Marsha Norris #212

Marsha Norris lost her brave battle with cancer on January 22nd. For the next two weeks, we honor her memory by re-running two more shows she recorded leading up to our I Survived Real Estate events that raised awareness and money for breast cancer.

Thank You for the notes, flowers, and prayers during this difficult time. We truly appreciate your concern and all the support over the years. We feel the love. We will deeply miss Marsha (Mom) but will forever cherish the wonderful memories.

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Marsha Norris #211

Marsha Norris lost her brave battle with cancer on January 22nd. For the next two weeks, we honor her memory by re-running two more shows she recorded leading up to our I Survived Real Estate events that raised awareness and money for breast cancer.

Thank You for the notes, flowers, and prayers during this difficult time. We truly appreciate your concern and all the support over the years. We feel the love. We will deeply miss Marsha (Mom) but will forever cherish the wonderful memories.

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I Survived Real Estate 2010 part 5#197

This week, The Norris Group presents the third audio installment from the event I Survived Real Estate 2010. This award-winning event has raised over $170,000 since its inception three years ago thanks to the support of all the sponsors and individuals donors that participate. This year, the event focused on the state of REO and foreclosure from an unusual and exciting lineup of experienced experts from multiple industries. This episode starts with more conversation with Fannie Mae and Freddie Mac talking more about bulk buying opportunities. Later, Bruce brings up the entire panel to discuss more on the economy and the real estate market.

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I Survived Real Estate 2010 part 4 #196

This week, The Norris Group presents the third audio installment from the event I Survived Real Estate 2010. This award-winning event has raised over $170,000 since its inception three years ago thanks to the support of all the sponsors and individuals donors that participate. This year, the event focused on the state of REO and foreclosure from an unusual and exciting lineup of experienced experts from multiple industries. This episode goes into a little more on bulk buying with Fannie Mae and Freddie Mac.

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I Survived Real Estate 2010 part 3 #195

This week, The Norris Group presents the third audio installment from the event I Survived Real Estate 2010. This award-winning event has raised over $170,000 since its inception three years ago thanks to the support of all the sponsors and individuals donors that participate. This year, the event focused on the state of REO and foreclosure from an unusual and exciting lineup of experienced experts from multiple industries. The video is now available on the website.

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I Survived Real Estate 2010 part 2 #194

This week, The Norris Group presents the second audio installment from the event I Survived Real Estate 2010. This award-winning event has raised over $170,000 since its inception three years ago thanks to the support of all the sponsors and individuals donors that participate. This year, the event focused on the state of REO and foreclosure from an unusual and exciting lineup of experienced experts from multiple industries. The video is now available on the website. In this second show, Bruce Norris introduces the panelists and starts the interview with Christopher Thornberg of Beacon economic fame.

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I Survived Real Estate 2010 part 1 #193

This week, The Norris Group presents the audio portion from the event I Survived Real Estate 2010. This award-winning event has raised over $170,000 since its inception three years ago thanks to the support of all the sponsors and individuals donors that participate. This year, the event focused on the state of REO and foreclosure from an unusual and exciting lineup of experienced experts from multiple industries. The video is now available on the website. In this first show, Aaron Norris and Bruce Norris launch the event and Bruce sets up the evening speaking on the current state of real estate in the US.

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Sean O'Toole with PropertyRadar #187

This week the Norris Group continues with radio interviews leading up to I Survived Real Estate 2010: The State of REO. On the radio show this week is president of Foreclosure Radar, Sean O'Toole. Bruce and and Sean talk about the state of current REOs and trustee sales in California, shadow inventory, where shadow inventory resides, legislation changing the market, and statistics on loan modifications. This and much more on this week real estate radio show and podcast.

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Marsha Norris #184

This week the Norris Group launches its third annual breast cancer fund raising event, I Survived Real Estate 2010: The State of REO. On the radio show this week is the inspiration for the event and wife of Bruce Norris, Marsha Norris. On the show, Bruce and Marsha discuss the many hurtles and challenges of fighting breast cancer for 15 years. Thanks to all of our sponsors for already helping us have the biggest launch to date. We couldn't do it without you.

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I Survived Real Estate 2009 part 8 #148

This week The Norris Group Real Estate Radio Show and Podcast presents the final eposide of I Survived Real Estate 2009. This segment features the much talked about panel discussion between Bruce Norris , Christopher Thornberg with Beacon Economics, Rick Sharga with RealtyTrac, John Young with the California Builders Industry Association, Pat Combs with the National Association of Realtors, Joseph Magdziarz from the Appraisal Institute, and David Kittle with The Mortgage Bankers Association.

