Certifications: Understanding What You’re Signing

By Tim Andersen, MAI
Excerpt: Next is another declaration to aid in the transparency of the analyses behind the appraisal. “I have performed no (or the specified) services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.” Here, the intent is to prevent the client from perceiving the appraiser is in any way biased for or against the subject property by disclosing any relationship the appraiser may have with the property.

Occasionally appraisers appraise the same property numerous times for different entities. This component of the Certification discloses the appraiser has received knowledge of the property from having provided a past service involving the property. Because of the use of the word services, it is clear if the appraiser has provided any services relating to the property, the appraiser must disclose them.

My comment: When I used to teach USPAP (before the Appraisal Foundation mandated what to teach) I always spent time on the 1004 certifications. I suspect that was the first time that attendees read them. I make my own certifications for my non-lender appraisals.

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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To read more of this long 8-9-18 blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on witch windows, appraising 3000 years ago, mortgage origination stats, etc.



Markets slowing down. Price declines??

Housing market is showing signs of cracking: ‘Anything-goes list-price strategy is no longer working
Excerpt: But the slowdown is also tied to overheated prices. Even in the hottest markets, there is a limit to affordability, and that limit is clearly now being hit.

In pricey Southern California, sales of both new and existing homes fell sharply in June compared with a year ago, according to CoreLogic. Demand is still quite strong, and while prices continue to gain, more listings are showing price reductions.

My comment: If I knew when the prices peak, I would be rich and get the Nobel Prize!! It is very tricky. Beware of price declines starting. Keep close watch on lots more listings than pendings. Few, or no, offers way over list. The bottom of the market is easy to see. Fast declines, then stabilizes for quite a while.

The problem of overpricing in real estate

By Ryan Lundquist


Excerpts: Overpricing is a problem. You’d think in such a “hot” market that it wouldn’t be an issue, but it is. I’m not trying to dog sellers, but let’s talk about some of the most common pricing mistakes right now. I hope this helps.

5) Sales instead of comps: The most common pricing mistake I see is pricing according to a sale down the street that really isn’t comparable. So a seller says, “I know that house is totally remodeled with a pool, but someone’s going to pay the same amount for my house.” My advice? Price according to similar homes that are actually getting into contract rather than dissimilar properties. Be careful about hijacking price per sq ft figures too.

My comment: Written for real estate agents, but helpful for appraisers. I encountered this when doing a retrospective estate appraisal for a house that will be listed. The owner kept going on and on about a home nearby that sold for $1,100,00 that was “smaller” than hers. Fortunately, I was not doing current value ;>



Witch Windows

Just For Fun!!

According to the folklore, Vermont’s slanted windows were installed to keep witches from flying into the house.

Excerpt: Traveling through the Vermont countryside, especially in the northern parts of the state, you might notice some old farmhouse windows oriented at an odd angle. According to folklore, these so-called “witch windows” were tilted 45 degrees so that witches couldn’t fly through them into the house.

Click here for full article with fotos. For lots more links, just google witch windows!



North Dakota wants appraisal waivers

By Jonathan Miller
Excerpt: This just came in so I will expand on this post in the future, but here is what we know.

The governor has submitted a request to the Appraisal Subcommittee for an appraisal waiver but the letter seems more orientated towards raising the de minimus which just occurred. By the way, isn’t it apparent that the banking lobby is a little to cozy with the Governor’s office to actually cosign this letter? The letter also makes references to the lack of rural appraisers as a long-term problem.

It is also clear from this letter that the FDIC hates appraisers (I have seen this for most of my career) as they facilitated the eventual writing of this request.

The key problem with this request is that the number of credentialed appraisers in North Dakota is up sharply from 2007 to 2017. Here are the numbers:

Licensed residential is up 62%
Certified general is up 50%.
Certified residential is up 8200% (only because there was no such category in 2007).

