledge with others.

What advice would you give to future appraisers?

Chip Wagner:  I believe that it is more important than ever to be associated with a professional association to help you stay abreast of the rapid change our industry faces.  There are several credible ones, find the one most active in their area, one that fits their ideals and then get involved.  The appraisers that I have seen that are the most “lost” are the ones who have not invested in their future through education, diversification, and networking with peers.  Being an active member with a professional association is a good start. 

As a profession, Real Estate Appraisers must keep an open mind, be aware of the changes, and seek opportunities.  Embrace change, don’t fight it. 

Guest Blog at the "Keeping Current Matters" web-blog

After a recent Wall Street Journal article stating appraisals were holding back the real estate market, my friend Steve Harney, a real estate veteran with a national following asked me for my thoughts and invited me to write as a guest blogger for his Keeping Current Matters (KCM) blog.

The link above brings you to the KCMblog.com to viewmy thoughts.

Should I get an appraisal on my home?

Recently, I was asked this question: We are planning to put our home up for sale and are interested in getting an appraisal so we understand what our home is really worth.  Can we talk to you and understand if this is a good thing for us to do?

My Response:  I think it is a very good idea to have an appraisal from a qualified and experienced appraiser to help guide you on your pricing strategy.  Through the years, I have done many appraisals for both buyers to help establish an offering price, as well as sellers to help set their asking price.  I also often work with Realtors who are working with their clients and want an independent opinion, from a disinterested third party.

I have over 20 years of experience in residential appraising in your market area.  Because my business specializes in corporate relocation appraising, my clients hire me for my accuracy, as I am asked to predict what a home will sell for and eventually after it does sell, my accuracy is tracked.  I receive repeat business from those clients because of my accuracy.  This experience leads to accurate appraisals that homeowners, lawyers and lenders can rely on. 

My process would include viewing your property's interior/exterior, gathering information on your home's size, features and condition.  I will be asking you of any improvements that you may have done to your property since you have lived there.  You can expect that portion to take about an hour.  My final appraisal report would be a thorough analysis of your home, suggesting potential improvements that may help marketability and/or the value.  It would include analyzing the market, giving you a thorough picture of properties in your market area.  I maintain specific statistics throughout Chicagoland (found at http://www.wagnerappraisal.com/report.asp) and incorporate this data into my reports.  I am the only appraiser that I know of in this area that collects this data in-house, and trends it to help measure the changes in the local real estate market.  Others use various resources but I do this internally.  I supply closed sales in my report, as well as current listings and properties that are under contract, as they all have an impact your home's value.

My fee for this service is based on the time it takes me to complete this process (please call or e-mail for a quote), and it typically takes me 5 business days to return my report after the inspection.  An appraisal is an opinion, and the opinion is based on the experience and qualifications of the appraiser.  In my industry, you will find many different people with various levels of experience and qualifications.  They will also quote many different prices for their service.  A couple of hundred dollars may make a difference of thousands of dollars in your bank account.  Your goal is to establish a fair price to minimize your market time to a reasonable amount.  Underpricing or overpricing is not beneficial to you, especially in this market.  View My Bio for my basic qualifications and a full resume is available upon request.

Contact Chip Wagner at chip@wagnerappraisal.com or (630) 416-6556 for a quote.

The Reason I Enjoy Teaching

In 2010, Worldwide ERC (Employee Relocation Council) released the new Summary Appraisal Report.  It had significant changes since the last revision in 2001, and I was honored to be one of the five appraisers from across the country to work on this project.

The appraisal industry lacks education on the "relocation appraisal niche" and I decided to write a 7-hour seminar on the subject for state continuing education for appraisers.  My intent was to teach it to appraisers in Illinois through the Chicago Chapter of the Appraisal Institute, an organization that I am very involved with.

In January 2011, my seminar was approved for continuing education in the state of Illinois, and I have since taught it in Chicago and Naperville.  In both seminars, which had 30-35 students each time, appraisers came from other states for this education.  It became obvious to me that I had something that nobody else was offering.  At the same time, other chapters of the Appraisal Institute began contacting me to bring my seminar to their states.


Since then, I have taught in Greensboro, North Carolina to 40+ students, East Brunswick, New Jersey to 60+ students, and 45+ students in Saint Paul, Minnesota.  On deck is South Bend, Indiana, then on to Novi, Michigan and Peoria, Illinois.


After teaching each of these seminars, I have received very favorable comments from my students, which certainly makes me feel very good.  But this past week, I received what may be the ultimate compliment from a client who attended my seminar in New Jersey.

"I just want to thank you for  the relocation appraisal seminar, last week in New Jersey. There was an appraiser there, that I met, who I had been dealing with for years.  She said that she got a lot of good insight from your course, when I spoke to her, at the seminar.