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I Survived Real Estate 2009 part 7 #147

This week The Norris Group Real Estate Radio Show and Podcast presents Part 8 of I Survived Real Estate 2009. This segment features the much talked about panel discussion between Bruce Norris , Christopher Thornberg with Beacon Economics, Rick Sharga with RealtyTrac, John Young with the California Builders Industry Association, Pat Combs with the National Association of Realtors, Joseph Magdziarz from the Appraisal Institute, and David Kittle with The Mortgage Bankers Association.

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I Survived Real Estate 2009 part 6 #146

This week The Norris Group Real Estate Radio Show and Podcast presents Part 7 of I Survived Real Estate 2009. This segment features the much talked about panel discussion between Bruce Norris , Christopher Thornberg with Beacon Economics, Rick Sharga with RealtyTrac, John Young with the California Builders Industry Association, Pat Combs with the National Association of Realtors, Joseph Magdziarz from the Appraisal Institute, and David Kittle with The Mortgage Bankers Association.

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I Survived Real Estate 2009 part 5 #145

This week The Norris Group Real Estate Radio Show and Podcast presents Part 6 of I Survived Real Estate 2009. This segment features Bruce Norris finishing of his presentation and then we enter part two of the event which features all eight panelists including Christopher Thornberg with Beacon Economics, Rick Sharga with RealtyTrac, John Young with the California Builders Industry Association, Pat Combs with the National Association of Realtors, Joseph Magdziarz from the Appraisal Institute, and David Kittle with The Mortgage Bankers Association.

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I Survived Real Estate 2009 part 1 #141

This week The Norris Group Real Estate Radio Show presents Part 2 of I Survived Real Estate 2009.

Rick Sharga from RealtyTrac start off the show talking about current foreclosure trends and the moratoria that have delayed the inevitable foreclosure wave coming to the market. Rick is followed by John Young of Young Homes and is Vice President of the California Builders Industry Association. John Young gives the audience some insight inti what the building association is currently dealing with and what the profession is pushing for to level the playing field for the building industry.

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I Survived Real Estate 2009 #140

This week The Norris Group Real Estate Radio Show presents Part 1 of “I Survived Real Estate 2009”. Aaron Norris starts the show by discussing the purpose of the event. I Survived 2009 is a breast cancer fundraiser. All donations received for this event were given to the Susan G. Komen for the Cure foundation. The Norris family has been personally touched by cancer, as Marsha Norris has been fighting cancer for 14 years.

The Susan G. Komen “Walk for the Cure” is September 27th at Newport Beach. Donations both small and large are appreciated. You can visit isurvived2009.com to learn how you can still get involved. The video of the event will be posted later next week.

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Joseph Magdziarz of the Appraisal Institute #137

This week Bruce is joined by Joseph Magdziarz. He is the current Vice President of the Appraisal Institute and he will become the President Elect in 2010 and President in 2011. He has been associated with the Appraisal Institute for 38 years.

Bruce begins by asking if Joseph if he considers business nowadays to be usual or unusual. Joseph has seen similar conditions in the late 80s and early 90s, but for many people, this is a new experience.

Bruce asks Joseph to explain what is similar about our current market and the market of the late 80s. The declining prices of real estate but the cause of these declines is significantly different.

Something radically changed a few months ago in the appraisal business. The Home Valuation Code of Conduct (HVCC) agreement between the Attorney General Cuomo and Fannie Mae and Freddie Mac caused this change. A few years before the HVCC came out, Joseph was lobbying with Congress about the pressure being put on appraisers to make inflated home appraisals. People were happy with many appraisers, because they received high appraisals, but this problem put ethical appraisers out of business, because they would not cooperate with people who wanted their home values inflated. Some of the new people coming into the business may have given into the pressure to make bad appraisals because they did not have the established relationships with lenders that some of the well known appraisers had.

The goal number for an appraiser is market value. Bruce asks if that is still the goal that appraisers are shooting for. Joseph says that is what appraisers are trying to estimate but some of the values coming out are closer to distressed asset value rather than market value.

