“Damn Right I’m a Competent Appraiser…Aren’t I?”
By Tim Andersen, MAI
Excerpt: To appraise a property, and then report it according to USPAP, is a requirement USPAP demands and the states enforce. All too often, reviewers see in reports boilerplate (especially in the reconciliation) such as: “In my professional opinion, the value of the subject is $XXXXXX”. In the light of competency, look closely at SR1-6(a) and (b), the reconciliation standards rule. What is a Competent Appraiser?
If there is nothing more in the reconciliation than this single (essentially meaningless) sentence, the appraiser has not complied with SR1-5(a) and (b), thus evidenced a lack of competency. In turn, the appraiser certified to a lie, in that, in not complying, the appraiser omitted preparing the report in accordance with Standards 1 and 2 of USPAP. To add insult to injury, the appraiser has violated SR2-1(b) in that the above statement and certification, with no other context or explanation, are misleading. Three serious USPAP violations might stem from these 11-words.
Therefore, relative to the concept of competency, the deeper meaning is that the above 11-words are capable of generating three charges from the state. In addition, they can generate questions from reviewers. When appraisers appraise the property credibly, and then report the results of that appraisal in a non-misleading manner, they avoid both attention from reviewers and from the state. Thus, in turn, they save not only time and money, they show themselves to be competent. They appear more professional. Professionals can and do charge more for their time and efforts, right? Let us, therefore, be professionals.
My NOTE: This blog post starts with USPAP competency standards and includes an analysis of Competency and the Fannie forms Neighborhood section.
To read more, click here
My comment: Tim Andersen is definitely a USPAP Expert! He writes, speaks, teaches classes, etc. on USPAP topics. He also helps appraisers get their appraisals more USPAP complaint. He focuses on residential appraisal issues – state boards, reviewers, AMCs, etc.
To read about lots more appraisal topics, continue reading below!
NOTE: Please scroll down to read the other sections of this long blog post on iBuyers, appraisal creep, popular MLS words, toilets , retirement, mortgage origination stats, etc.
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Appraisal Creep – The Hidden Reason Why House Prices Are Too High
Excerpts: Appraisal values should not be influenced by the price of the listing, but could a bias exist that proves otherwise? “Does the typical appraisal protect you from overpaying for a house?” asks John Wake in his article, The Hidden Reason Why House Prices Are Too High (And Income Growth Is Too Low) — Appraisal Creep.
The study looked at houses where two appraisals were done, one after they were foreclosed on and Fannie took ownership, and a second appraisal when they were under contract. Both appraisals were done within 6 months of each other and no repairs were made to the houses in the meantime. After adjusting for general house price appreciation between the first and second appraisals, the study found the second appraisals were 4.2% higher than the first appraisals…
The study made a few suggestions. The one I mentioned in the Forbes.com piece was not giving the appraiser the contract price. On one hand, the contract price holds a lot of information in it. On the other hand, releasing the contract price seems to skew the resulting appraisals a lot.
Appraisal Buzz short interview To read more, click here
Read lots more analysis and graphs in his very good Forbes article, To read more, click here
Beware of Spot Value Solicitations
Excerpt: Many appraisers have gotten invitation letters in the mail from Spot Value to join their panel. The letter states that the appraiser was recommended by one of their clientsand that their panel is by invitation only!
They have a website which makes them look legit. Their address at 2601 Main St, Irvine, CA 92614 is to Century Centre building but they do not provide a suite number. The domain is registered to a Michael Miller who is also the CEO and sender of the invitation letters. We were unable to reach Michael Miller at 919-404-4889. Their greeting message is computer generated and there is no voicemail setup to leave a message.
We researched the name Michael Miller and found the following:
To read more, click here
My comment: I have been reading comments online about Spot Value by appraisers for awhile. Many thanks to appraisersblogs for doing some research!! I did not receive an email. Guess I am on the Do Not Every Contact list ;> I think I am on many of those lists…
What Skills Do I Need Now?
By George Dell
Excerpt: Well, machines do some things better. While humans are better at other things. Machines (computers) are really good and really fast at calculations and doing what they are told to do. Humans are really good at seeing patterns, visualizing, and explaining things. Machines are good at handling masses of data. Humans are terrible at handling data beyond five or six data points.
Machines do not know how to interact with the human brain – until some human brain explains to the computer how to communicate with other human brains. Simple huh? So, who is good at telling computers how to interact with human brains?
To read more plus the appraiser comments click here
My comment: I have known George for a long time. He regularly writes much longer articles for the paid Appraisal Today and I regularly link to his blog posts in these free emails.
I will never forget the “Quants” (statistical analysts) that kept saying there was nothing bad before the last crash. Why? They did not include the Great Depression data, the only time when prices all over the country crashed. After then, it was local price crashes such as boom and bust oil dependent areas, etc. It never happened again until the 2000s. They never considered the angry appraisers, including petitions, about mortgage broker scams which all appraisers knew about – unqualified buyers, fake business income and expenses, etc. Data Rules….Unless It Is Inadequate and gives bad statistical results.
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Should You Stay or Should You Go?
