Can You Measure the Accuracy of An Opinion?
Excerpt: Two appraisals are completed on the same property. Each appraiser has a different opinion of the market value. Which one is accurate? Can they both be accurate?
Occasionally, I read articles or hear of companies that refer to the appraiser’s “accuracy rate”. I’ve always wondered how this is possible to measure. After all, an appraisal is an opinion of market value. Interestingly, if you look up the word “opinion” on www.dictionary.com, one of the definitions is, “a personal view, attitude, or appraisal.” Another is, “The formal expression of a professional judgement”. Can an opinion, or a person’s professional judgement be measured?
To read more, click here
My comment: I used to do a lot of relocation appraisals, where 2 or 3 appraisals were done on the same home. If the appraisals had the same values, it was suspicious. We were usually within 5%. Our accuracy was judged on how close we were to the sales price 60-90 days in the future. Very challenging appraisals!!
Video: How to make a graph in Excel with three price metrics
By Ryan Lundquist
From Ryan: I’ve been making tutorials for how to make certain types of graphs. My goal is to help appraisers tell the story of the market.
To watch the video, click here
For lots more videos, go to Ryan’s Youtube page
He uses lots of graphs in his blog http://sacramentoappraisalblog.com/
My comment: Everyone is worried about price declines due to the effects of COVID-19. We all remember the Great Recession, when too many appraisers did not report price declines. But, there was considerable pressure from mortgage brokers not to report price declines. This pressure is gone, especially with the required use of the 1004mc.
Be sure to support your opinion of market conditions with graphs and tables now. Home prices are stable to slightly increasing in most areas. Don’t wait until prices decline.
See below for forbearance info (delaying monthly mortgage payments). Not all loans are eligible. More foreclosures.
Unemployment insurance for employees and self employed persons can help, but the $600 per month additional from CARES will expire in July. If extended, it is very unlikely it will be $600. More foreclosures.
CFPB and CSBS issue statement on mortgage forbearance, warning servicers on borrower guidance
The three-page statement defines protections for borrowers with federally backed mortgages
My comments: Unfortunately, if the home loan is not federally backed (GSEs, FHA, etc) anything can happen. Some borrowers say they are offered 3 months of non-payment with the balance due at the end of the term. It is a Big Mess!!
Forbearance can help some borrowers by delaying monthly payments for up to a year, then adding what is owed to the loan amount. To find out if a home can get forbearance, contact your mortgage servicer and ask who is the lender. Contact the lender. Lots of info online about this. There have been problems with servicers giving incorrect information.
To read more, click here
Terrible Real Estate Agent Photos
Just For Fun and Oddities!!
If M C Escher had tried interior design.
<< 4 bedrooms, 2 bathrooms, and extensive opportunities for open plan off-roading.
Inexplicably bad property photographs.
It’s that simple
Don’t miss the Very Funny Captions!!
To see more, click here
Fast Connection AMC Fined $2.8 Million
Excerpt: The Texas Appraisal Licensing and Certification Board (TALCB) has issued a monetary fine of $2,801,500 against an appraisal management company. Fast Connections USA, Inc. and its President, Towhindul Hussain, were found guilty of hundreds of violations of Texas law and regulations.
TALCB found Fast Connections contracted 274 appraisals in Texas without proper registration. These violations have a mandatory fine of $10,000 each. TALCB also found Fast Connections USA failed to pay appraisers within 60 days as required under Texas law and some appraisers never received payment at all. Neither Fast Connection USA nor Towhindul Hussain responded to TALCB, which tacked on additional penalties.
To read more, click here
My comment: Be sure the AMCs you work (or are thinking about working for) are licensed in your state!! Check with your state regulator.
Advice from Dave Towne
If you are doing any assignments for this outfit, you would be wise to suspend any active report work, contact them, and demand full payment (by a certified bank check, money order, or ETF to your bank) before submitting any report.
If you have done recent assignments for this outfit, and are awaiting payment, you would be wise to immediately call their Accounts Payable department and demand payment… and also contact the LENDER and tell the person directly responsible for their mortgage lending department that the LENDER is responsible to pay you, even though they have used an AMC. If your state has a AMC licensing law, see if there is verbiage stating when payments to appraisers must be made. If your payment is late, file a formal complaint with the state IMMEDIATELY.Getting too many ad-only emails?
How to communicate with appraisers online.
What’s the best way for you?
In the June issue of Appraisal Today
Why connect with other appraisers online?
There are many reasons, especially since many appraisers work solo: get and give advice, see if other appraisers are busy or slow, appraisal problems, AMC/client issues, Fannie new exterior and desktop reports, etc.
Online is much more important now. With COVID-19, people being close together helps it infect more people so it can replicate faster. We must do social distancing to keep it from expanding. But, I really miss face to face communication, such as going each week on the local MLS tour, lunches with local appraiser friends, and attending live appraisal CE and events. I zoom 2-3 times a week, but it is not the same as face to face.
I first went online in the early 90s and started appraiser groups on Compuserve and AOL. (Back when Bill Gates thought the “internet” was a threat to his business.) I started this weekly email newsletter in June, 1994. Once the first web browser was available, I started using it and set up my business web site in 1998.
You can go online at any time, at your convenience. You can spend little time or lots of time. I discuss many different appraisal groups in this article so you can see which ones you like and try out one or two.
