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What is a “good” appraiser?
8 Characteristics of a Successful Real Estate Appraiser
Excerpt: Here are two:
The ability to form an unbiased, objective opinion of value is absolutely essential in this line of work. According to this survey, many appraisers agree that this is the single-most-important trait you need to have as a real estate appraiser. In order to provide trustworthy results and uphold the integrity of the appraisal profession, you must be unbiased. Otherwise, you risk losing your professional reputation.
It’s important for appraisers to be analytical, as each appraisal assignment will require thorough analysis and critical thinking.
My comments: I was hooked on science in my first science class: high school biology. I studied biology and chemistry in college. I learned to be objective and unbiased, analytical, and open to almost any possibility. I have used these skills in appraising. I have always been curious, which keeps me up on what is new and other ways of looking at appraising a property. As far as I know, relatively few appraisers have science degrees.
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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 Real estate market changing?, appraisal modernization, expert witness, desktop appraisals, cubicasa app, unusual homes, mortgage origination stats, etc.
Excerpts: Do you feel it? The temperature of the housing market has started to change. Let’s talk about what’s going on, and what this means and doesn’t mean.
Don’t call it a dull market
The housing market is still lopsided. We are far from normal, but we are likely starting to feel some of the effects of 5% mortgage rates. In short, the real estate market is ultra-competitive, but the temperature has begun to cool from ultra white-hot to just below ultra white-hot. Or like my friend Jonathan Miller said when describing Manhattan, “Not as frenzied, but still blistering.”
What this doesn’t mean:
I’ve heard some people talk about the housing market starting to correct, but there isn’t any statistical support for that right now. What we know is the market is starting to show a slight temperature change, and we’ll see that change in sales stats down the road. Frankly, a cooling should be happening somewhere around April anyway, so we need some time to understand if this is a normal seasonal thing or something else. For now, we are far elevated beyond a normal market, and demand is still outweighing supply. My advice? Be objective, pay attention to stats, avoid sensationalism, and change your narrative based on the numbers.
My comments: I knew there were significant fraud problems with lending long before the 2008 crash. I sold my old house in March 2008. Within a few months, the crash started. There were slight price declines over the previous year. I was very, very lucky. I never predicted a major housing crash. Sort of like Covid: no one predicted a housing price boom in a pandemic! I was expecting a recession.
We look at the past to predict the future—human nature. In 2008, the AVMs and models did not consider the Great Depression data, the last time we had price declines everywhere in the country.
Desert Flower in New Mexico: Earthship Lands on the Market for $3.5M
Excerpts: While iconic throughout New Mexico, Earthships don’t often come up for sale. Fewer than 10 of these eco-friendly dwellings are on the market nationwide.
The Earthship was first conceived in the early 1970s in the Land of Enchantment by architect Michael Reynolds. His concept took off, and these residences now dot Northern New Mexico and other arid areas of the country. Highlighted by a passive solar design, these distinctive homes are all about environmental conservation and sustainable architecture. Often built with upcycled materials, they use less electricity and are designed for desert climates.
Constructed from adobe and stucco in 1981, this Earthship is the Desert Flower. In the native Tewa language, it’s Ahkon Povi.
To read more and see lots of photos (scroll down the page), click here
My comment: I have always been fascinated by Earthships!
By Claudia Gaglione, Esq., National Claims Counsel for LIA
Excerpt: Editor’s comments: The appraiser accepts the
assignment. The attorney sometimes does not contact the appraiser for a long time. Then calls when the court date is very soon. I learned the hard way to be very careful to keep track of these requests. Attorneys pay very well. You can give up your lender/AMC appraisals and specialize in legal work. Few residential appraisers will do them because they don’t want to testify in court. Don’t believe them when they say, “No testimony will be required.”
Most importantly, the appraiser has to determine at the end of the call, or soon thereafter, if he or she has been retained to act as an expert and that retention or the lack thereof should be confirmed. The appraiser should not rely upon the attorney to do this. A simple email on the part of the appraiser can serve to clear up a great deal of confusion down the road.
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The Journey to a More Efficient Home Valuation Process
By Jake Williamson. Senior Vice President, Single-Family Collateral Risk Management
Excerpts: The method of establishing residential property values for mortgage lending hasn’t evolved much for several decades. Obtaining a traditional appraisal is one of the most time-consuming and costly parts of getting a home loan… But that’s changing, as the industry is on a journey of continuous improvement to make the process more efficient…
For decades there was just one way to confirm the property value for home purchase or refinance loans: an appraiser visited the property armed with a clipboard, tape measure, and camera, then performed an analysis and submitted a report. In recent years, the gear might have been upgraded to a tablet computer and laser measuring device, but the process was the same.
My comments: The GSEs keep saying they want to make the best use of appraiser skills by doing analysis at a desk. What will happen when fewer loans are being made because of higher rates? Another one of the inevitable highs and lows in appraisal volume.
The table above is a good illustration of The GSEs alternatives. Appraisal modernization: Desktops, Hybrids (being tested), and no human appraisals.
While not as celebrated as his dad, architect Lloyd Wright followed in his famous father’s footsteps and carved out an impressive portfolio of design.
The younger Wright, who was born in 1890 and died in 1978, left behind many projects. Among them were the Hollywood Bowl’s second and third bandshells (since demolished), as well as the John Sowden House and the Taggart House, both in Los Angeles.
The famed Derby House is now available for $3,295,000. Built in 1926, the 3,281-square-foot home features five bedrooms and three bathrooms.