Scroll down for more commentary in Appraiserville, or google “North Dakota”.
Dave Towne comments

How many appraisers are there in North Dakota?
The answer is 153, who are individually licensed in ND. I didn’t segregate the three different license types. This figure came from a download of the ASC appraisal registry of ND licensed appraisers, and not counting duplicate name appraisers with multiple licenses in other states.

Many of these appraisers are ‘dual licensed’ in more than one state, in most cases immediately adjacent, but sometimes in states far distant from ND.

What’s the population of North Dakota? According to Wikipedia:
The United States Census Bureau estimates North Dakota’s population was 755,393 on July 1, 2017, a 12.3% increase since the 2010 United States Census. This makes North Dakota the U.S. state with the largest percentage in population growth since 2011. The fourth least-populous state in the country, only Alaska, Vermont, and Wyoming have fewer residents.

The point of this is to state the population density per appraiser is 4,937 people. I am pretty certain this is far fewer than other states.

Yet the Governor and a state regulator in North Dakota – per the article below in American Banker e-newsletter – want everyone to believe there is a ‘shortage’ of appraisers. Actually, I suspect what they, and the state small bankers, really are peeved about is appraisals take more than a week to get submitted after the date of assignment. That’s not unusual elsewhere.
American Banker article

Excerpt: North Dakota has become the first state to ask for a federal waiver from real estate appraisal requirements to allow banks to do their own property valuations.

Gov. Doug Burgum and Lise Kruse, the commissioner of the Department of Financial Institutions, requested the temporary waiver, citing several factors including a drop in appraisers located in the state and a 12% increase in the state’s population.

Note: you may not be able to click on this link more than once to get the full story.


SFR rentals up. Use Income Approach?

Number of renter households way up

By Rob Chrisman

The U.S. Census Bureau knows a thing or two about numbers, and it tells us that over the 10 years from 6/30/07 to 6/30/17, the number of “renter” households in the USA increased by 8.4 million to 43.4 million while the number of “owner” households increased by just 0.9 million to 76.1 million. Over the latest 12 months, however, from 6/30/17 to 6/30/18, the number of “renter” households in the United States declined by 0.1 million to 43.3 million, while the number of “owner” households increased by 1.8 million to 77.9 million.
Cities With the Biggest Jumps in Single-Family Rentals

Excerpt: In some cities, Trulia found, the percentage of single-family properties compared to a decade earlier is quite a jump. In Detroit, Las Vegas, Memphis, and Fort Lauderdale, single-family rentals jumped by more than 9 percent in the ten years since 2006. Atlanta’s numbers climbed almost 9 percent.

Detroit saw the biggest jump. In 2006, nearly 14.7 percent of single-family homes were rentals. Ten years later, the number was almost a full quarter of the city’s single-family properties.

Link to Trulia study with lots more data and analysis: https://www.trulia.com/research/single-family-rental-analysis-2018/

My comment: Keep a close watch on the percent of rented vs. owner occupied. Since 2008 there have been large companies purchasing significant numbers of homes to rent in specific neighborhoods. This has slowed down, but the homes are still rented. To find out it is usually easy to at the public records service you use. Sometimes you can tell by deferred maintenance, but not always.


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Appraising over 3,000 years ago

Book of Numbers – appraisal of the Land of Canaan


In the Book of Numbers, Chapters Thirteen and Fourteen: God commanded one person from each of the twelve tribes to “to make a reconnaissance” of the Land of Canaan, now Israel. Persons selected were leaders, with sincerity of purpose, integrity, wisdom, judgement and knowledge.

The appraiser/leaders journeyed to the area and looked at the agriculture, towns, and people and collected agricultural samples. The objective was to determine the highest and best use of the property. The turnaround time for the appraisal report was 40 days.

The appraiser/leaders gave a verbal report to Moses and the entire community. “We went into the land to which you sent us. It does indeed flow with milk and honey; this is its produce. Its inhabitants are a powerful people. The towns are fortified and very big, yes, and we saw the descendants of Anak there. The Amalekite holds the
Negev; the Hittite, Amorite and Jubusite, the highlands/ and the Canaanite, the seacoast and the banks of the Jordan.”