I just got an appraisal from her, and  it is so much better than anything she had ever submitted before!  She has statistical data and support for the adjustments made.

Thank you for what you are doing."

This message was perhaps the biggest compliment thus far.  It tells me that I am making a difference, helping to make my profession better, even if it is just one appraiser at a time.  This is the reason I enjoy teaching!


Another client has been helping me to advertise my seminar by sending e-mails out to their appraiser panel.  I told them in my last seminar, approximately 20% of the students have never done a relocation appraisal.  I received this message from him:

"I am very encouraged to hear of any appraiser that is not currently doing relo that is attending these events. As we’ve discussed before, we (as an industry) have to be focused on attracting appraisers to the relo side of the profession. With the changing aging appraiser demographics in general and the limited proportion of that population currently involved in ERC appraisals – we have a two headed monster to tackle over the coming years. 

I am confident with the right approach and industry partnerships, we can tackle the issue and shape the future of the industry. Thank you again for your efforts in getting the ball rolling."

If you are interested in taking my seminar, contact your local Appraisal Institute chapter, and have them contact me for more details.

NAR's Economists' Outlook: State by State estimate of Shadow Inventory

Check out the link to the full article.  Interestng stuff.

How hard is it to count a bath?

BATHROOM COUNT


Per GSE UAD Appendix D 1.1 Field-Specific Standarization Requirements, "The appraiser must enter the total number of full baths and partial baths above grade. A three-quarter bath is to be counted as a full bath in all cases. Quarter baths (baths that feature only a toilet) are not to be included in the bathroom count. The number of full and half baths must be entered, separated by a period. The full bath count is represented to the left of the period. The half bath count is represented to the right of the period."

Tip: The guidance instructs the appraiser to use specific treatment of bathroom counts: "the count of ‘full’ bathrooms to the left of the period and the count of ‘half’ bathrooms to the right."

For example:

1.1 = One full bathroom (toilet, sink, shower) and one half bath (just a toilet and a sink)

2.3 = Two full bathrooms (both have toilets and sinks--one has a tub, the other a shower.) and three half baths

2.0 = Two full bathrooms (Commentary would be used to capture other non-conforming details that do not qualify as a half or full bath, such as, "The house has a sink in the garage and a toilet in the basement.")

The biggest house I have appraised?  8.3 baths.
 
Our MLS has followed this for many years. I guess my days of writing my appraisals "old school" are over.

The Impact Foreclosures Have on House Prices

The Impact Foreclosures Have on House Prices

Home values are again beginning to fall. What has caused this renewed downward pressure on prices? It can be directly tied to the number of distressed properties in the region which have shredded values in some marketplaces. Foreclosures and short sales impact prices in two major ways.




They are discounted competition to the house next door

When a home buyer decides to purchase, price is a major component in the equation. Every buyer wants to make sure they are getting an excellent deal especially after what has taking place over the last five years. According to RealtyTrac, foreclosures, on average, sell for a 41% discount and short sales sell for a 19% discount.



These distressed properties might not be in the same physical condition as the non-distressed properties. However, at sizable discounts, many purchasers are more than willing to do the necessary repairs. Every buyer who buys a distressed property is one less eligible buyer for the other homes. Less demand in a market with an oversupply of houses for sale means lower prices.



Distressed properties could impact your buyer’s appraisal

We had the honor to speak at the Leading Real Estate Companies of the World Conference and the RELO Direct Corporate Forum last week in Las Vegas. Chip Wagner of A. L. Wagner Appraisal Group, Inc. also spoke. He is a third generation appraiser and an industry icon who will be inducted into Worldwide ERC’s prestigious “Hall of Leaders” in May in recognition of his years of hard work in the field.



At the conference, Mr. Wagner explained:



“Recently appraisers have been accused of prolonging the nation’s real estate downturn by developing value opinions that are below proposed sales prices. Specifically, we have been accused for using distressed properties among the comparable sales used in the valuation process.



If a specific market area has a low amount of distressed listings and comparable sales, it is likely there is little impact on property values, and we may be seeing appreciation taking place. A ‘low amount’ would be under 10% to 15%. In market areas where there is a high amount of distressed market competition, typically greater than 1/3 of the market, this distressed competition has to be analyzed as this is the new ‘norm’ for that market area. Buyers active in that area are looking at all of the competing properties and making their purchase offers and buying decisions based on all of the information available to them. Sometimes the appraisers are using that data, and sometimes they are not. The important thing is that the appraiser properly research and analyze each property, understanding the differences in seller motivations and the condition between the properties.”



These properties sell at substantial discounts. When they are used as comparable sales, they could dramatically impact values.



Bottom Line

The number of distressed properties coming to market is increasing and will create downward pressure on house prices throughout 2011.

The Impact Foreclosures Have on House Prices