In Search of “Perfect” Adjustment Factors

By Richard Price

Excerpt: Although a “perfect” adjustment may not exist, the search for perfect adjustments in appraisal reports is becoming a hot topic with many interesting articles, continuing education courses, and webinars addressing the subject. The message is clear. If an appraiser can’t support the adjustments, the results of the appraisal are subject to question, leading to several possible outcomes; none of them good. So, we will define the “perfect” adjustment factor as the best and most appropriate adjustment that should be made to the comparables.


Adjustments, now what?

By George Dell
Excerpt: We’re told to “support” our adjustments.  We hear words like “prove” your adjustments. . . as if there were some magic formula which can give an exact, correct, and absolutely true number.

It used to be so easy. . . Our trainer gave us a sheet with the “right” adjustments. Simple.

USPAP Standards Rule 1-1 says we must be aware of, understand, and correctly employ recognized methods and techniques. What are they? Who recognizes them? How do I apply them?

So, what are these methods and techniques? Let’s look.

In The Appraisal of Real Estate (ARE) p.46, it says: “Qualitative analysis techniques may also be applied for elements of comparison for which quantitative adjustments cannot be developed.”  So, it seems the very first reference in the ARE says some adjustments cannot be quantitatively developed!

For lots more Dell Adjustment Writings, go to the Adjustment Archives:

My comments on adjustments: CU in 2015 revealed residential form appraising’s “dirty little secret”: lack of support for adjustments.

Before starting my appraisal business in 1986, I worked part time for a local appraiser for 3-4 months. I went out with him first on a few lender appraisals. I will never forget asking him where the adjustments came from. He said “we use these” with no explanation. Later I asked other appraisers and they had the same answer.

Finally, about 3-4 years ago, I quit doing adjustments on form appraisals except for market conditions and factors that significantly affected the value, such as a very good view. Those adjustments were supported.

Appraisal Business Tips

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at

To read more of this long blog post, click Read More Below!!


NOTE: Please scroll down to read the other sections of this long blog post on fannie, adjustments, trolley house, mortgage origination stats, etc.

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Fannie Mae Appraiser Update March 2019

Excerpt: What appraisers need to know about property data collection
  • Appraisal Modernization
  • Property Data Collection (PDC)
  • Desktop Appraisal
  • Scope of Work and USPAP

Also: Learn how to appraise MH Advantage homes

Read the short update:
Link to Fannie’s Appraiser Page – lots of good info


Appraisers Training Their Own Inspectors

Excerpt: FNMA’s recent newsletter states that a third party inspector should be hired to deliver photos, sketches, etc about a property to them. After their review, if they believe an appraisal is needed then they can forward that information to the appraiser and a desktop can be performed with ease and accuracy. In their words, this is no different than an appraiser relying upon other forms of data in the report such as public records, MLS, etc.

I really do appreciate the perspective of some who want the idea of detaching appraisers from inspection data to be successful. But it is my belief that a few things in our world need more precision than others, especially when we are dealing with the largest investment of most families. I used to be an executive in the banking industry, and I get concerned when too many moving parts are tossed into any profession that impacts so many people, which happens in finance too often.

My comment: I love this idea!! Appraisers look at properties differently than a home inspector, real estate agent, someone with a 2 week class (maybe), etc.. We look at a lot more than the physical characteristics of the property.


A Historic Trolley Hidden Inside a House

Just For Fun!!

Excerpt: In August 2018, they purchased a foreclosed house at 31 Smith Avenue in Hamilton, New Jersey, with the idea that they could transform it into an appealing rental unit. The description on the property listing said that the small home had been made out of a former rail car, but on first glance it looked like an ordinary suburban house, though perhaps a little worse for wear.

“I don’t think we’re gonna find a dead conductor or anything here … maybe there’ll be some old train parts or something,” says Breza, of his thinking at the time.


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Communicating with non-lender clients: Very, very different than lenders!! 

