How to Identify a Residential Complex Property

Excerpts: A complex one-to-four family residential property is defined as a property that meets at least one of the following criteria:

  • The property to be appraised is atypical
  • The form of ownership is atypical
  • The market conditions are atypical

“Below we dig a little deeper into each type of complex property outlined above, providing detailed descriptions and examples of properties that would fall under each of the three categories.”

To read more, click here

My comments: This is the best explanation I have read about this issue. All appraisers encounter complex properties. You may or may not decide to accept the assignment. Always check the info you have on the property before accepting the assignment. Or, you find out after starting on the appraisal that it is more complex than you thought. I regularly turn down assignments because it will require more time, or I don’t want to “reinvent the wheel,” as I may never do another like it, etc.

Mortgage lending appraisals are very, very cyclical. When you are very busy, I recommend turning down these assignments to make more money. You will have lots of time during the slow period to accept these assignments.

In ancient history, before AMCs, I often did the tough ones for loyal clients as a favor. AMCs will go down the list, sometimes for days, trying to find an appraiser. One called me yesterday about a mixed-use property that their lender client said was residential. From online information, it looked like commercial on first floor. The issue was highest and best use, of course. I told them I did not know any commercial appraisers who work for AMCs, plus the fee would be over $2,000. You have to know that city’s local zoning regulations, requiring local expertise to determine the highest and best use.

The Bottom Line: Don’t Risk Your Appraisal License if it is too complicated for you!! I get many calls from appraisers having problems. This is always my answer. I have returned fees up to $2,000 after spending lots of hours on the assignment.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, mortgage origination stats, etc.


The housing market feels like a crazy auction

By Ryan Lundquist


1) This market feels like an auction: The market feels like an auction where buyers are making really aggressive bids with the hope of winning due to being the highest. Throughout the country, we are seeing offers in many markets that are totally disconnected from a reasonable value. On that note someone asked if appraisals need to change so buyers have a better chance of getting deals done in this crazy environment. Nope. The appraiser’s role is to reflect the market, which very likely might not be the highest bidder. Don’t get me wrong, there are many things that need changing in the appraisal profession, but it’s not the appraiser’s job to fix an irrational dynamic in today’s market.

2) Do higher rates matter? I’ve heard the sentiment quite a bit that rising rates really don’t matter. The idea is the market is so hot and nothing can cool it. But I feel like the housing market could say, “Hold my beer.”

To read about what to look for in this market, click here

My comments: I started appraising in 1975 in Northern California. Soon after that prices started going up at 2% per month. In 1980, the market crashed due to high-interest rates and lasted until 1986, when rates went down. Many appraisers left appraising. Over the years, there have been big changes, up and down. These markets (up or down) are difficult for appraisers. The current market is crazy in most places. AMC appraisals are particularly stressful today with short turn times, “reviews” based on outdated criteria, etc.


36 Percent Of Homes Sold Above List Price In February 2021

Excerpts: The national median home-sale prices rose 14.4% year-over-year to $336,000 in February 2021, the largest increase since July 2013, according to a report from Redfin. However, a shortage of homes is responsible for the increase in the number of homes that sold above list price in February.

According to the report, a shortage of homes increased buyer competition causing 36% of homes sold in February to go for more than their asking price, the second largest share on record.

“This is the strongest seller’s market since at least 2006,” said Redfin chief economist Daryl Fairweather. “Buyers outnumber sellers by such a huge margin that many homeowners are staying put because they know how hard it would be to find a place to move to. It seems like the only move-up buyers who are confident enough to list their homes are those who are relocating to a more affordable area where they’ll have an edge on the local competition.”

Worth reading the full report. Easy to read and very interesting! With graphs and tables, To read, click here


Train Us and Trust Us

By Hamp Thomas

Letter to FHFA regarding Appraisal Modernization excerpts:

For such a complex topic we are moving far too fast to understand the changes that are happening now. What’s ahead for the appraisal industry appears to be almost certainly profit driven change and that is never a good reason to make change. Once we finish this current refinance bubble, what will we be left with? No matter what else is said and done, a quality appraisal can only be understood by another professional. The thought process and adjustments require hundreds of influences on property values.

The most weighted technique in most automated valuation programs comes down to one over-simplified formula, based on a guesstimation from an outside source that has no interest in the real estate system. Price-per-square-foot drives the real estate valuation industry. Agents use it, the URAR uses a mandatory price-per-square-foot adjustment, and most automated valuations use this same formula.

Most systems use the square footage numbers taken from tax records, where the assessors do not enter any house and have no interest in the real estate valuation process. They have no standards, over fifty different names for finished square footage, and the errors in square footage are easy to find. I’m enclosing just a few examples to show the differences between the numbers in MLS, tax records, and those reported through appraisal reports.

To read more, click here

My comments: I used to do a lot of relocation appraisals, where 2-3 appraisers would appraise a home for a possible corporate buy-out. We were expected to be within 5% on square footage. If the appraisers had the same square footage, it was a bit suspicious.

When CU started looking at appraisal square footage, MLS, and public records square footage, there were differences. When looking at AVMS, the most relatable indicator was square footage. But… much of the sq. ft. and other data may be inaccurate.

When I got my MBA in 1980, I had to do a “mini” thesis. I had worked for an assessor’s office for 4 years. I did not choose to do a multiple regression analysis for homes. I did the volatility of REIT stocks instead with very reliable results. The difference in the data reliability between stock prices and real estate data was dramatic.Getting too many ad-only emails?


