Reconsiderations of Value and What to Do About Them
By Danielle Lopez
Excerpt: It is Tuesday morning and I have my day planned and timed between reports that are due and morning inspections. I’m just about out the door when I receive an email notification for an appraisal I submitted last week. The notes indicate “Reconsideration of Value.” You know the drill, I’m sure.
Since I just completed this appraisal it was fresh in my mind. I recall the steps, time and attention to detail to locate the appropriate sales. I review my appraisal, and the unadjusted range of sales is $740,000 to $761,000, with adjusted prices of $740,000 to $756,000. I utilized three closed sales and two active listings/pending sales to support my opinion of value. The sales comparison approach is tight, bracketed and the report has an additional forty-eight pages of supporting documentation and explanation for the reader.
I open the notes from the AMC that say: “Please review the attached sales and indicate why they were not utilized in the appraisal.”…
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NOTE: Please scroll down to read about lot size mistakes; unusual mailboxes, time management, end of open floor plans, mortgage origination stats, Covid tips for appraisers, etc.
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Lot size mistakes
By Ryan Lundquist
Excerpts: I’ve seen it happen twice lately where Tax Records lists the lot size, but it’s actually incorrect. In one instance Realist showed the lot was five acres when in fact it was only two acres. In another example it said two acres when it was less than one. Yikes.
My advice? Thankfully most of the time we can trust the lot size in Tax Records, but it’s still a good idea to quickly double-check just to be sure. After all, listing the wrong lot size in MLS or an appraisal could lead to litigation, right? What we can do is view the plat map to see if there is anything abnormal as well as try to piece together the lot size (easy to do if it’s a rectangle)…
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Short with good map illustrations. Plus many, many appraiser comments. I guess it is a hot topic!!
My comments: Also check out Ryan’s local recent market video for some good ideas on how to show market conditions. Plus, all his graphs illustrating his local market.
When I want to know the lot dimensions to determine lot size, I always get a copy of the legal description (usually from the recorded deed). Assessor’s office maps are for assessment purposes and do not always match the legal description. Google Maps is a good way to determine parcel size if the site boundaries are clear.
When an owner asks about lot dimensions and lot line locations (usually a dispute with a neighbor), I always give the same answer: “I Always Assume the Fences Are Not on the Property Line. Hire A Surveyor! ”
8 Homes for Sale With Private Speak-Easy Lounges
Just for Fun!!
Excerpt: During Prohibition, thirsty folks had to find watering holes, secret bars, and nightclubs willing to sell spirits—often in private homes. When imbibers arrived, it was necessary to whisper, or “speak easy,” about your interest in an adult beverage to keep activity on the down low.
Today, wetting your whistle poses a new set of challenges. Instead of a prohibition on alcohol, it’s the crowds themselves that are inadvisable. This means the old-fashioned speak-easy has a brand-new starring role in the pursuit of leisure spent sipping suds with friends and family.
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The End of Open Floor Plans: How Homes Will Look Different After Coronavirus
Excerpt: Since the pandemic altered what buyers value in their homes, builders are predicting how future homes will change as a result, and what people will want most moving forward.
- As people spend more time at home during the pandemic, buyers are realizing which features of their homes are working, and not working.
- Home builders predict open-concept floor plans will be a thing of the past, as people now value more walls, doors, and overall privacy.
- New construction, which offers the chance to personalize home features, saw its listing page views grow by 73% over last May.
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My comments: Coronavirus has changed what we want in a house. I have a friend who remodeled her home and interior doors were removed (except for bathrooms). Now she is at home with her husband, who is on temporary furlough. She works from home for the first time and it is a nightmare (cats walking on computer keyboard, working on dining room table, no desk). Plus, no privacy.
Watch what is happening in your market. There are lots of open floor plans. You will often know, of course, by what is put in MLS comments.
Home Offices Top List of Reasons to Move in Wake of COVID
Excerpt: With all U.S. states at least partially reopened, it’s become clear that most Americans who have the ability to work from home want to continue doing so even after the pandemic ends. According to a recent Zillow survey, many would consider a move to more comfortably do so.
For those individuals, offices sit at the top of the list of the home features they desire most in a new home. This is likely due to the fact that, according to Zillow, just a third of respondents report being able to work from an actual home office. Listings mentioning a home office on Zillow have jumped about 10 percent since April 2019.
