Appraisal News and Business Tips

1-26-17 Newz: Master baths .Failed appraisals .$220 million home

The Rise of the Luxurious Suburban Master Bathroom
How a utilitarian room turned into a pleasure palace.
Excerpts:
Bathrooms haven’t changed much since indoor plumbing became a standard feature in newly built homes at the turn of the 20th century.  This, coupled with changing societal expectations regarding the frequency of bathing and new technology such as the flush toilet, swiftly ushered in the era of the modern bathroom.
The story of the master bathroom was long in the making. A space we now deem a necessity is only around 36 years old. It’s one of many examples of how a cocktail of social, technological, and economic influences combine to create new standards of living, and change the face of not only architecture, but how we live.
My comment: Fascinating, with lots of historic bathroom photos and excellent commentary! No comment on “master” and fair housing ;>
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This Is What a $250 Million House Looks Like
As a glut of mega-homes hits the L.A. market, developers are taking it up a notch.

Excerpt:
The Bel Air mansion offers 38,000 feet of interior space, including 12 bedrooms, 21 baths, a 40-seat home theater, and a four-lane bowling alley. That works out to more than $6,500 per square foot. By comparison, one lavish Los Angeles spec house changed hands last year for $100 million, or about $3,300 per square foot.
Makowsky (developer)maintains that the house is worth it.
 “It just reeks of quality and looks absolutely spectacular,” he said. “It gives you the feeling you can only get if you go to heaven.”
More links:
An appraiser’s take on that $250,000,000 house by Ryan Lundquist
15 Jaw-Dropping Photos From Inside the Most Expensive Home in America
The asking prices of LA’s ultra-luxurious estates are more or less wild guesses. Shoot for the moon!

http://la.curbed.com/2017/1/17/14303096/the-asking-prices-of-las-ultra-luxurious-estates-are-more-or-less-wild-guesses 

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Appraisal Fails Still Causing Issues Despite Improving Markets
 Excerpt:
While it trails well behind credit history and debt-to-income levels, collateral problems are consistently the third most frequent cause of loan denials.  CoreLogic said Home Mortgage Disclosure Act (HMDA) data for 2015 show collateral issuers were the reason behind 13.7 percent of the 450,000 first-lien purchase mortgage applications that failed approval.
The share of loans turned down for collateral reasons has remained consistently in the 12-13 percent range since home prices began to recover in 2012.  But Yanling Mayer, writing in CoreLogic’s Insights blog, says there is a wide variation in collateral denials on a geographic basis, ranging from 7 percent in Delaware to 22 percent in Michigan.  While lenders don’t provide specific causes in their HMDA reports, Mayer says appraisals coming in below the contract selling price is common. Data from other sources show 10 to 13 percent of appraisals nationwide come in below the contract sales price, a number consistent with HMDA data
Link to original article with some graphs and more explanations.
Read Dave Towne’s comments here and post your own:

My comment: Something new but sorta weird. Instead of bad, low, etc. What is a “good” appraisal? For most clients and home owners, it is a value that is what they “need” or “want”. Sometimes a client really wants to know what a property is worth.

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Recent articles in the paid 

Appraisal Today  

  • Is the New AMC business model broken?
  • Meet the New Boss – CU by Jared Mickel, SRA, RG.
  • Practical tips for dealing with complex residential appraisals by Joseph Lynch
  • State Appraisal Boards: Appraiser Discipline and E&O Insurance By Peter Christensen
  • Want to do appraisals for lenders but not for AMCs? Private money lending – no UAD or CU, computer “reviewers”, or being treated like you know nothing!!
  • AMCs tell all to residential appraisers by Joe Lynch
  • How do upgrades affect UAD Condition and Quality Ratings? By Rachel Massey, SRA, AI-RRS

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Highest and lowest priced cities
Not Dirt-Cheap: 10 Cities Where Land Is Worth More Than the Home on It
The 6 top cities are in CA, with 3 of the top 4 in the San Francisco Bay Area, with San Francisco land at 77% of total value. When I started appraising here in 1986, land values were 40% or more. I have no idea what lenders think when the see the Cost Approach now!! The others are Boston, Miami, Seattle and Portland OR (50%)
Cities Where Less Than $1,000 a Month Buys a Home
Detroit | $911 a month
Median Home Price: $170,817; Required Salary: $39,033
St. Louis | $876 a month
Median Home Price: $170,000; Required Salary: $37,527
Cincinnati | $843 a month
Median Home Price: $157,000; Required Salary: $36,117
Cleveland | $798 a month
Median Home Price: $138,900; Required Salary: $34,185
Pittsburgh | $746 a month
Median Home Price: $140,000; Required Salary: $31,962

https://www.nytimes.com/2017/01/13/realestate/cities-where-less-than-1000-a-month-buys-a-home.html

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Life After Dodd-Frank
By Brian Weaver

Excerpts:

Will the states walk away from AMC regulation? Perhaps not all, but definitely some states will either bypass the registration and licensing of AMCs or may repeal their existing regulations.
The question becomes, what happens to AMCs who are no longer regulated?
Nothing. AMCs will continue to operate whether there are regulations or not. If AMCs are not regulated in a state, won’t that affect their ability to process federally related transactions? About 4% of all residential transactions fall into this category and yet, no one is quite clear which transactions those are.
My comment: What do you think? Click on the link above and post your comments!!
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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 www.mbaa.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 https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.
Mortgage applications increased 4.0 percent from one week earlier
WASHINGTON, D.C. (January 25, 2017) – Mortgage applications increased 4.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 20, 2017. This week’s results included an adjustment for the MLK Day holiday
The Market Composite Index, a measure of mortgage loan application volume, increased 4.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index increased 0.2 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier to its highest level since June 2016. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 0.1 percent higher than the same week one year ago.
The refinance share of mortgage activity decreased to 50.0 percent of total applications, the lowest level since July 2015, from 53.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.7 percent of total applications. The average loan size for purchase applications increased to $309,200, its highest level since December 16th, 2016.
The FHA share of total applications increased to 13.6 percent from 13.1 percent the week prior. The VA share of total applications increased to 12.2 percent from 12.1 percent the week prior. The USDA share of total applications remained unchanged from 0.9 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to 4.35 percent from 4.27 percent, with points decreasing to 0.30 from 0.39 (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 $424,000) increased to 4.28 percent from 4.22 percent, with points decreasing to 0.31 from 0.36 (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 4.19 percent from 4.10 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 15-year fixed-rate mortgages increased to 3.57 percent from 3.51 percent, with points decreasing to 0.28 from 0.34 (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 3.41 percent from 3.44 percent, with points increasing to 0.30 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

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