Mission StatementThe North Peninsula Building Association

represents builders and associates of the building industry. We advocate constant improvement of

building and business practices to provide quality construction in our community.

Vol. 4, Issue 11 www.npba.info 360-452-8160 PO Box 748 • 3430 E. Highway 101, Ste. #1, Port Angeles, WA 98362 November 2011

Silent Auction items sought

On Dec. 10, NPBA will have its Silent Auction and Holiday Bash at the Sit-N-Bull in Port Angeles. Si-lent Auction chairman Donna Knifsend hopes you can help the NPBA reach its goal of $2,500 for the community support fund. All donations are wel-come! Ornaments, flowers, tools, books, CDs and homemade items such as scarves, hats, mittens, can-dies, baked goods and whatever you are willing to donate are greatly appreciated. No donated item is too small or too large.

If you would like to donate, contact Donna Knif-send at 360-670-9406 or the NPBA office. All pro-ceeds from the auction are designated for local com-munity programs such as Project Homeless Connect, Clallam County food banks and Healthy Families of Clallam County.

Salvation Army Angel Tree Stop by the NPBA office at 3430 East Highway 101

to pick up your Salvation Army Angel starting the week of Nov, 21! Or watch your e-mail for the op-portunity to select an angel tag and provide a gift for a child. Angel tags also can be picked up at the NPBA’s Silent Auction and Holiday Bash on Dec. 10 at the Sit-N-Bull. Gifts will be collected through Dec. 16.

You are invited to the

Hot Buttered Clams, Barbecued Oysters,

Crackers and Fresh Vegetable Crudite with Dip

Salad and Leonard’s Famous Seafood Chowder

Sliced Beef Tenderloin and Roasted Potatoes

Green Beans with Almonds and Cranberries

Dinner Rolls, Au jus and Horseradish SauceFestive Desserts

Food provided by Mystery Bay Seafood Catering. Let us know if you have

dietary concerns as they can be accommodated.

Cost is $25 per person. RSVP to the NPBA office at 452-8160 or e-mail

faleana@npba.info. A registration also can be printed off the NPBA’s website

at NPBA.info and returned by fax to 452-8197.

NPBA’s Big Holiday Bash and Silent Auction

Sit-N-Bull, 510 N. Beech Road, Port Angeles6 p.m. Dec. 10

MenuSandy Haley places a big on Silent Auction items.

Name(s): __________________________________________________________________________________

Company: ___________________________________________________Phone:______________________ _

Mailing address for credit card: _______________________________________________________________

Method of Payment (Circle one): VISA MasterCard Cash or Check at the door

Card Number: __________________________________ Exp Date: ____________ Total $: ______________

Address for Credit Card: ____________________________________________________________________

3-digit “V” # on back of card: _________ Signature: ____________________________ Date:____________

Make reservations no later than Tuesday, Dec. 6

by 5 p.m.

Reservations not canceled

24 hours in advance of the event will be billed.

Reserve your space at the

NPBA Holiday Bash

& Silent Auction

The 2012 NPBA Board of Directors also will be installed at this event.

Sponsored by Eagle Home Mortgage and Estes Builders

Dear Donna:I have a written contract that I make clients

sign before starting each project. I recently was advised that I could not lien the property when I was not paid because I failed to pro-vide a disclosure to the homeowner. Is this correct?

Answer: Yes, if your contract was (a) for the repair, alteration or construction of four or fewer residential units or accessory struc-tures on such residential property when the bid or contract price totals $1,000 or more; or (b) for the repair, alteration or construction of a commercial building when the bid or contract price totals $1,000 or more but less than $60,000 (RCW 18.27.114), you must provide a disclosure notice to the customer.

This disclosure is in addition to any

Vol. 4, Issue 11 November 2011

Donna L. Knifsend

DearDonna

other consumer notices that are required to be given. Furthermore, contractors must get the disclosure notice signed by the custom-er and retain a copy for at least three years. Sample forms are available on the Labor and Industry website.

Dear Donna:I would like my staff to solve problems

without running to me every time there is a disagreement in the company. It feels like I am a referee rather than a contractor. Any suggestions?

