Are you violating USPAP every day?
If you pick comps the old way, you may be violating USPAP every day!
Excerpts: (In the past) Data was hard to get. I was taught it was only necessary to use only three or four comps. And only a few comps were available. I did learn the importance of bracketing from my trainers (it was nowhere in my appraiser education). I was diligent, and of course, I picked my necessary and available comps carefully. Don’t pick appraisal comps the old way.
Then things changed. No one noticed. MLS came on line. Income properties came online. Public records came online. All relevant sales became available. Instantly. Without thinking, I ignored the “as available” rule. But stuck to the ‘as necessary’ rule. And heck, everybody used just three comps. In fact, USPAP says I should do what my peers would do. And they all used just three or four.
So, what changed?
Today in most areas, all the sales are available. But are they necessary? Well no. All my peers use just three or four, so it is ok. But what if I want to do more than achieve credible results?
To read more, click here
My comment: I love George’s Most Excellent headlines plus his writings!! His blog posts are short, as they should be. But, sometimes we want to read more. The June issue of the paid Appraisal Today will have his 6-page article: “Old Versus New: Conflict or Opportunity?” about the past, current and future in appraisal analysis. Very interesting!!
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 extraordinary assumptions, collection, $9 million house lot, mortgage origination stats, etc.
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Disclosure Example: Extraordinary Assumption
Excerpt: Jim is appraising a single-family home for a mortgage refinance loan. When he inspects the property, he notes a crack in the foundation. He is unsure if this crack is structural or cosmetic, and he does not have the expertise to make this determination. In valuing the property, it may be appropriate for Jim to employ the extraordinary assumption that the home is structurally sound and does not need repair.Taking this scenario even further, let’s say that the lender subsequently hires a structural engineer, who determines the home needs $50,000 of repairs to be made structurally sound. Jim’s extraordinary assumption is then be found to be false, rendering his value opinion invalid.To read more, click hereMy comment: Well written and worth reading on this somewhat tricky topic for appraisers.
Mortgage refinance booms are a thing of the past: MBA chief economist
Excerpt: The era of plentiful refinance volume is over for the foreseeable future, the result of mortgage rates remaining in a very narrow band for the past decade, said Mortgage Bankers Association Chief Economist Mike Fratantoni.
The unexpected drop in mortgage rates since last November was “incredibly positive” for the home purchase business following the rapid rise of last year, but its impact on refinancings was muted, in large part because during in the current decade, rates stayed in a 1 percentage point range between 3.5% and 4.5%, Fratantoni said during a session and separate press briefing during the MBA’s National Secondary Market Conference in New York on Monday, May 20.
For more info, plus MBA purchase and refi forecasts click here:
My comment: Lender appraisal volume has been driven by refis since the GSEs started securitizing loans in the 1970s. S&Ls did not have to keep their loans, but could sell them. He is predicting that refi volume won’t change much.
How to collect all your billings.
Don’t work for free!!
The primary source of problems – fear and greed
Why do appraisers keep accepting orders even after they have past due billings from a client?
Why do appraisers accept all clients without checking them out? Why don’t appraisers contact clients soon after a billing is past due?
Fear – they won’t get another appraisal order from the client, or they will
never get another appraisal order from anyone.
Greed – want to make as much money as possible (or at least bill out as much as possible).
Don’t ever, ever put all your eggs in one (AMC) basket
Don’t ever rely on one client for a large part of your billings. Why? Clients
come and go, for all types of reasons, including going out of business.
In the January 2019 issue.
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Are Hybrid Appraisals Becoming the New Normal In Real Estate Transactions?
Excerpt: Appraisals, a critical part of real estate transactions, have customarily been done in-person by an experienced appraiser. However, with advancements in technology and the rise of big data, alternatives to the traditional appraisal field are beginning to become more prevalent in the U.S.
That is according to panelists at the real property valuation forum yesterday during the 2019 REALTORS® Legislative Meetings & Trade Expo.
“The adoption of these new financial technologies is not a matter of if, but when,” said Phelan. “And with a new generation of tech-savvy homebuyers, this digital revolution will be necessary.”
For more info, click here
My comment: The June issue of Appraisal Today will have a long article, “Fannie’s big changes: New Forms and UAD, Bifurcated Appraisals, etc.” including what Fannie is doing, including the timeline for the changes, lots of info on how Fannie is testing who is best for inspections on bifurcated appraisals, why Fannie is making the changes. Plus the shift to dynamic appraisal forms, done in a browser. You do not fill out a form.
Empty 11,000 sq.ft. Palo Alto CA lot listed for $9 Million
Excerpt: The rush of tech expansions, strong stock prices and hoped-for IPO windfalls has the top-end of the Bay Area economy accelerating like a Tesla in ludicrous mode. The Old Palo Alto neighborhood of leafy, century-old estates — former home to the late Apple co-founder Steve Jobs, current home to Google co-founder and CEO Larry Page — has become a hive of real estate selling and buying.
My comment: WoW… Wish I owned the lot ;>
Frank Lloyd Wright’s Final Home: What’s Taking It So Long to Sell?
Excerpt: Frank Lloyd Wright may have many obsessive fans, but that doesn’t always translate to throngs of buyers. Case in point: The final home the pioneering architect designed before his death in 1959 has been on and off the market since 2016—and, just recently, dropped in price to $2,650,000. That’s quite a steal!
Phoenix’s famous Norman Lykes home was at one point for sale for as much as $3,600,000. So now, nearly one million dollars less, the home is positioned to sell very quickly, according to listing agents.
To read more, click here
My comment: Interesting commentary with lots of fotos.===========================================
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 email@example.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
Mortgage applications increased 2.4 percent from one week earlier
WASHINGTON, D.C. (May 22, 2019) – , according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 17, 2019.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2 percent compared with the previous week. The Refinance Index increased 8 percent from the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 7 percent higher than the same week one year ago.
“Mortgage rates fell for the fourth straight week, with the 30-year fixed rate mortgage hitting its lowest level since January 2018, leading to a rebound in refinances. The refinance index increased 8 percent to its highest level in over a month, and once again there was an increase in average refinance loan sizes, as borrowers with larger balances responded accordingly to lower rates,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity declined again, but remained around 7 percent higher than a year ago. We’re keeping a close eye on whether there may be some adverse effects of the ongoing global trade disputes on overall demand. Some potential homebuyers may be delaying their home search until there’s more certainty.”
The refinance share of mortgage activity increased to 40.5 percent of total applications from 37.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent of total applications.
The FHA share of total applications decreased to 9.4 percent from 10.1 percent the week prior. The VA share of total applications increased to 11.0 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 4.33 percent from 4.40 percent, with points increasing to 0.43 from 0.40 (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) remained unchanged at 4.24 percent, with points increasing to 0.35 from 0.27 (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 4.34 percent from 4.32 percent, with points decreasing to 0.47 from 0.49 (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 remained unchanged at 3.78 percent, with points decreasing to 0.40 from 0.43 (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 3.57 percent from 3.82 percent, with points decreasing to 0.37 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.
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