Bruce asks if something has changed in the appraising process or if the changes are coming in after the appraiser states a market value and someone attempts to correct them. The definition of market value has not changed since 1989. The methodology has not changed either. Joseph thinks that many appraisers have not experienced a distressed market such as the market we are currently in. The HVCC, and the lenders’ choice to move much of their business to appraisal management companies, have caused a lot of problems.

This is one of the first markets we have had in 10 years in which we have declining prices. It is legitimate to have a 90 day old comp that is worth less today than it was when you first got it. Bruce asks if the big problem is that we do not have enough fully repaired homes as comps in comparison to vacant REOs. Jospeh says it’s very localized. Joseph says this is a big problem in some parts of the country, but the real problem occurs when all the occurring sales are foreclosures and short sales.

The definition of market value is the meeting of the minds between a buyer and a seller, each equally motivated and knowledgeable, and without undue pressure. If you have a bank with many foreclosures, they are more motivated than a typical seller would be. They will often dispose of those assets at a lower price which makes none of those properties a valid comp. The motivation of the buyer and seller is important when evaluating market value.

TNG’s business is buying and fixing properties that need work. TNG typically puts $35,000 dollars into a repair job, and they typically end up with a property that is worth about $140,000. It is very hard to get $35 grand worth of credit. There seems to be a rule which only allows a ten percent credit limit for the kind of properties that TNG deals with. Bruce asks Joseph to explain this issue. Joseph explains that this issue relates back to a Fannie Mae/Freddie Mac guideline that says when you have an adjustment greater than 10 percent, you need to explain it. As the percent of adjustment increases, the sale becomes less comparable. There is no ten percent requirement. This is just a guideline, but unfortunately, some of the underwriters believe it to be a rule.

Bruce has had trouble with this guideline. For example, Bruce had 6 offers on a property being sold at 122,000, but then the appraisal came at 102,000, and then the review appraisal came in at 85,000. That is far from what 6 buyers thought the market value was. In the end, Bruce did not sell this property and he kept it as a rental home. If an appraiser is not able to honor the market decision of a buyer, then the market price in some areas will go down further for no good reason. Part of this problem goes back to the HVCC stating that there needs to be a firewall between people originating a loan and people doing appraisals. At this time, that firewall is the appraisal management company. One of the main complaints that Joseph is getting is that many appraisals are being done by appraisers who are not experienced enough in their geographic region.

Bruce asks how appraisers are assigned properties to appraise. Some companies broadcast assignments to everyone on their approved list, so the first person to sign up for the job gets it. The problem with the AMC is that they are not giving these jobs to experienced appraisers. The AMC is focused on getting these jobs done quickly rather than effectively. Better appraisers are missing out on jobs because they cost more. They are hiring people with not enough experience.

The Appraiser’s Institute company has 26,000 members. Each one of these members receives notifications saying that they need to have the proper experience necessary to get jobs done properly, otherwise the Appraisers Institute will take aggressive enforcement against any member who accepts a job that they are not qualified for. These members are also given information on how to turn in unqualified appraisers.

In July, the current president of the Appraisal Institute met with Congress to discuss this issue. He also reminded them a few years before that these problems were occurring, and they failed to act on those problems back then. These problems do not look like they will be dealt with until some time next year. A few bill are pending but nothing will be done until next year.

Bruce asks if the Appraisal Management Companies has to be run by someone with an appraisal background. This is a problem that the Appraisal Institute has been lobbying for as well. There are appraisers who have had their licenses revoked that are now supervising other appraisers. Joseph thinks it would be better if appraisers were required to be licensed within their state.

Bruce asks if communication is allowed between agents and appraisers who are working for Fannie or Freddie. Joseph says this is not forbidden. The loan officer is not allowed to communicate with the appraiser, but Realtors and management companies can communicate with appraisers. Appraisers have an obligation to verify information given to them about a sale. This is a misunderstood rule that Bruce has had difficulty with. Bruce has called appraisers who told him that he was not allowed to talk to them.

Bruce asks Joseph about what the fee was for an appraiser before HVCC and what that fee is now. This is one of the five biggest problems that the Appraisals Institute currently has. Not all appraisal management companies are the same. In Chicago, GAMCO uses Appraisal Institute members, and they give designated members 90 percent of the fee, and they give non designated members 80 percent of the fee. What Joseph has heard nowadays is that management companies are starting to take 50 to 60 percent of the fees. When that happens, the better appraisers refuse to work for those companies. That leaves the new appraisers with the ability to get into the business, and they may not be qualified. Joseph fears that these rules may cause some very knowledgeable people leaving the business. Another problem with management companies is that they require a 24 to 48 hour turn around time. This does not allow appraisers to get to know the market value of a specific market.