Answer: Yes. I suggest that you download the free 71-page pdf e-book on my website www.lawsuit-prevention.com which includes tips and techniques for dispute resolution and conflict management. To start your employ-ees in the right direction, consider the follow-ing steps to problem solving:

1. Identify/define the problem.2. Clarify the desired outcomes.3. Gather the necessary information.4. Generate all ideas for possible solutions.5. Select mutual options geared toward the

desired outcome.6. Implement mutually agreed upon solu-

tions.7. Evaluate the results.

Last month we provided tips on preparing for Expo 2012. The article covered booth format, before and af-ter photos, enlisting personnel early, establishing a budget and talking to your vendors for literature and/or fi-nancial assistance.

When a company puts time and money into a project, there is an ex-pectation of a positive return on in-vestment. So it is the same with being an Expo exhibitor. What do you get for your expenditure on Expo? Here is a sample of what the NPBA does for you to ensure your time at Expo is worthwhile.

Advertising for Expo starts months in ad-vance. Reminders and updates appear in the NPBA monthly newsletter, the weekly Build-ing Bulletin and at our membership networking events.

Save the date advertising occurs in the fall in the Sequim Gazette’s special sections advertising and with print advertising occurring two weeks out from the event in the Peninsula Daily News. We also run an ad campaign on both KONP and KSQM radio stations prior to Expo. Rack cards are inserted into the Chamber of Commerce newsletters in Sequim, Port Angeles and Forks

Planning for Expo Part 2

as well as are distributed by local businesses in their monthly statements. There also are com-mercials that run on WAVE cable stations.

The advertising culminates in the Offi-cial Program Guide which is produced by the Sequim Gazette and distributed and direct-mailed to more 16,000 households in Clallam County.

All this advertising and more is done for you, the exhibitor, to ensure success. And it pays you dividends when people attend and visit your booth!

If you would like to register for Expo, please visit NPBA.info to download a registration form or give us a calll a 452-8160. Early registration specials expire on November 23, so don't delay.

Vol. 4, Issue 11 November 2011

Thanks!NPBA would like to thank the following companies for their

continued support:A Millican Crane Service Alex Anderson Concrete

Angeles Concrete Childers Bukovnik Construction

Designs by SouzaDry Creek Water Association

Emerald RoofingEverwarm Hearth & Home

Ferguson EnterprisesFirst Federal

Kandu EnterprisesLBR ConstructionMountain Propane

Penny Creek Quarry, LLCPropane Northwest

Servpro Sherwin WilliamsSimpson Electric

WAVE BroadbandWilder Auto & RV

On improving the residential appraisal pro-cess — an issue that continues to hold major implications for the nation’s housing markets — NAHB has been working hard behind the scenes on several fronts and has been able to make sig-nificant headway.

Deficiencies in the current system for evaluat-ing homes have become glaringly evident in the unprecedented housing downturn of the past few years.

Faced with declining home prices, rising fore-closures and plunging new-home sales, builders have had to contend with inaccurate appraisals that have further undermined the health of their businesses and the housing market.

Widely reported around the country, poor ap-praisals have reduced home sales, taken a vicious swipe at the profitability of builders and have made it difficult for them to project whether they will be able to attain the prices they need to cover the construction costs of their new homes.

“Too often, due to faulty appraisal practices, the builder’s house winds up getting appraised at less than the cost of construction,” said NAHB chairman Bob Nielsen.

“This is not only unfair and unreasonable but it perpetuates the cycle of declining home values, drives more homeowners underwater, negatively affects housing demand and acts as an obstacle to the recovery of the housing market,” he said.

“Major reforms in appraisal practices and oversight are needed to ensure that appraisals accurately reflect true market values and don’t contribute to price volatility,” he said.

An ongoing series of surveys of builders by NAHB’s Economics and Housing Policy Group shows that appraisal problems persist today.

In the latest survey in October, a full 60 per-cent of the respondents reported that they were experiencing appraisals coming in below their contract sales price.

