Every Thursday night, I pack up my laptop and files and tote them home with me for Work from Home Friday. At first, it took some getting used to. Now I find I’m much more productive when I work from home. I still value my time in the office – it’s easier to have an impromptu discussion in the kitchen if you’re all in the same kitchen – but I consider Fridays to be “Get Things Done” day. Here’s how I do it:

Set Up a Real Home Office
I don’t have kids and my cats sleep most of the day, so I don’t have those distractions, but I still prefer to work in my home office rather than at the kitchen table or on the couch. For one thing, I hate typing on laptops, so I turn on my laptop for reference, but do the bulk of my work on my home computer and upload it to the office server. I’m also more tempted to turn on the TV or wander off if I work outside my office.

Get Your Coworkers on IM or Skype
My office already uses IM to communicate while we’re at work, so we’re also on IM at home. Skype is growing in popularity for regular telecommuters because it allows for a free virtual water cooler. If you don’t have either, stay in touch by email and phone when you have questions.

Train Your Pets and Humans
When I first started working from home, I had just finished grad school, so the cats figured I would interact with them as much as before. It took some time, but they’ve now learned that they can’t jump on my keyboard while I work or attack me when I’m on the phone. Until your pets learn this lesson, save documents often and invest in a phone with a mute button. Humans may be harder to train, but if you have kids old enough to understand, let them know that you shouldn’t be disturbed except in a real emergency (define emergency for them.) Check in every hour or so when you get up to stretch.

Don’t Become the Neighborhood Gal Friday
If your neighbors learn you work from home, they may ask to have packages delivered to you when they’re not home, or drop by for coffee unannounced, or ask you to watch their kids while they run to the store. The answer to all of these is no (unless you frequently have packages delivered to them.) Gently remind them that you are actually working and have deadlines to meet or your employer won’t continue to employ you. That said, I’ve been know to use my “lunch hour” to run errands on Friday morning when I get them done faster and then have the rest of the day to concentrate.

Start on Time
This may not matter to some people, but I find it easier to get into “work mode” if I maintain the same general hours I do in the office. I might start a little earlier or work a little later, but I don’t stretch it too far. It helps me maintain the work/life balance.

Don’t Forget to Take Breaks
When you’re in the office, you probably move around a lot due to interruptions from co-workers, restroom breaks, or a run to the kitchen for more coffee. I find that my butt is in the chair longer when I work from home, so I have to remind myself to get up and stretch. I go to the gym near my office four days a week, but I also try to do a short home workout mid-day on Fridays to stretch my neck and get my energy up.

I’m fortunate that my employer sees the value in working from home and is flexible about it. If your employer isn’t ready to take the leap, ask for a trial run to prove just how productive you can be away from the office.

You’ve probably seen distressing news reports about the failure of the new home appraisal process (called the Home Valuation Code of Conduct) for loans eligible for purchase by Fannie Mae and Freddie Mac. It doesn’t apply to FHA loans or jumbo loans. Since the new system went into effect on May 1, 2009 it has sent home appraisals into chaos. Some deals are falling apart, and appraisers, loan officers, consumers, and real estate agents alike are complaining about the whole process.

The New Appraisal Rules
Under the old system, your loan officer would review a list of approved or known appraisers familiar with the location of the home and then choose one to schedule the appraisal. It usually cost the consumer about $300 and took about 3-5 days. The appraiser, the lender, and the real estate agents could all communicate with each other. Some large banks did use appraisal management companies (AMCs), but loan officers could still contact the appraisers assigned by the system. If your bank didn’t approve your loan, you could take the appraisal to another bank without paying again.

Under the new system, the loan officer can’t speak to the appraiser. Instead, the lender orders the appraisal from the AMC. The AMC assigns the next available appraiser in the geographic region. The appraiser conducts the appraisal and enters the report into the system within 24 hours. The appraisal is reviewed be a supervisor who may not be local. It is then sent to the loan officer.

Why the New System is Bad for Everyone
Consumers:
the major reason this new system is bad for consumers is the cost. Instead of the average $300, it now costs at least $400. Ours cost $540 because our home is worth more than $500,000. In addition, we had to pay that up-front via credit card rather than pay it at closing.

Appraisers: Rather than receiving the bulk of the appraisal fee, most appraisers now receive $200 or less and have to turn it around faster. In addition, they may have to conduct an appraisal far outside of their area of expertise. In our case, the appraiser came from a different county, nearly 40 miles away.

Real estate agents: Real estate agents are concerned because the appraisals are derailing contingency periods, while REO sellers (banks) are pushing for shorter contingency periods. They’re also concerned that appraisals are coming in low. Low appraisals may be valid if they reflect the market, but they’re a problem if the low value is based on inaccurate comparables.

Lenders: Finally, lenders don’t like the new system because they’re cut off from the process. The loan officer can’t call the appraiser to check on a late report. If there’s a problem, they can’t contact the appraiser to have it corrected or supply more accurate comps.

I spoke to our loan officer today and he said about 2% of appraisals come in high. 70% come in on target. Nearly 30% come in low.

Our Appraisal Story
We’re buying an REO, which means the bank insisted on a 10-day contingency period for our inspection, appraisal, and loan application. Traditionally, appraisals are conducted before inspections to avoid wasting money if the appraisal comes in low. Initially, were going to have to do our inspection immediately because of the short timeframe, but the bank was slow to assign an escrow company, which bought us enough time to get the appraisal done first. Here’s the timeline from the day our offer was accepted.

Day 1: Offer accepted. Interest rate locked. Appraisal ordered.
Day 2: Updated financial documents delivered to complete loan application.
Day 3: Appraiser calls our agent to confirm appraisal.
Day 5: Appraisal conducted.
Day 8: Escrow opened. Contingency period starts.
Day 9: Appraisal returned. It came in exactly at our purchase price, and our file was sent to underwriting.

From what I hear, this was a relatively quick process. Some people wait 10 days or more to get an appraisal.

Why the New System Was Introduced
As we all know, there was fraud in the system. Washington Mutual had a cozy relationship with appraisers and would demand that they “hit the number” or risk not being assigned another appraisal. This led to the rapid increase in valuations, many of which were not sustainable or were tied to fraudulent loans.

New York Attorney General Cuomo threatened to sue over this fraud unless the new system he created was instituted by Fannie Mae and Freddie Mac. The irony is that Washington Mutual was using an AMC it owned. Furthermore, AMCs are unregulated. Independent appraisers are regulated. So he took a regulated system with some bad actors and replaced it with an unregulated system that does little more than reap massive profits for AMCs, most of which are owned by banks.

We were lucky. Our appraisal was returned quickly (but not without a week of stress for me.) The appraiser did a good job and pulled appropriate comps. Most of all, we can afford to pay the appraisal fee up-front. Although it will be credited back to us at closing by the lender, but we’ll have to pay our credit card bill before we close.

If you’re in the process of buying a home, you need to be aware of this new system and plan accordingly. You may also want to ask your agent to pull his or her own comps in case you need to make a case for your purchase price.

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