Top Ways to Defend Your Work When the Appraised Value Comes in Under Sales Price

Excerpt: As a real estate appraiser, you’ve likely encountered assignments in which the purchase price is not supported by the available comps. So, what are the best ways to address complaints and requests in these situations? To find out, we (McKissock) asked appraisers, “What’s your top tip for defending your work when the appraised value comes in under sales price?” Here’s what they said…
How to prevent and prepare for complaints and requests
Many survey respondents emphasized the importance of making sure your work is as detailed and well-supported as possible—by means of careful comparable selection and analysis, thorough documentation, and clear explanation of why the available comps do not support the contract price…
To read more, click here
My comments: Lots of good ideas. Worth reading

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The Last Remaining Flying Saucer Homes

All the 1960s Futuro Houses left in the world
Excerpt: The Futuro was a product of its times: when Finnish architect Matti Suuronen designed the little alien-looking abodes in 1968, the postwar economic boom was in full swing, time-saving home gadgets promised a leisure-filled vision of the future, and society was transfixed by the Space Race.
Spaceship architecture was in vogue, but nothing hit the nail on the head quite like these UFO houses. Ironically, that may be what ultimately led to the Futuro’s failure.
To read more and see more photos, click here
My comment: Good to see there are still some of these very unique homes to see! There are a few left in the U.S. See the map at the bottom of the post.
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Frank Lloyd Wright’s Freeman House Listed in Hollywood Hills for $4.25M

Excerpts: Two-bedroom, 2,884-square-foot home built in 1928 on a steep hillside with excellent views.
Key tenets of Wright’s designs visible in the Freeman House include an open floor plan, a floor-to-ceiling hearth, and the concrete-block detailing. Over the years, the owners hosted notable Hollywood types as well as numerous political and social salons. The legendary actor Clark Gable was reportedly a tenant at one time.
“There is going to be a conservation easement,” says the listing agent, “so it has to be conserved in the original condition. The new owner has to be passionate about architecture and committed to the restoration.”
My comment: Lots of photos, including unusual wall coverings and exteriors. Very unique, of course!! It will be fascinating to see who buys it, how many offers there are, and what it sells for. Of course, Beverly Hills is a good place for expensive, unusual homes with a Hollywood connection. In my city, a semi-decrepit waterfront home where Jack London stayed (maybe) is semi-famous ;>
To read more and see lots of very interesting photos, click here
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Increasing Diversity in Appraisal Profession

By Robert Murphy
Excerpt: The Urban Institute recently released a blog post entitled – Increasing Diversity in the Appraisal Profession Combined with Short-Term Solutions Can Help Address Valuation Bias for Homeowners of Color.
This article addresses several issues with the real estate appraisal profession that are worthy of further examination and comment.
The article accurately notes the lack of diversity in the appraisal profession. This comes as no surprise, especially when considering the article also notes an overall lack of diversity in the real estate sector.
To read more, click here
My comments: This post discusses issues in the Urban Institute article. The author, Bob Murphy, was the Director, Property Valuation and Eligibility, for Fannie Mae from Oct 2000 – Sep 2015 and is very experienced and knowledgeable.
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Appraisals in Rapidly Changing Markets

By Scott Reuter, Single-Family Chief Appraisal Officer, Freddie Mac
Excerpts: Our ongoing oversight routines reveal data that indicates the current trend in appraised values coming in below contract price has risen from an annual average of 7-9% (2013-2019) to 20% nationwide in April and May 2021. And the peak that we typically see in the late spring (generally the result of seasonal upward swings in price coupled with use of “winter sales”) has only increased in the summer months.
Our data also indicates a conservative trend in the overall net adjustments, suggesting appraiser behavior that is designed to not appear overly aggressive or excessive. For example, a market conditions adjustment might be offset by under-adjusting elsewhere. Recognizing and adjusting for increases in any amount is perfectly acceptable, provided the appraiser has developed adequate market support using a recognized method (e.g., analysis of repeat sales, market trend analysis, etc.).
To read more, click here
My comments: The article is worth reading, with good summaries of techniques for appraisers. The author, Scott Reuter, is Freddie Mac’s Single-Family chief appraiser and director of valuation. He is a certified general appraiser with over 30 years of experience in valuation, appraisal and collateral risk management concerns. Thanks to subscriber Joe Lynch for this link.
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Have home prices started to crest this year?

July 26, 2021, By Ryan Lundquist
Are prices finally starting to slow? Can it really be happening? Have home prices likely started to crest for the year? The answer is YES. Here are two quick things on my mind. These trends are for the Sacramento region, but I suspect many markets across the country are starting to show similar stats (or will soon).
Four Quick Takeaways
1) Not the same: The temperature of the housing market is not the same in every price range and neighborhood. In other words, it’s possible for prices to be doing different things in different areas, so it would be a huge mistake to assume prices are dipping everywhere.
2) Not dull: The housing market is still moving very fast and it’s super competitive.
To read Takeaways 3 and 4, plus more, click here
My comments: Ryan has some good graphs to use when analyzing what is happening in your market. Written for real estate agents but very relevant for appraisers. I am hearing more about the market maybe peaking or slowing down around the country. As we all know, prices go up and down. No one really knows when the peak occurs until after prices start dropping.
For example, I sold my house in May 2008 for $1,000,000. The market was slow, and there had been some price declines in the previous year. I had no idea they would drop like a rock after that time even though I appraised in the local market every day. I was very, very lucky to sell my home before the crash!
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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. I have been following this data since 1993. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7 AM to noon, Pacific time.

Mortgage applications increased 5.7 percent from one week earlier

WASHINGTON, D.C. (July 28, 2021) – Mortgage applications increased 5.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 23, 2021.
The Market Composite Index, a measure of mortgage loan application volume, increased 5.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The Refinance Index increased 9 percent from the previous week and was 10 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 18 percent lower than the same week one year ago.
“The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery. Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinances for conventional loans increased over 11%. With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan.”
Added Kan, “The purchase index decreased for the second week in a row to its lowest level since May 2020, and has now declined on an annual basis for the past three months. Potential buyers continue to be put off by extremely high home prices and increased competition. The FHFA reported yesterday that May home prices were 18% higher than a year ago, continuing a seven-month trend of unprecedented home-price growth.”
The refinance share of mortgage activity increased to 67.2 percent of total applications from 64.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.6 percent of total applications.
The FHA share of total applications decreased to 9.1 percent from 9.6 percent the week prior. The VA share of total applications decreased to 9.8 percent from 10.5 percent the week prior. The USDA share of total applications remained unchanged at 0.5 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.01 percent from 3.11 percent, with points decreasing to 0.34 from 0.43 (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 $548,250) decreased to 3.11 percent from 3.13 percent, with points decreasing to 0.27 from 0.32 (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 decreased to 3.03 percent from 3.08 percent, with points increasing to 0.35 from 0.31 (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 2.36 percent, the lowest level in the history of the survey, from 2.46 percent, with points unchanged at 0.30 (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 increased to 2.81 percent from 2.74 percent, with points increasing to 0.23 from 0.19 (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.
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Ann O’Rourke, MAI, SRA, MBA
Appraiser and Publisher Appraisal Today
1826 Clement Ave. Suite 203 Alameda, CA 94501
Phone 510-865- 8041
By on July 30, 2021   /   appraisal, bias, Freddie, real estate market   /   Leave a comment
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