Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Wednesday, August 26, 2020

Black homeowner claims discrimination, low appraisal in real estate appraisal - Real estate appraiser, reviewer with 35+ years responds - Mary Cummins


UPDATE: The author of the article removed some of the false racist accusations. They removed the name of an appraiser they misquoted. They also removed the false statements by Andre Perry. I wrote a letter and article in reply to Andre Perry's false and misleading statements he made about appraisers, appraisals and real estate to the Finance Committee last year. The author clearly received many, many letters from people about this extremely misleading and reckless article. This is not the time to be making false claims of racism. There's enough actual racism out there. Below is the article refuting Andre Perry's false claims.


UPDATE: After doing some research this is partially busted. I'd need to see the appraisals to make a true determination if the first appraiser came in low. I obviously can't determine if the first appraiser was racist and acted in a racist manner. We don't even know if the appraised value stated by the owner was the actual appraised value. I have not and am not appraising this property. There are issues here. I posted some comps below pulled by a robot and not me. Yes, racism exists and some appraisers are racists. That doesn't mean every loan rejection is caused by an intentionally low appraisal made by a racist.

First a word about robot appraisals. They are not good indicators of value. The robot hasn't seen the property. The robot doesn't know condition of the property, view and many other very important factors. The robot pulls comps based on a basic math formula. It does not choose the most similar comparables.  That said I'm including robot appraisals only because there is no way anyone can claim racism, bias, discrimination with a robot. It's also just to show a range. Here is a saying among appraisers about robot appraisals such as Zillow. "The 'a' in 'Zillow' is for 'accuracy.'"

The original appraisal came in at the range given by four different robot appraisals for the property. The final appraisal came in higher. See the four main robot estimates below. The robot appraisals were based on the false larger size so they are even higher than they should be. Robots are software programs. They definitely do not consider the race or anything about the owner. They don't see the property. They know nothing about the interior. 

It's not a 4 bed, 4 bath home legally. It's 3 bed, 2.5 baths. That makes a big difference. The size in the MLS is larger than legal. Some estimates are based on the false larger size. You can't include unpermitted additions with most lenders because building and safety can force them to remove unpermitted additions. You have to choose comps based on legal size, bed/bath count of subject only. 

It has a funky addition which doesn't appear to be permitted. It's on a double corner lot closer to the main highway and commercial area. These can be negatives. 

It was not a bank loan but a credit union loan and a credit line. There are different requirements for credit union loans than bank loans. Based on my experience credit unions aren't as picky. The couple got a 15 yr loan which is generally for riskier borrowers and what appears to be another line of credit on the property. They took cash out. Banks need to see a higher loan to value to do a refinance and get cash out. Sounds like they didn't get the loan first time around which could be based on credit, income, length of time at current job... I have no information to verify this though I do have their loan documents and loan agreement. 

The area is not "predominantly white." If we go by % only then yes, whites are predominant at over half or 51% in this area. Whites are 51%, blacks 30%, Asians, Hispanics, mixed make up the rest. See chart below. In my area "predominant" is considered 85% or more. Also, the wife is black and husband is white. Did the appraiser only discriminate against the wife? 

Below is information about the property. It's all public information. 

They just refinanced July 18, 2020. They bought the 3 bed, 3 bath, 2,512 sf home built 1951 on a 21,586 sf lot 4132 Sherwood, Jacksonville, Florida for $295,000 July 19, 2017. There is what appears to be a $60,000 second. It's assessed at $308,000. Lot: 5  Block: 3  Map Ref: PM6505 Abbreviated Description: Assessor 100746-0000 Legal LOT:5 BLK:3 UNIT:1 SUBD:ORTEGA FOREST UNIT 01 SEC/TWN/RNG/MER:SEC 09 TWN 03S RNG 26E 19-22 09-3S-26E ORTEGA FOREST UNIT 1 LOT 5 BLK 3 MAP REF:PM6505. They got a $292,000 first 15 years from a credit union Coastline FCU, not a bank. They publicly listed their names, Abena Sanford Horton and Richard Alex Horton, and address. I'd still like to see the appraisals. If a local appraiser can run some comps, that'd be great. I'm in California and not Florida.

Below is the Zillow estimate $366,000 to $448,000 with $407,171 estimate. It looks like they are pulling the false larger MLS bed/bath count and size which appears to be more than legal. That could cause a big difference right there.


Redfin says it's worth $342,000.


Movoto says $324,000.


Real AVM score.

$424,300
Confidence Score
68
RealAVM™ Range
$373,384 - $475,216

Here is the racial makeup of this neighborhood based on the address.White 51%, Black 31%, Hispanic 10%, Asian 5%, 2+ races 2.6%, other .4%. African American isn't the minority here. The minorities are Hispanic, Asian, other and mixed. While whites are listed at 51% which is more than 50% it's not 85-95% white which is generally considered a "white majority" in my area. 

This is from the MLS when they bought it. I see some issues, i.e. unpermitted extra large bedroom, bathroom and double corner lot. 

