Can Smart Appraisers Make Dumb Mistakes?
By George Dell, ASA, MAI, SRA
Excerpt: I am a smart and educated, award-winning appraiser. It is not possible for me to be irrational. Of course not. You can see that. I can see that.
A high IQ and education won’t necessarily protect you from highly irrational behavior—and it may sometimes amplify your errors. David Robson, in an Excerpt from The Intelligence Trap
Oh No! Who is this guy!? Doesn’t he know how smart I am? Why, even my peers have said I am smart. I pride myself on my critical thinking. Even my kids say that! What more proof do you need? Let’s get this straight: I am rational, smart, of high IQ and extremely educated, especially in my chosen field!
Recently, scientists have started to measure what things go with irrationality. There is even a name for this field of study, this measure: dysrationalia. The studies roughly parallel the studies of dyslexia and dyscalculia (difficulty in dealing with number things).
Understandable, Well Written and Interesting!! To read more, click here
Bidding wars fall to 8-year low in August
Numbers dropped drastically from last summer
Excerpt: Reaching a historic new low, only 10.4% of offers on homes written by Redfin agents in August faced a bidding war. Last month, that number was 11.4%. Last year, that number was at 42%.
August’s total is the lowest bidding war rate on record since 2011, according to Redfin.
To read more, click here
My comments: What’s happening in your market? Reliable appraisals depend on appraisers knowing what is happening, particularly when a market is changing.
My market has seen a significant decline in multiple offers since early 2018. On the flip side, there are relatively few homes for sale. Prices have been stable.
Local agents tell me that the homes that sell have remodeled kitchens and baths. In many other parts of the country, there has been a shortage of new homes to buy, particularly in affordable prices. Maybe buyers want new homes, can’t find them, and are looking at existing homes that have been fixed up.
The coming recession & the housing market
By Ryan Lundquist
Excerpts: Last time isn’t the new template: The collapse of the economy during the last recession isn’t the new template for how every future recession and housing market will unfold. I’ve heard things like, “I’m so ready for this recession because I’m going to buy low after values tank.” But prices don’t always crash during a recession as you can see in the images below…
Don’t get too stuck on prices: When we think about a recession, let’s of course watch prices, but the bigger story will likely be found in what happens to the number of sales. Are buyers playing the market or are they backing off? In short, let’s not forget to watch sales volume because we’re so obsessed with prices.
Read the full article for lots more analysis click here
NAR economist’s analysis click here
My comment: I have been reading economists’ comments on this topic, including the link above. But, appraisers are much closer to the actual market. Many thanks to Ryan for good explanations, plus some graphs, of course!
The Commuting Principle That Shaped Urban History
From ancient Rome to modern Atlanta, the shape of cities has been defined by the technologies that allow commuters to get to work in about 30 minutes.
Excerpt: In 1994, Cesare Marchetti, an Italian physicist, described an idea that has come to be known as the Marchetti Constant. In general, he declared, people have always been willing to commute for about a half-hour, one way, from their homes each day.
This principle has profound implications for urban life. The value of land is governed by its accessibility—which is to say, by the reasonable speed of transport to reach it.
Fascinating, with good graphics!! To read more, click here
My comment: Today, when and commutes have been getting worse in many areas, distance from shopping and walk scores affect home sales it may seem unusual. But, 2,000 years ago Rome was set up to have no more than 30 minutes of walking was needed.
New In the September 2019 Issue of the Paid Appraisal Today!!
- Bifurcated Appraisals and USPAP Compliance By Julie Friess, SRA
- Moasure – A New Way To Measure! By Wayne Pugh, MAI
- Evaluations: Yes, No or Maybe By Tim Andersen, MAI
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The United States of Abandoned Places
From Alabama to Wyoming, there are abandoned towns, amusement parks, and ruins lurking in your home state.
Just For Fun!!
Excerpt: Hidden deep in forests or in plain sight on the side of highways, the United States has its fair share of abandoned places. Ghost towns, forgotten theme parks, and overgrown hospitals can evoke a sense of mystery about what came before us.
