Appraisal News and Business Tips

11-15-19 Newz: Adjustments – Angle Measurements – Zillow iBuying Problems

Accurate Measurements with Odd Angles

Excerpt: Imagine a 2,100 square foot, one and a half story house with an attached garage, porch, and deck. You probably imagined the typical bungalow. Now, imagine that house having 48 corners and only 4 of them are 90 degrees. I recently had an experience with just that house. Some architect, thinking they were Frank Lloyd Wright reincarnated, decided to build this house on a high bank cliff overlooking the Puget Sound. Don’t get me wrong, it was a pretty cool design, but I knew right away when I received the order for that appraisal that I was going to need some help.

To read more, click here Lots of reviews of the product, plus other similar products.

My comment: $19.95. An inexpensive product we all need!! They have been around for awhile, but most appraisers did not know about them. I appraise a lot of Victorians. Very useful!!

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Bifurcation Policy Adopted by NAR

Excerpts: Now we know what you are thinking, they should have banned them all together, but take a look at what the Real Property Valuation Committee proposed and ultimately got passed by NAR’s Board of Directors. NAR has many appraiser members but let’s be honest, the bulk of their members are sales agents. Some of those sales agents may complete the property data collection piece of bifurcated appraisals, so keep in mind a happy median is a good policy for NAR…

By no means are we promoting bifurcated appraisal products, however, this official policy addresses most of the concerns appraisers have with the bifurcated appraisal products. It also gives each state some talking points with their state legislators.

To read more, click here

My comment: The short policy statement was done by NAR’s Real Property Valuation Committee. Worth reading.

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NAR bans “pocket listings”

Excerpt: It’s a practice that was surging in competitive markets such as New York, San Francisco, Los Angeles and Washington D.C. It allowed a listing agent to use a multiple listing service to let others know the property was for sale, usually with an informal “coming soon” notice, while not officially sharing the listing and often retaining a full commission…

The new NAR rule requires properties to be listed on the MLS within one business day of being marketed to the public.

To read more, click here

My comment: For awhile now, in my local MLS, I have seen “coming soon” and “for comps only (after a sale)”. To me, “pocket listings” had always meant a listing that was not exposed to the market using an MLS. Popular with agents as they get all the commission.

My small city did not have an MLS until the early 1990s. A local agent published one line listings and sales. Local appraisers used to come to my office to see the list. There are many markets around the country where many homes sold through agents are not exposed to the market. Some markets also have lots of FSBOs. This new policy can help appraisers.

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Zillow experiences growing pains as it moves from listing houses to buying them

Excerpts: But, while things may be looking up for Zillow Offers, the program’s costs are exceeding the money coming in, leaving the company operating at a big loss.

In the third quarter, Zillow posted a net loss of $64.6 million, an increase of more than 13,000% from the same time period last year, when the company lost only $492,000.

For the year, Zillow has now lost more than $204 million, compared to a loss of just over $22 million in the first nine months of 2018.

And basically all of that loss is coming from the company’s homebuying expansion.

Put simply, Zillow is losing $113 every time it buys and sells a house.

In Q3, Zillow purchased 2,291 homes and sold 1,211 of them.

The company ended the quarter owning 2,822 houses.

To read more, click here

My comment: I’m not surprised at these results. Flipping is a tough way to make money, even if you are very familiar with the local market. Appraisers need to be careful about sellers selling to Zillow (and other ibuyers) with a steep discount. Be sure to use the resale price.

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Staying positive with low fees, excessive revision requests, etc. from AMC

Excerpt:

Positive vs. negative attitudes towards your business

For all business owners, seeing the glass as half full rather than half empty is critical for success.

Fortunately, I have always been a “glass is half full” person. I learn a lot from my mistakes, and try to do better the next time. If you tend to be a “glass is half empty” person, you can change, but it takes work.

Also, having a negative attitude is very stressful, affecting your health and relationships with your family and friends. With a positive attitude, you will spend less energy worrying and fretting over things you cannot change. Then, you can focus on today and planning for the future.

Remember what it was like during the crash after 2008, when there were

very few loans, and appraisal volume severely declined? If you are reading this, you are a survivor. Mortgage lending is very, very cyclical. Those that adapt survive.

But, surviving the changes is very difficult without a positive attitude.

