Appraisal News and Business Tips

8-25-16 Newz://What are C&R fees when fees are changing?, 8 colorful cities, Flooded appraiser donations

Donation Fundraising for Louisiana Appraisers

Thanks (again) to Dave Towne for this info!!

Excerpt:

The Louisiana Real Estate Appraisers Coalition (LAREAC) has started a fund raising campaign using PayPal, which will be used to equally provide donated funds to affected appraisers who are suffering as a result of the massive flooding last weekend. PayPal is being used because its administrative fee is less than another more-well-known crowd funding web site.

There are approximately 8-10 presently known appraisers who have had their homes nearly destroyed in the flood.

http://appraisersblogs.com/donation-disaster-louisiana-appraisers

My comment: last week I wrote about donations to Bill Cobb, whose house was flooded. It is great that this donation method is done also.

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8 Colorful Cities that Look Like They Were Designed by Crayola

See the world in a whole new light through these vibrant locales.

Just for Fun!!!

Excerpt:

Many cities are known for their distinctive profiles and unique landmarks, but all across the globe there are regions that are landmarks in and of themselves thanks to their insane colorations. From a all-blue town in Spain that is a leftover from a Smurf marketing stunt, to a Venetian island that looks as though it was born of an intense acid trip, some of the most colorful locations in the world aren’t the biggest, just the most eye-popping. Check out eight cities and towns that offer vibrantly colorful views which are just as unforgettable as any big city skyline.

My comment: None are in the U.S. Too conservative I guess…

Great article with lots of photos and comments!!

http://www.atlasobscura.com/articles/8-colorful-cities-that-look-like-they-were-designed-by-crayola

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35% of homes are rentals and more homes are being built for rentals

Excerpt: the share of single-family homes built for rent accounted for 4.5 percent of all single-family housing starts as of the end of Q2 2016, based on a one-year moving average.

While this share is higher than the historical average of 2.8 percent, it is lower than the peak of 5.8 percent from early 2013. Still, the number of single-family homes built for rent experienced a significant gain for the year-long period that ended on June 30, 2016-up from 26,000 for the year-long period ending June 30, 2015, according to NAHB. The number includes only homes that are built and held for rent, and not homes built and sold for the purpose of renting.

…the primary source of rental housing is existing homes, since homes tend to be rented out as they age. According to the 2013 American Community Survey, about 35 percent of single-family homes are being rented nationwide.

http://www.themreport.com/news/08-19-2016/more-single-family-homes-being-built-for-rent

My comment: 35% rentals is a large percent of total SFRs. Sometimes the Income Approach on homes is applicable. Blackstone is the largest owner of rental homes in the U.S.

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Corelogic Automated appraisal review sample report

Ever wanted to see what a non-CU review report looks like?

To see a sample of Corelogic’sLoansafe Appraisal Manager Sample report, including an Appraisal Risk Score, click here

https://www.corelogic.com/downloadable-docs/loansafe-appraisal-manager-sample-report.pdf

For more information, click here:

http://www.corelogic.com/products/loansafe-appraisal-manager.aspx

My comment: Corelogic is investing in data, AMCs and technology. They are becoming a bigger player in residential lender appraising.

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How do upgrades affect UAD Condition and Quality ratings?

By Rachel Massey, SRA, AI-RRS

In the June 2016 issue of the paid Appraisal Today newsletter,

available to all paid subscribers

Excerpt:

Remodeled kitchen and baths, C3 vs. C4 and Quality

Consider the scenario that follows, where the C3 and C4 ratings are most likely in play. The difference between the two are that on C3, some components may be updated or recently rehabilitated and well maintained, and on C4 they are adequately maintained and

functionally adequate.

Survey: What about quality ratings for this same property?

Because this is a question that seems to engender different answers, I asked this question through SurveyMonkey:

“If the subject property is a solid Q5 or Q4 production house, but the owners have installed a new high quality kitchen and bathrooms, does the quality rating change?

Figure about a 10-year old house and all sales were built the same initially.” I purposely limited the responses to three choices because I did not want to get too many options, or otherwise there would be little consensus from the respondents.

The choices included:

1) that recently installed new high-quality kitchen and bathroom changed the quality,

2) that it did not change the quality but changed condition, and

3) that it did not change quality but was addressed as a line item adjustment.

There were over 430 response, which is more than sufficient to have a good sense of appraiser’s opinions.

Survey results:

* 20.55% of the respondents considered it an upgrade of quality

* 54.34% considered it a condition rating change

* 25.11% considered it a line item adjustment

In essence, 79% of the respondents considered it did not change quality but was either a condition change, or warranted a separate line-item adjustment.

To read the full article with more comments and analysis of this controversial topic, subscribe to the paid Appraisal Today.

$8.25 per month, $24.75 per quarter, $89 per year (Best Buy)

or $99 per year or $169 for two years

Subscribers get, FREE: past 18+ months of past newsletters

plus 4 Special Reports, plus 2 Appraiser Marketing Books!!

To purchase the paid Appraisal Today newsletter go to

www.appraisaltoday.com/products or call 800-839-0227.

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What are Customary & Reasonable fees when residential fees are changing rapidly?

I don’t think that residential fees have ever gone up this quickly, both for non-AMCs and some AMCs. Keeping up on residential fees in my local market is tough. Of course, the “flip side” is that fees will go down when the boom is over, especially AMC fees.

