Appraisal News and Business Tips

7-19-19 Newz: Rates Going Down?- Appraiser Boards – AVMs Misunderstood?

AVMs Are Not Understood By A Large Swath of Non-Appraisers

Source: Jonathan Miller
Here are some recent survey results that show more than half of the respondents indicated, it is either NEVER appropriate or NOT SURE if it is appropriate for a non-appraiser to perform a valuation on a home.
So the jury is still out for a third of respondents but a third are absolutely sure it is inappropriate. One can infer that appraisers have an opportunity to convey what AVMs really are to the public.
Link to NAR AVM survey results click here
My comment: Good graphics and easy to read. Lots of topics including AVMs, desktops, bifurcated, etc. Results of a survey of NAR members. Lots of topics. Scroll down to AVMs, etc.
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Fannie Mae lowers mortgage rate forecast and says home-price growth will accelerate

Mortgage giant predicts 30-year fixed rate will average 3.7% in 2019’s second half

Excerpts: Fannie Mae issued a new forecast that predicts the average U.S. rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019, down from the 3.9% the mortgage financier called for a month ago. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.
“This continued decline in mortgage rates and our upwardly revised view on house price growth have led us to increase our forecast for single-family mortgage originations for the remainder of the year,” Fannie Mae said. “We now expect total originations to rise 7% from 2018 to $1.75 trillion, and we expect refinances to account for 32% of total mortgage originations in 2019, up from 29% in 2018.”
That would make this year the highest since the $1.8 trillion originated in 2017, according to Fannie Mae data.
To read more, click here
My comment: Lots more refi appraisals!!

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Joining Your Real Estate Appraisal Board

Interview with Cristy Conolly, current Chair of the Florida Real Estate Appraisal Board and Chief Appraiser at Nationwide Appraisal Network,
Excerpt: Buzz: What’s one thing you wish to convey to appraisers about being on the Board? Are there any common myths you’d like to address?
Cristy: I think a common misconception is Board members are scary and unapproachable. Board members are people, just like everyone else. They want to do good for the industry and their state. They aren’t “out to get” anyone. They are charged with protecting the public and sometimes that means disciplining the “bad actors,” but that typically includes educating them so they can learn from their mistakes and improve themselves.
To read the full interview click here:
My comment: Worth reading. I have never seen anything written about what it is like to be a state board member.
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18 Historic Homes that Would Be Fascinating to Appraise

Excerpt: Historic homes make for complex and interesting appraisal subjects. As one appraiser said, “I love unusual properties, and the challenge they present to appraise. I have always loved appraising large, older properties. They take us back to another world back in time.” We recently asked our appraisal community, “What famous historic home would you want to appraise?” Here’s what they said.
A few of the homes:
Frank Lloyd Wright’s Fallingwater
The White House
Norman Bates “Psycho” House
Graceland
To read the full list plus comments click here
My comment: For me, none of the above ;> Too difficult!

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What is a Bedroom?

Excerpt: Layout and Floor Plans (Fannie Mae)
“Dwellings with unusual layouts and floor plans generally have limited market appeal. A review of the room list and floor plan for the dwelling unit may indicate an unusual layout, such as bedrooms on a level with no bath, or a kitchen on a different level from the dining room. If the appraiser indicates that such inadequacies will result in market resistance to the subject property, he or she must make appropriate adjustments to reflect this in the overall analysis. However, if market acceptance can be demonstrated through the use of comparable sales with the same inadequacies, no adjustments are required.”
It is clear, then, that at least Fannie Mae depends on the appraiser to determine the definition of a bedroom and whether a room used as a bedroom meets local market acceptance, suggesting that adjustments for unusual layouts, be derived from the local market.
What does FHA say?
Then we move on to consider what FHA has to say about bedrooms. Here we receive more detailed information.
n Section II (B) 3. (v.)L “The Appraiser must not identify a room as a bedroom that cannot accommodate ingress or egress in the event of an
emergency, regardless of location above or below grade.”
FHA Handbook 4001.1 no longer contains the guidance concerning the size of windows below-grade.
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Should appraisers study statistics?

