Dennis Norman
By: Dennis Norman
Monday I did the first post and yesterday the second post of my E-View with Frank Gregoire, a Florida appraiser and author of Appraiser Active.
Frank is often quoted as a source for nationally syndicated real estate columnists and appears as a
Francois (Frank) K. Gregoire, IFA RAA
speaker on appraisal and mortgage related topics. Articles by Francois Gregoire have been published in the REALTOR(R) magazine and the Journal of Property Economics.
Now for the final part of my E-View with Frank:
Dennis- You are in Florida…let’s focus on that market for a moment. Florida enjoyed some pretty rapid increases in property values for quite a while..to the point that, in my opinion, values were based on the “greater fool theory”. I remember looking at condos on the gulf coast in 2003-2004 when I was thinking of buying some for vacation rentals. When I suggested to the agent that the prices were well above what they should be based upon the income being produced the answer I got was that someone else had just paid that much for a similar unit in the complex. The agents did not argue that the deal made no financial sense in terms of an investment. What are your comments on this?
Frank-It has been rare, in the 33 years I’ve been in the real estate profession, that the income from gulf coast rentals was sufficient to justify or support the sales price. Returns on such an investment are realized when the property is sold at an (hopefully) appreciated price. Many of the gulf front condominiums are retained as vacation homes or held for the owner’s future retirement. Beach living is a lifestyle and that lifestyle costs money, more than you or I are apparently willing to spend.
Dennis-Florida is one of the states that has seen some dramatic “price corrections”, which were most likely needed. What are your thoughts about current prices? Do you think they have dropped to the point that the represent good value to someone looking for a second home or vacation rental?
Frank-In addition to being an appraiser, I happen to be a proponent of the Sunshine State and in particular, St. Petersburg, the Sunshine City, where I live and work. The weather is great, there is no state income tax and you are bound to find someone from your home state or country right around the corner.
While I can’t speak for other parts of the state, there is a good supply of detached single family homes, townhouses and condominiums all along the barrier islands. Although the income is unlikely to support the price paid, even in this market, it is a great opportunity to examine a great selection and take advantage of the lowest prices we’ve seen in years.
I want to thank Frank for taking the time to do this E-View in which I think he has shared a wealth of information with us. If you would like to contact Frank his contact information is below.
Francois (Frank) K. Gregoire, IFA RAA
Gregoire & Gregoire, Inc.
727-344-3393
email: fgregoire1@yahoo.com
blog: http://appraiseractive.blogspot.com/
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Mr. Gregoire,
As an appraiser, I agree with most of what you say, and certainly appreciate you making an effort to be involved, but I don’t agree with the part about how the banks got “duped” by the complacent appraisers. I think it’s the other way around in reality. The banks “duped” the whole world, the regulators didn’t do their jobs, and now we’re taxing the poor to feed the rich.
Mr. Norman,
Thank you for writing about this issue. If you would like to read a very entertaining recent article about the corruption behind what goes on in the mortgage business, go to -
http://www.nichereportonline.com/reader.php
to read the Niche report, July edition. Good article about the HVCC, from perspective of a non-involved party.
Regards,
Jeniffer
Jennifer,
Thanks for the comments. I’ll agree that there is plenty of evidence that many banks appeared to be willing participants in many of the schemes. My comments are colored by examination of hundreds of complaints made against appraisers by banks and other institutions that now hold these loans. In most of these cases, the secondary lender was clearly duped. In more than a few of these complaints, the appraiser’s workfile included two versions of the purchase and sale agreement; the one used to buy the property and the one submitted to the loan originator. Usually the work file also included information from the multiple listing service about the subject property. In some instances the difference between the actual sales price and inflated appraisal was 67% or up to $400,000.
Keep the comments coming!