We now have the ability to use automated appraisals (AVM), but these automated appraisals are trumping appraisals made by actual appraisers. These automated appraisals are done on a statistical basis. The problem with these reports is that they do not use comparable sales. These automated appraisals essentially come up with a median value rather than a market value. These mechanical appraisers are not capable of looking next door to a certain property in order to obtain a better understanding of the value of the home being examined.

Joseph is can be seen September 11th at our I Survived Real Estate 2009 event.

Joseph C. Magdziarz, MAI, SRA is the 2009 vice president of the Appraisal Institute. He will become the president elect in 2010 and president of the Appraisal Institute in 2011.

Magdziarz has been an active member of the Appraisal Institute for 38 years. He has served in a variety of capacities at all levels of the organization.

At the regional level, Magdziarz has served two terms as Regional Vice Chair and two terms as Region III Chair. He has also been a regional representative for many years. On the national level, Magdziarz served two terms on the Appraisal Institute’s National Board of Directors. He has served as Chair of the Education Committee for five years and has also chaired the National Audit Committee, Instructor and Faculty Committees, and Education and Publications Committees. In addition, he has served on a number of project teams. Presently, he is serving on the ADAPT (MAI demonstration report alternative) project team and the International Education and Designation project team.

Magdziarz has been President of Appraisal Research, Inc. in Rockford, Illinois for 38 years. He resides in Rockford, Illinois with his wife Sandra of 41 years and his bulldog Bella.
Magdziarz is an approved Appraisal Institute instructor for 26 courses in the Appraisal Institute’s QE, AE, CE, and USPAP curriculums. He has also had international assignments in Naples, Italy; Istanbul, Turkey; Seoul, South Korea; and Beijing, Tianjin, and Shanghai, China.

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Tommy Williams with the National Auctioneers Association 8-22-09 #136

This week Bruce is joined by Tommy Williams. Tommy is certified by the Auctioneers Institute. He is the founding partner of Williams and Williams Auction Company. He served as president between 1986 and 2000, and he became board chairman in 2001. He has conducted over 10,000 auctions all over the world. Tommy is also part of our I Survived Real Estate 2009 expert panel.

Tommy Williams has done auctions in multiple countries such as Puerto Rico, Canada, and his company is working with companies in South Africa. Bruce thinks that bank owned properties are probably very prevalent in other countries as well so their auction business has probably picked up. What has occurred in the United States has occurred all over the world. Tommy thinks that it is amazing that a country so far removed from the United States, like South Africa, has gone through the same economic swing. The entire world is experiencing the real estate bubble bust.

The United States auctioning business has gotten better. The number of auctions have increased, and auction popularity has increased for many years as well. However, the auctions are not making as much money because the real estate market prices are not doing well.

In 2003-2008, the business for residential real estate went from $11.5 billion to $17 billion. The volume has gone up, but the pricing has gone down very far, so auctioneers have to sell larger numbers of units to achieve the same profit. In many areas of the United States, home prices are down 75 percent from their peak. Bruce recently bought two properties, from a lender, for 15 percent of the owed amount. This is not an unusual occurrence. In many of these cases, the original buyer had a very bad loan. Fraud is involved in many of these cases. A property that may have never been worth 10,000 to begin with may have been given a mortgage of 100,000.

It was common in the lower end of Moreno Valley to have a neighborhood in which each property was selling for $300,000, but now the price for those homes is generally around 100,000. The buyer and lending mindset was very different in 2005.

Bruce asks if the auction business has shifted to making the multi-property owner to be its main customer rather than the individual property owner. Tommy says that he hopes this is not true. He believes that if you want to build a successful auction company then you need to deal specifically with normal “end-user” buyer and seller. The focus of an auction company should always be to deal with private owners/investors. There are very few companies that deal with REOs, and that is not a long range way to build a business.

Deutsche Bank recently said that by 2010 or 2011, 50 percent of the owners in the United States will be upside down. That would have a profound effect on the amount of inventory that would be able to sign up for a one house auction. The most important thing about a house that is upside down is that the seller needs to sell their house. Either they cannot afford their house any more, or they have had a change in lifestyle such as a job transfer or a divorce. People need to sell their properties at the time they become a liability. If they go through a long foreclosure process then their property will deteriorate, and their neighborhood may deteriorate, and they will end up selling a property for less than they could have.