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My comment: Many of my friends who are working at home for the first time have difficulties: working from a couch, dining room table, children at home, etc. Back problems are common.
I am lucky. I have always lived in a 2-3 bedroom home and had one bedroom available for a home office. All my newsletters, starting with the first one in June, 1992, have been written in my home office. Appraisals and business stuff are done in my separate office in a business location.
Home office space will definitely be popular as many people will continue to work at home after the virus threat is over (someday).
9-20 UPDATE: For lots of Covid analysis and news, go to my new covidscienceblog.com
E&O insurance – How to Reduce Liability, Most Frequent Claims, Statute of Limitations, etc. List of E&O Insurance Brokers
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What’s Your Time Worth?
By Blaine Feyen
Excerpt: The cost of an hour matters because it’s a metric that should be used, not only to decide what to say ‘yes’ to, but more importantly, what to say ‘no’ to! What we say ‘no’ to is often far more important in the short, and the long term, because every decision about how to spend each hour will either positively or negatively affect that hourly rate. What those decisions will also ultimately affect is your happiness, which rarely gets factored into the hourly rate calculation. So, while you might be able to increase your hourly rate by increasing your average fee, lowering your time on each order, and even outsourcing some of the low cost tasks (highly recommend this), a better set of questions and calculations is needed if you have any desire to grow, be more profitable, and enhance your lifestyle.
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My comment: Appraisers sell our time. I have been writing about this since 1992. My most recent article was in the March 2020 issue of the paid Appraisal Today newsletter, “How much money did you make per hour, after expenses, in 2019?” I included excel spreadsheets for income and expenses analysis, plus sample time sheets in word to determine what you spend time on. I used 2019 because most of us were doing our 2019 taxes in March 2019, but it will work any time.
The World’s Most Incredible Mailboxes!
Take a Break and See These Strange, Beautiful and Weird Mailboxes!!
Excerpts: There are few purer joys than the little rush you get when receiving a postcard or letter in the mail. But what you don’t hear a lot about is how good it can feel to drop a letter off in a mailbox. There’s the pure pleasure of sending something to someone you care about, but there’s also a sort of sense of fulfillment in having accomplished something (even if that something is relatively minor. With as pleasant as the whole experience can be, it’s little wonder that there are wondrous mailboxes all over the world that make using the mail even more unforgettable.
Whether it’s one of the most remote mail drops in the United States, a pirate post box on a desert island, or a novelty mail drop for fairies, mail boxes can make for terrific mundane wonders.
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My comment: I gotta pay more attention to mailboxes!! Mine is soooo boring ;>
HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org 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 decreased 8.7 percent from one week earlier,
WASHINGTON, D.C. (June 24, 2020) – Mortgage applications decreased 8.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 19, 2020.
The Market Composite Index, a measure of mortgage loan application volume, decreased 8.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 9 percent compared with the previous week. The Refinance Index decreased 12 percent from the previous week and was 76 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 18 percent higher than the same week one year ago.
“Mortgage applications decreased 9 percent last week, with both refinance and purchase activity falling despite the 30-year fixed rate mortgage staying at 3.30 percent – the record low in MBA’s survey,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinance applications dropped to their lowest level in three weeks, but the index remained 76 percent higher than a year ago. Despite the decline last week, MBA still anticipates refinance originations to increase to $1.35 trillion in 2020 – the highest level since 2012.”
Added Kan, “Even with high unemployment and economic uncertainty, the purchase market is strong. Activity has climbed above year-ago levels for five straight weeks and was 18 percent higher than a year ago last week. One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market. Additional housing inventory is needed to give buyers more options and to keep home prices from rising too fast.”
The refinance share of mortgage activity decreased to 61.3 percent of total applications from 63.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.1 percent of total applications.
The FHA share of total applications increased to 11.4 percent from 11.0 percent the week prior. The VA share of total applications decreased to 11.0 percent from 11.5 percent the week prior. The USDA share of total applications remained unchanged 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) remained unchanged at 3.30 percent, with points increasing to 0.32 from 0.29 (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 $510,400) decreased to 3.62 percent from 3.67 percent, with points increasing to 0.29 from 0.28 (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 increased to 3.35 percent from 3.33 percent, with points decreasing to 0.22 from 0.23 (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 2.81 percent from 2.80 percent, with points increasing to 0.30 from 0.28 (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 increased to 3.09 percent from 3.07 percent, with points decreasing to 0.01 from 0.29 (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