Is it all a big lie? Are there really 6 fallacies of market value?

By George Dell, MAI, SRA, ASA

Excerpts: Some ten years ago, we saw the start of the economic meltdown. Were appraisers to blame?  Some tried to pin the blame that way. But was there a big lie underneath? The required (federally insured) definition of value has seven distinct elements. Were appraisers doing what they were told?
Seeking entertainment for my Stats, Graphs, and Data Science¹ classes, it seemed fun to see if these assumptions had not been religiously followed.  This led to a PowerPoint slide entitled:
 “Dell Operative definition of market value”
Check it out at:

My comment: Interesting comments plus some humor ;>

In the Trenches, Crazy Appraiser Stories

Just For Fun!!

Excerpt: You’ve all got them… The crazy car chases, the surprising living conditions, the exotic assignments and the unique collectors. Here are a few of our stories we found buzz worthy.
This was a beautiful 3,200 sq ft home with all the extras. After measuring…
The Stories plus 10 comments with more stories.
My comment: I love the foto of the crazy appraiser!!

Which of us does not have a weird experience… or lots of them ;>

Dollars, Data Analysis and Values

The myth of dollar for dollar in real estate
By Ryan Lundquist
Excerpt: Dollar for dollar: It’s rare in real estate to spend a dollar and get a dollar back in value. It seems like it should be easy to increase value like it is on HGTV, but even if you look at the Remodeling 2018 Cost vs. Value Report, hardly any items on the list give close to a 100% return compared to the cost. For instance, a bathroom remodel is said to only add 68.2% of the cost to the value, and an upscale kitchen remodel is said to only recoup 46.5% of the cost in the resale market. Yikes. That’s pretty far from 100%.
Find out how Ryan uses his own bathroom remodel as an example:
My comments: I always find the cost vs. value studies amusing.
Somehow, being done by a remodeling magazine could make it a bit biased ;>
Zillow – Entry-Level Homes with ‘Farmhouse Sinks,’ ‘Wainscoting,’ or ‘Exposed Beams’ Sell for Nearly 30 Percent More than Expected
Excerpt: Homebuyers – especially first-time buyers shopping for entry-level homes – can expect to pay a significant premium for houses with listings that tout popular farmhouse or craftsman-inspired features, according to a new report from, a Zillow Group® brand tailored to helping first-time buyers find and budget for their first homes.
Jonathon Miller’s comments on Zillow below (scroll down to Appraiserville) at :
“Chip and Joanna Gaines’ farmhouse-inspired design trends command highest sale premiums among entry-level homes, according to an analysis from”
No they don’t. This is what we call “junk statistics.” This press release suggests that when someone installs a “farmhouse sink” in a $400,000 home, the house becomes worth $520,000? Nope.
My comments: Very strange… farmhouse sinks???

Did That Guy Just Take a Picture of My Kids?

By Dustin Harris
Excerpt: So, let’s say you’re an appraiser who adheres to FHA rules, meaning you have to take a picture of each comparable at the time of the inspection (heaven forbid we have a photo of that comp that’s two weeks old, because of course everything will be completelydifferent by now… okay, sorry, I’ll stick to the topic). You pull up outside the property and see that there are people outside; let’s say there are kids playing there in the front yard. What do you do?
Some of you will say, “I take the photo. That’s my job!” I get that, but look at it from another perspective. You’re a mom or dad inside the house, watching your kids play out in the yard. Suddenly a stranger pulls up in their car, winds the window down, takes out their camera or smartphone and appears to take a photo of your children. Are you trying to tell me that if you were that parent, you wouldn’t be at least a little bit freaked out?
Read the full article plus lots of appraiser comments at:
Appraisal Today

America’s Mortgage Market Is Still Broken

Ten years after the 2008 crisis, crucial flaws need fixing.

Written by Bloomberg Editorial Board
Excerpts: Regulators have done a lot to reform the financial system since the 2008 crisis, but they still haven’t fixed the market where the trouble started: U.S. mortgages. It’s an omission they need to put right before the next crisis hits…
In recent years, highly regulated institutions such as Bank of America – burned by billions of dollars in fines – have shied away from the mortgage business. Instead, they provide short-term credit to nonbanks such as Quicken Loans and PennyMac, which do the actual lending. Nonbanks now originate some 60 percent of new mortgages… The solutions aren’t rocket science. In both lending and servicing, regulators should put banks and nonbanks on a more equal footing.
Interesting. Worthwhile reading at, plus the 139 comments:

AMCs and Lenders Fighting Over Residential Valuation “Trade Secrets”

By Peter Christensen
Excerpt: The residential valuation business for mortgage lenders has been taking big steps lately toward wider scale replacement of the Uniform Residential Appraisal Report (URAR or 1004) historically used in mortgage lending. As this movement happens, some would-be providers of replacement valuation products (such as “hybrid” appraisals and AVMs) are fighting over technology turf and trade secrets. These companies are fighting over ownership of the future of property valuation as they envision it.
My comment: I am finally writing an article about hybrid appraisals for the June issue of Appraisal Today. Needed to get the “big picture”. Interviewed appraisers who work for them now and 10 years ago, plus USPAP finale, fees, forms used, etc.
AI Education
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 0.4 percent from one week earlier
WASHINGTON, D.C. (May 9, 2018) – Mortgage applications decreased 0.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 4, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index remained unchanged from the previous week. The Refinance Index decreased 1 percent from the previous week to its lowest level since October 2008. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index increased 0.4 percent compared with the previous week and was 3 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 36.3 percent of total applications, its lowest level since September 2008, from 36.5 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 decreased to 10.1 percent from 10.3 percent the week prior. The VA share of total applications increased to 10.4 percent from 10.2 percent the week prior. The USDA share of total applications decreased to 0.7 percent from 0.8 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.78 percent from 4.80 percent, with points decreasing to 0.50 from 0.53 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) decreased to 4.65 percent from 4.69 percent, with points decreasing to 0.36 from 0.42 (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 4.80 percent from 4.81 percent, with points decreasing to 0.75 from 0.78 (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 decreased to 4.20 percent from 4.21 percent, with points decreasing to 0.48 from 0.49 (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 4.00 percent from 4.03 percent, with points decreasing to 0.43 from 0.44 (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.
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