Appraisal News and Business Tips

8-16-19 Newz: Refi Mania – Paper vs. Google Maps – GLA Split/Bi-level homes

Refis Way Up: Almost 20 Million Homeowners Could See A Mortgage Rate Drop

According to new data from the Mortgage Bankers Association, refinances have doubled since late. They’re now at their highest point since mid-2016.

The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage application volume, rose 21.7 percent on a seasonally adjusted basis during the week ended August 9.

Freddie Mac shows the average rate on a 30-year, fixed mortgage is just 3.6% — a 15-point decrease from one week prior.

To read more, click here

My comment: Don’t work for cheap fees! Make money while you can!!

See below for the full MBA report on the refi boom.

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Paper Maps vs. Google Maps 

Excerpt: But despite their current market supremacy, mapping apps have a fatal flaw compared to their paper ancestors. A map that is centered on the user—a format that cartographers literally call the “egocentric” view—blinds drivers to their surroundings. All those stories you’ve read of motorists who’ve charged up sloping underpasses that they mistook for freeway onramps, careened into the Mojave Desert, or steered off a bridge illustrate the risk of maps that de-center the larger context in favor of the individual.

To read more, click here

My comment: I still use my old Thomas Bros. maps on all my appraisals. I take copies of the maps with me. I need to know city boundaries and the “big picture” of where my subject fits in the neighborhood, freeways, etc. Google maps are for getting somewhere, not what the street layouts look like. Do you still use local paper maps? Of course, I use waze to check traffic conditions and google maps to find where I am going, even sometimes when having problems finding a comp!

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A massive garage & paying too much attention to prices

By Ryan Lundquist

Excerpts: saw a massive garage while on vacation that I just have to share. I also have some quick thoughts on focusing too much on prices. Those are the two things on my mind. Then for those interested let’s dive deep into the market.

I took almost two weeks off and part of my vacation was to drive to Boise to visit family. Of course my real estate mind doesn’t shut off when out of town, so I was blown away to see a brand new neighborhood with nearly every other house having a massive RV space in the garage. This one actually has two separate RV spaces. I’ve never seen two spaces like this in my market. Have you?

To read more, click here

My comment: WoW!! I guess people love their RVs in Boise ;>

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10 Websites to Lookup the “Value” of a home

Excerpt: I’ve run my childhood home through each website. The home is a four-bedroom, two-bath, single-family home. I am reasonably confident the home is worth about $130,000.

In addition, I’ve also run through a rental property that I own in Temple, Texas, to see if the results measure up on both. The rental property is newer (built in 2004) but has three bedrooms and two baths. I think the home would probably sell for about $160,000 right now. This is on par with what the county assessed it at this past May.

Let’s see how each website valued the homes…

To read more, click here

My comment: Very interesting brief comparisons of the 10 web sites and the differering values on the same homes!!

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Most appraisers focus on completing appraisals, not the business side of their companies,
and make less money

Excerpt: Many appraisers don’t consider themselves to be “in business”. I know few appraisers who are true entrepreneurs. Most identify themselves as self-employed. Instead of doing appraisals as a trainee or staff appraiser, they do the same appraisals as a self-employed person. But, unfortunately, their business side is often neglected, resulting in lower profits.

How can you become more positive, which is critical to a successful business?

As appraisers we are trained to look at the past (comps). But if you always look at the past, you can’t see the future. Many appraisers are pessimistic about the future of appraising because all they can see is what has occurred since 2008.Some become paralyzed, bitter, and cynical.

To be successful as a self-employed person, you have to see the glass as half full, not half empty. Some of us are naturally optimistic, so it’s easy for us to have an attitude adjustment when we get down. If you tend to look at the bad side (pessimistic), you can change your mental attitude!

See how you rate on my Paycheck vs. Profit Thinking Table!!

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Appraisers Should Never Do Evaluations

Excerpt: When FIRREA 1989 was first written, The United States Congress recognized that there may be rare instances in rural or under-served areas in which a lesser product that does not meet all (or even any) of the requirements of USPAP may be required for a variety of exceptional reasons.

They called these poorly defined “less than appraisal” products, evaluations. They never intended that they should become the preferred lowest cost / fastest turn time ‘valuation product’ available.

