The Magical Appraiser Wand

By George Dell
Excerpt: Can you just give me some magical software which will calculate my adjustments?

I get asked questions like this often. Can you just show me how to do a graph a client wants? Can you just give me your class stuff so I don’t have to come all that way? So often, the question degrades into something like “Why does the regression software give stupid answers?” I pushed the magic button!

People do not like the answer. You’re paid to do an analysis, not wave a magic wand, or push a magical appraisal button. We have another name for that, it’s called an AVM.   In addition to a point value prediction, AVMs can be tested for reliability. This is called the FSD (Forecast Standard Deviation). The AVM. It gets results. It’s fast. It’s cheap. And it provides a measure of reliability – the FSD.

Why would a client want something slower and more expensive with no measure of reliability? Why hire a pesky appraiser?

Click here for the answer!!

How Important Is a Bathtub for Resale?

Excerpts: It’s long been believed that every home needs at least one bathtub to attract the widest group of buyers. But with increased interest in big, well equipped, walk-in showers, does a tub really matter that much?

Bathrooms reflect trends as much as any room in a house does. Back in the 1980s and ’90s, whirlpool tubs with multiple water jets were all the rage. They fell out of favor as many homeowners found they just didn’t use them as much as they expected to. Other users were frustrated by the time deeper tubs took to fill. Some tubs even posed health concerns due to piping that was tough to keep clean.

The basic rectangular tub returned, although it was soon eclipsed by the oversized, deluxe shower, big enough for two and with multiple controls and rainfall heads offering a personalized experience.

Interesting and worth reading at:
My comment: Obviously, it does not matter if there is at least one bath with a tub in the home. I have appraised a few small homes with one bath and no bathtub, only a shower. There was no way to add a tub. Very tricky. Depends on the market, of course, but hard to get any data.

Thousands of mortgage lending jobs at risk as refis drop

Refinances prepare for lowest level since 2000

Excerpt: Interest rates continue to increase, and the Mortgage Bankers Association recently predicted the Federal Reserve will raise the federal funds rate four times in 2018 and twice more in 2019. Mortgage interest rates are expected to continue rising for the foreseeable future, meaning refinances will continue to grow less and less attractive.

Now, one expert, Inside Mortgage Finance Chief Executive Guy Cecala, said overall mortgage originations could see a decrease of 15% to 20%, leading to a job loss of about 10% within the mortgage industry

My comment: Guy Cecala is very savvy and has been publishing his newsletter much longer than I have. Time to start looking for non-lender work or at least non-AMC work where fees will be dropping…My Appraisal Today paid newsletter can really help. I have been writing about getting non-lender work since 1992. Plus non-AMC work. All my appraisals have been non-lender for over 10 years.  Just Do It!!!

Sales price vs. appraisal value

Excerpt: CoreLogic continued its series of blog articles related to appraisals with an analysis of the appreciation rate when an appraisal has come in above the sale price versus a sale where the appraisal falls short. Principal Economist Yanling Mayer says when an appraisal doesn’t match the sales price then buyers probably think either they overpaid for their house or that they got a bargain. If either is true, then should they expect either a below market rate of appreciation in the former instance or above-average appreciation in the latter?
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Residential Cost Approach: complying with USPAP when lenders require the Cost Approach, Part 1

Excerpt:  Summary of important issues
* The Cost Approach is being required by more and more clients; even in cases where it isn’t necessary for credible assignment results.
* The USPAP requires appraisers to complete each analysis in a competent manner.
* The Cost Approach, even in cases where not necessary and not given any consideration in the final value reconciliation, can be completed and reported without creating a “misleading” report (See USPAP FAQ #290).
* The reconciliation is the section where the appraiser should communicate to the client his/her evaluation and ultimately the consideration given to the Cost Approach in concluding the final opinion of value.
* The quality of data (absolute and relative to the other approaches) should be discussed in the reconciliation; the quality of data determines how much consideration the Cost Approach should be given.
In the March 2017 issue of the paid Appraisal Today, available to paid subscribers.  Part 2 is the in April 2017 issue. 