To read the full article, with lots of practical advice, in the February 2019 issue, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

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Home Inspectors Tell All: Strange but True Tales From the Trenches

Excerpt: Home inspectors go where none of us particularly wants to go—into all the nooks and crannies around our homes, both inside and out. So you can bet that they’ve seen it all. You know—all that stuff that you don’t want to think about happening in those dark and creepy spaces.

Wait, actually we do want to know. (Is it masochism?) So we asked home inspectors who’ve been in the biz for a long time—and boy, did they deliver, with stories ranging from Stephen King–level horror to just downright weird. Check out some of the crazy things these home inspectors have witnessed. It’s all in a day’s work!

For more info, click here

My comment: I don’t even want to think about crawling under homes, checking out what’s under the kitchen sink, etc.!! Of course, appraisers see lots of strange things, such as DIY projects that did not work out well. I have always wondered why so few appraisers became home inspectors (or did both). Awhile ago I wrote an article on home inspections and found out a lot about it – licensing, fees, marketing, associations, etc.

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Navigation Apps Change Traffic

Excerpt: … virtually everyone is following a routing app, in L.A. and beyond. A 2015 Pew survey found that 90 percent of Americans who own smartphones get their driving directions from them, at least some of the time. Our troubled psyches are soothed by the constant movement the apps encourage us to be in. By isolating the source of jams in closures and crashes, the apps teach us why congestion even exists, a question that can be as aggravating as the thing itself. “Why is traffic slow? How can I get around it? Waze tells me,”

To read more, click here

My comment: In the past few years on my narrow block (no parking on one side, two cars can barely pass) traffic has become much heavier. Hard to back out of my driveway. Why? I live between two busy streets. There are stop signs on those streets. When people stop, they use my block as short cut. I live on an island and traffic over the 3 bridges and 1 tunnel regularly gets bad, especially during commute hours. Before I leave my house, I check waze. I also check it for any freeway problems before I leave.

We know traffic can have an effect on value. Consider checking Waze and/or asking the owners if traffic has changed. Or, check online, where there are lots of stories about this.

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How Appraisal Adjustments Work

Excerpt: A scale is simply a tool of measurement. In appraising real estate appraisal, there are many features of a home that are measured. If you look at most real estate appraisals that are documented on a form style report, you will note that there are usually positive and negative adjustments on the grid, next to different features of the comparable sales.

That is where appraisers reflect the measurement of value for that specific feature. For instance, location, lot size, view, room counts, gross living area and so forth. Adjustments, like weighted scale stones, are used to measure value incrementally.

To read more, click here

Lots of fun fotos and animated gifs ;>

My comment: Written for home owners, but useful tips for appraisers, especially when trying to explain adjustments to home owners, real estate agents, and everyone else ;>

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Mortgage applications increased 9.6 percent from one week earlier

WASHINGTON, D.C. (November 13, 2019) – Mortgage applications increased 9.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 8, 2019.

The Market Composite Index, a measure of mortgage loan application volume, increased 9.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index increased 13 percent from the previous week and was 188 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent higher than the same week one year ago.

“Mortgage applications increased to their highest level in over a month, as both purchase and refinance activity rose despite another climb in mortgage rates. Positive data on consumer sentiment, and growing optimism surrounding the U.S. and China trade dispute, were behind last week’s rise in the 30-year fixed mortgage rate to 4.03 percent,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “Refinance applications jumped 13 percent to the highest level in five weeks, as conventional, FHA, and VA refinances all posted weekly gains. With rates still in the 4 percent range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020.”

Added Kan, “Last week was a solid week for homebuyers. Purchase applications increased 2 percent and were 15 percent higher than a year ago. Low supply and high home prices remain a key characteristic of this fall’s housing market, which is why the largest growth in activity continues to be in loans with higher loan balances.”

The refinance share of mortgage activity increased to 61.9 percent of total applications from 59.5 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 13.1 percent from 11.8 percent the week prior. The VA share of total applications increased to 12.7 percent from 12.0 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) increased to 4.03 percent from 3.98 percent, with points decreasing to 0.31 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 3.98 percent from 3.97 percent, with points decreasing to 0.22 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.85 percent from 3.79 percent, with points increasing to 0.28 from 0.21 (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 3.43 percent from 3.38 percent, with points decreasing to 0.28 from 0.31 (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 decreased to 3.40 percent from 3.43 percent, with points decreasing to 0.17 from 0.21 (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.

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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

Email  ann@appraisaltoday.com

www.appraisaltoday.com

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