they want to assist with, so we're planning a meeting with appraisers and bankers in the area to discuss next steps.
Erik, have indeed seen your posts on the subject, and they've been instrumental in motivating me to participate. And the Mortgage Crisis article you wrote back in 2008 perfectly distills the essence of our difficulties today. We're fortunate here in San Diego with a responsive local AIA , however as you say the issue is a broad national one - what response to the article did you receive from members at large/the AIA leadership, and can we build on it?
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Original Message:
Sent: 03-24-2011 08:37
From: Eric Rawlings
Subject: Architect-Designed Homes: Informing Appraisers/Bankers
Heather, I don't suppose you've seen my numerous posts on this issue? You're on my favorite soap box and I'm delighted that you see the same exact problem that I've been talking about since I wrote an article for AIArchitect in 2008 called "How can We Architects Respond to the Mortgage Crisis" (see attached). Appraisals and the value of a structure are the main reasons green homes, not so big houses, or any other structure that costs more per sf than the typical cookie cutter have a hard time getting built. Since single family dwellings represent the vast majority of real estate sales, the way they are valued dictates how the market reacts to commercial buildings too. I have often said, as a minimum, the banks should be giving some amount of automatic value if a local, licensed Architect designs the house.
- Plan book designs are often stolen from the internet and redrawn by the builder. This creates risk for the lender if an intellectual property dispute erupts, seeing how the bank is the owner. I've seen lawsuits for as much as $250K over a sacred plan book design being used without permission.
- Professional Architects dedicate a minimum decade of their lives qualifying for the title Architect and Residential designers need only to print some business cards. That's nearly the same thing.
- Every builder I have worked with has told me the Residential Designers don't understand structure and are not capable of drawing framing plans. Their solutions are simplistic, amateurish. They are not problem solvers, just regurgitators of Cracker Barrel aesthetics.
- Many Designers often misuse the title Architect, which is illegal and can carry a fine in most states.
- Professional Architects have liability insurance policies. Why wouldn't a bank want a designer to be responsible or even known? Most houses, the bank has no idea who the author of the design is, see first comment.
- Local Architects are more likely to visit the job site, yet the plan book may be too busy seeing copies in Maine, Florida, and Wyoming to come to your job site next.
- Local Architects understand local and national codes, yet designers are often unaware of either.
- Local Architects understand the local climate, topography, available trades/ materials, local craftsmen, etc. How does a one size fits all plan work in Miami and in Maine? How does a plan book know what the context of the neighborhood is like? How is a builder more qualified than an Architect when it comes to deciding what the built environment will look like? Why don't Architects start scheduling the concrete truck, ordering materials, or shopping for the cheapest sub? Because that's not our job, so why are others doing our job? True green homes cannot be a one size fits all solution and certainly shouldn't come from a catalogue.
- ALL and I repeat ALL of my spec houses have consistently outsold all of the cookie cutter spec houses in my neighborhood by as much as $150K more than the next houses of the same size, location, and time frame. The free market has spoken in the loudest way, that no one and I mean NO ONE wants to live in the same house as their neighbor.
- Unique designs should be valued more than mass produced designs. Every commodity in America is valued like this. A handmade Martin guitar can cost upwards of $20,000, yet a massed produced Mexican Fender is $200.
This is a short list of reasons why our designs should be valued higher than the average of everyone else who happens to be doing the lousiest job possible. You see, the problem with real estate is that the commodity is valued as an average between the properties that just happened to sell in the area recently. Most of the weight of the appraisal is on the location and the sf of the house. This is why the McMansion evolved in the first place. Bigger is the only thing that's better. The fact that the "area" or "location" and the "structure" or built "quality" is factored together as the same cost is why appraisers have to compare "like" properties in the same area, which severely limits an accurate comparison of the structures, though the desire for location is accounted for. Unique houses are penalized because they are compared to the status quo as equal. I have a very unique house on the market that is compared to cookie cutters, because no one is building anything else. The value is misjudged because others choose to be cheap and unimaginative. Several buyers have tried to offer over $900K, but their banks can't justify the value beyond $800K because they can't see the difference.