"Property Overview - Two blocks off the river and in the popular Stockton School District in Ortega Forest, sits a 4 bedroom home with the most beautiful wooded, double corner lot waiting for new owners to call it ''Home''. And if you absolutely love your a Mother-in-Law, there is a suite just for her! But if not, then you have 2 Master Bedrooms! Some of the other Main Features include an over-sized 2-car garage, wood floors in most of the house, interior recently painted, a very large terrazzo-floored Florida Room, wet bar, tiled sunroom, french doors and a large awning-covered back patio. You need to come see this, because with just a tiny bit of TLC, it could be yours!"

The first appraisal allegedly came in at $330,000 when owners thought it was worth $450,000. $330,000 is in ballpark of the robot appraisals. The area is not $350,000 to $550,000. High is $480,000. Allegedly the second appraisal came in at $465,000. We still don't have the appraisals so we don't know the values of the appraisals. This is all speculation.

Below are some comps pulled by a robot and not me. They were pulled after the Hortons got their loan. We have to throw out comp 1 and 12. One because it's newer and 12 because it's right on the river, has a boat dock and larger. 4693 Ivanhoe is much larger, has been renovated and is farther from the main street. It also came in higher. Look at comp 3, 4336 Sherwood. This is on the same street but an inner lot closer to the river and away from the major road and highway. It closed after they got their loan. In appraising we can never appraise over the highest current sold comp. It's possible there just weren't similar enough comps that had closed when they had their house appraised. 


Below is a satellite image of the subject. You can clearly see why there would be a large variation in values due to location on the water or near a major highway and commercial zone. Subject is located closer to the main highway and commercial area than higher comps which are located closer to the river.





Abena Sanders Horton is an attorney? Maybe she threatened to sue the Credit Union if she didn't get the loan she wanted. I've seen it many times. I can't find her original post online. Perhaps she deleted it when the scrutiny started. A lot of people post iffy things then they blow up.


ORIGINAL: Few weeks ago an article came out about appraisers allegedly discriminating against black homeowners in real estate appraisals appraising them below market value. The non-peer reviewed "research" it was based upon was faulty. I've been writing a response but have had major computer issues so I have been putting it off.

In the meantime some people are jumping on that misleading "research" stating they've been discriminated against in real estate appraisals of their home. I'm sure there are a few bad apple racist appraisers who may not appraise homes properly. That said there are many regulations and rules which prevent this.

Below is link to an article where a homeowner states their home was appraised 40% below market value due to their race. 


I've been a real estate appraiser over 35 years including a review appraiser. I review other appraisers appraisals for banks. The homeowners need to post the address and both appraisals so appraisers can review this appraisal.  Real estate appraising is based on a math formula just like robot appraisals. Not only do we never consider who owns, lives in the home or decor, we must and do blur out all people and photos/paintings of people, religious articles, some other personal items in the photos in the appraisal. This includes comp photos. It's the law and we all do it. No appraisal gets past the Appraisal Management Company and gets to the bank without following these rules.Homeowners don't have to remove photos or personal items from their homes. Appraisers remove them digitally. Look at your appraisal.

I think some people are jumping on the misleading and incorrect "research" someone posted recently about black appraisals coming in low just to get attention. Appraisers may vary by 5% and still be within proper parameters. If an appraiser is appraising a tract home in a median home value area, any variance should be minuscule like one percent. The property should appraise itself. To vary by 40% is criminal. If that is true, that appraiser should lose their license and go to prison. Not only that but the Appraisal Management Company would have caught and stopped a poor quality appraisal before it was submitted to the bank. 

Real estate appraisal is based on the theory of matched pairs. Our goal is to find an identical property to the subject which has sold very recently on the open market. This is rarely possible so we find the most similar properties and adjust for the differences in size, location, view, amenities, upgrades, time and market. 

Below is the real estate appraisal math formula, equation. It's similar to what is used by robot appraisals such as Zillow, RealValue...

An appraiser first researches the condition, amenities, location, size, bed/bath count, view, upgrades... of the home, subject property. The most similar comparable sold and listed properties are then searched. We generally use at least three comparables sold within three months, one listed comp under contract and one active listed comp. The formula is as follows:

1. Properties +/-15% difference in Gross Living Area (GLA) with similar bed/bath count, view, amenities, age, condition, upgrades, location... 

GLA is the legal permitted size of the subject property. It does not include garages, patios, decks, balconies, stairwells, open areas, breezeways, unfinished attics, basements, unpermitted additions, guest houses, ADUs... Basements, guest houses, ADUs will be added in the comp grid as an "other" amenity. Unpermitted additions including unpermitted attic conversion generally can't be used in search parameter or given credit in the appraisal. The theory is Building and Safety can order the home order to remove it. The items are still mentioned, photographed in the report.

2. Properties within 1/2 mile radius or another similar area. It could be a square, other area based on known neighborhood boundaries of the subject property.

3. Properties sold within last three months or six months if no properties sold within last three months, active listings and under contract listings. 

After we have searched using the above parameters we then chose THE MOST SIMILAR SOLD/ACTIVE COMPARABLES TO THE SUBJECT PROPERTY.     

The appraiser then takes these comps and puts them in the grid in the appraisal.  We then adjust for the differences among the properties. Our adjustments are based on matched pairs analysis. Again, it's math, the same math computer appraisal software uses.

