Appraisal News and Business Tips

10-4-2019 Newz: Comp Photos – Waivers – No Permits – Rubik’s Cube

When 1,000 square feet doesn’t count

By Ryan Lundquist

Excerpts: One of the most interesting homes I’ve seen just sold. It was brand new, four stories, and a halfplex. Oh, and on paper it was 3,000 sq ft, but about 1,000 sq ft didn’t count in the square footage. This is definitely a conversation piece, so I’m thankful Realtor Brian McMartin agreed to do a Q&A. I hope this will be valuable and interesting. Any thoughts?

Quick points:

This house has 1,000 sq ft that is not permitted as square footage. The “non-conditioned” space looks just like square footage.

Understanding permits really does matter…

Interview with selling agent plus Ryan’s (and appraisers’) comments. Worth reading.

To read more, click here

My comment: I see non-permitted areas in homes a lot in my city, typically converted basements. Fortunately, I can get the permit info easily from the city and the property owner does not “get into trouble” because of my inquiry. I am lucky.

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‘Appraisal Waiver Questioned by Legislators

Excerpt: Late (last) Friday afternoon”, VaCAP learned the Financial Services Committee Chairwomen. Maxine Waters and Senator Sherrod Brown, Ranking Member of the Senate Committee on Banking Housing and Urban Affairs, sent a letter to the Appraisal Subcommittee Chairman Arthur Lindo inquiring around the circumstances of the North Dakota Appraisal Waiver that was granted a few months back. The exact verbiage used in the letter to describe the waiver was “unprecedented with minimal justification.” This speaks volumes as to their concern.

“Congress has repeatedly recognized the essential role that appraisals play in both safety and soundness and consumer protection. That is why it is so concerning that the ASC, the primary federal organization with oversight over appraisal and appraiser standards, has acted to waive appraiser certification requirements with minimal justification.”

To read more, click here

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Taking Comp Photos, Yes or No. A Very Controversial Topic!!

Yes. Dustin Harris, Sept. 27 in appraisersblogs

To read more, click here

Link to Dustin’s podcast To read more, click here

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No. Michael Ford, Oct. 2 in appraisersblogs

To read more, click here

My comments: Always A Very Hot appraisal topic!! Lots and lots of appraiser comments on Dustin’s blog and appraisersblogs. Post your opinion in the comments…

I can’t decide which side I am on for my own appraisals. Since I have been taking comp photos since 1986, I am not comfortable stopping. However, MLS, Google Street view and aerials, make it easier to see what the comp looks like. But, even though I work a very small geographic area now (my small city), I still drive by the comps because I forget the details of the last time I used the comp. Too many factors: traffic, nearby apartment buildings, deferred maintenance on nearby homes, etc. etc. Of course, when I appraised in other, more rural, areas with gates and signs such as “trespassers will be shot” I used MLS and aerials ;>

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4 Ways International Real Estate Differs From North America

Excerpt: The primary difference across global markets is rooted in the presence or absence of systems and policies based on cooperation. Four of the most significant challenges unique to real estate markets outside North America are as follows:

1. Lack of Systemic Cooperation

Without an MLS system, associates are reluctant to cooperate, buyers struggle to know what is on the market and sellers have limited property exposure to generate a quick sale at the best price….

To read more, click here

My comment: The Appraisal Institute publishes “Real Estate Valuation in Global Markets”, Second Edition (2010). I reviewed the first edition (1997) and it was fascinating!! I highly recommend this book to give you a perspective on what is happening in other countries. It really makes you appreciate how easy it is for U.S. appraisers.

To read more, click here

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 New in the October Issue of the Paid Appraisal Today

  • Risk Management for Real Estate Appraisers and Appraisal Firms – Buy This Book!!
  • Data and Verification Sources(s) are Critical by Dave Towne
  • The differences Between Evaluations and Appraisals by Tim Andersen, MAI

Risk Management book is easy to read and has tips and advice for all appraisers. The very best book I have ever seen on this topic.

Data and verification sources discusses many aspects of this topic and focuses on Fannie and lender appraisals as well as USPAP, comparing data and verification sources.