Sometimes places are abandoned after disaster strikes: Jazzland, a former amusement park in New Orleans, was judged too expensive to restore after Hurricane Katrina and left in ruin. In other cases, times change so rapidly that entire towns can be left behind: the former gold-rush settlement of Rhyolite, Nevada, was inhabited for only 12 years before nearby mines closed and residents were forced to move elsewhere.
Scroll down the page, check out the fotos, and click on a few. For more info, click here
My comment: abandoned places are one of the most popular links for my readers, and myself ;>
1004p hybrid real estate appraisal report
One appraiser’s experience
by Mary Cummins
Excerpts: The inspection report, sketch, measurements and photos give the appraiser enough information to satisfactorily complete the appraisal report. I’ve found the inspectors take way more pics than necessary. They take a few pics per room instead of just one. They take up close pics of the materials. The photos are large and detailed so you can zoom in if there are any doubts.
The measurements don’t always equal the tax roll due to unpermitted additions or mistakes e.g. adding area of stairs. Same happens when I inspect. I only include the tax roll gross living area, bed/bath in my report anyway.
The materials in the written inspection report aren’t always correct but it doesn’t matter. An agent wrote “wood siding” when it’s actually “shingle siding” which I can clearly see in the pic. I report what I see in the pic. The underwriter can see the material in the pic anyway in case the agent or appraiser made a mistake.
To see a copy of the 1004p form and read more, click here
My comment: FYI, Fannie Mae is using the 1004p form to test bifurcated appraisals. I pretty sure it will be replaced by a much better form. The September issue of the paid Appraisal Today has an excellent article Bifurcated Appraisals and USPAP Compliance, written by Julie Friess, SRA
Should I Buy a Home Next to a Drug-Treatment Center?
Excerpts: There is evidence that such centers have little to no impact on safety and property value. But every home buyer has different criteria.
High on the list of things that evoke cries of “not in my backyard” are residential drug-treatment centers. Some worry that they lead to crime and violence, and harm property values.
Two recent studies debunk some of those theories. A 2016 study in Baltimore found that the areas surrounding drug-treatment centers were no more dangerous than those around convenience stores, and safer than those near liquor stores. Across the country, a 2017 study in Seattle found that the presence of a drug-treatment center had no impact on home values, after other variables were factored in.
“There could be nuisance crime right around the property,” said Brady P. Horn, an associate professor of economics at the University of New Mexico, and a co-author of the study about Seattle property values. “There are also positive aspects. They treat substance disorders and they make a neighborhood better. To me the benefits and the costs wash out.”
To read more, including appraiser comments, click here
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Mortgage applications decreased 3.1 percent from one week earlier,
WASHINGTON, D.C. (September 4, 2019) – Mortgage applications decreased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 30, 2019.
The Market Composite Index, a measure of mortgage loan application volume, decreased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 152 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 5 percent higher than the same week one year ago.
“Ongoing trade tensions between the U.S. and China led to volatile, yet declining Treasury rates last week, causing the 30-year fixed mortgage rate to fall to 3.87 percent, its lowest level since November 2016,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite lower borrowing costs, refinances were down from their recent peak two weeks ago, but still remained over 150 percent higher than last August, when rates were almost a percentage point higher.”
Added Kan, “Purchase applications increased 1 percent last week and were 5 percent higher than a year ago. Consumers continue to act on these lower rates, but the volatility in the market is likely leading some borrowers to pause refinancing and buying decisions.”
The refinance share of mortgage activity decreased to 60.4 percent of total applications from 62.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.7 percent of total applications.
The FHA share of total applications decreased to 10.2 percent from 10.5 percent the week prior. The VA share of total applications increased to 11.3 percent from 9.9 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 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 3.87 percent from 3.94 percent, with points decreasing to 0.34 from 0.38 (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) increased to 3.94 percent from 3.89 percent, with points decreasing to 0.24 from 0.26 (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 remained unchanged at 3.80 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.29 percent from 3.31 percent, with points decreasing to 0.32 from 0.33 (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 3.40 percent from 3.42 percent, with points decreasing to 0.27 from 0.39 (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
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