Of those reporting that they had encountered this problem, 53 percent said that the appraisal they received was lower than the cost of produc-ing the home.

One-third of the builders responding said that they had lost sales during the preceding six months as the result of an appraisal that was less than the contract sales price.

The inappropriate use of distressed proper-

ties as comparables; confusion over the ability of builders to convey relevant information to ap-praisers; a shortage of local appraisers with the experience and knowledge needed to recognize the value of green and other home features to ar-rive at good evaluations; and the complexity and fragmentation of the appraisal system all have contributed to the faulty process.

The good news is that by working with repre-sentatives of federal banking regulators, the ap-praisal industry, the housing finance industry, the real estate and housing sectors and others, NAHB has scored considerable progress in finding rem-edies for what seriously ails the appraisal system.

Several milestones center around the four ap-praisal summits that NAHB has held in Washing-ton, commencing in 2009, with the latest held last month.

A timeline of events tracing the problem and its solutions can be found at http://bit.ly/uVkdFZ. To read an overview of the fourth summit, as well as information about the first three meetings, visit http://bit.ly/tn7cr3.

With the decline in home prices appearing to have ended or to be coming to an end in most parts of the country, improving housing market conditions themselves are expected to gradually alleviate some of the negative impact of apprais-als.

However, those within the appraisal industry itself recognize that today’s system is outmoded and to be truly effective will require a major over-haul that will take years to accomplish.

A white paper in this issue by Joan Trice — who is working with NAHB to provide resources that association members can use to get the best re-sults from a malfunctioning appraisal system — describes in detail the major undertaking that will be needed to re-engineer the appraisal process.

Resources have been collected on NAHB’s web-site to assist builders on the appraisal issue (some of the links below are available to NAHB mem-bers only).

Following are specific issues where builders have gained ground and are working to make fur-ther strides in the year ahead:

Communication between the builder and the appraiser

NAHB worked extensively with Fannie Mae

and Freddie Mac to clarify that neither the Home Valuation Code of Conduct nor Fannie Mae prevents a builder from communicating with an appraisal management company or appraiser to provide additional information or explanation on the basis for a valuation or to correct objective factual errors in an appraisal report.

Guidance released by Fannie Mae on June 30, 2010, addressed this issue. It also addressed many other issues that NAHB had been working on with Fannie Mae, such as requiring apprais-ers to identify the differences between the home being appraised and a distressed property being used as a comparable sale; requiring lenders to

continued Page 4

NAHB continues to make headway on fixing broken new-home appraisal system

Vol. 4, Issue 11 November 2011

Building news, continued from Page 3

President: Rick Gross, Estes Builders, LLCImmediate Past President: Tracy Gudgel,

Zenovic and Associates Secretary: Donna Knifsend, Lawsuit

Prevention & Management Life Director: Bill Roberds, Excel Utility

ConstructionTreasurer: Teri Ward, First Federal1st Vice President: Garrett DelaBarre,

DelaBarre Construction2nd Vice President: Bill Feeley, Feeley

ConstructionBuilder Directors: Alex Anderson, Alex

Anderson Concrete; Bill Feeley, Feeley Construction; Larry Hanna, L.P. Hanna Construction; Jac Osborn, by Design Group

Associate Directors: Roger Wheeler, RJ Services; Dan Donovan, Allform Welding; Jim Strong

State Directors: Mark Smith; Kevin Russell, Clawson Construction; Garrett DelaBarre, DelaBarre Construction; Scott Schwagler, J&J Construction of PA; Rick Gross, Estes Builders, LLC

Executive Officer: FaLeana WechFuture Builders Construction

Superintendent: Troy Belbin

2011 OfficerS and BOard Of directOrS

only use appraisers who are knowledgeable and experienced in appraising specific property types located in a given market; allowing sales of the builder to be used as comparable properties; and barring lenders from making unilateral changes to appraisal reports.

NAHB developed a two-page summary for members on how to build stronger and more productive relationships with appraisers.

Builder communication with lenders and ap-praisers should include: market and absorption information, sales information, all relevant data, specifications of the property, details on the ma-terials that were chosen and buyers’ reactions to the products selected.

