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Fannie Requiring Appraisal Floor Plans Coming?
Are Floor Plans in Your Future?
By Dave Towne
Excerpts: In the Selling/Servicer Guides of FNMA and Freddie Mac, both GSE’s identify a ‘sketch’ to be a diagram of the subject as measured by the appraiser which shows exterior walls, and includes the dimensions. That’s it. They don’t even say that room labels are needed, but most appraisers include those.
Including a ‘sketch’ in reports as an exhibit is an additional Assignment Condition, beyond what USPAP requires in Standard 2, per the Assumption and Limiting Conditions on the residential forms. Both GSE’s require a more detailed diagram including interior wall locations when interior design abnormalities are discovered, and reported – which they call a “Floor Plan”.
I’ve talked with representatives from both GSE’s recently. Their line of thinking, at the present time, is a “Floor Plan” should be provided as an exhibit in the appraisal report even though the report signing appraiser was not physically present at the subject property when data was gathered. Their line of thinking is also slanted to having third parties provide the subject property data, believing appraisers are more valuable as ‘analysts instead of as observers and detailers of the property characteristics.
Thus the evolution to the new 1004 (Desktop) and 1004 (Hybrid) report forms, with different Scope of Work and Assumption and Limiting Condition statements in each version. (These forms are in your software forms package now.)
My comments: Read this post, watch Danny Wiley’s remarks in a video, and read many appraiser comments. Quite a while ago, Fannie started requiring detailed floor plans. This did not last very long, but I continued doing rough floor plans manually. I still do them but do not include the floor plans in the appraisal sketch. It keeps me from missing a small room, bathroom, etc. Of course, when there are floor plan functional problems, I put the details in the appraisal sketch. In my area, tandem rooms are common (usually from additions). They cannot be included as bedrooms.
When I used to do relocation appraisals, I always included a full interior floor plan with walls and doors. This was standard practice in my area. Doing an interior floor plan with walls and doors takes a lot of time, both measuring and using my sketch software.
Known as the “pie house,” this structure was designed to fit an oddly shaped lot and measures only 3 feet wide at its tip. Inside, the two-bedroom home resembles most suburban dwellings—although there are some interesting angles at play. It has been featured on The Tonight Show with Jimmy Fallon, The Chicago Tribune and media from around the world. This iconic 2 bedroom 2.5 bathroom home on a corner lot is much larger than it appears with a smart design so that only the powder room and closets are in the narrow end of the home.
To read more and see lots of interesting photos, click here
Why You Should Never Buy A House Near A School, And 32 Other Secrets, Stories, And Advice From Real Estate Agents and Brokers
5. Clients should check an area’s police records if they’re concerned.
8. Agents are regularly targeted by super-creepy fake clients.
9. And a lot of realtors and agents carry pepper spray and stun guns because of it.
12. If you’re selling your home, be sure to install security cameras.
18. Google the address first and see if any news articles come up.
24. Beware of cat owners. (very funny animated gif)
To read more details on the 32 tips, and see lots of fun animated gifs, click here
My comment: Good look at real estate sales, written for consumers primarily. I got a few ideas, such as google the address for news. Appraisers could give similar advice, but don’t do it for free. We have many fewer personal risks and strange people contacts than agents. We are not salespersons and don’t have to be “nice” to everyone. We don’t see everyone as a prospect for a sale.
New in the December issue of Appraisal Today – Available December 1, 2021!
2021 year-end tax planning for appraisers It’s not too late to save on your 2021 taxes! Lots of ways to save money in this article.
Marketing with holiday gifts and cards – An easy and Most Excellent Marketing Tool. I’m working on my annual 60+ holiday cards now! My most effortless marketing by far.
Think carefully before signing a Records Affidavit by Claudia Gaglione, Esq.
An Appraiser Gets Audited by the IRS! My Story by Ann O’Rourke It was a Very Bad Experience. A random audit of all my personal and business records. Poor mileage records, auditor inspected my home office, etc. Many many hours getting receipts, etc.
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“For Sale By Owner” Listings tend to be used by Rural and Lower-Income Sellers
Over three-year period, 4-6% of all monthly listings nationwide were offered directly by owners
Excerpts: “Our research shows that homes put on the market directly by owners are a small but consistent part of the housing ecosystem,” said Zillow economist Alexandra Lee. “We see that these types of listings are more heavily used by rural, lower-income sellers, a demographic that appears to value flexibility to sell their home on their own terms.”
The research found that in 2021, 24% of rural sellers did not use an agent, compared to 16% of suburban and 20% of urban sellers. Additionally, across all markets, FSBOs are listed at prices 18% lower than properties represented by agents. This trend is likely attributable to location and size of the home, rather than the home being sold at a discounted price. The median listed price for a FSBO home is $292,810. The median price of a home listed with a seller’s agent is $355,777.
FSBOs can be found in every state in the country, providing an option for some buyers searching for a home at a lower price point.
