Building a Secure Appraisal Business
by Joshua Walitt
Excerpt: Like many of you, I got my start as a real estate appraiser in residential mortgage work. At the time, residential mortgage work was all that I knew, and for a time, all that I thought I could do!
As a residential real estate appraiser focusing heavily on 1004 work, I had blinders on and I had not adequately considered the many, many opportunities available to me. As I developed as a professional, I began to realize that the potential career paths, types of work, and the different roles available to a real estate appraiser vary widely. I think too often as appraisers we severely limit ourselves into what we can or can’t do and define the services we can offer to the marketplace far too narrowly.
The industry is changing, and I like to think of myself as being part of the change, rather than being apart from the change. As appraisers, we each need to ask ourselves: “Do I want to be a part of the change that is taking place in the industry, or will I be apart from it?” Either way, as things change in life and in business (and they will!), we are all faced with a choice about how we will adapt to the changes and overcome the obstacles we encounter along the way. As the appraisal industry continues to evolve and change, it’s important that we appraisers understand that we are capable of providing a very wide range of services in a variety of roles.
For example, here is a list of valuation-related services that appraisers are suited for and can diversify into…
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My comment: worth reading with lots of ideas. I have been writing about this since 1992.
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The One Personality Trait Every Property Appraiser Must Have
“As an appraiser, you MUST give an unbiased opinion of value based on the data you have collected and your experience for it to be valid.”
“If you can’t be unbiased you should not be an appraiser. It is the hallmark of what an appraiser does.”
“Every appraiser needs to be unbiased. You can have knowledge, experience, patience, and all the credentials in the world, but if you are biased in either direction you are doing your client a disservice whether it benefits you or them.”
To read the other top traits and other interesting comments, click here
My comment: I was trained at an assessor’s office. When I first started working there I was told never to even have a taxpayer pay for your lunch. We were trained to be unbiased. Lending was a big shock for me later, with the pressure for values and non-disclosures. Most say that ethics come from within you. But, maybe fear of losing your appraisal license could be a motivator.
I don’t think that USPAP, licensing, regulations, etc. has done much about this. All it does is make us pay for a new USPAP book and class every other year. Plus way too many changing regulations. Plus very uneven state board enforcement. Before licensing, lenders knew who on their panels were ethical. When I started worked at a biotech company doing real estate management, I knew which local commercial appraisers were ethical and who was not after making a few phone calls. Of course, to many AMCs, all appraisers are the same, are sorta stupid and maybe unethical.
Data Standards and Appraising
By Elizabeth Green
Excerpt: Professional Standards
Standards like Uniform Standards of Professional Appraisal Practice (USPAP) define processes, protocols, and considerations that appraisers should follow in order to ensure compliance with how their work is viewed and judged by licensing authorities, peers, and clients. Ethical standards and best practices exist in many professions for similar reasons, examples include attorneys, accountants, and physicians.
To read more, click here
My comments: ANSI square footage is mentioned in the article. It is a standard appraisers are familiar with. You have to purchase a copy. Liz Green has been doing this for a long time, back to the days many years ago, when Fannie was trying to set up MISMO standards for appraisal data. She is very savvy.
For appraisers, a big issue is why we have to pay for our USPAP standards every two years. In my March newsletter I will have the first article on this topic, explaining why have to pay USPAP standards, “Why is USPAP copyrighted? Why you must buy it every 2 years?” (It is all about money.) Future article(s) will expand on the Appraisal Foundation and what it does with your money.
late 1980s and started my paid appraisal newsletter in 1992. I focus on having a more satisfying (and profitable) appraisal business.
17 Jaw-Dropping Cliffhangers
Just For Fun and a Brief Escape from the Daily Grind ;>
Precarious observatories, windswept lighthouses, remote monasteries, and other places that are literally on the edge.
Excerpt: These places, which are found around the world, promise incredible views and, often, churning stomachs. From lighthouses on eroding perches to monasteries only accessible by steep, steep stairs, these structures sometimes seem defiant, hanging on against all odds and reason. Here are 17 spots on the edge. Savor the view, and watch your step.
Above is a photo of one: Castle of Roccascalegna (Italy)
This precariously perched fortress was once ruled by a crow-worshipping baron. Roccascalegna is a small village in the Majella region of Abruzzo in central Italy. The village, thought to be founded by the Lombards around 600, sits at the foot of the impossibly-built Castle of Roccascalegna.
To read more, click here
Click on the photos you like to see lots more photos and information.
My comment: I have always loved looking at cliff hanger buildings. I have no idea why… Maybe because I have never lived anywhere with steep mountains and cliff hanging buildings ;> We do have homes falling into the ocean from hillside erosion on a steep bluff …
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New in the March issue of the paid Appraisal Today
- Restricted Appraisal Reports – Yes, No or Maybe? By Tim Andersen, MAI
- Why is USPAP copyrighted and Why must you buy it every 2 years?