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What’s the difference between these free weekly email newsletters and the paid monthly newsletter?

They are very different!

The Free weekly emails are similar to digests. They have a very wide range of topics each week. They include links to online articles with brief excerpts. I often write short comments. I get lots of emails with information every day, plus blog posts. I look for the most interesting topics to include. I get stats on every link, so I know how popular the topic was. I write the newsletter on Thursday, to go out on Friday morning. I do not typically plan what is in the newsletters. It is very last minute, as I try to make the content as recent as possible, appropriate for a weekly newsletter. Weird homes and properties are often one the most popular topics. Plus business and appraisal “how to” tips. It is advertiser-supported.

The paid monthly newsletters similar to magazines. Each issue is typically about a few appraisal and business topics. I sometimes work on an article idea for several years before finally writing the article. I do the research and writing plus have guest authors. The newsletters are 12 to 17 pages long and take a long time to write. Since they are in PDF format, the newsletters can be any length. I have never taken ads.

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Appraisers Are Sitting Ducks to Random Legislation

By Jonathan Miller

Excerpt: Bill A5185 and AMC Bill A5146 introduced to the state legislature in New Jersey show just how much state legislators don’t understand the appraisal profession. Valuation Legal warned us about this back in December: Appraiser and AMC Laws to Include Prohibitions Against Discrimination.

Why appraisers are especially vulnerable:

1. The Appraisal Foundation and Appraisal Institute are literally the opposite of being racially diverse and have no standing in this situation. They are an embedded bureaucratic problem that has limited entry by people of color and women into the profession. Years of ignoring their self-dealing has a price.

2., Appraisers are sitting ducks to random legislation like this and eventually one of these state laws will pass. The Illinois legislature just defeated a similar poorly thought out bill.

To read more, click here

My comments: These regulations are proposed in some other states, including California. It could be big problem for appraisers who work for lenders. Appraisers are blamed again.10 Creative



Just For Fun!!!

Excerpt: If you harbor any preconceived notions about the beloved barndominium—a barn or industrial building converted into a home—we urge you to reconsider. Because the true beauty of a barndominium is it has only a single limitation on its final format: an owner’s imagination.

Roomy, endlessly flexible, and customized to match its owner’s passions, barndominiums represent everything wonderful about rugged ingenuity and folks who want to carve out their own little slice of heaven.

Whether it’s horses, cars, office spaces, boats, RVs, or a full-on party pad, there’s a barndominium for everyone.

To read more and see photos, click here

My comment: I have seen many barns, but never a Bardominium. I can’t wait to see one!! No one has ever complained that they had too many garages or storage buildings ;>

============================================What Famous Literary Home Would You Want to Appraise?

Just for Fun!!

Photo: Hemingway House in Key West, FL

Excerpts: The Ernest Hemingway Home

The most popular answer, selected by 29% of survey respondents, was the Ernest Hemingway House in Key West, Florida.

“I would want to appraise the Ernest Hemingway home because he had a home here, where I currently live and work, and because there is such a rich history of his life here, and it would also be considered a special use property as it is now in the ownership of a non profit for cultural programs.”

“Being in Key West and housing more than 40 cats, the house has character, first built in 1851, and everyone knows what a character Hemingway himself was. It would be an honor to appraise his property and get a feel for the man.”

To read more, click here

My comment: I love Key West!! I only visited it once after I spoke at a NAR convention and want to go back. Appraising one of these homes would be very interesting – when I am not very busy ;>


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 decreased 2.2 percent from one week earlier

WASHINGTON, D.C. (March 17, 2021) – Mortgage applications decreased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 12, 2021.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 39 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 5 percent higher than the same week one year ago.

“Mortgage application activity was mixed last week, as the run-up in rates continues to reduce incentives for potential refinance borrowers. The 30-year fixed rate increased to its highest level since June 2020, and all other surveyed rates were either flat or increased,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “After reaching a recent high in the last week of January, the refinance index has since fallen 26 percent to its lowest level since September 2020. Rates have jumped 36 basis points since the end of January, and last week refinance activity fell across all loan types.”  

Added Kan, “The purchase market helped offset the slump in refinances. Activity was up 5 percent from a year ago, as the recovering job market and demographic factors drive demand, despite ongoing supply and affordability constraints.”

The refinance share of mortgage activity decreased to 62.9 percent of total applications from 64.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 2.7 percent of total applications.

The FHA share of total applications increased to 11.7 percent from 11.6 percent the week prior. The VA share of total applications decreased to 10.3 percent from 11.1 percent the week prior. The USDA share of total applications remained unchanged 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 3.28 percent from 3.26 percent, with points decreasing to 0.41 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) remained unchanged at 3.34 percent, with points decreasing to 0.40 from 0.50 (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 3.25 percent from 3.20 percent, with points increasing to 0.38 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 2.67 percent from 2.63 percent, with points remaining unchanged at 0.37 (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 2.82 percent from 2.69 percent, with points decreasing to 0.30 from 0.37 (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

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041


1 Comment
  1. Thank you for sharing this insightful information. It’s worth noting that the real estate valuation industry is heavily driven by price-per-square-foot. This formula is used by agents, the URAR, and most automated valuations, making it an essential factor in determining property value. This knowledge will be very helpful to my sister who needs to hire an estate appraiser before she sells her home.

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