For instance, subject has three beds when sold comp 1 only has two beds. We figure out the value adjustment, market response to three beds verses two beds. I'm paraphrasing this for lay people because advanced statistics is involved. This is oversimplification of the process. DO NOT QUOTE OUT OF CONTEXT. We do this (paraphrased) by two searches where all parameters are the same except bed count. One search is for three beds, one is for two beds. Using statistics one can see the market reaction, value of three beds verses two. The third bed could add $20,000 value to the home. It varies by property. We do this with every line item for every property in the grid. 

This isn't my grid. I intentionally did not use one of my grids. I'm not commenting on their adjustments.


   

Per Fannie Mae we can't vary more than a certain % for each line item and total line items i.e. "adjustments must not exceed 10% for line items, 15% for net adjustments, and 25% for gross adjustments." This does not mean we can vary 20% on the actual valuation of the property! This ensures the comparables are truly comparable. The goal is no adjustments. This happens quite often with new to newish tract homes and condos. This makes appraisers very, very, very happy. The numbers do our work for us.

Some may ask why not use robot appraisal software so there's no human bias at all. Because you need to inspect, measure, photograph the home. Robot appraisals only work on newer identical tract homes and condos in good condition with the exact same amenities. They don't work for custom homes, view homes, upgraded homes, hillside homes, homes in poor condition, very old homes, condo unit in good/bad location in project... In my area of Los Angeles this is most homes. 

I've seen many people get upset at a home appraisal that came in lower than desired or being denied a loan due to credit. They frequently state it must be discrimination against age, sex, sexual orientation, color, religion... The appraiser, underwriter, AMC, bank...generally don't know any of these factors about the borrower. They only know home value and credit. Yes, there are racists in this industry like all the others. It doesn't mean that every loan denial is based on racism. 

Getting back to the original article I would like to see both appraisals. The homeowner should post them immediately or retract their statements. No living sane appraiser would come in 40% below "actual value." An AMC would catch it before it ever got to the bank or homeowner. There is a lot more going on here. 



Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Friday, January 10, 2020

Construction process, costs today are exponentially higher than 1900's, 1950's - Mary Cummins

Real estate construction costs, rising, permits, survey, architect, land costs, labor, materials, utilities, mary cummins, real estate, appraiser, appraisal, Los Angeles, California
Many people today have no idea how much it costs to build a new housing unit. Some are aghast at the $500K/unit estimate given to build housing units for the homeless or anyone. People also have no idea how long and difficult the process is today. Back in 1900 all you had to do at most was submit a two page form to the city and pay for the permits. You didn't need an architect, survey, soils, geological, engineer or even a drawing. You didn't need approval from your neighbors, other city departments, historical overlay zone committee members, building and safety, zoning and planning, dept of transportation... The cost today to build a unit is easily 100x what it was back in the day. It's also exponentially more difficult today. Today because there is no vacant land you have to demolish an existing structure and pay millions for the land. Then you have to deal with even more agencies and people. This article should explain some of the changes and challenges we face today.

Below is a complex building permit application which was approved. It's a two story 1906 very good quality home in Los Angeles. It cost $3,000 to build about 3,000 sf or $1/sf. This included everything for this high quality home. This was very, very expensive in 1906. This home exists today.



This home was built in a more rural area of Los Angeles in 1934. 672 sf for $1,000 or $1.40/sf. Look at this form. No architect, engineer, contractor. You could built it yourself. You didn't need a licensed contractor, plumber, electrician. There were no building and safety regulations or planning and zoning and no inspections. You want to build a house or school right next to a liquor store, highway, industrial plant? Okay.


This home was built in 1952. Again, no architect, engineer but there's a contractor because this person doesn't want to build it himself. Can you imagine no building and safety regulations? This time there is a little sketch. 2,200 sf built for $8,300 or $3.77/sf. That's it.

Below is the budget for a four-plex in the city of Los Angeles. This is the actual budget. Again, not my client. They paid $1.1M to buy a tear down home on an R2 lot. It cost $2,000,000 to build four units or $500,000 per unit. This developer is highly experienced. This soon to be property is in a not so good area of Los Angeles. This doesn't include a lot of other costs such as selling commission, transfer fees, property taxes...if they sell it. These people hold property and don't sell it. They'd have to sell over $2,000,000 to make a profit. We appraisers figure in a 20% profit so they would most likely sell it for $2,400,000 which seems about right based on the area. These are not luxury units. They are bare bones basic minimum requirement units. They're built dormitory style as if for students.



Cut to the chase today, 2020. It easily costs $175/sf to build an average low quality home. The amount of paperwork involved would be at least 3-5 feet tall not including plans and surveys. This cost doesn't include architect, survey, engineer, geo, soils, grading, utility hookups, appliances, finishes... It also doesn't include time, effort and money getting approvals from building and safety, planning and zoning, neighbors, NIMBYs, neighborhood lobbyists/extortionists, HPOZ Committee, transportation... It doesn't include mortgage payments, insurance during pre-contruction and during construction. It doesn't consider that you can only choose a piece of property with a very specific zoning in a very specific area. It can easily take two years from permit application to breaking ground. That's two years of holding costs just to do nothing. After you break ground it could take another year to have building and safety inspect the electrical, plumbing, mechanical... elements of your home so you can continue to the next step. It could take up to two more years getting a Certificate of Occupancy. All of these things take a lot of time and money.

