Why Comp Photos?
by Richard Hagar, SRA
Excerpt: First, don’t even think about not doing it! To begin with, it’s required. Inspecting the exterior of every comparable isn’t a USPAP requirement, by the way, it is a Fannie Mae, Freddie Mac, Federal Housing Authority (FHA), and Department of Veteran Affairs (VA) requirement.
However, FNMA’s requirement goes directly to the heart of USPAP’s “scope of work” rule. USPAP defines scope of work, in part, as: the type and extent of research and analyses. The scope of work section of the 1004 appraisal states “The appraiser must, at a minimum: (3) inspect each of the comparables sales from at least the street.” So, when an appraiser agrees to an assignment and its required scope of work, they have agreed to personally inspect the exterior of each sales comparable used in the appraisal. There is no way around this; an appraiser can’t contradict the certification requirement by inserting a qualification within the appraisal. In other words, it’s your job; you are being paid to personally inspect each sales comparable—so do it!
To read more, click here
My comments: Last week’s newsletter had a very popular negative post on comp photos: Original Comp Photos: Dangerous, Unnecessary. This week is the other side!! I know what it is like to drive many miles to take an original comp photo that I somehow forgot to take. But, I am more comfortable if I take another comp photo again as I forget about the details sometimes. I have used MLS photos when I cannot see the comp from the street.
Hagar discusses the many aspects of original comp photos, including the limiting conditions on the Fannie forms. In my opinion, the statement is somewhat uncertain. “…inspect each of the comparables sales from at least the street”. Does this mean original photos and always driving by? I do not have this statement in my non-lender appraisals, plus many other Fannie statements. However, many lenders and AMCs have this in their requirements.
On the other side, I used to travel to Canada to speak at appraisal conferences. At that time, taking original comp photos was not required for lending purposes. Few appraisers did them. They said they had “seen it in the past”.
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NOTE: Please scroll down to read the other topics in this long blog post on USPAP, comp photos, adjustments, Bias, mortgage origination stats, Covid tips for appraisers, etc.
USPAP 2020-2021 Extended to 2022
USPAP has been extended for one year, effective through December 31, 2022.
Excerpts: From the Appraisal Foundation news release, issued on Feb. 19, 2021: “Pressing issues have arisen in our profession over the past year ranging widely from concerns about fair housing matters to how to conduct a socially distanced property inspection. USPAP is a maturing document, and it can take longer to study the complex issues facing our profession and how they will impact our standards. We believe all of these are all critical issues and deserve thoughtful consideration before we issue guidance,” said ASB Chair Wayne Miller.
From the FAQs: We will be holding a webinar just for educational providers on this decision and our new 7-hour continuing education course on March 4th.
To read the press release, FAQs, and add your comments, click here.
‘Worst House on the Street’ in Florida Is the Week’s Most Popular Home on realtor.com
A real estate agent “anti-marketing”??
$69,000 2bed 1.5bath 826sqft .45acre lot
Zephyrhills, FL, 33541
Description excerpts: Here it is, literally the worst house on the street! The Seller has done the hard work of cleaning up the almost half-acre property (it only took 7 dumpsters… The roof leaks, the floor creaks, and there’s a terrible draft, but this 3 bed, 1.5 bath home is a very open concept. And by that, we mean the inside is open to the outside because several of the windows are broken.
No interior photos. Use your imagination!! To read more, click here
The Freddie Mac House Price Index Is Your Retrospective Friend
By Joe Lynch
Excerpt: Where the FMHPI really shines is with retrospective work. My local MLS has data going back to 1998 for my county. That’s great for the past 23 years but what if a client wants a date of value before then? In the past two years I have had requests for appraisals dated in the 1980s and early 1990s on multiple occasions. Each time I used the FMHPI to determine market trends and calculate time adjustments.
To read more and see lotsa graphs, tables, and explanations on how to use the data, click here
My comments: Most of my appraisals are for estates. Occasionally I get requests for appraisals going back farther than 20 years. There have been no mass property tax assessments in California since 1979 (Proposition 13), so tax records can’t be used. I have MLS books going back to 1986 for many areas, but not all. In my city, they go back to 1980. Getting trends going back in time, even on a regional basis, would be very useful. Plus, very interesting!! I have used Zillow as it allows you to select the city, type of property, etc., but it does not go very far back in time.
Fortunately, today, people usually order an appraisal soon after the person passes. In the late 1980s and 1990s, I frequently did appraisals with an effective date way in the past.Getting too many ad-only emails?
