1004MC or 1004 ANSI

By George Dell, MAI

Excerpt: The 1004MC “market conditions” appraisal addendum was created by Fannie Mae and Freddie Mac to require a form-based market analysis. This added to the traditional practice to collect a handful of ‘comps’ to opine and foretell market price. There are problems and unintended consequences.

The ANSI requirement is that residential appraisers measure houses according to the ANSI (American National Standards Institute) method. This constraint can have good long-term results for consistency, if it is adopted by the full universe of participants. The requirement would have to include tax assessors, building permit agencies, real estate agents, investors, insurance companies, architects, contractors, and unlicensed appraisers. This part might take years, if ever.

We can take a quick look at some similarities, some differences, and where things may go…

To read more, click here

My comments: George and I talked about this and agreed to disagree. He is not the only one with doubts about ANSI. Most are appraisers, like George, who have never used it. I finally found a somewhat negative post about ANSI, instead of social media rants ;>

My opinion: This Standard is better than no standard. Appraisers have been using ANSI since 1996. I did not hear about problems with using it or with lender clients. Change is hard.

See the end of this newsletter for info on Appraisal Institute’s New 4 hour online ANSI class and an excellent ANSI webinar this Monday with Lyle Radke from Fannie being grilled by three appraisers! Two of them had negative comments.

ANSI Z765-2021 Resources for Appraisers

Appraisal Business Tips 

Humor for Appraisers

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To read more of this long blog post with many topics, click Read More Below!!

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



5 Homes With a Hole in the Roof—by Design


Builders of spec homes are always in search of the next big thing in over-the-top amenities. We’ve seen luxury homes with shark tanks in the floor, living walls full of greenery, and wellness rooms stocked with tranquility pods.

The open roof was popularized in the 1950s and 1960s by famed builder Joseph Eichler. “What’s old is new again,” says Mariotti.

And he should know; he grew up in an Eichler-inspired home, which makes him well-aware of the resurgent trend. Mariotti helped us spot five houses either on the market or recently sold, all featuring a roof that’s open to the elements. Scroll on down for a look.


Manhattan Beach, CA PHOTO ABOVE

1601 San Onofre Dr, Pacific Palisades, CA

Price: Sold in July for $83,000,000

This spectacular spread was purchased last summer by 26-year-old billionaire Austin Russell, CEO and founder of self-driving car automation company Luminar.

The property was previously available for lease for $350,000 a month. The megamansion features a retractable roof in the primary bedroom, where access requires a retinal scan. On rare nights when it’s raining or chilly out, the retractable roof can be closed.

But you’ll still have something to gaze at: a custom projection screen, so you enjoy your favorite show. The 20,000 square-foot estate features five additional bedrooms and 18 bathrooms. Other luxe amenities include two home theaters, an infinity pool that wraps around the house, and a garage with a car turntable that can also serve as a dance floor.

To read more and see more photos, click here

My comments: I have never seen a home without a roof (except a major fixer-upper with fire damage) or a retractable roof. Check out the other houses. One is 10 miles from me and priced at $1,500,000, slightly above the median price for the area.


This Tiny Home Is Suspended on a Cliff Over Kentucky’s Red River Gorge — and the Views Are Epic

I hope you’re not afraid of heights!

Excerpts: If climbing straight up a cliff and perching yourself precariously on its face to catch a little shut-eye sounds like a relaxing vacation, then this Airbnb is for you.

Located in Kentucky’s Red River Gorge, the Airbnb is known as “Cliff Dweller,” which is an apt name, seeing as the tiny home really is bolted directly into a cliff.

The first bedroom can be found in the loft space, with an ultra-cozy queen bed that looks out into the wilderness. For the primary bedrooms, guests have to climb a few more stairs but are rewarded at the top with another queen bed that looks out a picture window onto the treetops. There’s even a rooftop patio, complete with a swinging chair that dangles from the cliff’s edge. It’s a once-in-a-lifetime stay, and one you’ll never forget, according to those who’ve stayed there before.

To read more and see lots of photos, click here

My comment: WoW!! Great that you can rent it and not have to buy it. I don’t want to think about carrying groceries up the many steep stairs! I have appraised homes in Berkeley, CA, on very steep hillsides. Some have a container on a track that takes groceries up the hill. Others have a lift to take people, including appraisers, up the hill.Getting too many ad-only emails?


