The Four Tests of Highest and Best Use


  1. Legally permissible

You must consider whether any zoning issues or restrictions will prevent building on or improving the lot.

Some questions to answer:

  • Do you have a current survey of the property? (If not, obtain one, specifically covering boundaries to learn if easements or encroachments exist.)
  • Are there any deed restrictions?
  • Are there zoning issues, such as minimum lot size or maximum building height or size?

To read more, click here

My comments: Short and well written with good tips for the four tests. This is particularly important for vacant land and areas that are transitioning to other uses, such as changing from homes to conversion to commercial uses. Appraisal highest and best use analysis is critical.

Many residential appraisers miss these issues as most lender appraisals are for standard properties, such as subdivision homes. You can get into Very Big Trouble by just checking the check box, which is probably already checked on your form template…

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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NOTE: Please scroll down to read the other topics in this long blog post on holiday cards and gifts, appraiser discrimination, lighthouse home, assumptions, mortgage origination stats, etc.


FHFA Announces 7.4% Increase in Conforming Loan Limits for 2021

Fannie Mae and Freddie Mac Baseline Limit Will Increase to $548,250

Excerpt: FHFA Announces Conforming Loan Limits for 2021

Fannie Mae and Freddie Mac Baseline Limit Will Increase to $548,250

For more info and good links for your local market click here

My comment: The 7.5% increase, reflects the increase in home prices. More mortgage loans can be sold to the GSEs, increasing the number of loans made. More appraisals needed.


MBA: Upward Revisions to 2020, 2021 Mortgage Forecasts

Excerpt: The latest MBA Mortgage Market Forecast and Economic Forecast for November sees better than expected incoming data resulting in upward revisions to its 2020 and 2021 originations estimates. Total 2020 mortgage originations are now expected to reach $3.39 trillion, an upward revision from the $3.175 trillion forecasted in October. This represents a 50% increase from 2019 ($2.25 trillion) to the highest level since 2003 ($3.81 trillion).

With interest rates hitting record lows for most of the past six weeks, MBA projects refinance originations are expected to jump by 91.5% in 2020 to $1.97 trillion, the highest since 2003 ($2.53 trillion). Purchase originations in 2020 are forecast to increase by 16% to $1.42 trillion, the highest level since 2005 ($1.51 trillion).

MBA now projects given the strong pace of home sales, purchase originations in 2021 are now expected to rise to $1.59 trillion, which would eclipse the previous record high of $1.51 trillion in 2005. Refinance originations, on the other hand, are projected to slow next year to $971 billion as mortgage rates, which should finish 2020 at 2.9 percent, rise to 3.3 percent in 2021.

Together, MBA said 2021 mortgage originations are expected to fall to $2.56 trillion, which would still make it the second-highest total in the past 15 years.

To read more, click here


Illinois Bill Introduced to Include Prohibitions Against Discrimination in Appraiser and Real Estate Licensing Acts

By Peter Christensen

Excerpts: Significantly, HB 5862 would also amend both acts to provide for “a private right of action in the circuit court” – meaning that aggrieved parties could bring civil claims for damages against appraisers and real estate licensees for alleged violations of the discrimination prohibitions. Violations would also subject appraisers and real estate licensees to potential professional discipline.

Coinciding with recent public and media attention regarding allegations of discrimination in property valuations, legal actions alleging unlawful discrimination in appraising have begun to emerge in small numbers in the courts, and complaints have been filed with appraiser licensing agencies as well…

This is not just an issue in regard to single-family homes and residential appraisers. For example, in a civil lawsuit filed earlier this year, appraisers valuing a hotel that had been converted to temporary homeless housing in an East Coast city were alleged by the property’s owner to have violated non-federal anti-discrimination prohibitions similar to those in the Fair Housing Act…

To read more plus appraiser comments, click here

My comments: Of course, real estate agents discriminated significantly in the past and still do it now sometimes. I still don’t understand why (or how) appraisers would discriminate against Black homeowners. Why were they included in the proposed bill? Of course, we are all still affected by slavery, our country’s Original Sin.

Redlining started in the 1930s. Appraisers participated in the redlining by lenders of certain neighborhoods. There were a few areas in my small city, including where I live.

To read more and see the maps, click here Search for your city – box on the upper right.

I was not doing lender appraising prior to 1986. I don’t know if I would have participated in redlining. Hopefully not.Getting too many ad-only emails?


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Marketing with holiday gifts and cards – An Easy and Most Excellent marketing tool!!

Excerpt: Why would you want to send holiday gifts and cards?

It is one of the few times in the year that sending something is not unusual. A few appraisal assignments or referrals, or even one, will more than pay for the cost. Send them to current clients, previous clients, new clients, prospective clients, etc.

