Appraisal News and Business Tips

4-5-18 Newz//Weird home interiors, Reduced AQB requirements and state regulators, Data analytical tools

The rage of Airbnb rentals (and stuff to keep in mind about value)

By Ryan Lundquist

Excerpts: The owner has a cash cow. Her second unit is bringing in $3,300 per month as an Airbnb rental, and it’s paying her mortgage. Since these types of rentals are all the rage right now, let’s talk about some important details to keep in mind from a value perspective. This isn’t meant to be exhaustive, but I wanted to share some things on my mind. I’d love to hear your take in the comments.

Topics:
1) Airbnb rent vs. market rent
2) Lenders and market rent
3) Investors & seller expectations
4) The fine print and a 12% tax

Click here to read the details, plus the appraiser comments:

My comment: This stuff gives me a headache ;> These seem to be everywhere now, especially room rentals. The Local Politics can be a mess. I look at the income as a business. Very different than renting by the month or year (at much lower daily rates), unless it is in a popular vacation rental market.

Data Analytical Tools for Appraisers

Excerpt: As appraisers, I believe that we should really be trying to incorporate some of the analytical tools available in order to give the insight to all of the data. There are various ways that appraisers use data analysis and data analytical tools. I wanted to share some of the tools that are available for appraisers and how they use them. I have reached out to appraisers and here is what they have to say about the tools:
Gandysoft, Spark/Trendsheet, Appraiser Genie, Redstone, Regression Excel in a la mode store, Solomon Adjustment Calculators, Market Machine, Appraiser Developed Tools with Excel, Appraiser’s Business Companion

Note: some have appraiser reviews, some have info from the developer, and some have both

Click here to read the details
My comment: Good to see info on all these tools in one place! Of course there is always DIY in Excel, my favorite method ;>

Weird stuff that people do to their homes

Just For Fun!!

My comment: After over 40 years appraising, there is always something I have never seen ;>
8 Hot but Highly Impractical Design Trends That Are More Trouble Than They’re Worth
Excerpt: … before you fork over a ton of cash to make your home look Pinterest-worthy, remember that some of the hottest design trends are also a whole lot more trouble than they’re worth. Like with a beautiful dry-clean-only cashmere sweater, proceed with caution when trying these trends on for size.
1. Marble countertops
2. Metal tiles
4. Dining benches
8. Unusual flooring materials
To see all of them plus photos and details click here:

https://www.realtor.com/advice/home-improvement/8-hot-but-impractical-design-trends

——————
7 Home Decor Trends to Avoid If You Hope to Sell Your Home
Excerpt: There’s a huge difference between decorating for your own pleasure and spiffying up your home to sell. If you’re staying put and pining for a purple bathroom, go for it! The resale value of your eclectic tastes don’t apply.
3. Too much purple or yellow
4. Too much cold white
7. A statement door that makes too much of a statement
To see all of them plus photos and details click here:
———————-
The One Room That’ll Make Buyers Bail, Even If They Love the House
Excerpt: So what is this ominous, deal-killing room? It turns out there are more than one. Peruse the list below for the common offenders-not just my own, but ones that real estate agents have noted make buyers cringe en masse. Hey, it’s better to know than not so you can make some changes, right?
Empty Rooms, Dark Rooms, Icky Bathrooms, Cluttered Playrooms, Run-down Kitchen, Stuffy Formal Living Room, Creepy Basement (my least favorite), Cluttered Closet
My comment: I go on open house tour every week and see this stuff sometimes (if the agent can’t get the sellers to clean up etc.) such as opening a closet and everything falls out. Of course I see this a lot on homes not for sale ;>
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AI education

 USPAP Q&A March 29, 2018

Employing an Extraordinary Assumption when a Client Provides Inspection Data (Revised from 1-18 version) (Still not very clear to me, but better than the 1-18 version)

Signing and Labeling of Supplemental Certifications (when using a form that does not allow changing the certification)

Appraising Lakes Beyond Front Footage

Rachel Massey’s article in NAR’s Realtor Magazine – lakefront properties

Excerpts: When attempting to determine the value of lakefront property, there’s so much more to the equation than just measuring waterfront space. Here’s what appraisers and agents need to know.
There are many questions that buyers, real estate agents, and appraisers should consider in addition to the present appeal of the lake itself, because these issues contribute to whether the lake remains appealing into the future.

My comment: The author lives in Michigan, with many lakes, and specializes in lake front properties. Well written and worth reading, even if you don’t appraise lakefront properties (not many natural lakes in California) I had no idea there were so many complicated issues!

AQB reduced licensing requirements effective 5/1/18

 Excerpt: Previously, a licensed residential appraiser needed 30 hours of college-level education, but as of May 1, 2018, no college education will be required.

A certified residential appraiser previously needed a bachelor’s degree or higher. Now, however, the board is providing appraisers with six possible options of which the most simple is an associate’s degree in one of the board’s required fields.

…Changes below to the experience requirements. Most required hours and time taken to complete the hours were reduced by about half.

Good summary graphics on the changes:
———————
Issues with state regulators who can have higher requirements than AQB

Excerpt: each state is free to take one of four courses of action:
  • Adopt these revisions effective 5/1/2018.
  • Adopt these revisions, with an effective date further off in the future.
  • Adopt some of these revisions, but not all of them.
  • Adopt none of these revisions, and leave their requirements exactly the same as they are now.

Check with your state.
Scroll down the page to the state regulator section.

My comments: The AQB bows to pressure from lenders and AMCs. There would be no appraiser shortage if lenders accepted trainees signing appraisals. Many appraisers leaving: don’t like to work for AMCs. Lower requirements will not help much.

As usual, Certified General requirements have not changed. Residential appraisers are inferior with lower requirements. There are a few licensed appraisers left who would be helped

Federal Agencies Approve Rule Doubling Appraisal Threshold for commercial appraisals from $250,000 to $500,000

Excerpt: “For commercial real estate transactions exempted from the appraisal requirement as a result of the revised threshold, regulated institutions must obtain an evaluation of the real property collateral that is consistent with safe and sound banking practices.”

My comment: Guess the ASB will have to tell us (again) what these “evaluations” are. The res threshold of $250,000 from 1989 did not change anything as the GSEs still required appraisals.
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Wondering what will happen in 2018? My article in the April issue of the paid Appraisal Today explains the factors: What will happen to residential mortgage lending in 2018?  

Mortgage applications decreased 3.3 percent from one week earlier

WASHINGTON, D.C. (April 4, 2018) – Mortgage applications decreased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 30, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.3 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 5 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 5 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to its lowest level since September 2008, 38.5 percent of total applications, from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications increased to 10.1 percent from 9.9 percent the week prior. The VA share of total applications remained unchanged at 10.3 percent. The USDA share of total applications remained unchanged at 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.69 percent, with points remaining unchanged at 0.43 (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 $453,100) decreased to 4.56 percent from 4.60 percent, with points decreasing to 0.27 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.74 percent from 4.75 percent, with points decreasing to 0.54 from 0.56 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.09 percent, with points decreasing to 0.42 from 0.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.87 percent from 3.92 percent, with points decreasing to 0.28 from 0.46 (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
Email   ann@appraisaltoday.com

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