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In the March Issue of Appraisal Today

  • Who Said I Agreed To Be An Expert? By Claudia Gaglione, Esq.
  • Review: Measuring Square Footage with ANSI 2021: Home Measurement Textbook  By Hamp Thomas
  • ANSI and Appraisers, real estate agents, and MLS – what it means by Hamp Thomas
  • What do you want/need to know about ANSI? Many appraisers say they know ANSI but do not when questioned.
  • Review of all available ANSI classes and webinars except in-person. Select what works best for you.
  • How do we value a house with a HUGE non-permitted addition By Ryan Lundquist

To read more about ANSI and homes with big additions, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you understand ANSI or how to appraise large additions, it is worth the subscription price!!

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>If you are a paid subscriber and did not get the February 2022 issue, emailed on February 1, 2022, please send an email to info@appraisaltoday.com and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.


The anatomy of doom & gloom real estate articles

By Ryan Lundquist


Sensational title: These posts start with a sensational title such as, “We’re going to see a massive implosion,” or “It’s going to be worse than 2008.” I get it. A great title helps people click.

Minimal statistical substance: In many doom articles, we tend to see big ideas without statistical substance. These articles often say, “Prices are high, so we’re going to see the same thing happen again.” In my mind that’s not enough substance, especially since there is no such thing as a rigid formula where the housing market has to do exactly what it did the last time.

Moreover, many websites have been sharing this message for years, so we have to question credibility at some point. But back to stats, many doom articles seem to hype up the future without entertaining the present. I guess the message of, “The market will change in the future” feels a bit vague and boring to me.

A perspective that goes against stats: Sometimes, people say things like, “We’re going to see massive mortgage delinquencies and a new foreclosure crisis.” But when we look at actual stats, mortgage delinquencies are really low, and foreclosures hardly exist. During the beginning of the pandemic, the mortgage delinquency rate shot up, but it has since declined. This doesn’t mean we cannot have a problem in the future, but current stats don’t support a doom narrative.

To read more click here

My comment: I keep hearing about 2008 also, mainly from appraisers. That crash was caused by massive lender fraud. One of my nephews worked briefly for a company with lots of CPAs fabricating tax returns, including businesses that did not exist.

No lender fraud now, just supply and demand. Prices go up and down over the years. Whenever someone asks me what a good time to buy is, I always say, “when no one else is buying.” I purchased my previous home in 1995 and got 100% seller financing. It had no offers for two years due to a very slow market. I sold it in 2008 for $1,000,000.


What The New ANSI Standard Requirement Means For Appraisers and Agents

By Tom Horn

Excerpts: If there is a 200 square foot difference between what the agent uses in their price calculations and what the appraiser has, and the price per square foot used is $100, then this could cause the asking price to be off by $20,000.

If the agent used the ANSI measurement, which the appraiser is required to use, then this difference would be greatly reduced. Carrying this further, the future sales information regarding this property would be more reliable and could be used by agents and appraisers with greater confidence.

How can the agent utilize ANSI? They can measure the house themselves, or if they do not feel comfortable doing it they could have someone who is familiar with it, such as an appraiser, do it.

The ANSI standard is not a “quick fix” in standardizing data. However, it is the first step in a longer process to eventually having everyone in the real estate transaction using the same methods of house measurement.

To read more, click here


ANSI Z765-2021 Resources Web Page at www.appraisaltoday.com/ANSI

Every week I write about new classes, Webinars, and videos. I am putting them on this web page. Plus, removing old information, such as a class that has changed the dates it is offered.

Appraisal Institute: New 4-hour ANSI online class and Webinar

I attended both the class and the Webinar and recommend them.

Online Class: Measure It Right! – Using the ANSI Z765-2021 Standard for Residential Properties 4 hours online $80 AI members Non-members $95

  • Recognize the purpose behind the creation of the Z765-2021 Measurement Standard.
  • Identify and apply key components of the Z765-2021 Standard.
  • Apply measurement techniques and analyze measurement results through real-world examples.
  • Identify causes that may lead to measurement errors.
  • Compare and contrast the Z765-2021 Standard protocol with other measuring methods, such as FHA, VA, and ERC.

To register, google the full class name. This is the only recent online class available.

My comments: I took the class this week. Very good and comprehensive. Most of the material is text. It is well written and includes references to inconsistencies and lack of information when relevant.

One of the class authors, Byron Miller, was on the ANSI consensus committee for the 2021 update. The other author, Craig Harrington, has developed appraisal courses for many years. I review all the available classes and webinars in the March issue of Appraisal Today.