The exterior displays a Mayan Revival design, which is also visible in the Hollyhock House and Ennis House, two prominent L.A. residences designed by the elder Wright.
Characterized by a textile block design, concrete blocks are set in a distinct pattern and provide an imposing look on the exterior. The elder Wright’s influence on the Derby House design isn’t a surprise—the father and son worked on the Ennis House together just a couple of years prior.
Other key elements of the Wright aesthetic in the Derby House include a floor-to-ceiling fireplace with 8-foot-tall, wrought-iron gates in a two-story living room, a hexagonal-shaped dining room, and a spacious bay window.
To read more and scroll down the page for many photos click here
I am working on an article for my May paid newsletter, with lots of details, but wanted to get you this important info now.
There is a lot of confusion and misinformation. I read all the GSE information, take webinars, and interview knowledgeable people.
Appraisers are being asked to do these Desktops, but the client may not know what the GSEs require from them to send to the appraiser.
If you are asked to do a 1004/Desktop you will need (from your client):
Detailed floor plan with exterior dimensions or a separate sketch with exterior dimensions.
Subject front, street scene, and rear photo plus main living area, kitchen, and baths.
Enough information to fill out the property description on the first page – same as URAR.
How does the AMC or lender do this? Have an independent Property Data Collector (not the listing agent) get it using a cellphone app. What are their qualifications? Each AMC is different.
You can probably get info from MLS, but that is for sales purposes to make the house look good. The listing agent may have a floor plan. Maybe your assessor has floor plans with exterior dimensions.
If you go inside the home for any reason, it automatically is upgraded to a full appraisal.
Common errors per GSEs
Not reading the Scope of Work and Certifications.
No floorplan, sketch, etc.
Failing to meet the minimum photo requirements.
Using addendums (from their templates) that discuss all the things they did and did not do during their inspection (that never occurred).
Failure to complete the top of page 3.
“Cloning” old desktop forms. THE NEW 1004/DESKTOP FORMS ARE DIFFERENT!
Don’t be afraid to say “No.” You may want to consider waiting a while to do these desktops until lenders and AMCs figure this out. I will have lots of information in my next monthly issue on May 1.
To read a March 25 email newsletter with desktop links click here
Cubicasa floorplan app with exterior dimensions and GLA
I will review cubicasa in next month’s paid newsletter, which uses newer smartphones to do floor plans with exterior dimensions. Get a free test at cubicasa.com. Appraisers can get two more free samples. Great floor plans – far better than any you could do with your sketch software. If you measure the home, let me know how accurate it is. I got within 4%, which seems to be what many other appraisers are getting.
How accurate were our GLAs when we measured to the closest 1/2 foot, rounding up or down, before April 1? Measuring to the nearest inch or tenth of an inch is much more accurate! Multiple appraisers measuring the same house had different GLAs.
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
My comment: Rates are going up. Make money while you can!!
Mortgage applications decreased 1.3 percent from one week earlier
Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 8, 2022.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 62 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent lower than the same week one year ago.
“Mortgage rates across all loan types continued to move higher, with the 30-year fixed rate exceeding the 5-percent mark at 5.13 percent – the highest since November 2018. Refinance activity as a result declined to the slowest weekly pace since 2019,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Higher rates are increasing borrower interest in ARMs. Their share of applications last week was at 7.4 percent, which was the highest share since June 2019. In a promising sign of strong purchase demand amidst affordability challenges, both conventional and government purchase applications increased.”
Given the faster than expected increase in mortgage rates, and the likelihood of more aggressive actions from the Federal Reserve to curb inflation, MBA’s April 2022 forecast now calls for mortgage originations to total $2.58 trillion in 2022 – a 35.5 percent decline from 2021. Purchase originations are still forecasted to reach a record $1.72 trillion this year – a 4 percent increase from 2021. Refinance originations are now expected to fall 64 percent to $841 billion.
“Mortgage rates have spiked more than 1.5 percentage points thus far in 2022. This rapid increase in rates, caused by a much more rapid pace of rate hikes and balance sheet reduction from the Federal Reserve, is in response to the booming job market and inflation being at a 40-year high. The jump in mortgage rates will slow the housing market and further reduce refinance demand the rest of this year,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Higher home prices and rates as well as ongoing supply constraints are now expected to lead to an annual decline in existing home sales. However, MBA continues to expect purchase originations to reach a new record in 2022. Even though existing sales volume will be slightly lower than last year, the continued growth in new home sales and the swift rise in home prices should deliver a smaller, but solid, 4 percent annual growth in purchase origination volume.”
Added Fratantoni, “Total origination volume is now expected to be at $2.56 trillion this year – down from roughly $4 trillion in 2021.”
The refinance share of mortgage activity decreased to 37.1 percent of total applications from 38.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.4 percent of total applications.
The FHA share of total applications increased to 9.5 percent from 9.2 percent the week prior. The VA share of total applications increased to 9.9 percent from 9.8 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 ($647,200 or less) increased to 5.13 percent from 4.90 percent, with points increasing to 0.63 from 0.53 (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 4.68 percent from 4.51 percent, with points increasing to 0.37 from 0.34 (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 4.95 percent from 4.90 percent, with points increasing to 0.75 from 0.68 (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 4.34 percent from 4.11 percent, with points increasing to 0.65 from 0.53 (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 4.06 percent from 3.82 percent, with points increasing to 0.68 from 0.46 (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.