Appraisal News and Business Tips

11-16-17 Newz//:Value Of Additional Bedrooms, 13 Animal-Shaped Homes, Timber Towers

Architectural menagerie

13 animal-shaped buildings

Just For Fun!!
Excerpt: Novelty architecture can take on many fantastical forms – think municipal water towers done up like peaches and soft serve-shaped ice cream stands – but animal-shaped buildings are in a league of their own.

Often built as roadside attractions meant to lure motorists off the highway, these completely functional structures serve a greater purpose than just kitschy ornamentation. Some are truly mimetic – that is, the building is representative of its original purpose be it a poultry shop, seafood restaurant or woolen clothing boutique. Others are more symbolic, which is probably a good thing.

Here are a few:
– Big Sheep Wool Gallery – New Zealand
– Turtle Building – Niagara Falls
– Crocodile Hotel – Australia

Good fotos and write-ups at:

Why Timber Towers Are On the Rise in France

Excerpt: Spurred by concerns over climate change and the negative impacts of concrete manufacturing, architects and developers in France are increasingly turning to wood for their office towers and apartment complexes.

Concrete was praised through much of the 20th century for its flexibility, functionality, and relative affordability. In France, the material ushered in an era of bold modernist architecture including housing by Auguste Perret and Le Corbusier. Today, however, wood is lauded for its smaller environmental footprint and the speed with which buildings can be assembled.

Building wood towers: How high is up for timber structures?

Excerpts: The recent push for larger and taller wood structures may seem like an architectural fad. But Building Teams around the world are starting to use more large-scale structural wood systems.

Building Teams around the world are starting to use more large-scale structural wood systems, including heavy timbers, engineered framing systems, and other modern wood products. The number of new buildings of this kind has been trending modestly upward, spurred by such benefits as sustainability, cost effectiveness, and reduced construction impact. Leading the way: podium-type concrete and light-framed hybrids in the U.S., and heavier “mass timber” structures elsewhere.

Ireland extradites fugitive to U.S. to face raft of mortgage fraud charges

Country’s first extradition to the U.S. since 2012

Excerpt: On Friday, November 12, Patrick Lee, a 44-year-old man with dual U.S. and Irish citizenship was arraigned in federal court in Boston on more than 50 charges relating to a mortgage fraud scheme that he allegedly perpetrated in the run-up to the housing crisis.

Lee’s alleged malfeasance took place from 2005-2007, and the charges were originally filed against Lee in 2011, but Lee has been living in Ireland since 2007.

All total, Lee faces 29 counts of wire fraud, six counts of unlawful monetary transactions, and 16 counts of aggravated identity theft for his participation in the mortgage fraud scheme

According to the U.S. Attorney’s Office for the District of Massachusetts, Lee and several co-conspirators bought multi-family properties in Dorchester and South Boston between 2005 and 2007 and converted the properties into condos.

Lee allegedly pretended to be a licensed real estate appraiser, using the name and license number of an actual licensed appraiser, and prepared appraisals for the condos.

More info at:

https://www.housingwire.com/articles/41805-ireland-extradites-fugitive-to-us-to-face-raft-of-mortgage-fraud-charges 

Recent articles in the Paid Appraisal Today Newsletter

Residential Cost Approach: complying with USPAP when lenders require the Cost Approach
* Practical tips for dealing with complex residential appraisals
Fannie Fiction and Fact: comp selection, market conditions, appraisal resubmissions, and lots more, including AQM and Risk Scores. Tell underwriters what Fannie really says!!
* What’s happening in state and federal appraisal regulations? Statute of Limitations on Appraisal Board Complaints, Evaluations, AVM, QC, Etc.
* Is the Traditional Appraisal Process Becoming Obsolete?
* Want to do appraisals for lenders, but not for AMCs? Private money lending has no UAD or CU, Scope Creep, computer “reviewers”. You are not treated as though you know nothing!!
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How much value added for additional bedrooms?

When a home is almost three bedrooms (but technically only two)
By Ryan Lundquist

Excerpt: Imagine a house that used to be three bedrooms until the owner converted one room into a den. Is there a big hit to value now? Will the appraiser only give credit for two bedrooms? Let’s consider some thoughts below. Anything to add?

EXAMPLE 1: A seller closed up a bedroom closet to use the space as an office and is now concerned an appraiser is not going to give him credit for the extra “bedroom.” Since there isn’t a closet, an appraiser will likely label the home as two bedrooms, BUT the appraiser will also recognize the house can very easily have an extra bedroom with the addition of a closet. Since the house is so much closer to being a three-bedroom home, it would be very limiting to only use classic 2-bedroom comps (see #3 below too). In other words, buyers see the big picture of a house and they probably aren’t going to expect a massive price reduction over one simple closet being removed.