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New in the March Issue of Appraisal Today
- Managing Multiple Appraisal Deadlines, By Doug Smith, SRA, AI-RRS
- If people can’t find you, they can’t order an appraisal or give you a referral
- Review of The Appraisal of Real Estate, 15th Edition
- Sales and financing concessions. What Fannie and USPAP say, Tim Andersen, MAI
- 20 Questions from Tim Andersen
- How affordable, really by Rachel Massey, SRA, AI-RRS
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Otherworldly Milton Sidley House Hovers Over the Market in Malibu for $20M
Take a Break and see the photos of this home!!
Excerpts: The 4,356 square feet of living space include four bedrooms and four bathrooms.
The structure with the bedrooms resembles a landed spacecraft, with podlike rooms extending from a central spine. Those “pods” are elevated 16 feet above the ground, with nothing but air beneath them.
Read more and see lots of photos, click here
My comment: Wow!! One of the most creative, unusual, and livable, homes I have ever seen.
Is Bias Biased?
By George Dell, MAI
Excerpt: Is it possible discussions about bias are biased? Oh no!
Surely personal motive cannot affect my position on bias. Can it?
It is difficult being a word nerd right now. Particularly writing about bias. This is a topic which is much in the news and our culture right now. Being an immigrant myself at a young age affected me in both negative and positive ways. Later in life, I often found myself inside groups of minority outcasts, different, troublesome people, with even “strange ideas about statistics.”
To read more, click here
Three excellent articles on face masks. Very popular posts!
Links are on the top of covidscienceblog.com in the News post.
- Where to purchase non-counterfeit N95 masks from small U.S. manufacturers
- KN94, KN95, and Elastomeric Respirators: What and Where to Buy
- Surgical and Cloth Face Masks – What to Buy and Where to Purchase
I finally found new cloth and N95 masks that I really like!!
I got my second Moderna shot last week and will start appraising again very soon, after a year off because of Covid. I get calls every week for non-lender appraisals, mostly from google searches pointing to my website and my free google business listing. My life will be changing in many ways. Already planning lunches with vaccinated friends and relatives. The only time I see people without masks now is on zoom!!
Three vaccine tips:
- Get shot in your left arm if you are right-handed.
- People over 60 usually have minimal side effects, but some are tired the next day. Younger persons may have mild cold/flu symptoms for a few days.
- Don’t schedule any appraisal appointments for the next day.
Note on any Spam Message: when you click on a link to my covid blog, you may receive a message saying, “website may be impersonating covidscienceblog.com.” My website tech guy says, “McAfee has your covid site blacklisted, saying it distributes malware, but I’ve found nothing on a scan. I think they just blacklisted it because it’s related to covid. If someone has McAfee installed, they will have a problem. As far as I can tell, the site is fine, and everything works as it should.”
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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 11.4 percent from one week earlier
WASHINGTON, D.C. (February 24, 2021) – Mortgage applications decreased 11.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 19, 2021.
The Market Composite Index, a measure of mortgage loan application volume, decreased 11.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10 percent compared with the previous week. The Refinance Index decreased 11 percent from the previous week and was 50 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 12 percent from one week earlier. The unadjusted Purchase Index decreased 8 percent compared with the previous week and was 7 percent higher than the same week one year ago.
“Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed rate last week climbing above 3 percent to its highest level since September 2020. As a result of these higher rates, overall refinance activity fell 11 percent to its lowest level since December 2020, but remained 50 percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Additionally, the severe winter weather in Texas affected many households and lenders, causing more than a 40 percent drop in both purchase and refinance applications in the state last week.”
Added Kan, “The housing market in most of the country remains strong, with activity last week 7 percent higher than a year ago. The average loan size of purchase applications increased to a record $418,000, in line with the accelerating home-price growth caused by very low inventory levels.”
The refinance share of mortgage activity decreased to 68.5 percent of total applications from 69.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.7 percent of total applications.
The FHA share of total applications increased to 11.2 percent from 9.0 percent the week prior. The VA share of total applications decreased to 11.9 percent from 13.2 percent the week prior. The USDA share of total applications decreased to 0.3 percent from 0.4 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.08 percent from 2.98 percent, with points increasing to 0.46 from 0.43 (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 $548,250) increased to 3.23 percent from 3.11 percent, with points increasing to 0.43 from 0.35 (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 increased to 3.00 percent from 2.93 percent, with points decreasing to 0.33 from 0.37 (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 2.56 percent from 2.47 percent, with points increasing to 0.40 from 0.36 (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 remained unchanged 2.83 percent, with points decreasing to 0.36 from 0.70 (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