This week The Norris Group Real Estate Radio Show presents Tommy Williams segment on I Survived Real Estate 2009. Tommy has over 40 years experience in real estate auctions, land development, and real estate investments. He is the founding partner of Williams and Williams Auctions, and he is the immediate past president of the National Auctioneers’ Association. He has conducted over 10,000 auctions in 48 states, and has even auctioned for Bruce Norris.
We have two economic systems that are flourishing in the world. One is the China system, which is completely government controlled; all individuals and businesses operate on the government’s direction. We once had the exact opposite of that. The U.S. has risen to the place that it is at because it has always placed the individual as number one. It has always placed private business as number one with government interference.
In Tommy’s opinion, when government interferes with the free enterprise system that the U.S. has we develop a bad problem. Every stock sold today, throughout the world, is sold using an open auction. We can speculate about what the real estate market will be like in the future, but if we are going to help real estate recover we need to get the market to reach the price that buyers think that real estate is worth.
There are two ways that real estate comes onto the market. One way is when a property becomes a liability to the owner. Whenever real estate comes into market because of this reason, it needs to be sold in an auction as soon as possible, by a professional auction company. Realtors need to do everything they can to educated buyers on what they need to know for real estate auctions. Auction companies will want to sell properties for as much as possible, and buyers want properties for as cheap as possible.
When a property is sold, families move into them and repair them, and when those homes are repaired the property value of every home in that neighborhood increases. This is the only way the real estate market will recover.
Tomorrow Chrysler will fluctuate based on what Chrysler is worth. Unfortunately, the government is wanting to interfere with what Chrysler is worth. Tommy was told multiple times that if TWA closed down then we would not be able to fly to many places in America, and that it would be the end of American air travel as we know it. It did eventually close down, but a variety of other airline carriers came out of it, and now the air transportation industry is in better shape than it was before. If we let capitalism flourish, it will dig us out of this real estate downturn based on fair market value.
The next speaker for I Survived Real Estate 2009 was Joseph Magdziarz. He is the 2009 vice president of the Appraisal Institute, and will become president of the Appraisal Institute in 2011. He has been an active member of the Appraisal Institute for 38 years.
The Appraisal Institute is the largest professional appraisal group in the world with 26,000 members. Last year, the Appraisal Institute had 3,900 new members.
The market conditions today are difficult to figure out. When there are complex issues going on, we need to have experts dealing with them, but we are not getting experts to deal with these issues. The reason why this is happening is because the appraisal management companies want reports within a few hours and they pay very little. The best appraisers are starting to leave the industry because of this.
The HVCC expires in July of next year, and people are not happy with it. Moratoriums are not going to help anything. We need long term solutions.
There are 10 large appraisal management companies in the country. Those companies are advertising jobs to people who can do appraisal jobs quickly and cheaply, so people are taking these jobs in areas that they are not familiar with. This is harming consumers, and it harms everyone in the industry. The government is trying to pass a bill which will regulate management companies, so that they work on a state by state basis, and the appraisal management companies do not like that. If this bill passes, perhaps appraisal management companies will start looking for people of quality to do these jobs. Right now, consumers are paying more from lower quality work, and that is wrong. Perhaps if we present this problem as something that is hurting consumers then we can get this problem fixed, because nobody cares about appraisers, realtors, and mortgage bankers.
One of the problems with current appraisal standards is that appraisers are using distressed sales as comparable sales. Distressed sales do not meet the definition of market value. If you were to use them, you would have to make significant upward adjustments.
People who are not a member of the Appraisal Institute are 7 to 20 times more likely to have complaints filed against them. Joseph hopes to make appraisals more competent by increasing education. Joseph asks that if anyone has an appraiser who is doing work outside of their comfort zone then they need to file a report with the Appraisal Institute. Anyone who does work outside of there are of competency needs to be reported.
Joseph supports the original HVCC because appraisers need to have pressure taken off of them, so that they can make accurate appraisals. Before, some appraisers were pressured to inflate appraisals.
A lot of the Appraisal Institute’s members had relationships with lenders, and they could talk to the lenders when they had problems. They were not being influenced to do unethical things. Right now appraisers have to register with the state, but they do not need a license. Appraisal fraud is beginning to increase again.For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.