- How much money did you make per hour on your appraisals, after expenses, in 2019?
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Adjustment? How much value does a pool really add?
By Ryan Lundquist
Excerpt: What is a built-in pool worth? I get asked this question all the time. Well, let’s look at some fresh stats to help show why there isn’t a one-size-fits-all answer.
It’s easy to get stuck giving the same value adjustment every time we see a pool, but the market doesn’t pay the same amount for a pool everywhere because buyers have different expectations based on location and price range. So a pool probably isn’t worth anything in Antarctica while it’s worth way more in Arizona. As local stats show, in some areas like Granite Bay, buyers hands-down expect a pool to be present while in other places pools are extremely rare. Of course just because a pool is not common doesn’t mean it doesn’t add value. I’m just saying this gives us pause to consider the value of a pool might not be the same everywhere.
For more info, click here
My comment: In my market, with cool weather most of the year, especially in the summer due to fog, pools are neutral. Have not seen a premium or a loss. Sellers offer to fill in pools, but never do. It limits the number of possible buyers because of the safety issues.
Adjustment? Listing in Early May Can Earn Home Sellers a Premium
Excerpt: Early May is the best time to list in 17 of the 35 largest metros in the U.S. But there are some differences across the country, which could be impacted by local market dynamics or even the weather — buyers don’t want to drive to showings or open houses through the snow, if they can avoid it. The earliest is in San Diego, where the second half of March is typically the best time to list. The latest is in Cincinnati, where sellers see the greatest premium when listing their home in the first half of July.
The typical premiums when listing during these windows are greatest in San Jose, Minneapolis-St. Paul and Seattle. Homes in San Jose listed in late April bring a 2.1% premium, or $24,400 on a typical home there. The typical premium sellers in the Twin Cities that list in the suggested early May window can earn is 2%, or $5,700 on the median home there, while those in Seattle that list at the same time typically earn a 1.8% premium, or $9,500.
To read more, click here
My comment: Months listed for many markets around the country. In my market, the prime time has always been early spring. Picking the correct month is critical. Summers are not very good for unknown reasons. Early fall is good. Thanksgiving to New Year’s is bad. What is your local market like?
Adjustment? Let there Be Light
Though difficult to measure its exact value, natural light undoubtedly helps with a home’s desirability.
Excerpt: “When you have natural light, the home becomes alive. Everything is so real, so you appreciate the color of the floor, the color of the walls, the artwork,” said Isaura Curiel, an agent with ONE Sotheby’s International Realty in Aventura, Florida.
Even if they do not realize it, many potential home buyers often harbor a visceral partiality to sunlight, which numerous health studies link to increased productivity and improved well-being…
In cities that grow vertically, the amount of sunlight that streams into narrow townhomes and even lower-level apartments, depends not only on properties’ architecture but also on their environment…
To read more, click here
My comment: I had not really thought much about this until I read the article. When I started doing lender appraisals in the winter when the sun goes down early, I tried setting appointments after dark. It did not work at all as the home looked very different.
In my small home, the living room has a big window (facing west) and sliding glass door (facing south). The living room is has good light almost all of the day. The adjacent bedroom, also facing west, is dark. It has a small window on one side. I installed a light tube, which helped, but still often have to turn on lights in the daytime.
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Mortgage applications increased 1.5 percent from one week earlier
WASHINGTON, D.C. (February 26, 2020) – Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 21, 2020. This week’s results include an adjustment for the Washington Birthday (Presidents’ Day) Holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 152 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago.
“Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago, but applications overall moved 1.5 percent higher,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Refinance applications for conventional loans dropped a bit, but FHA refinances increased more than 22 percent. Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months. With housing supply at low levels, new inventory is a positive development for prospective homebuyers.”
Added Fratantoni, “As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility. Next week’s results will show the impact this drop in Treasuries had on mortgage activity.”
The refinance share of mortgage activity decreased to 60.8 percent of total applications from 63.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications.
The FHA share of total applications increased to 10.5 percent from 9.5 percent the week prior. The VA share of total applications decreased to 11.8 percent from 12.1 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.73 percent from 3.77 percent, with points decreasing to 0.27 from 0.28 (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 3.72 percent from 3.79 percent, with points increasing to 0.23 from 0.19 (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 3.84 percent from 3.86 percent, with points increasing to 0.26 from 0.24 (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 3.18 percent from 3.22 percent, with points decreasing to 0.23 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 5/1 ARMs decreased to 3.21 percent from 3.23 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 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
2033 Clement Ave. Suite 105, Alameda, CA 94501