This is why Mayor Eric Garcetti can fund a housing a project and not have a grand opening for at least two to five years. I was on the Prop F Committee to build the new animal shelters and fire stations. I've gone through the process over years with the City Committee. They actually did a really good job staying on top of things even when issues arose. Still, it took years and wasn't cheap.

The high cost of land, construction materials/labor, excessive red tape, NIMBYs dragging out the costly process is why we have a housing crisis. This is why we need housing for homeless, low income and even low middle class people today. Because of all the obstacles to building new units not enough units have been built over the past 30-40 years which is why rents are so high. It's a basic supply and demand issue. Rent control made the situation worse as landlords left the rental market and few new units could be built.

Some say "developers are just greedy." No, they're not. They're developers. Their goal is to build a project and make money. As an appraiser we figure in 20% developer profit. Many times they don't make 20%. They can end up losing their entire investment because building projects is extremely risky. Other people sell cars, clothing, medical services. They also expect to make a profit. It's just economics.

I've offered many solutions to these problems in my many articles about the housing crisis and solutions. The main solution is to limit NIMBY's power to stop projects. Some cookie cutter 2-8 unit projects should be automatically approved and need no further approvals from neighbors or NIMBYs. I just wrote this quick article so people can see how much it costs and how difficult it is today to build housing. People are yelling at Mayor Eric Garcetti like he is intentionally stalling on building new housing. He is doing everything in his power to build new units. He is stymied by NIMBYs.

Recently there was a project to build 250 units on vacant land with units for homeless, very low income, low income and market rent units. People fought it because they wanted more units for very low income. This was a private developer offering to build low income units when there is no law that states he must build super low income. NIMBYs  killed the project. A low income housing unit in the hand is better than two in the bush. NIMBYs are one of the biggest causes of the housing crisis.They have a place to live so eff everyone else.

FYI I have nothing to do with any of the homes listed above which is why I used them. I have never appraised, inspected, sold them. I just pulled some random buildings of specific ages.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Thursday, August 29, 2019

1004P hybrid real estate appraisal report form analysis by Mary Cummins real estate appaiser

1004P appraisal form, report, 1004 p, mary cummins, real estate, appraisal, appraiser, los angeles, california, licensed, certified, cheap, affordable, 
UPDATE: 01/02/2019 The original article was about the 1004P appraisal and the lender, investor, appraiser. I didn't talk about how it affects the homeowner trying to refinance. Obviously it can't be used for purchases as they are riskier.

Here's a good reason why a home owner should make sure they don't get a cheaper 1004P desktop appraisal. They can only be used for same bank refinance with no money out. If you want to take money out, use a different bank, get a second instead of refinancing the first, home is older, not in perfect condition, hasn't been sold on the MLS recently, large loan, hight LTV ratio, not the best credit, market is decreasing...you will need a regular 1004 appraisal. Lender charges borrower the same price for either one. Lender pockets more when they use a 1004P. Purpose of 1004P is so lender makes more money. It doesn't help the home owner who could end up having to pay for two appraisals. It also takes longer to have two appraisals. With prices going down in my area that's not a good thing.

ORIGINAL: The 1004P hybrid appraisal report is a Fannie Mae real estate appraisal form and appraisal process. A licensed real estate agent or appraiser does the physical inspection of the subject property. They measure/diagram the property, note materials/condition and take the photos of the subject to form their report. A licensed real estate appraiser takes that data, selects the appropriate comps and types up the finished appraisal. The appraisal clearly states that John Doe license # 12345 did the inspection, measured, took the photos and appraiser John Doe 2 license # 678910 completed the appraisal report.

When I first heard about the 1004P hybrid appraisal report I was skeptical for a few reasons. One, is a real estate agent qualified to inspect property for lending purposes? How would a real estate agent be able to recognize building and safety violations, be able to note condition of the home or even all of the materials? How well will they measure the home? Would their photos be good enough for the appraiser to see materials and condition? Two, how would one know if the inspection and photos are of the subject property? Three, can a proper appraisal be made using MLS comparable photos? That’s why I decided to research the 1004P.

Below is the actual 1004P appraisal form and the USPAP Compliance Addendum. As you can see the 1004P Appraiser’s Certification form states page five item 12 “I obtained the information, estimates, and opinions furnished by other parties and expressed in this appraisal report from reliable sources that I believe to be true and correct.” The USPAP Compliance Addendum clearly states who inspected the property, i.e. name, license number, E&O Insurance and who did not, i.e. the appraiser. The MLS photos used clearly have a stamp that says “CRMLS,” “TheMLS.”

https://drive.google.com/file/d/12Cpcr4YUWTc88ehXFfIHxRe9mvGxVCng/view?usp=sharing
I decided that I should do a sample 1004P report. I’m not posting that report as I have a horrible cyber stalker who loves to forge documents. I had to add a hidden seal to all my docs for that reason.
This is what I’ve learned from doing an actual 1004P report.

The inspection report, sketch, measurements and photos give the appraiser enough information to satisfactorily complete the appraisal report. I’ve found the inspectors take way more pics than necessary. They take a few pics per room instead of just one. They take up close pics of the materials. The photos are large and detailed so you can zoom in if there are any doubts.