Some consider VA fees as C&R, but they are increasing also in some areas.

Although some AMCs keep looking for appraisers who will do a quick turn time for a low fee, it is becoming more and more difficult as fewer appraisers are willing to do this.

I recently attended a CE class nearby that focused on AMCs, who said that there were big issues with turn times and fees from their lender clients. The September issue of the paid Appraisal Today will have an article on what was discussed at the class, “AMCs Tell All to residential appraisers”.

Why were fees relatively stable for decades? Prior to HVCC, in my market, fees would gradually go up over time, increasing $25 to $50 when demand was very strong. Most fees were in a fairly narrow price range. We made money on the easy tract homes and lost money on the “tough ones”.

Why have fees gone up so dramatically? Appraisers are reporting turning down (or not responding to) 20-30 or more requests a day from AMCs. Residential appraisers had never competed much on lender fees prior to HVCC. I do commercial appraisals, where bidding has always been done. Fee ranges of $1,500 to $3,000 for the same property have never been unusual. The time and cost of bidding is included in the fee. Most AMCs have been using bidding as there was an oversupply of appraisers. When business is slow, they offer lower fees. Now that business is strong, they pay higher fees. Of course, there are still some appraisers doing them for low fees.

In some areas, AMCs are desperate for any appraisers at any fees to accept appraisals, especially for purchases. Particularly tough are markets where an AMC has one, or a few appraisers. NAR warned real estate agents not to try for 30 day closes.

How do AMCs handle the high fees? This depends on their lender agreements. TRID is a factor as loan officers usually set the fees, which are very difficult to change. Some lenders will allow AMCs to charge more for a specific appraisal. If not, the AMC has to pay the additional cost.

What about turn time? If a loan needs to close quickly, such as a purchase loan, some lenders are offering very high fees. Be careful taking them – be sure to see how difficult the appraisal will be before accepting as turn time is very critical. Also, you will doing less work for a regular “A list” clients.

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Everybody Has a Plan for Fannie and Freddie But Nothing Gets Done

Excerpts: The stakes are high. Earlier this month, the Federal Housing Finance Agency, which oversees the GSEs, said Fannie and Freddie might need a $126 billion rescue if the economy were to stumble hard again. In recent years the Treasury has collected more than enough money from the GSEs, in the form of dividends, to cover a bill of that size.

Plenty of ideas have been floated. Former FHFA Director Edward DeMarco and ex-Senate Republican staffer Michael Bright have proposed turning the GSEs into lender-owned insurers. Others have suggested transforming them into what amount to mortgage utilities, with capped rates of return, essentially keeping them in place in a more regulated form.

http://www.bloomberg.com/news/articles/2016-08-18/the-fix-is-out-fannie-and-freddie-heading-for-new-troubles

My comment: No outdated appraisal forms?? No CU?? No Fannie Mae “rules”?? Yay!!

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Using an Appraiser’s Judgment for adjustments

Excerpt: It is common for USPAP instructors to hear this question: “I know my adjustments are supposed to have market-support. However, what should I do if there just is not any market support for a particular adjustment? Should I not make it even though an adjustment for difference-X really needs to be made?”

Since the imposition of collateral underwriter (CU), it is clear that an adjustment in an appraisal report must have market support. For those of you who have taken the 2016-2017 7-hour USPAP update class, you know that the idea of support for adjustments is woven throughout the class. It is also clear that The Appraisal Foundation (TAF), as well as all of the national appraisal societies, have bought in to this conclusion. The problem is that term “market-support” has no structured definition. Therefore, neither boots-on-the-ground appraisers nor state appraisal boards have any definition for the term “market-support.”

Read the full article. Worth reading.

http://www.workingre.com/making-case-for-an-appraisers-judgment/

My comment: USPAP does not contain the word “adjustment”. If you work in conforming tracts that are relatively new, there are usually not many adjustments to consider as compared with areas with much older homes. I quit making adjustments two years ago, except for market conditions, as I don’t do any newer tract home appraisals and don’t any lender work. I only do qualitative analysis. I quit doing them as our state regulator expects to see support for them.

The author states: ” on rare occasions and under unique market conditions it is clear that an adjustment is necessary…” This was not “rare” for my appraisals. I still occasionally make dollar adjustments for critical factors by going back in time, interviewing agents, etc. For example, the value of a 3rd bedroom in a condo, where there very few 3 bedroom condos exist.

In the September issue of the paid Appraisal Today, my article “The Art of Appraising” discusses why appraiser’s judgment is needed and the “Curbside” approach. CU and AVMs will never be able to provide accurate analysis on all properties.

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to https://www.mba.org

Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to www.appraisaltoday.com/products or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

WASHINGTON, D.C. (August 24, 2016) –

Mortgage applications decreased 2.1 percent from one week earlier,

according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 19, 2016.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.3 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 62.4 percent of total applications from 62.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 4.6 percent of total applications.

The FHA share of total applications decreased to 8.9 percent from 9.6 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.2 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.67 percent from 3.64 percent, with points increasing to 0.34 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 3.62 percent from 3.60 percent, with points increasing to 0.35 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.53 percent from 3.49 percent, with points increasing to 0.34 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.95 percent from 2.90 percent, with points increasing to 0.38 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.84 percent from 2.85 percent, with points increasing to 0.37 from 0.17 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

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