To read lots more, including stats in some cities, click here
My comments: Interesting and worth reading. Zillow research. I am so glad there are few FSBOs where I work. Almost all sales are through the MLS. FSBOs are not exposed to the market. I have only used them a few times when I was desperate for a comp similar to the subject. If a local agent I know personally is involved with helping the seller, I am more comfortable maybe using them.
533 sq.ft., 10 ft. wide house on 1,200 sqft lot in Mamaroneck, NY
Excerpt: After losing his home and his business, Nathan Seely was given a 1,200-square-foot plot of land by his neighbor Panfilo Santangelo in Mamaroneck, NY in 1932. Seely, who is reputed to be one of New York’s first African-American home builders, created something unforgettable—even beautiful—on the tiny plot of land.
Using recycled materials, including chicken coops and railroad ties, Seely built a home and a piece of history that’s been lovingly maintained and updated by the Seely and Santangelo families ever since.
It has also achieved historic recognition. The Skinny House in Mamaroneck was placed on the National Registry of Historic Places in 2015.
Only 10 feet wide, 533 sq.ft. and 27-foot tall. Sold for $245,000 in 2019.
In 2017 I received this from an old friend. It “spoke” to me, especially as an appraiser and business person. This is a different, very personal, way to look at what we can be thankful for in our daily lives.
These words from an unknown poet remind me to be thankful on Thanksgiving and all the other days, too.
Be thankful that you don’t already have everything you desire.
If you did, what would there be to look forward to?
Be thankful when you don’t know something,
for it gives you the opportunity to learn.
Be thankful for the difficult times.
During those times, you grow.
Be thankful for your limitations,
because they give you opportunities for improvement.
Be thankful for each new challenge,
because it will build your strength and character.
Be thankful for your mistakes.
They will teach you valuable lessons.
Be thankful when you’re tired and weary,
because it means you’ve made a difference.
It’s easy to be thankful for the good things.
A life of rich fulfillment comes to those who are also thankful for the setbacks.
Gratitude can turn a negative into a positive.
Find a way to be thankful for your troubles, and they can become your blessings.
Gratitude By George Dell, SRA, MAI, ASA, CRE
Excerpts: Why should I have gratitude? Ugh!
My clients want me to hit the number . . . And be ethical about it! Pressure, pressure, pressure.
For me, the problem was the way I looked at things. I saw gratitude as a way of giving thanks for what had been given me. I see things differently today.
For me giving thanks is different from being grateful. Once again, my self-oriented brain got tricked into doing good for me. I was outsmarting myself. Gimmie, gimmie, gimmie, then I will thank you. But there were some things I didn’t know. I didn’t know what I didn’t know. It turns out gratitude is a tool. A method for making my own life better. Even better. . . it made the lives of those around me better. And they behaved better also. Unbelievable!
Once again, modern brain-body science jumps ahead and teaches me things. I am told there are seven scientifically proven benefits of gratitude. They say gratitude is one of the most misunderstood free tools for a better life. There’s no money involved. And the benefits are amazing.
My comments: Today is the day after Thanksgiving, but these are thoughts we should have every day. I can always count on George Dell for original ways of looking at appraising! His follow-up post Does Gratitude Make Me Money? is worth reading.
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 email@example.com . Or call 800-839-0227, MTW 7 AM to noon, Pacific time.
Mortgage applications increased 1.8 percent from one week earlier
WASHINGTON, D.C. (November 24, 2021) – Mortgage applications increased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 19, 2021.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.1 percent compared with the previous week. The Refinance Index increased 0.4 percent from the previous week and was 34 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 0.4 percent compared with the previous week and was 4 percent lower than the same week one year ago.
“The financial markets continue to discern the Federal Reserve’s policy path in the coming months in light of the current high growth, high inflation environment. Despite a fair amount of rate volatility last week, mortgage rates were higher, with the 30-year fixed rate increasing 4 basis points to 3.24 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the increase in rates, refinance applications rose slightly, driven by a 2 percent gain in conventional refinances. Borrowers continue to lock in mortgages in anticipation of higher rates in the future. Refinance applications were still more than 30 percent below a year ago, when the 30-year fixed rate was 32 basis points lower.”
Added Kan, “Purchase activity increased for the third straight week, as housing demand remains robust, even as the housing market approaches the typically slower holiday season. Both conventional and government loan applications increased, and the average loan size for a purchase loan was at $407,200, continuing its ongoing 2021 run of being mostly above $400,000.”
The refinance share of mortgage activity increased to 63.1 percent of total applications from 62.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.4 percent of total applications.
The FHA share of total applications decreased to 8.6 percent from 8.9 percent the week prior. The VA share of total applications decreased to 10.3 percent from 10.8 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 ($548,250 or less) increased to 3.24 percent from 3.20 percent, with points decreasing to 0.36 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 3.28 percent from 3.26 percent, with points decreasing to 0.26 from 0.39 (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 3.27 percent from 3.23 percent, with points decreasing to 0.34 from 0.41 (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 2.59 percent from 2.56 percent, with points decreasing to 0.34 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 increased to 3.00 percent from 2.89 percent, with points increasing to 0.32 from 0.16 (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