It's not the banks' responsibility to judge beauty. It is the free market that decides what is desirable. The bank chooses to ignore the will of the free market and just homogenizes the market place, thus reversing the profit motive. Essentially, everyone is getting paid the same regardless of effort. Once one guy lays around drinking vodka all day, before you know it everyone is drinking vodka instead of working. Why work hard? Our real estate valuation system is quite communist when you think about it. Consider our Health Care, where we have a profit motive for the insurance company to bring in as much premiums as possible while paying out the least in claims. No wonder our health care is 10x more expensive than anywhere else, hindering our ability to compete internationally, while we keep getting less healthy.
During the boom, my houses would often sell for $50K-$150K more than the next "comparable" house. The other builders would immediately use my houses as comps so they could ask for my sales prices. In turn my houses asked for more. I watched values go up about $100K in a year or so because these guys were able to use my quality to compare themselves as equals. It's not just about my value being skewed by their lousy job, but they are enjoying more value and worth than they earned off my hard work. This is anti-capitalist, anti-American and it must change.
If we separated the value of land from the structure, then we could comp houses all over the country. Tax assessors already view property separately as structure and land, so why can't appraisers? There could be a land index for each "area" based on market prices and the economy as a whole. This would simply be multiplied by the sf of the lot to establish the desirability or value of the area or location. Now the structure can be analyzed more accurately and compared to any structure in any location. The problem of a house being unique in an area, now goes away when you can look beyond a 2 mile radius. As it stands now, we're comparing apples and kiwis in one bag to oranges and pineapple in another, only because they showed up to the same market on the same day.
Heather, feel free to contact me, as I'm already working on this in a small capacity here. The more we get people talking, the more likely the right person will hear us. I really think the builders have better shot being heard and all of them I've talked to agree with me. They borrow the money, so they have a direct stake in it. From what I understand, the FDIC has clamped down on the appraisers for obvious reasons, so I don't think a local, grass roots effort is going to do it. This is where the AIA could really step up and get this message out to the right heads of industry and to the White House. This issue affects us all far more than any issue I've seen the AIA spear heading. They've been to DC quite a bit and I haven't heard anything being said about one of the chief reasons why the housing bubble burst in the first place. This one issue has been holding all of us back. I'd appreciate the AIA's help, but I'm not holding my breath. I'm not sure they could help, even if there was a will. Agendas have been created and there's never room for a new idea, I've tried locally only to be disappointed by petty BS issues that were so much more important. It's sad how so many of us wonder who this AIA is, what they're really doing to help the profession, and why I pay so much for an acronym. I'm tired of whiny artists with hurt feelings. It's time to fight! Revolt against this system for the good of all of us involved. Sadly, I'm finding more skepticism from Architects and more support from agents and builders, yet this helps us the most. We're such a sad bunch of self-defeatists with bruised prides and inflated intellects that often harm us more than help us.
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Eric Rawlings AIA
Owner
Rawlings Design, Inc.
Decatur GA
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Original Message:
Sent: 03-23-2011 16:22
From: Heather Johnston
Subject: Architect-Designed Homes: Informing Appraisers/Bankers
This message has been cross posted to the following Discussion Forums: CRAN Custom Residential Architects Network and Residential Knowledge Community .
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Local appraisers and banks need to acknowledge the measurable monetary value added to a home when designed by an architect, and that must be directly reflected in appraisals. And recognized as the considerable asset it is when a homeowner is applying for a loan for an architect-designed home.
How can our local AIA / its members spearhead a concerted, results-based effort to change this? I can think of no other single way to simultaneously raise our perceived public value while directly, positively affecting our (residential architects) bottom line. I'm working with our local chapter, AIA San Diego, to strategize a way to positively affect how appraisers and bankers view architect-designed homes. Are other chapters already looking into this, and if so what have they found? Input appreciated.
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Heather Johnston AIA
Principal
Heather Johnston Architect
La Jolla CA
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