As originally written, evaluations were specifically prohibited from being referred to as appraisals, or allowed to ever be called appraisals.

For more info, click here

My comments: Looks like residential lenders are trying to bring evaluations back as a way to get rid of those pesky lender appraisals that take too long and cost too much. They have been popular for commercial properties for awhile. Waivers, AVMs, bifurcated appraisals, etc. etc. The Appraisal Foundation is working on something. Some states have regulations about evals. In my next paid newsletter, I will have a comprehensive article about Evaluations that discusses the many issues, including USPAP.

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What is the New Valuation Body of Knowledge? Part 1

Excerpts: The new body of knowledge for valuation incorporates much of the old appraisal body of knowledge. What is the difference? The fundamental dividing line is actually simple.

Traditional appraisal practice was developed almost 100 years ago — in a dramatically data-different world than today. There were two primary sources of data then. One source was courthouse records, which documented transactions. There was little information on physical features. In many states, even the sale price was prevented from being disclosed. The second source was other people, primarily real estate agents, lawyers, and participants in the transaction. Almost every “comparable sale” required a phone call or a personal visit…

The main point is that the appraisal body of knowledge was formed around collecting four or five comps to support your opinion. Market knowledge was important. Who you knew was even more important.

Then things changed…

To read more, click here

My comment: Data analysis is a hot topic in real estate (and other areas). UAD in appraisals has standardized many of the important factors. What does this mean for appraisals and appraisers?

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GLA Issues When Appraising Split & Bi-Levels… Where The Ground Meets the Wall

Excerpt: When it comes to appraising split-level and bi-level dwellings, trying to calculate the gross living area (GLA) can be tricky. If you’re trying to figure out what the gross living area of one of these types of homes is, there are some important things to consider. For example, where the ground meets the exterior wall of a particular level.

In real estate, the line at which the ground intersects with the foundation of a home, is called a grade or grade line. Did you know that where the ground meets the exterior wall of a level, can have a direct impact on value? How so? Let’s get down to the nitty gritty of it, shall we?…

To read more, click here

My comment: Very comprehensive, well written, article. Don’t miss the fun “split” video at the end. Hint: be sure to watch until 1 minute mark.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.

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Mortgage applications increased 21.7 percent from one week earlier

WASHINGTON, D.C. (August 14, 2019) – Mortgage applications increased 21.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 9, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 21.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 20 percent compared with the previous week. The Refinance Index increased 37 percent from the previous week to its highest level since July 2016, and was 196 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 12 percent higher than the same week one year ago.

“The 2019 refinance wave continued, as homeowners last week responded to extraordinarily low mortgage rates. Fears of an escalating trade war, combined with economic and geopolitical concerns, once again pulled U.S. Treasury rates lower. The 30-year fixed mortgage rate decreased eight basis points to 3.93 percent – the lowest level since November 2016 – and has now dropped more than 80 basis points this year,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “In just the last two weeks, rates have decreased 15 basis points and the refinance index has increased more than 50 percent, reaching its highest level since July 2016. The government refinance index, driven by a 25 percent increase in VA refinance applications, is now at its highest level since May 2013.”

Added Kan, “Purchase applications also benefited from these lower rates, with activity increasing 1.9 percent last week and 12 percent from a year ago.”

The refinance share of mortgage activity increased to 61.4 percent of total applications from 53.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.0 percent of total applications.

The FHA share of total applications decreased to 9.5 percent from 11.0 percent the week prior. The VA share of total applications decreased to 12.2 percent from 12.8 percent the week prior. The USDA share of total applications decreased to 0.5 percent 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 its lowest level since November 2016, 3.93 percent, from 4.01 percent, with points decreasing to 0.35 from 0.37 (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 its lowest level since November 2016, 3.88 percent, from 3.96 percent, with points decreasing to 0.24 from 0.26 (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 its lowest level since November 2016, 3.81 percent, from 3.86 percent, with points decreasing to 0.29 from 0.38 (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 its lowest level since November 2016, 3.28 percent, from 3.37 percent, with points decreasing to 0.34 from 0.37 (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 increased to 3.43 percent from 3.36 percent, with points decreasing to 0.35 from 0.36 (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

Email  ann@appraisaltoday.com

www.appraisaltoday.com

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