NAR survey breaks down appraisal problems
In a survey by the National Association of Realtors (NAR) in September, 65% of realtors reported they had no contract problems relating to home appraisals over the past three months; 11% said a contract was canceled because an appraised value came in below the price negotiated between the buyer and seller; 9% reported a contract was delayed; and 15% said a contract was renegotiated to a lower sales price as a result of a low valuation.
Lawrence Yun, NAR chief economist, said these findings are notable given that homes in many areas are selling for less than replacement construction costs. “Though the real estate recovery is taking place, the combined issues of stringent mortgage lending requirements and appraisal frictions are hampering otherwise qualified buyers from purchasing a home in a timely fashion, and in some cases are preventing them from buying at all,” he said.
Major problems reported by realtors surveyed included:
• Some appraisers are using foreclosures, short sales and run-down properties as comparable homes, and are not making adjustments for market conditions or the condition of the property.
• Appraised values that do not reflect market conditions such as rising prices, the presence of multi-bidding and low inventory.
• Appraised values are very inconsistent and fluctuate widely.
• Out-of-town appraisers, who are not familiar with the area or local market conditions, are being used.
• Turnaround time by both appraisers and banks is slow, which delays closings.
• Appraisers who don’t make distinctions between distressed and non-distressed properties.
In addition to these problems, some appraisers are required to provide as many as eight to 10 comparable sales, which almost guarantee the use of distressed properties as comps, the NAR said. Previously, three comparable homes were the norm for most appraisals. In many cases there simply aren’t enough apples-to-apples comps to comply with the excessive demands by lenders, so discounted distressed homes are sometimes used in valuating traditional homes in good condition without appropriate adjustments.
Fortunately, the NAR said, the level of distressed sales is trending down — they accounted for about one-third of all sales in 2011, but have averaged roughly a quarter of sales in recent months. By 2013 the NAR expects the distressed market share to decline to about 10% to 15%. As distressed inventory is cleared from the market over the next two years, it should help to correct ongoing problems.
“In the meantime, buyers, sellers and real estate agents need to be aware that there are problems with some real estate appraisals, but also be aware of their rights to communicate with appraisers and lenders about errors or concerns with individual valuations,” said NAR president Moe Veissi, broker-owner of Veissi & Associates in Miami. “In some cases, a second appraisal may be justified.”
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Use of BIM rises dramatically
A study by McGraw-Hill Construction indicated that architects, engineers, contractors and owners are increasingly embracing Building Information Modeling (BIM) in their building projects. Comparing results from its similar research in 2007 and 2009, McGraw-Hill Construction found that the percentage of companies using BIM jumped from 17% in 2007, to 49% in 2009, to 71% in 2012.
BIM uses digital representations of the physical and functional characteristics of a building, as opposed to blueprints or other types of building plans. The resulting models can then be shared between various stakeholders to facilitate decision-making from the earliest conceptual stages through design and construction.
Other findings from the McGraw-Hill Construction study:
• For the first time ever, more contractors (74%) are using BIM than architects (70%);
• All users report increased business benefits from BIM, including better profits, more accurate documentation, less rework, reduced project duration, fewer claims and the ability to offer new services;
• Almost 40% of BIM users are heavily committed to it, doing more than 60% of their work in BIM. This group has surged by 44% since 2009;
• As a sign of its increasing acceptance and maturity, almost half (49%) of BIM users have five or more years of experience using it.
BIM uses digital
BIM uses digital representations of the physical and functional characteristics of a building water sub metering, as opposed to blueprints or other types of building plans. The resulting models can then be shared between various stakeholders to facilitate decision-making from the earliest conceptual stages through design and construction.
Eco Building Products partners with CorWorth Building Systems
Eco Building Products (ECOB) has signed a binding Memorandum of Understanding with CorWorth, a Texas limited liability company and its affiliates, including Restroom Facilities and others. This formal agreement between ECOB and CorWorth represent an exclusive nationwide marketing and sales arrangement for a limited scope use, and provides a niche market use of ECOB’s protected lumber, logo and product identity.
CorWorth bids on municipality contracts across the nation and will now specify Eco Red Shield protected lumber on all bids moving forward. CorWorth specializes in the design, manufacture, delivery, and monitoring of high-quality modular buildings.
"CorWorth is excited about our affiliation with Eco Building Products," said Howard Worthing, president of CorWorth Building Systems, "to be named as the exclusive provider of Eco Red Shield and other Eco products used for the manufacture and construction of public restrooms and related buildings for the Parks & Recreation industry.
“The Eco Building Products allow us to provide competitively priced wood-framed buildings that have all the advantages of concrete with all the flexibility of design, construction, and features only achievable using wood-frame construction. These lighter-weight buildings are much faster to construct than concrete, and now thanks to Eco, are also resistant to moisture damage, insect damage, and fire, coupled with our rigorous construction techniques; they are as durable as concrete."
It is expected that CorWorth will spend a significant amount of time and money promoting ECOB products on the CorWorth website, attending various tradeshows, conducting continuing education classes, and through their concerted efforts in specifying Eco Red Shield protected lumber products for all projects sent out to bid.
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