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Fannie Mae Appraiser Update: Appraisal Observations and Insights Webinar

Are you receiving multiple appraisal revision requests from lenders? Are you curious how Collateral Underwriter® (CU™) scores your appraisals? Would you like a better understanding of how your appraisals are reviewed?Appraisal Observations and Insights, our newest webinar offering, is customized for appraisers and provides a live demo of CU to show appraisers exactly how we train lenders to use it. We’ll share our latest appraisal observations and recommend ways you can improve the scoring of your appraisals in CU, reduce revision requests, and save time.

Register for one of the upcoming webinar times (East Coast time):

  • Thursday, March 1, 2 p.m. – 3:30 p.m.
  • Wednesday, April 4, 1 p.m. – 2:30 p.m.
For more information on CU, including FAQs, job aids, and user guides, visit the CU web page.

Airbnb hosts can now use income in refinance mortgage apps

Fannie Mae, Quicken Loans and other lenders join partnership

Excerpts: Airbnb, a short-term rental service, announced today it is partnering with some of the largest U.S. lenders to allow host income to be used in mortgage applications.
The company explained when its hosts apply for a refinance, they can include their proof of income from Airbnb in the application. The new partnership will allow lenders to consider Airbnb income when processing the application.
Worth reading at:
My comment: Lots of online comments on this top. From “I don’t care about airbnb” to “should definitely consider it” A few months ago I had a long discussion with another appraiser about the value of airbnb income for a duplex. The owner was renting both units on airbnb. The city where it was located was setting up restrictions on airbnb. Lots of issues. She decided that airbnb was business (going concern) short term income, not apartment rental income. A home here recently was listed with airbnb income. I am watching to see if it affects the value.
Appraisal waivers – rural properties
Excerpt: This bill, if signed into law, will allow lenders to bypass appraisals for any property with a ‘transaction value’ of $400,000 or less (this is moving the de minimus goal post) if the lender was unable to find an available appraiser to complete an appraisal “within a reasonable amount of time”… that time frame apparently as determined by a regulator agency with jurisdiction over the lender. The bill shows ‘exceptions’ to this as per other laws.
Definition of rural (from 1026.35(b)(2)(iv)(A) of title 12, Code of Federal Regulations) “A county is “rural” during a calendar year if it is neither in a metropolitan statistical area nor in a micropolitan statistical area that is adjacent to a metropolitan statistical area, as those terms are defined by the U.S. Office of Management and Budget and as they are applied under currently applicable Urban Influence Codes (UICs), established by the United States Department of Agriculture’s Economic Research Service (USDA-ERS). A creditor may rely as a safe harbor on the list of counties published by the Bureau to determine whether a county qualifies as “rural” for a particular calendar year.”
My comment: This is for commercial appraisals but could be expanded to residential. Could be scammed. Seems like it would be easy to say the appraisers they called said they could not do the turn time and would not accept the low fee requested.
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
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 or send an email to . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

Mortgage applications decreased 4.1 percent from one week earlier

WASHINGTON, D.C. (January 30, 2015) – WASHINGTON, D.C. (February 14, 2018) – Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 9, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 2 percent from the previous week. The seasonally adjusted Purchase Index decreased 6 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 4 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 46.5 percent of total applications from 46.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.3 percent of total applications.

The FHA share of total applications decreased to 10.1 percent from 10.4 percent the week prior. The VA share of total applications remained unchanged at 10.1 percent from the week prior. The USDA share of total applications increased to 0.8 percent from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to its highest rate since January 2014, 4.57 percent, from 4.50 percent, with points increasing to 0.59 from 0.57 (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 $453,100) increased to its highest rate since January 2014, 4.55 percent, from 4.47 percent, with points increasing to 0.47 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 30-year fixed-rate mortgages backed by the FHA increased to 4.54 percent from 4.47 percent, with points increasing to 0.73 from 0.69 (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 its highest rate since April 2011, 4.00 percent, from 3.92 percent, with points increasing to 0.65 from 0.65 (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 3.74 percent from 3.77 percent, with points decreasing to 0.37 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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

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

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