Each online group is different. The larger the number of members, the greater the number of postings. Search the services (email discussion groups, Facebook, etc.) for other groups. For example, searching email discussion group services for the word appraiser resulted in hundreds of groups, many of them very small and with little or no recent activity.
Appraiser groups – politics, flaming, lurkers, etc.
All the groups I belong to have moderators. None of the appraisal groups allows political discussions. When one starts it is quickly stopped. They are NPA: No Politics Allowed. I have the same policy in this newsletter.
“Flaming” and personal attacks do occur, particularly on
appraisersforum.com, but they are quickly stopped on the other groups by the moderators. They sometimes remove the person from the group.
“Lurkers” just watch and seldom post comments. Many people are lurkers. But, it is better to be a contributor so you can interact with other participants.
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The skinny on accessory dwelling units
By Ryan Lundquist
What is an accessory dwelling unit (ADU)?
There are lots of definitions out there. In short, an ADU is typically a detached or attached dwelling unit meant for independent living, so it includes a sleeping area, bathroom, and cooking area. California, Sacramento County, and other areas may describe ADUs a little differently.
If a unit doesn’t have a kitchen is it an ADU?
An ADU must have a cooking area. Otherwise we’d call it something else. Personally I’d probably call it a casita, but that’s just me. Anyway, if a builder constructs an “ADU” and it only has a bedroom and bathroom without a kitchen, we just wouldn’t call it an accessory dwelling.
What other words are used to describe an ADU?
There are countless words such as granny flat, casita, in-law quarters, mother-in-law apartment, garage apartment, etc… This could vary from market to market and person to person.
To read more, click here
Lots more info from the American Planning Association click here
Note: image above from their web site.
My comment: This article is well written and useful. ADUs are confusing. More states are allowing them. Determining if a property is 2 units or 1 unit plus an accessory dwelling can be difficult. Often, there are very few, if any, sales with ADUs.
I am in California and have been following the ADU issues for awhile. The state, and cities, keep changing their regulations. Some cities have few ADUs and some have a lot.Fannie Appraiser Update 6-11-20 – extends temporary flexibilities to July 31, 2020
“We have updated Lender Letter LL-2020-04, Impact of COVID-19 on Appraisals, to extend the expiration date for the temporary flexibilities to July 31.”
“As a reminder, you can access the Lender Letter, FAQs, and other resources, including the Top 6 Tips for Appraisers on Using COVID-19 Flexibilities video, on the Appraisers page, and you can submit any questions you have using the Contact Us link.”
Appraisers page: fanniemae.com/appraisers
Link to Contact Us at the bottom of the page. Per Fannie, they read every message sent to them by appraisers.
My comment: These short Appraiser Updates are not posted on the appraiser web page. They are only sent out by email. I guess they are extending it one month at a time even though the pandemic will not be over soon. Directions from FHFA, their regulator, maybe/probably may be a factor.Webinar Title: NEW
FHA Appraisal Policies, Principles, and Practices
Wednesday, June 17, 2020
1:00 PM to 4:00 PM (Eastern)
On-line Webinar — No Fee
Atlanta Homeownership Center
Registration Link: Click here
Description: Representatives from the Federal Housing Administration (FHA) will provide an update to appraisal standards, practices, and policies. The topics for discussion include: COVID-19 appraisal practices; minimum property requirements (MPR); minimum property standards (MPS); deferred maintenance; property flipping; and other pertinent appraisal topics.
This training is targeted primarily to appraisers, underwriters, inspectors, real estate agents/brokers, and lenders; however other seasoned mortgage lending professionals may also benefit from attending.
Attendance for this online webinar is free of charge and open to all FHA-approved mortgagees and all other stakeholders; however, advance registration is required. Seating is limited; early registration is suggested.
Once registered, attendees will receive the link to access the webinar and other details with their registration confirmation.
The Q&A session, which will be conducted at the end of the session, will be by written questions only. All questions must be submitted in advance to: AtlPUDTrng@hud.gov
My comment: I hope all the FHA and Fannie appraiser training will stay online so I can attend!!
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 firstname.lastname@example.org . Or call 800-839-0227, MTW 7AM to noon, Pacific time.
Mortgage applications increased 9.3 percent from one week earlier
WASHINGTON, D.C. (June 10, 2020) – Mortgage applications increased 9.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 5, 2020. The previous week’s results included an adjustment for the Memorial Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 9.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 20 percent compared with the previous week. The Refinance Index increased 11 percent from the previous week and was 80 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 15 percent compared with the previous week and was 13 percent higher than the same week one year ago.
“Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased. The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13 percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinances moved higher for the first time in nearly two months, with both conventional and government applications rising and the overall index coming in 80 percent above year-ago levels.”
The refinance share of mortgage activity increased to 61.3 percent of total applications from 59.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.1 percent of total applications.
The FHA share of total applications increased to 11.5 percent from 11.2 percent the week prior. The VA share of total applications increased to 12.3 percent from 12.0 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.38 percent from 3.37 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.70 percent from 3.66 percent, with points decreasing to 0.26 from 0.30 (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 decreased to 3.38 percent from 3.46 percent, with points increasing to 0.24 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 2.83 percent from 2.85 percent, with points decreasing to 0.26 from 0.27 (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 3.02 percent from 3.05 percent, with points increasing to 0.27 from 0.25 (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.
NOTE: NEW POSTAL ADDRESS
Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501