Click here to read the other examples, analysis and, of course, the comments!!

My comments: This week I saw a 1 bedroom home on the weekly open house tour. I have appraised one bedroom homes in many cities. There is always a significant difference between 1 and 2 bedrooms. I always look to see if there is enough room to add a second bedroom. Also, in my city there are many older, “classic” 2 bedroom homes, typically under 1,200 sq.ft. There is not a significant difference in value between a 2 and 3 bedroom home as most buyers look at the price, overall floor plan and interior architectural features. For larger homes, and modern homes a third bedroom is a plus as it is expected by buyers. I have never considered a room that looks like a bedroom, but lacks a closet as not a bedroom, if only because the cost to cure is minimal. I don’t count “walk through” rooms as bedrooms as buyers don’t see them that way. If you work in an area with septic tanks, you must know how many bedrooms are allowed.
———————-
How Much Value Does That Extra Bedroom Add? (Understanding Regression)
By Dr. Keying Ye

Excerpt: Going Further with Multiple Linear Regression
Using simple linear regression, an appraiser can use the most important predictor of a property’s value to make his/her appraisal analysis (or even use SLR analysis on multiple features to get multiple reference points. But what if the most important predictor isn’t clear? What if, for example, all of the three bedroom units in a given analysis have a different number of bathrooms, varying gross living areas, or only a couple of them have pools? By using multiple linear regression (MLR) appraisers can compare the effect that multiple predictors have on a property value with a single calculation.

http://www.workingre.com/how-much-value-does-that-extra-bedroom-add-understanding-regression/ 

How will small business “pass through” tax changes affect appraisal businesses?

My comments: Of course, this all could be changed at any time. I left my office (Wednesday) for a couple of hours and now I am reading about possible Medicare cuts!! Proposed corporate tax reductions are very clear. The proposed tax reductions on small businesses (non-corporate) is not clear. Of course, the Senate and House proposals are different. Also, it is not clear if there will be limits on how much can be contributed to small business retirement accounts that are not 401ks. For now, my SEP-IRA has a high annual limit. Of course, appraisal “pass through” businesses may be negatively affected by other tax proposals.
Big Question: Are appraisal businesses “professional-services”?
My opinion: it does seem like a rip-off that corporation proposed tax rate is 20% and small businesses will probably get a much higher tax rate. Small businesses create jobs.
Below are a few excerpts and links.
The Senate bill would create a new 17.4% deduction for pass-through business income that effectively creates a reduced rate for many pass-throughs but not professional-services businesses.

The House bill provides for a 25 percent tax rate for many sole proprietors, partners and shareholders in what are known as S corporations. These owners have what are called pass-through companies because their business income is not taxed at the company level, but passes to their 1040 returns. The bill also creates a 9 percent rate for the first $75,000 in earnings by some smaller pass-throughs.

 dated 11-13
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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 paid monthly 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 7AM to noon, Pacific time.

Mortgage applications increased 3.1 percent from one week earlier

WASHINGTON, D.C. (November 15, 2017) – Mortgage applications increased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 10, 2017. This week’s results do not include an adjustment for the Veterans’ Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 6 percent from the previous week to its highest level since October 2017. The seasonally adjusted Purchase Index increased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 17 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to its highest level since September 2017, 51.3 percent of total applications, from 49.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.4 percent of total applications.

The FHA share of total applications decreased to 10.2 percent from 10.6 percent the week prior. The VA share of total applications increased to 10.1 percent from 10.0 percent the week prior. The USDA share of total applications remained unchanged from the week prior at 0.7 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.18 percent, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) remained unchanged at 4.12 percent, with points increasing to 0.26 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 4.05 percent, with points decreasing to 0.40 from 0.43 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to its highest level since March 2017, 3.54 percent, from 3.51 percent, with points decreasing to 0.43 from 0.44 (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 increased to its highest level since March 2017, 3.41 percent, from 3.33 percent, with points decreasing to 0.37 from 0.59 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

If you would like to purchase a subscription of MBA’s Weekly Applications Survey, please visitmba.org/WeeklyApps, contact mbaresearch@mba.org or click here.

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.

Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105
Alameda, CA 94501 Phone 510-865-8041
Fax 510-523-1138
Email   ann@appraisaltoday.com

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