Per their report: “The coastal plain has abundant water resources and fertile soil; the hills of the lowlands are well suited for vineyards and olive groves. The central mountains are covered by forests and some of the wide valleys intersecting them from east to west are among the most fertile parts of the country.” In contrast, the Negev, the large Judean desert and parts of the Jordan Valley were found to be unsuitable for agriculture and settlement.

Ten of the 12 appraisers had negative reports. Two had positive reports, Caleb and Joshua. Later Joshua lead the Israelites to the Land of Cannan.

This article is based on “The First Appraisal” written by Sanders K. Solots, published in the 1986 issue of The Real Estate Appraiser and Analyst, Summer, 1986, by the Society of Real Estate Appraisers.

In the August, 2018 issue of the paid Appraisal Today, available to paid subscribers.  
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Visualizing the Hidden ‘Logic’ of Cities

Some cities’ roads follow regimented grids. Others twist and turn. See it all on one chart.

Excerpt: In Chicago or Beijing, any given street is likely to take you north, south, east, or west. But good luck following the compass in Rome or Boston, where streets grew up organically and seemingly twist and turn at random.

Geoff Boeing calls this structure the “logic” of a city, and he would know: An urban planning scholar at the University of California, Berkeley, Boeing developed a tool to let anyone visualize this urban logic in seconds.

My comment: Fascinating!! In the island part of my small city, most streets were laid out in the mid-1800s, with streets paralleling the two long sides of the island. In the other part, a peninsula across a bridge, with a large development done in the 1980s to 1990s, the streets are typical cul de sac suburban style to slow down traffic (and make appraisers crazy, expecially when running late for an appointment ;> )


Half of Homes Past Pre-Recession Values

Excerpt: “Even a decade after the 2008 financial crisis, and five-plus years into the recovery, it’s clear that the housing boom and bust was felt very differently in various markets-and is still being felt today in many,” Terrazas says. “In markets like Las Vegas that got farthest ahead of themselves during the boom, and consequently fell the most, a large majority of homes are still not worth as much today as they were a decade ago-but in markets like Denver that were more stable a decade ago, many more homes are worth more now than ever before.”

In Denver, 99.6 percent of homes are at or beyond their peak prior to the recession, while in Las Vegas, 0.8 percent are the same, according to the report. Denver mirrors parts of Texas, where the majority of properties have recovered: in Austin, 98.7 percent; in Dallas-Fort Worth, 97.7 percent; and in San Antonio, 98.8 percent. The areas that align more with Las Vegas include Baltimore (8.7 percent), Orlando (5.4 percent) and Riverside, Calif. (6.5 percent), where a fraction of homes have recouped value.

Link to Zillow report with lots more data and graphs. Worth reading. See how other areas is doing.



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 decreased 3.0 percent from one week earlier

WASHINGTON, D.C. (August 8, 2018) – Mortgage applications decreased 3.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 3, 2018.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.0 percent on a seasonally adjusted basis from one week earlier to its lowest level since January 2016. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week to its lowest level since December 2000. 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 2 percent lower than the same week one year ago.

The refinance share of mortgage activity decreased to 36.6 percent of total applications from 37.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications.

The FHA share of total applications remained unchanged at 10.4 percent from the week prior. The VA share of total applications increased to 10.6 percent from 10.5 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) remained unchanged at 4.84 percent, with points remaining unchanged at 0.45 (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 4.74 percent from 4.76 percent, with points increasing to 0.39 from 0.37 (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 increased to 4.83 percent from 4.78 percent, with points increasing to 0.76 from 0.74 (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 decreased to 4.26 percent from 4.29 percent, with points decreasing to 0.48 from 0.53 (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 4.07 percent from 4.17 percent, with points increasing to 0.42 from 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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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