There are not very many online classes available. Course providers have been telling me for a while that getting national approval for online classes takes much time, hassle, and more money. Requirements increased in 2010 because some state regulators were worried about appraisers taking only 2 hours to complete a 7-hour USPAP class. The number of test questions significantly increased.

I had not taken an online class for over 15 years. There definitely were many more questions to answer for a 4-hour CE class. I probably will not take another online class. I was not used to the questions, and it took me much longer than 4 hours to finish the class. I have always been an excellent test taker until this class. There are many Zoom classes offered in my area. No live classes because of Covid.

Who knows how long ANSI will be a hot topic? Livestream is much easier to get approved. No tests are required. A few other ANSI online classes are waiting for approval. Maybe they will be approved before April 1.


Webinar Policy Update – Desktops and ANSI Square Footage Calculation

February 21, 2022 – Watch this 90-minute Webinar!

Lyle Radke from Fannie started the Webinar with an overview. The appraiser panelists provided some tough questions on ANSI and the new Desktops.

I finally learned more about the new Desktops with interior floor plans. Looks like they will have a slow adoption with lenders who did not like the Covid desktops. Lyle Radke says Cubicasa and Inside Maps will have ANSI-compliant smartphone software. Listen and hear what he said.

I am ready to start using a smartphone app to measure from the inside. No more rose bushes with thorns, trying to measure around big bushes, dogs, mud, etc. I quit doing drivebys because of the lack of information on the subject. Remember the “comp checks”? They were desktop appraisals. I am hearing from appraisers using a few free samples from Cubicasa. I am ready to test it.


•  Lyle Radke, Senior Director, Collateral Policy, Fannie Mae

•  Allen Gardiner, MAI, SRA, Owner, Gardiner-Ray Real Estate Appraisal and Consulting

•  Dawn Molitor-Gennrich, SRA, AI-RRS, President, Molitor-Gennrich Consulting

•  Mark Verrett, SRA, Chief Innovation Officer, Accurity Consolidated

The Webinar is recorded and available on the Appraisal Institute’s youtube channel www.youtube.com/c/AINational/videos

My comment: Watch this Webinar! Three appraisers were grilling Lyle Radke from Fannie! Two of them had negative comments about ANSI. About 1,000 people registered for the Webinar. I have a full review of the Webinar in the March 1 issue of Appraisal Today.

Appraisers seem to be divided into two primary groups: Have never used ANSI and hate it, or use ANSI and say it is ok. Some have been using it since 1996 when it started. I am in a middle group. I have never used ANSI, but I think standardization is an excellent idea. I don’t do lender work now, so I don’t have to use it. But I did residential lender work for 20 years and know what this Fannie requirement means for appraisers. No one likes changes, especially when everyone is (still) 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 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 email info@appraisaltoday.com . Or call 800-839-0227, MTW 7 AM to noon, Pacific time.

My comment: Rates are going up. Make money while you can!!

Mortgage applications decreased 13.1 percent from one week earlier

WASHINGTON, D.C. (February 23, 2022) – Mortgage applications decreased 13.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 18, 2022.

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11 percent compared with the previous week. The Refinance Index decreased 16 percent from the previous week and was 56 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 10 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 6 percent lower than the same week one year ago.

“Mortgage applications dropped to their lowest level since December 2019 last week, as mortgage rates continued to inch higher. The 30-year fixed rate was 4.06 percent, almost a full percentage point higher than a year ago. Higher mortgage rates have quickly shut off refinances, with activity down in six of the first seven weeks of 2022. Conventional refinances in particular saw a 17 percent decrease last week,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications, already constrained by elevated sales prices and tight inventory, have also been impacted by these higher rates and declined for the third straight week. While the average loan size did not increase this week, it remained close to the survey’s record high.”  

The refinance share of mortgage activity decreased to 50.1 percent of total applications from 52.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.1 percent of total applications.

The FHA share of total applications increased to 8.7 percent from 8.3 percent the week prior. The VA share of total applications increased to 9.9 percent from 9.3 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.06 percent from 4.05 percent, with points increasing to 0.48 from 0.45 (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 $647,200) increased to 3.84 percent from 3.81 percent, with points increasing to 0.45 from 0.39 (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 4.09 percent from 4.01 percent, with points decreasing to 0.56 from 0.59 (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 3.42 percent from 3.37 percent, with points decreasing to 0.45 from 0.50 (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 decreased to 3.26 percent from 3.36 percent, with points decreasing to 0.34 from 0.48 (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

Phone 510-865-8041

Email  ann@appraisaltoday.com 


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