Don’t forget the real estate agents that were willing to spend time explaining their sale and appraisers that helped you on an appraisal.

Other topics include: when to send, postal vs. email, gift ideas, types of cards, send cards by December 10. I will be sending over 60 cards this year!

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Live in the Braddock Point Lighthouse on the Shores of Lake Ontario

Excerpts: A home on the shores of Lake Ontario comes with an illuminating amenity—its very own operating lighthouse.

Built in 1895, the Braddock Point Lighthouse in Hilton, NY, is on the market for $996,000.

The lighthouse sits on 5 acres and is connected to the home, which has sheltered a total of five lighthouse keepers and three private owners.

“It retains a lot of the original detail. The current and previous two owners have just meticulously maintained and restored the property,”

To read more and see lots of photos, click here


The Most Important Assumption in My Appraisal Career

Excerpts: Assumption are made on every appraisal because we do not open up walls to see what’s happening behind the dry wall, or crawl into the attic, unless we are performing an FHA appraisal. Appraiser’s don’t have X-ray vision to look below the dirt to see if there is a broken drain tile. You get the idea…

Since March of this year, I have been making a completely different kind of assumption. It has nothing to do with the homes I appraise. However, it has changed the way I complete my inspections. In my opinion, it is an assumption that is far more important than those made regarding the home itself. Why? Because it has life-changing ramifications if I were to make the wrong assumption. What is the assumption?

It has to do with the COVID-19 virus. I am assuming that I am infected. One of the most problematic aspects of this pandemic, in my opinion, is that a person can be infected with the virus, and yet have no symptoms.

To read more, click here

My comment: Written for homeowners, but some good ideas for all of us. I am working on an update of face masks because of the significant increase in cases. Appraisers may need a higher level of protection now. See below.


COVID-19 Recent posts

Dr. Fauci on Surges – Don’t Give Up, Vaccine Approval Process. 11-23-20 12 minute video.

Dr. Fauci says it so much better than I can write about it! He is an excellent speaker and speaks directly to all of us. I tend to be more complicated in my writing. Also, hearing him speak is much better than reading a transcript. I tested this on this new blog post video. Fauci won by a mile!!

Fauci is interviewed frequently, but when on the news it is usually just a brief comment on one topic. I prefer longer interviews, with very good interviewers. That is what I put on my covid blog.

To read more and watch the video, click here


Face Masks Update coming

I am working on an update for appraiser face masks due to the current virus surges everywhere. What is important in selecting a face mask is what you are using it for and how much protection you need. Appraisers need more protection now, as infection rates are going up significantly everywhere.


For now, see my post: How face masks work: excellent animations

Reading about it is much harder to understand. 

The best visualization of the filtering capabilities of face masks at the microscopic level I have seen! Compares cloth to n95. You can scroll through the animations. Less than 5 minutes is required. There are references for more information.

To read more and watch the animations, click here


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 

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 or send an email to . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

Mortgage applications increased 3.9 percent from one week earlier

WASHINGTON, D.C. (November 25, 2020) – Mortgage applications increased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 20, 2020.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 79 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 19 percent higher than the same week one year ago.

“30-year fixed mortgage rates dropped seven basis points to 2.92 percent, another record low in MBA’s survey. Weekly mortgage rate volatility has emerged again, as markets respond to fiscal policy uncertainty and a resurgence in COVID-19 cases around the country. The decline in rates ignited borrower interest, with applications for both home purchases and refinances increasing on a weekly and annual basis,” said Joel Kan, MBA’s Associate Vice President of Industry and Economic Forecasting. “The ongoing refinance wave has continued into November. Both the refinance index and the share of refinance applications were at their highest levels since April, as another week of lower rates drew more conventional loan borrowers into the market.”   

Added Kan, “Amidst strong competition for a limited supply of homes for sale, as well as rapidly increasing home prices, purchase applications increased for both conventional and government borrowers. Furthermore, purchase activity has surpassed year-ago levels for over six months.”   

The refinance share of mortgage activity increased to 71.1 percent of total applications from 69.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 1.9 percent of total applications.

The FHA share of total applications decreased to 10.0 percent from 10.5 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 decreased to 0.4 percent from 0.5 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 a survey low of 2.92 percent from 2.99 percent, with points decreasing to 0.35 from 0.37 (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) increased to 3.18 percent from 3.11 percent, with points decreasing to 0.27 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 30-year fixed-rate mortgages backed by the FHA decreased to a survey low of 2.99 percent from 3.11 percent, with points decreasing to 0.27 from 0.37 (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 a survey low of 2.51 percent from 2.59 percent, with points decreasing to 0.34 from 0.35 (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 2.63 percent from 2.84 percent, with points decreasing to 0.44 from 0.53 (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.


Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041


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