That is the Question…
Many appraisers are burned out on excessive AMC hassles and low fees. Working 7 days a week is too much. Some are well over 60 and thinking about retirement. Others are considering a career change, changing their appraisal business, cutting back on hours, etc. What about the future with bifurcated appraisals and new online forms? Next month’s paid newsletter will have lots of options, tips, etc.
I am 76 years old and have cut way back on appraising to have more time to play pickleball, socialize with friends, etc. No more 60-80 hour weeks. My Social Security of $3,500 per month plus income from my newsletters helps a lot.
What do you think? Please hit the reply button. I really want to hear from you!!
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The Best 18th-Century Toilets Were Designed to Look Like Books
Just for Fun!!
Excerpt: READING MATERIAL AND TOILETS HAVE a special relationship. Stacks of magazines are as common a fixture of many washrooms as toilet paper, toothpaste, or towels. The porcelain-throne-as-reading-nook trope is so famous that Barnes and Noble once created a list of the five best “books to read in the bathroom,” ideal for tackling in “two- to 10-minute increments.”
Books had a place in some 18th-century bathrooms, too, but they weren’t always for reading. Occasionally, they were just highbrow camouflage…
For more info, click here
My comment: Interesting. Just For Fun (and some very strange info and fotos) . I could not include any photos – copyrighted or in non-image formats. Worth checking out!!
The Most Popular Words in Real Estate Listings
Excerpt: No matter the price range or the region, the three absolute winners are “granite countertops,” “hardwood floors” and “stainless steel appliances,” signaling buyers’ preference for practical and beautiful listing details.
If you’re expecting to find major differences between listing descriptions in the $250,000 to $500,000 range and listings in the “$1M-$5M” range, you’ll be disappointed. An increase in buyers’ expectations, coupled with a generalized upgrade in amenities to meet those expectations, has led to the majority of listing descriptions mentioning quite similar features.
Lots more data and graphs by price range, region, etc etc. Very interesting!!
To read more, click here
My comment: Guess they don’t count “fixer upper” or “lowest priced home”. I do a lot of estate work and these are what I often appraise. I look up to see if I can see the sky through the ceiling, etc. ;> Almost every listing here is staged and fixed up.
When I started appraising here in 1986 I had never done a Bay ARea residential appraisal. Fortunately had a broker’s license with full MLS access. The MLS tells you what is important and, sometimes, what is not important. For example, in Berkeley CA the names of certain historic architects were regularly included in the MLS. It made a definite difference in value. I never saw it anywhere else I appraised, but it does occur in some cities.
iBuyers… The Pawn Shops of Real Estate
By Jamie Owen
Excerpt: Over the years, pawn shops have been a place where those in need of quick cash can go to get out of a tight situation. Others have come into possession of something that they would like to sell quickly for cash, without the difficulty of trying to sell the item on their own…
The concept of offering a cash deal on a home at a discounted price, in order to then sell it for a profit, is not a new concept. In fact, investors have been doing this very thing for many years. I have done a fair amount of appraisal work for investors who want to know what the market value of a home is before they purchase it, and then after they renovate it.
However, the iBuyer is being branded as something new. While the business concept is like an investor who purchases something at a discount and then sells it for more, to make a profit, the iBuyer concept is designed to streamline the entire process of selling a home into one relatively easy transaction, using technology to assist in the valuation process.
Fascinating and worth reading, To read more, click here
My comment: Jamie Owen is a genius! I have no idea how he figures out to combine pawn shops and iBuyers!! I love his short videos.
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 email@example.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
Mortgage applications increased 30.2 percent from one week earlier
WASHINGTON, D.C. (January 15, 2020) – Mortgage applications increased 30.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 10, 2020. Last week’s results included an adjustment for the New Year’s Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 30.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 67 percent compared with the previous week. The Refinance Index increased 43 percent from the previous week and was 109 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 16 percent from one week earlier. The unadjusted Purchase Index increased 51 percent compared with the previous week and was 8 percent higher than the same week one year ago.
“The mortgage market saw a strong start to 2020. Applications increased across the board, and the 30-year fixed mortgage rate hit its lowest level since September 2019,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act. It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.”
Added Kan, “Homebuyers were active the first week of the year. Purchase activity was 8 percent higher than a year ago, and the purchase index increased to its highest level since October 2009. Low rates and the solid job market continue to encourage prospective buyers to enter the market.”
The refinance share of mortgage activity increased to 62.9 percent of total applications from 58.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.5 percent of total applications.
The FHA share of total applications increased to 12.7 percent from 12.2 percent the week prior. The VA share of total applications decreased to 12.1 percent from 14.1 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to the lowest level since September 2019, 3.87 percent, from 3.91 percent, with points decreasing to 0.32 from 0.34 (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 $510,400) decreased to the lowest level since November 2016, 3.83 percent, from 3.88 percent, with points increasing to 0.24 from 0.17 (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 the lowest level since October 2019, 3.78 percent, from 3.85 percent, with points increasing to 0.30 from 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 the lowest level since September 2019, 3.30 percent, from 3.35 percent, with points decreasing to 0.27 from 0.29 (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 3.35 percent from 3.19 percent, with points decreasing to 0.11 from 0.18 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
2033 Clement Ave. Suite 105, Alameda, CA 94501