The measurements don’t always equal the tax roll due to unpermitted additions or mistakes e.g. adding area of stairs. Same happens when I inspect. I only include the tax roll gross living area, bed/bath in my report anyway.

The materials in the written inspection report aren’t always correct but it doesn’t matter. An agent wrote “wood siding” when it’s actually “shingle siding” which I can clearly see in the pic. I report what I see in the pic. The underwriter can see the material in the pic anyway in case the agent or appraiser made a mistake.

The inspection report and photos give enough information to see if they are of the subject or not. So far all 1004P have been ordered for homes which sold recently on the MLS. You have MLS photos, data, public tax data, permit data to compare to the inspection photos and report to verify. This is true for all cases unless the current owner did a full remodel. Then I check with permits. If I were to do a drive-by appraisal or exterior only appraisal, I don’t get to inspect the interior or receive any interior photos. The 1004P gives a lot more data than regular exterior only inspections.

MLS comparable photos can be sufficient if they match Google street view photos. So far I haven’t come across MLS pics that don’t match Google street view doing 1004P. I have seen other MLS photos where they photoshop dirt into grass, cut out high tension power lines or just use an architect rendering program photo. If I were to see that, I would use Google street view photo instead and note it in the report. In a regular report we are only taking street view pics of the comps anyway as of the date of our appraisal and not the date of the sale of the comp. We don’t know if interior photos are real or not as it is.

After my analysis I believe that 1004P appraisals are good enough to use for lending purposes in certain situations. Those situations would be easy appraisals of newer normal tract homes and condos that have sold more recently on the MLS. I don’t think they should be used for more difficult assignments where there would be more lender risk. Those assignments would be large custom homes, homes in C4 condition or worse, homes with any unusual conditions or very old homes i.e. 80 years plus. I believe those homes and properties should be appraised by a licensed real estate appraiser who has personally physically inspected the property.


Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Monday, June 24, 2019

An example of one cause of housing crisis. Apartment buildings sell and new owner raises rents. Mary Cummins

436 - 440 W Imperial Ave, El Segundo, California was listed for sale on the MLS and Loopnet for $5,000,000. It sold for $5,000,000 June 9, 2019. It was previously owned by a trust. It looks like the landlord was an elderly person who just didn't raise the rents for years. Tenants were paying $1,100 to $1,400 for a 650 sf two bed one bath unit. The new rent will be $2,100. Tenants were basically saving the difference between market and actual rent all these years.

The property was listed as a "value-add property." It states rents are 35% under market which they are. Cost per unit is $312,500 which is low. LA CPU more like $500K though this building built in 1954 and probably needs kitchen, bath upgrades. Gross rent multiplier is 19 which is very high. It's high because rent is low. It market rent were used it'd be 12 which is about right.

Below is MLS listing.

https://drive.google.com/file/d/1YKMlj4IwqtmtbYe_7WK7E8I926yBBMFo/view?usp=sharing

Below is Loopnet listing.

https://images2.loopnet.com/d2/tEOAoY9dFRSdUIKzJ92ID0Lh2lOrDnRTt8QwUr6xZTg/document.pdf

This has been happening all over Los Angeles County and the state because of the housing rebound. It's one reason for the housing crisis. The current tenants will not be able to find another two bedroom unit for $1,100. They will have to pay $2,100 which is market rent. As the units are all two bedrooms at least two people live in each of them paying half each or $550/month which is insane cheap rent. Time will tell what happens to these tenants. A wise tenant would have realized that cheap rent wouldn't last forever. They should save money and look for a higher paying job. People on fixed income, retired, won't be able to find another place at this rate.

New owner will raise rents, tenants will move, they will renovate unit and re-rent for market rent.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


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Thursday, June 20, 2019

Letter in reply to Andre Perry of the Brookings Institute presentation to the U.S. House Committee on Financial Services

I watched the U.S. House Committee on Financial Services meeting today. All the experts were great except one that didn't belong there, namely Andre Perry. He was not in the real estate or finance industry. He works with the Brookings Institute in the Metropolitan Policy Program. He is clueless about real estate, value and finance.

Andre Perry thinks homes owned by black people are under valued by $48,000 by appraisers. He compared similar sized homes in predominantly white and black areas. He determined that real estate appraisers are intentionally reducing the value of the homes owned by black people by $48,000. Did he even stop and consider when these people buy these homes in different areas they are paying different prices because they are worth different amounts because they're in different locations? How did the Brookings Institute let this paper get out? I no longer respect the Brookings Institute if they can release this garbage report.

(Turns out Andre Perry has a book coming out about blacks and value. He's hitting up all the shows and meetings gearing up for his book release.)

In the meeting only one person agreed with Mr. Perry. That person was POC Congresswoman Rashida Tlaib (MI-13). She is a new politician elected in 2019. She needs some education. Why was she put on this Committee when she knows nothing about the subject matter? They should know the basics of an issue before they are put on a Committee.

She said, "Homes look identical but homes in white areas are worth more? Doesn't make sense. You are working in a broken system. You should be able to change the value based on other things. It's not right that someone with no money can't buy a home. I want to take you home to my district (to Mr. Perry because what he said agrees with her thinking)."