A Campbell Report that came out in which 1,000 agents responded to a questionnaire. These agents claimed that the biggest problem they were dealing with was a lender’s slow response to a short sale offer. It takes months. The auction business could help the lender decide what the value of a property is. Auctions can identity, with nearly absolute certainty, what the market place thinks a property is worth. If multiple people bid on a property, and the highest bid is $100,000 dollars, then you have discovered what the market value for that property is. It is frustrating to see lenders take such a long route to discovering the truth about the value of their property, and take a huge price hit in the process. Lenders have dealt with the problem of over valued homes in the worst way possible. Tommy had a neighbor who went through a divorce and had other life changes. This neighbor bought his property for about $650,000, and he started going delinquent on his payments. Tommy told him his house would sell for about $450 to $500,000 at that time. This neighbor believed Tommy to be correct, but his lender would not negotiate with him, so he went through the foreclosure process, and he eventually walked away from it. This home recently closed for about $370,000 and Tommy could have sold it for much more. Tommy has been trying to tell this story to congressmen and senators, so that these problems may be fixed in the future, but they will not listen.

This is one of the reasons why I Survived Real Estate 2009 is so important to Bruce. Every industry affects other industries. Fortunately for Tommy Williams, he has not had trouble with appraisers arguing with the price that homes have sold for at his auctions, because the value is proven by the market place. One of his colleagues sold their home, and their lender told them that they would not lend money on a home bought at an auction. The National Auctioneers Association immediately contacted them and asked them to explain this policy, but they would not. This problem did not occur with a small lending company.

The word “auction” has a bad meaning in the United States. Here, it means that you have a desperate seller. In 2004 to 2006, Bruce was receiving multiple offers on each of his “for sale” properties. If Bruce had thought to offer those homes in an auction, which would put each of those buyers in direct competition with each other, his selling prices would have definitely been higher. When the market is really over heated, that is when you want to have an auction for sure. Under desperate times, such as right now, the reason why you have an auction is because buyers will not show up if you use any other method.

On September 11, the builders will be attending the real estate event. Bruce thinks it would be a perfect partnership if builders started selling with auctioneers. Tommy has had this opportunity on two different occasions. At the time, everybody thought this was crazy, but the auctions were very successful. If Tommy was in the building business, he would launch his selling process with an auction. Bruce is planning on getting involved in building soon, and he plans on using auctions for selling his houses.

When you participate in the boom market, it is easy to sell, so you do not think about auctioning your home. Also, auctions are typically seen as an option that is only used in a tough market. The auction is viewed different ways in different countries. In New Zealand, auctions are one of the first options used for selling homes. Views towards auctions also vary in different states. States like Tennessee, Ohio, and Missouri have a much more positive view towards auctions than states like California.

Tommy has found it difficult to buy bulk properties within the last six months. There are opportunities out there, but good businessmen would not go after those opportunities.

We look forward to seeing Tommy Williams September 11th at I Survived Real Estate 2009.

Tommy served as President of the National Auctioneers Association in 2008 and is current Chairman of the Board. Tommy also graciously took part in I Survived Real Estate 2008 last year and will also appear on the I Survived Real Estate 2009 panel.

Thomas L. Williams is a graduate of Penn State University (B.S. Animal Science) and the Certified Auctioneers Institute (CAI). Representing the third generation of Williams family auctioneers dating back to the mid-1800s, Williams is also a graduate of the historic Reppert School of Auctioneering. He has over 40 years experience in real estate auctions, land development and real estate investment. He currently serves as President of the National Auctioneers Association.

A founding partner of Williams & Williams, Williams served as president from 1986-2000, and became board chairman in 2001. He also co-founded and served as managing partner of Lowderman & Williams Auctioneers from 1965-85. He has conducted over 10,000 auctions in all 48 of the contiguous United States and Canada, and is an advisor to auctions conducted throughout Western Europe, South Africa, Australia and New Zealand.

An avid cattleman, Williams also owned and operated Bradmar Angus Farms from 1965-85, after which he continued to serve as a herd and genetics consultant for many of the nation's premier Angus cattle breeders.

Williams is a licensed auctioneer and real estate broker in over 20 states, and an active member of the National Association of Realtors.

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