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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, bias, Airbnb, reconciliation, appraisal business mortgage origination stats, etc.
Say No to Subjective Language in Appraisals
By Ryan Lundquist
Excerpt: Is it a poor neighborhood? Is it rich? Is the neighborhood desirable or undesirable? Is it family-friendly? Is it crime-ridden? These are words some might use to describe certain neighborhoods, but they’re 100% off limits for appraisers (and probably other real estate professionals).
Luxurious community: On the other hand when we say a location is luxurious, what does that mean? The word is so subjective because one person’s luxury is another person’s dump. That’s why I might suggest saying something like, “The neighborhood fetches some of the highest-prices in the zip code with homes typically above 5,000 sq ft., etc…” A focus on the facts is much more useful than a subjective word, right?
To read more, click here
To read Fannie Mae June 2021 newsletter with a section on problem phrases including sample phrases to use, click here
My comments: Excellent post plus many appraiser comments. Of course, appraisers learned about fair housing, and how to make sure their reports were okay, many years ago.
I remember when I started my appraisal business in 1986 and spoke to a group of agents. I used the word “undesirable” to describe a neighborhood in my city. I got a lot of negative kickback and have been careful what I write and speak since that Big Mistake!
Five (5) Ways a Proper Reconciliation Keeps Your Assets Out of a Sling – Podcast 10 minutes
By Tim Andersen, MAI
Excerpts: Want to know how a proper reconciliation keeps your assets out of a sling? Unfortunately, it is too easy to find them in one. Too many people want your assets on a tray. Did you “kill” a deal? That real estate broker wants your assets in a sling now! Does that homeowner think you did not give enough credit to that poorly-built wood deck in the backyard? She wants your assets in a sling! Your state appraisal board? It thinks appraisers can’t do anything right! So, stay off the state’s radar!
This podcast shows you five (5) ways a proper reconciliation helps keep your assets out of those slings! What’s just one example? Your reconciliation process forces you to go over your appraisal and report at least one more time. Maybe you’ll catch an error as you consider your reconciliation. Maybe a flaw in your logic and reasoning will stand out! Is there a convoluted sentence? A review prior to your reconciliation may help you catch it, then re-write it!
To read more, click here
My comments: Practical and understandable podcast. I love Tim’s titles – creative and fun!! Tim is a regular contributor to the monthly Appraisal Today newsletter. He is definitely The USPAP Expert and consults with appraisers on how to keep out of trouble in their reports and helps appraisers with state board complaints. www.theappraisersadvocate.com
8,284 sqft Mansard Mansion/”The Castle”, Elmira, NY for Under $100K
The home is nicknamed “The Castle.” Built in 1876 (approximately), 41 rooms, 10 bedrooms, 4 baths, 8,284 sqft, 0.47-acre lot with an intricate stone facade and a mansard roof topped with a grand cupola. It has all the exterior features of the Second Empire style, while the interior is in the midst of a renovation.
The property last changed hands in 2005 for $157,500 and the owners began a restoration that is still in progress. This is certainly not a project for the faint of heart. There is lots of work to be done here although there is a “newer” rubber roof, energy-efficient boilers and new electric service. Some of the 41 rooms have been gutted but there are still plenty of original features in evidence.
For lots of interesting interior photos and excellent historical information, click here
My comment: Fixer? Over improvement? Likely buyer? Comps? Looking for an appraisal challenge? Just Say No to the appraisal so you can complete 5 (or more) easy tract home appraisals and make lots of money and avoid AMC hassles?Getting too many ad-only emails?
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Exposure Time Vs. Marketing Time
Excerpt: Every real estate appraiser is familiar with the terms “marketing time” and “exposure time,” but it’s not always clear why and how these are developed in everyday assignments when developing an opinion of market value. (In this post), we (McKissock) provide a basic overview of exposure time vs. marketing time and sources that can be used to support an opinion of reasonable exposure time.
An opinion of exposure time is needed for the following reasons:
- It assists in evaluating the suitability of the sales chosen as comparables.
- It aids in evaluating the risk of the loan transaction.
- It can indicate that the opinion of market value is not adequately supported.
- It can indicate a supply and demand imbalance (shortage or oversupply) or a softening market.
To read more, click here
My comments: Relatively short and well written. I got a few good tips, plus reminders of why exposure time is important.
Legal & Accounting Tips for Appraisers Video 19 minutes
Excerpt: Growing and understanding the legal structure of your business.
What should you consider between LLC versus Corporation? Do you hire employees or independent contractors? What tax considerations should you consider? Other topics include exiting from your appraisal business, hiring staff, etc.
To watch the video, click here
My comment: Covers many aspects of running an appraisal business. One good idea is worth listening to the video! Plus take a break from grinding out appraisal reports ;>
Best Places To Buy a Vacation Rental for Airbnb use
Excerpt: This new American wanderlust translates into one thing for the owners of short-term vacation rentals: a big-time boom, after last year’s devastating pandemic-fueled bust.
That means those who buy short-term rentals can make a killing—if they know where to get the best return on their investment dollars. The data team at Realtor.com® found the most profitable real estate markets for those thinking of buying a property to list on a site like Airbnb or Vrbo. These are the places where extra rental income can really help chip away at mortgages—provided owners don’t mind giving up a few choice weekends.
#2. Sea Isle City, NJ
Median list price: $1.2 million
Annual change in revenue generated: 82%
Average daily rate: $432
Days to break even: 14
To read lots more, click here
To read Ryan Lundquist’s tips on Airbnb, plus the appraiser comments, click here
My comments: If you work in an area with Airbnb rentals, you know that appraising them can be tricky. Sales or Income Approach or both? What does Fannie, etc. say? Many cities have regulations, which can change over time. Airbnbs are everywhere. Even in my small town because San Francisco is only 10 miles away. They may be on a street where you live!
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 firstname.lastname@example.org . Or call 800-839-0227, MTW 7 AM to noon, Pacific time.Mortgage applications decreased 1.7 percent from one week earlier
Mortgage applications decreased 1.7 percent from one week earlier
WASHINGTON, D.C. (August 4, 2021) – Mortgage applications decreased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 30, 2021.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.7 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 2 percent from the previous week and was 3 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 2 percent compared with the previous week and was 18 percent lower than the same week one year ago.
“Interest rates drifted lower globally last week, as markets assessed the latest concerns regarding the delta variant. 30-year mortgage rates dropped below 3 percent in our survey for the first time since this February, presenting an opportunity for many homeowners who have not yet refinanced to lower their rate and their payments. Refinance application volume slightly decreased, following an 11 percent jump last week,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Purchase application volume decreased again, reflecting the ongoing lack of inventory that continues to drive rapid home-price appreciation across the country.”
The refinance share of mortgage activity increased to 67.6 percent of total applications from 67.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.4 percent of total applications.
The FHA share of total applications remained unchanged from 9.0 percent the week prior. The VA share of total applications increased to 9.9 percent from 9.7 percent the week prior. The USDA share of total applications remained unchanged from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 2.97 percent from 3.01 percent, with points decreasing to 0.33 from 0.34 (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) increased to 3.12 percent from 3.11 percent, with points increasing to 0.30 from 0.27 (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 3.08 percent from 3.03 percent, with points decreasing to 0.29 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 15-year fixed-rate mortgages decreased to 2.33 percent from 2.36 percent, with points decreasing to 0.23 from 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 2.93 percent from 2.81 percent, with points decreasing to 0.20 from 0.23 (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. The 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