How is Rashida Tlaib on this committee when she knows nothing about property value, buying homes and owning a home? If you were to give a poor person money for a down payment and put them in a home they can't afford, they will lose the home when they can't afford to make mortgage payments. They would be worse off. I've seen it happen. Not everyone in the US needs to own a home especially now that the real estate recession started Q4 2018.

Mary Cummins
645 W 9th St #110-140
Los Angeles, CA 90015

June 20, 2019

Amy Liu, Mark Muro, Alan Berube
Brookings Institute
Metropolitan Policy Program
Via email: MetroMediaRelations@brookings.edu
Members of the U.S. House Committee on Financial Services
Via email: FSCDems@mail.house.gov
RE: "Know Your Price: The Devaluation of Residential Property in Black Neighborhoods," authors Andre Perry and David Rubenstein

June 20, 2019 Andre Perry sat before the U.S. House Committee on Financial Services. He presented the above paper to the Committee linked here https://financialservices.house.gov/uploadedfiles/hhrg-116-ba04-wstate-perrya-20190620.pdf.

Andre Perry stated in his paper, "We sought to understand how much money majority-black  communities are losing in the housing market stemming from racial bias, finding that owner-occupied homes in black neighborhoods are undervalued by $48,000 per home on average, amounting to $156 billion in cumulative losses."

Andre Perry does not understand the basics of home valuation or even value. He inferred in the meeting that real estate appraisers intentionally reduce the value of a home owned by a black family. Mr. Perry said he could see no other reason why the similar homes in different locations were valued differently. Everyone knows real estate is valued by location, location, location. When the audience was asked by a Committee member if they thought appraisers discriminate against black people in arriving at the value Mr. Perry was the only person who raised his hand in a room of real estate valuation experts.

I've been a real estate appraiser, broker, expert witness over 35 years in Los Angeles, California. I will give a brief explanation of the concept of value and how appraisers arrive at the value of a home. There is no adjustment for skin color.

The value of a home is what a willing buyer is willing to pay to a willing seller in an open market. Most of a home's value is location. A 1,500 sf 50 year old home in Detroit will be valued differently than a 1,500 sf 50 year old home in Beverly Hills. Facts are facts. Numbers are numbers. The value is what it is.

All real estate appraisers must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). To appraise an average home the appraiser searches for other similar homes which have sold recently, are currently listed or under contract in the same area. The mathematical formula is to search +/- 15% difference in gross living area, within the last six months and within a half a mile radius of the subject property.  The appraiser then selects the comparables which are most similar to the subject property in terms of age, amenities, modifications... We widen or tighten the search parameters as needed to find proper comps. We must bracket for size, bed/bath count and age. We then generally use the three most similar sold comps, one comp under contract and one current listing.

After we have our comps we make adjustments for the differences among the comps and the subject property. One might be slightly larger, have an extra bedroom, bath, garage, be fully remodeled or a fixer. We adjust for all factors which are different. In a perfect world we will find comps exactly like the subject and never have to adjust.

We don't and can't search for the color of skin of the owner of the comp properties. We don't even know the color of skin of the owner of the subject property unless we see them at the property. We generally meet the agent or the home is vacant and we meet no one. If a person or a portrait of a person is in our photos, we must Photoshop the people out of the photos.

Homes in areas that are predominantly black, Latino are generally though not always valued less than homes in primarily white neighborhoods. There are a few areas in Los Angeles where it's reversed. The correlation is between what the buyers can afford to buy and the price at which the homes are selling. No one is steering certain races to certain areas. People buy homes which they like and can afford.

Racism most certainly exists. Blacks, Latinos make less than whites. Women make less than men. That said real estate appraisers do not value homes owned by black people less than homes owned by whites. We value homes based on size, age, amenities and location.

Sincerely,

Mary Cummins
Se habla EspaƱol!

https://drive.google.com/file/d/15g-0CdRhvY9WA0-5p2KQoi7dzbMMjK0P/view?usp=sharing

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Tuesday, June 18, 2019

Here is the real cause of increase in homelessness in Los Angeles 2019 - by Mary Cummins

cause of homeless increase in los angeles california is the recovery from the real estate recession, mary cummins, real estate appraiser, appraisal, mayor eric garcetti,
There has been a significant increase in the number of homeless people in Los Angeles and the entire state of California. One of the biggest causes besides stagnant wages and 30 years of not building enough units is the recovery from the real estate recession that began in late 2007. If you look at the chart there is a direct correlation between the rising price of homes, 2-4 units and apartment buildings and homelessness.

I've been a real estate broker, appraiser in Los Angeles since 1983. My specialty is apartment buildings. I have gone through three boom and bust real estate cycles in Los Angeles as a broker, appraiser. While I've always been concerned about the homeless I've never lived in an area with homeless people previously. I'd only see them doing appraisals in South LA or downtown. I now live in an area with homeless people.

The great recession started in the fall of 2007. By 2009 some properties had dropped 35%. Some new DTLA lofts dropped by 50%. HOA were going bankrupt. Entire loft buildings were in foreclosure. During this time people who could afford to hold their property held and rented it out. By 2010 prices started to rise a little. By 2014, 2015 some values were almost close to what they were fall 2007. Some people started to sell in the bull market while prices continued to rise. Prices continued to rise until fall 2018. We are now in the beginning of a real estate recession though apartment buildings are still doing well because of lack of sufficient units.