Excerpts: … In particular, I was already used to the fact that for both general and residential work, the data available to me included all, or substantially all, the sales in my area. I benefited from the fact that San Diego public records, assessor information, and even GIS (geographic information) was also ahead of data availability and quality in most other parts of the country. But one thing stood out. There was a conflict between what I was being taught in most of the PhD-level stats classes, and the reality of what I saw as a practicing appraiser.
The conflict was simple, yet convoluted by a belief system. The confusion mostly has to do with the difference between a sample, and a population.
… It’s time for our appraisal organizations to recognize the laws surrounding these fallacies, and cease teaching what has been fully debunked in a statement by the American Statistical Association itself.
Now is the time.
For more info, click here
My comment: I had the same problem with my appraisal classes in the 1980s. Very out of date, especially after I got my MBA and did multiple regression studies. Don’t get me started on the out of date stuff taught in commercial appraisal classes. The 3 approaches have not changed since the 1930s.
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A Truth About Bifurcation

By Robert Murphy, former Director, Property Valuation and Eligibility at Fannie Mae
Excerpt: The third-party inspection piece is the part of the bifurcation appraisal process which has garnered the most discussion. Don’t get me wrong, the discussion regarding who should be completing the inspection is understandable and justifiable. Should it be done by an appraiser or appraiser trainee? A home inspector or insurance inspector? Some random third-party? Unfortunately, as with many things today, we must be able to sort out the truths from the half-truths, and pure nonsense. There needs to be clarity on this issue prior to any type of bifurcated appraisal process becoming mainstream.
However, I believe there needs to be some focus given to the second step of the process. I have been hearing, anecdotally, of appraisers who have been completing bifurcated appraisals without ever having appraised in the specific market/geographical area where the subject is located. Therefore, a discussion regarding competency requirements might be useful.
To read the full article plus lots of appraiser comments, click here
My comment: Interesting analysis from Bob Murphy about appraiser geographic competency. I have spoken with appraisers who have done bifurcated appraisals all over the country. Bob started appraising in 1978 and worked for Fannie for many years. Very savvy. Leave your own comment.
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Homebuyer Bidding Wars Are Fading Fast, Even in San Francisco

Excerpt: Here’s how rapidly the U.S. housing market has cooled: Buyers are now about four times less likely to face a bidding war than they were just a year ago.
In June, 12% of buyers faced competition compared with 52% a year earlier, according to an analysis by brokerage Redfin of offers written by its agents. While San Francisco is the most competitive market, the share of listings that got multiple offers fell to 28% from 65%.
To read more, click here
My comment: What’s happening in your market? Mine is lot less competition for listings. Keeping a close watch for any price drops…
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Mortgage applications decreased 1.1 percent from one week earlier

WASHINGTON, D.C. (July 17, 2019) – Mortgage applications decreased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 12, 2019. Last week’s results included an adjustment for the Fourth of July holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 24 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 87 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 21 percent compared with the previous week and was 7 percent higher than the same week one year ago.
“Mortgage rates increased across the board, with the 30-year fixed rate mortgage rising to its highest level in a month to 4.12 percent, which is still below this year’s average of 4.45 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Coming out of the July 4th holiday, applications were lower overall, with purchase activity slipping almost 4 percent. Refinance applications increased, with activity reaching its highest level in a month, driven mainly by FHA applications. Historically, government refinance activity lags slightly in response to rate changes.”
Added Kan, “Buyer interest at the start of the second half of the year continues to outpace year ago levels, with activity last week up 7 percent.”
The refinance share of mortgage activity increased to 50.0 percent of total applications from 48.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.9 percent of total applications.
The FHA share of total applications increased to 10.6 percent from 10.1 percent the week prior. The VA share of total applications decreased to 12.9 percent from 13.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.12 percent from 4.04 percent, with points increasing to 0.38 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) increased to 4.07 percent from 4.03 percent, with points decreasing to 0.21 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 4.01 percent from 3.97 percent, with points decreasing to 0.28 from 0.30 (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 increased to 3.48 percent from 3.42 percent, with points remaining unchanged at 0.32 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 3.58 percent from 3.56 percent, with points decreasing to 0.27 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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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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
1 Comment
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