Coming in the April issue
We are all familiar with doing appraisals for lenders. You get the initial order information, decide if you want to do it, then bid. Maybe a few questions, such as phone number does not work, etc. Some back and forth on bidding maybe.

Non-lender appraisal communication is completely different.      

Communication with the client is critical. For example, the person who contacts you may be an estate trustee who knows nothing about appraisals. What about communicating your report so they can understand it? Is this person the client, or is it their attorney or accountant?

This article has lots of information and practical advice. I have been doing many types of non-lender appraisals since 1986. 
In the April 2018 issue of the paid Appraisal Today, available to paid subscribers.  
To read the full article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
If this article got you one non-lender appraisal, it is worth the subscription price!! 
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If you are a paid subscriber and did not get the March 2019 issue, emailed Friday, March 1 2019, please send an email to  and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.

Should Adjustments Actually Be Done?

By Dustin Harris
Excerpt: How much credit should we give ourselves when it comes to making adjustments? Making adjustments is controversial. USPAP says nothing about adjustments – it does not require us to make them. They are a GSE construct. So, should we real estate appraisers stop making adjustments? Clients pay us for opinions of value, so our adjustments are really opinions based on what the market tells us (or that’s what we should base them on), but they are still opinions we form; they are not facts we find. So, maybe, should we stop making adjustments?

Coester out of business (finally), Appraisers Unpaid

Excerpt: The company’s demise was swift. Its financial difficulties began in Fall 2018, with appraisers reporting that they had not been paid for their appraisals performed in the early summer. Then in November 2018, a letter began circulating that FVC Bank, one of Coester’s creditors, had frozen the company’s $700,000 line of credit. The barely legible letter posted around social media also suggests that FVC Bank had a contractual right to Coester’s accounts receivables, which would mean that even if the bank paid Coester for the appraisals being performed, appraisers who continued working for Coester would not be first in line to get paid.

My comments: There were lots of warnings on this. Hope you did not lose money… The Primary Collection Rules: Get your money ASAP, before it runs out and The Squeaky Wheel Gets the Grease. Keep Track of what AMCs owe you. Don’t wait to demand payment!! I have written lots of articles on collection in my paid newsletters. 


 Mortgage rates going down! More appraisals needed!!

Every month in my paid monthly newsletter, since 1992, I have a graph of number of mortgage loan applications over time with data from the Mortgage Bankers Association.
Loan apps, particularly refis, started significantly increasing this January.
See the data below. 

What does this mean for you? Make money while you can, OR go after non-lender work while other appraisers are working for AMCs for very low fees, very fast turn times, and lots of hassles!!

The Very Best Time to get non-lender work  is when other appraisers are very busy doing lender appraisals.
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 increased 8.9 percent from one week earlier

WASHINGTON, D.C. (March 27, 2019) – Mortgage applications increased 8.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 22, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index increased 12 percent from the previous week. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 4 percent higher than the same week one year ago.

“The spring buying season is off to a strong start. Thanks to an unexpectedly large drop in mortgage rates following last week’s FOMC meeting, purchase applications jumped 6 percent and refinance applications surged over 12 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Rates dropped across all loan types, and the 30-year fixed-rate mortgage is now more than 70 basis points below last November’s peak. The average loan size increased once again to new highs for both purchase and refinance loans, as borrowers with – or seeking – larger loans tend to be more reactive to the drop in rates.”

The refinance share of mortgage activity increased to 40.4 percent of total applications from 39.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.8 percent of total applications.

The FHA share of total applications decreased to 9.3 percent from 10.4 percent the week prior. The VA share of total applications decreased to 10.4 percent from 10.6 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.45 percent from 4.55 percent, with points decreasing to 0.39 from 0.42 (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 $484,350) decreased to 4.35 percent from 4.37 percent, with points increasing to 0.27 from 0.23 (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 4.48 percent from 4.59 percent, with points decreasing to 0.48 from 0.50 (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 3.87 percent from 3.97 percent, with points increasing to 0.47 from 0.40 (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 3.77 percent from 3.99 percent, with points increasing to 0.30 from 0.29 (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, contact 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

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