By 2016, 2017, 2018 people started selling their properties. They sold homes and 2-4 units, apartment buildings. Most of the homeless came from 2-4 units and apartment buildings though some may have come from homes which were group rented. As these properties sold the tenants were evicted for many legal reasons. You can pass through major renovations to tenants. As most landlords were not properly maintaining their units during the recession these properties needed work. They were class C buildings. Class A buildings are luxury new. Class B buildings are renovated and rented for market. The tenants were not able to pay the increase in rents. They became homeless. They couldn't afford to move or store their possessions so they left most of them. Landlords, contractors dumped the items on the street or maybe dumped it a few blocks away. This is where a lot of the trash comes from. You can tell it's eviction trash when it includes mattress, clothing, household items... Construction trash and business trash looks very different.

The best way to make money as a real estate investor in Los Angeles is to buy run down units with below market rents. Get rid of the tenants, renovate the building and re-rent for market rent. This provides the best return on investment. It's just a business deal like buying a car for $5,000, fixing it up for $1,000 and selling it for $7,500. Investors aren't trying to make people homeless. Homelessness is just collateral damage.

I will now focus on an area of which I'm very familiar, the area around USC. Rents around colleges and universities are generally higher than the rest of the city. From 2015 to today I'd say at least four run down apartment buildings per block have been sold, renovated and re-rented for market rent. The rate of sale of these buildings increased drastically since 2013 and mainly 2015. Some of these properties were old large homes converted to units with and without permits back in the 1980's when the area was very run down.

The poor tenants and their poor friends who stayed with them were all evicted. With some of these properties people were living in garages, carports and patios. In some apartments every room was turned into a bedroom including the living room, dining room, pantry. Some rooms were divided with a hanging sheet into two bedrooms. The tenants appeared to be Latino, some black, a few white day laborers, maids, restaurant workers, construction workers... low wage people. They were not Section 8 tenants.

The rebound of the real estate market happened in Los Angeles alongside the revitalization cycle of real estate of some poorer parts of the city. Some call it gentrification. This causes an increase in renovation and new developments which bring money, tax income, jobs, businesses which help the community, city and state at the cost of an increase in number of homeless. Here is one property which I watched as poor tenants were evicted, their possessions were dumped on the street, property was renovated and they're now trying to rent it. I can give you many more addresses where the same exact thing happened. Most were just poor working people who were evicted.

http://mary--cummins.blogspot.com/2019/06/flop-houses-in-shitty-areas-sold.html

The other causes of the rise in homeless is stagnant wages. Even if you made $15/hr, you still couldn't rent a one bedroom in Los Angeles with your take home pay. You need two people making $15/hr to rent a cheap one bedroom.

The most significant cause of homelessness and the housing crisis in LA is lack of development of housing units over the last 30 years. The cause is/was rise in cost of land, cost of construction, development red tape and NIMBYs. Here are a few ideas from others and some of my own about how to deal with the housing crisis.

http://mary--cummins.blogspot.com/2019/04/ideas-to-help-solve-housing-crisis-here.html

FTR Mayor Eric Garcetti did not cause this problem. He inherited this problem. The rise in homelessness is caused by the rebound from the housing recession, developer red tape, stagnant wages, insufficient development of new units and NIMBYs. Garcetti is doing what he can to try to fix the problem. Instead of trying to house the homeless as a way out of this mess we need to look at the causes. In domestic animal rescue we state you can't adopt your way out of pet over population. You have to work on the causes of pet over population. The same applies here. LA can't afford to build housing for all the homeless. We need to keep people from becoming homeless in the first place. We need to get the homeless back into productive jobs so they can pay for housing on their own.

Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit

Flop houses in shitty areas sold, rehabbed and re-rented as "luxury" rooms in Los Angeles - cause of rise in homeless

1409 1411 w 25th st, los angeles, california, 90007 duplex, slum, dangerous, usc, rental, sale, mary cummins, real estate appraiser, flop house, half way house, homeless, tripalink, high crime area, murder, stabbings, death, shootings, the zoe, tripalink

A flop house owned by "Second Chance" at 1409-1411 W 25th St, Los Angeles, CA 90007 sold late 2018 for $749,000. Months before that it sold for $485K. It was originally owned by a woman who is now elderly or dead. It's located off an alley and behind an auto store right off Vermont across from a Jack in the Box and a liquor store. It was sold as a two unit with four beds, two baths each. It was broken down into eight rooms rented separately to near homeless people. They would panhandle across the street at the Jack in the Box or in the Ralphs parking lot. People were frequently passed out in front of the building or they were smoking pot, doing drugs on the porch. It was built in 1904 and is in a Historic Preservation Overlay Zone. It was a total fixer. Below are some pics of it before. It was boarded up to keep the ex-tenants and homeless out.