The Federal Reserve Board’s interim final rule on appraisal independence

Provisions in the Dodd-Frank Act, which was signed into law on July 21, 2010, prohibit ap-praiser coercion and required rule making by the federal financial regulators on the independence of appraisers.

The guidance is headed in the right direction and is aligned with many of the concerns dis-cussed at NAHB’s summits, including open com-munication and the need for a process to contest an inaccurate appraisal.

There has been general agreement among in-dustry stakeholders participating in the summits that a sales contract contains critical informa-tion about the real estate transaction, such as the

scope of work, upgrades and more, and should be made available so the appraiser can use it. The interim final rule does not preclude the sharing of the sales contract with the appraiser.

Appraiser qualifications NAHB discussions have increased awareness

of the need for appraisers of new homes to have sufficient education and experience.

In a letter to the Appraisal Qualifications Board commenting on proposed revisions to appraiser qualifications that are expected to become effec-tive around the start of 2015, NAHB wrote that, “It is necessary that an appraiser of new construc-tion make every effort to obtain comprehensive information on the subject property, including lot values, custom features, upgrades and energy efficiency data. A new construction appraisal requires the appraiser to have the ability to read plans, review the materials description lists and evaluate the builder’s contract and any other spe-cial additions.”

NAHB said that minimum educational re-quirements for appraisers should be set for lot values and building costs, including those for green building and other evolving new construc-tion techniques.

Appraisal workout guidance In both federal banking regulation and HR

1755, the Home Construction Lending Regula-tory Improvement Act of 2011, NAHB has fo-cused on the importance of appraisals in enabling creditworthy borrowers of acquisition, develop-ment and construction loans to have their loans

renewed or restructured. NAHB has been working on the regulatory

front so that builders can benefit from guidance that enables commercial property lenders in their collateral assessment for credit risk grading to utilize an “as stabilized” market value or prospec-tive market value if there are plans to provide the resources to complete the project, instead of an “as is” market value.

Limitations on new-home sales information

Because new-home sales are not reported to lo-cal multiple listing services in many areas, NAHB has encouraged builders and home builders asso-ciations to maintain records on new-home sales in a format provided by NAHB that appraisers easily can use as comparables.

The format suggested by NAHB would capture information similar to what is in the “compara-bles” section on Page 2 of the Uniform Residen-tial Appraisal Report, Form 1004.

With the goal of improving the accuracy of new-home appraisals to achieve greater long-term stability in home valuations, NAHB is pur-suing a multi-faceted work plan through the end of 2012.

As part of that agenda, the association plans to meet with key appraisal and lending organi-zations; pursue stronger appraiser qualifications and licensing requirements; assist in the develop-ment of data collection on new homes, including Fannie Mae and Freddie Mac’s Uniform Appraisal Dataset; and improve the licensing, oversight and appeals processes of the states.

Dungeness Instream Flow Rule update

Ecology is restarting rule-making on the Water Resources Management Program for the Dungeness Portion of the Elwha-Dunge-ness Water Resource Inventory Area (WRIA 18) – Chapter 173-518 WAC. A copy of the rule will be posted on Ecology’s website in January with the rule being officially filed in March. The rule will go into effect in August 2012. If you have not put your well to benefi-cial use prior to this date, you will be subject to the new rule. For more information about the rule, visit DOE’s website at www.ecy.wa.gov/programs/wr/instream-flows/dunge-ness.html.

CODE CORNERClallam and Jefferson County, Port Angeles,

Port Townsend, Sequim, Juan de Fuca Chapter of ICC

The 2009 Washington State Energy Code (WSEC) requires an “energy credit” in addition to meeting the basic energy code requirements. How does this work when one proposes an addition to an existing structure?

When adding on to an existing structure, the addition needs to comply with the WSEC and an energy credit is required. There is a Small Dwelling Unit credit which allows additions up to 750 square feet of heated floor area to fulfill this requirement. If the addition is greater than 750 square feet in size, Option 6 is not available and another credit option must be chosen. See Chapter 9 of the WSEC.

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