Tim Andersen compares USPAP and the Interagency Guidelines, including a table with side by side comparisons.

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Blue Door, Red Door, Doggie Door Value

By George Dell

Excerpt: Why won’t statistics work?!

Recent studies, by seemingly responsible companies, have shown such things as red doors, pet doors, $100,000 pools, and flatter roofs as making properties more valuable. My first reaction each time is: “This must be a spoof!” Yet these outlandish, seemingly serious statements keep coming out in full view—embarrassing the very essence of companies, organizations, and people who claim to be on the “forefront of technology.” Why is this happening?

I have been giving talks to investor, lender, and appraiser groups around the country. The topic: Fallacies, Foibles, Fun, and Future of Appraisal. Some statistical silliness and fateful fallacies provide plenty of material for some laughs and some concern.

Examples of Real Estate Statistical Mistakes… (some are very humorous)

To read more, click here

My comment: I have seen some very strange statistical analyses. Zillow likes to do this. Using aggregated data for adjustments is often not the same as local data.

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8 Similarities Between the Rubik’s Cube & Appraisals

Excerpt: If you’re like my family and friends, the topic of real estate valuation is a little boring. Okay, it’s a lot boring! When I start talking about it, I see the look on their faces. It’s like they’ve been cornered and actively thinking for a way to change the subject. Que the conversational rodeo clown. Find a topic that distracts and re-directs the conversation towards anything but real estate valuation. But not today my friend!

One thing that I enjoy about appraising is that lots of comparisons are made. After several decades of performing appraisal work, I’ve become comparison oriented. This often morphs my mind into recognizing crazy comparisons of other things, like the similarities between completely unrelated objects and appraisals. For instance, the Rubik’s Cube and appraisals!

Very interesting. To read more, click here

My comment: Rubik’s Cube and Appraising? I never thought about it until now ;> Of course, I have neve finished a Rubik’s Cube ;>

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Mortgage Activity Posts Solid Year-over-Year Gains

Excerpt: The Mortgage Bankers’ Association’s latest Weekly Application Survey, for the week ending September 27, 2019, showed sharp increases in the year-over-year gains in purchasing and refinancing activity of all mortgages, of 9.6% and 132.9%, respectively (seasonally adjusted). Throughout most of the current year since mid-March, refinancing activity on a year-over-year basis has been particularly strong this year, holding steady from late June through mid-August, and then surging in the fall. In the latest week, the 30-year, fixed-rate mortgage decreased by 9 basis points to 3.64%, consistent with the downward movement of Treasury yields.

Check out the graph to see why you are so busy. If you do non-lender work, you are also busy as lender appraisers turn down this work when they are busy.

To read more, click hereNote: 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 8.1 percent from one week earlier

WASHINGTON, D.C. (October 2, 2019) – Mortgage applications increased 8.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 27, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8 percent compared with the previous week. The Refinance Index increased 14 percent from the previous week and was 133 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago.

“Mortgage rates mostly decreased last week, with the 30-year fixed rate dropping below 4 percent for the sixth time in the past nine weeks. Borrowers responded to these lower rates, leading to a 14 percent increase in refinance applications,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Although refinance activity slowed in September compared to August, the months together were the strongest since October 2016. The slight changes in rates are still causing large swings in refinance volume, and we expect this sensitivity to persist.”

Added Kan, “Purchase applications also increased and remained more than 9 percent higher than a year ago. Low rates and healthy housing market fundamentals continue to support solid levels of purchase activity.”

The refinance share of mortgage activity increased to 58.0 percent of total applications from 54.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent of total applications.

The FHA share of total applications decreased to 10.4 percent from 11.4 percent the week prior. The VA share of total applications decreased to 12.4 percent from 13.1 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 3.99 percent from 4.02 percent, with points remaining unchanged at 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) decreased to 3.98 percent from 4.00 percent, with points increasing to 0.28 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 3.79 percent from 3.90 percent, with points remaining unchanged at 0.23 (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 3.43 percent from 3.46 percent, with points increasing to 0.37 from 0.36 (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 3.42 percent from 3.39 percent, with points increasing to 0.37 from 0.29 (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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