1409 1411 w 25th st, los angeles, california, 90007 duplex, slum, dangerous, usc, rental, sale, mary cummins, real estate appraiser, flop house, half way house, homeless, tripalink, high crime area, murder, stabbings, death, shootings, the zoe, tripalink

1409 1411 w 25th st, los angeles, california, 90007 duplex, slum, dangerous, usc, rental, sale, mary cummins, real estate appraiser, flop house, half way house, homeless, tripalink, high crime area, murder, stabbings, death, shootings, the zoe, tripalink

1409 1411 w 25th st, los angeles, california, 90007 duplex, slum, dangerous, usc, rental, sale, mary cummins, real estate appraiser, flop house, half way house, homeless, tripalink, high crime area, murder, stabbings, death, shootings, the zoe, tripalink

They renovated the place and it's already listed for rent. Here's the ad listing. Mind you it's in a very, very dangerous area where people have been murdered. Someone was murdered at the Jack in the Box across the street. Another person murdered a block up. Within last six months someone murdered two blocks away. A USC couple murdered two blocks to the west. Cars are broken into every night. People steal mail. It's within 500 feet of the 10 freeway which is dangerous for your health. It's also located next to a very, very busy intersection. The air pollution, sound, constant police sirens, police helicopters, people fighting, yelling... The address of the owner is a Marcus & Millichap office. The people who were evicted from there now live on the parkway and still hang out there as they are now homeless. The spelling errors below are not mine. The site seems to be run by Chinese people as it's also in Chinese.

"Enjoy private relaxation and high-quility living experience in this luxury house close to USC and DTLA. This duplex is located in UPC Patrol Areas (DPS patrols) which provides safe and private space for every resident. Situated in a convenient location, surrounding by multiple restaurants, 3 minutes’ walk to Ralphs and 4 minutes to USC by riding. This duplex is equipped with all the amenities needed to feel right at home. Brand new mattress, beddings, and solid wood furniture will be provided to giving you a place for the most comfortable rest and study.With a cozy living room on second floor including sofa, coffee table and carpet."

https://www.tripalink.com/#/cityDetail/36

It's already for re-sale for $1,200,000. It's allegedly master leased to a student housing group. It's actually illegal to rent out the rooms separately as this is not zoned for a boarding house. I wonder if leasing  to a corporation who subleases to individuals gets it out of rent control? The master lease includes 3% increase in rent per year which is Los Angeles City rent control. Do the sublessees have tenant rights since they aren't the main tenant? Maybe this is how they are getting the units out of LA City rent control. Per rent control even if you rent a room in a boarding house for 30 days plus you are covered by rent control. By July 2019 the landlord can increase your rent by 4%.

https://www.loopnet.com/Listing/1409-W-25th-St-Los-Angeles-CA/15814642/

They said they added heat and cooling, new copper plumbing, electrical. They say there are two units with four beds and four baths each. I think only two baths are legal. Everything else was done without permits. They state it was built in 1907. It was built 1904 and moved in 1907.

I pity anyone who rents a room there for $1,400/month. There are eight rooms. You have to rent for 12 months so it's not student housing. The site advertises itself as communal living. It's now called "The Zoe." I bet they paint over graffiti every morning and roll homeless people off the grass. Whoever cleaned out the building just dumped everything on the sidewalk and parkway across the street in front of Jack in the Box. The homeless people didn't do that. The contractor did. This is where all the trash and dumping is coming from. When you evict a poor person they can't afford to rent another place, move, pay for storage so they have to leave everything. Landlord, contractor dumps it on the street and blames the tenants. The tenants wouldn't dump their stuff on the street. They'd just leave it. I've appraised properties like this with evicted poor tenants. They leave almost everything because they can't afford to move it and have no place to move it to.

1409 1411 w 25th st, los angeles, california, 90007 duplex, slum, dangerous, usc, rental, sale, mary cummins, real estate appraiser, flop house, half way house, homeless, tripalink, high crime area, murder, stabbings, death, shootings, the zoe, tripalink
And this is why there was a huge increase in homeless. Investors are buying slum buildings cheap, renovating and re-renting for market rent. This is the real estate cycle of revitalization though some call it gentrification. It's good for the community and city bringing jobs, money, taxes, business but it displaces a few of the poorest people in the city.

I'll post a few more of these that I've seen. Chinese investors are buying up a lot of slum homes, apartments to turn into individual room rentals. When you ask them what are their plans for the building they lie and tell you they are going to move into it ;-)


Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the
Mary Cummins of Animal Advocates is a wildlife rehabilitator licensed by the California Department of Fish and Game and the USDA. Mary Cummins is also a licensed real estate appraiser in Los Angeles, California.


Google+ Mary Cummins, Mary K. Cummins, Mary Katherine Cummins, Mary Cummins-Cobb, Mary, Cummins, Cobb, wildlife, wild, animal, rescue, wildlife rehabilitation, wildlife rehabilitator, fish, game, los angeles, california, united states, squirrel, raccoon, fox, skunk, opossum, coyote, bobcat, manual, instructor, speaker, humane, nuisance, control, pest, trap, exclude, deter, green, non-profit, nonprofit, non, profit, ill, injured, orphaned, exhibit, exhibitor, usda, united states department of agriculture, hsus, humane society, peta, ndart, humane academy, humane officer, animal legal defense fund, animal cruelty, investigation, peace officer, animal, cruelty, abuse, neglect #marycummins #animaladvocates #losangeles #california #wildlife #wildliferehabilitation #wildliferehabilitator #realestate #realestateappraiser #realestateappraisal #lawsuit