Crazy Appraisal Stories! We all have them!!

Excerpts: Not Just Measuring Homes and Taking Pictures

I went to appraise a home for a movie producer in Brentwood, California. I knocked on the door, and one of the producer’s boyfriends opened the door and invited me in. He was completely naked. He told me that whatever I do, don’t let the cat out. As I went room to room taking photos, I met another naked boyfriend. He also told me not to let the cat out. As I went to the second floor of the house, I met the producer who was also naked. He told me again, “don’t let the cat out.”

I’m approaching the rear patio door to take pics of the rear of the house. Outside I see a beautiful pure-bred Persian cat. I know I didn’t let the cat out but I sure as hell better get it back in the house. I started chasing the cat in the rear yard. Finally, I grabbed it, but not before it ripped my blouse and caused my hands to bleed. Huffing and puffing from the chase, I tossed the cat back into the house and closed the door. A few moments later one of the naked boyfriends came over and said “that’s the neighbor’s cat. Get him out of the house.” I then had to chase the cat again. Finally, I caught the cat and put him out of the house. I was left there panting with a torn blouse and bleeding hands, thinking appraising homes is definitely not just measuring homes, taking pics, and typing up forms.

-Mary Cummins

My comments: Just For Fun! We’ve all got these stories!

Excerpt: The Chemosphere has been featured in numerous TV shows and films. After the high cost of living drove Malin and his family out of Los Angeles, the Chemosphere was rented out to untamed partiers who trashed the place. In recent years, publisher Benedikt Taschen purchased the Chemosphere and restored it to its former glory. Leonard Malin didn’t initially set out to build a house that resembled a dormant extraterrestrial spacecraft. He simply wanted a structure that would remain sturdy at a steep angle.

More than one onlooker who was surprised by the sight of Malin’s unconventional home has asked why no one told them that space creatures now had a California command station with a killer view of the San Fernando Valley.

Excerpt: What does housing finance currently impact when it comes to the appraisal industry? What does this mean for the future of the appraisal industry? How is new technology shaping appraisers directly in the field? These questions and much more will be answered.

My comment: 725+ views. Very popular!

Excerpt: Think about it… how Fannie Mae will reject a loan over a missing water heater strap; or, in my case feeling the pressure to always tell them in writing that this home built 80 years ago still has a remaining economic life of over 30 years (or, more accurately, exactly 30 years so that they can do their loan if I expect to keep getting assignments from them, is what has ruined the profession). Look at FHA. The concept has gone from value to health and safety, and the appraiser has gone from valuation professional to home inspector, all with increasing liability.

Now, we all know that the primary motivation for sanctions and license revocation by BREA (California state appraisal regulator) is allocated to terrible adjustments either intentionally or otherwise, and yet virtually all policy changes trickle down to a direct influence on the risk we take doing our jobs.

My comments: I am so glad I quit doing res lender appraisals in 2005! I do my appraisals the way I want, using USPAP of course. When BREA said they required that all adjustments be supported, I quit putting any adjustments in my non-lender appraisal reports, except market condition and usual features affecting value. Works out fine.

Excerpts: Could you live in a tiny home? Or what about a skinny home? I’m talking where walls range anywhere from eight feet to twelve feet wide at their maximum. Well, let’s talk about a super thin unit that sold recently in Sacramento.

Good luck finding three model match sales in a one-mile radius. That’s just not going to happen for something unique.

A few questions I would ask:

1 Are there any other unique homes that have sold in the neighborhood or other neighborhoods? Maybe those can give clues to value.

2. Has the subject property been sold previously? If so, what did it compare to at the time? These could be clues.

3. What are similar-sized properties selling for in the neighborhood? The subject might not compete with these units, but we need to at least understand what buyers have been paying for similar sizes.

4. What is the price position? In other words, where might a property like this fit into the market price spectrum? I know this sounds really subjective, but we have to ask. Is a property like this poised to compete toward the highest prices or the lowest prices?

My comments: In my city, there is a well-known “Spite House,” 10 ft. wide on a very small corner lot. I saw it at an open house about 15 years ago. Well done floor plan. “Spite houses are rare now due to strict modern building codes, but many that have grandfathered in, like the Alameda house, are still standing, not as annoying these days as they are novel, and many now look upon the spite houses with a smile.” Excerpt from an article on The Alameda spite house.

“Let’s Talk Appraisals” Webinar with Jeff Allen & John Brenan (Chief Appraiser at Clear Capital). 60 minutes. Not a promo for Cubicasa and their Desktop methods. Very good on both Desktops and Cubicasa. Excellent Q and A of the questions appraisers ask about both. Watch it.

Jeff Allen is the President of Cubcasa. He explained the technical and business sides. John Brenan, a long-time appraiser, explained the appraiser side. There were many Cubicasa questions, but there was no time to discuss most of them. They may send a list of the Q&As later.

I have watched many webinars and videos on both Desktops and Cubicasa. This is one of the best ones!

Excerpt: This class will cover:

(1) How to handle stairs!

(2) What to do with low or sloping ceilings;

(3) Why Fannie Mae is adopting uniform standards;

(4) How to handle unique rooms, curves, and more;

(5) How to stay out of trouble!

My comments: I have taken many of Richard’s classes. Excellent instructor. The webinar has some very good photos and illustrations to help you understand ANSI,including below grade. I watched the 1-hour version. More time was needed, so Richard did a 2-hour webinar.

With Byron Miller, SRA, AI-RRS speaker, and Jonathan Miller, SRA as the interviewer. Video, 54 minutes.

Excerpt: Here are a few of the topics. Summaries of Byron’s answers are in ALL CAPS.

* How does this differ from HUD, USDA, & VA requirements for measuring? THOSE ARE NOT STANDARDS BUT ARE ASSIGNMENT CONDITIONS OF GSE (GOV’T SPONSORED ENTERPRISES. THIS IS A SUBTLE BUT IMPORTANT DISTINCTION. LOOSELY, THEY COULD BE CONSIDERED “AD-HOC” STANDARDS.

* Can you describe the process involved in making changes via the consensus committee? REVIEWED ALL COLLECTED QUESTIONS, PRIORITIZE, PROPOSE CHANGES, EXPOSE TO THE PUBLIC, ITERATE

* How does gross living area relate to the Z765 standard? IT DOESN’T, Z765-2021 DOES NOT DEFINE OR DISCUSS GLA, IT DEFINES ABOVE-GRADE, BELOW-GRADE, FINISHED, AND UNFINISHED SF.

* What about below-grade square footage? BELOW-GRADE SF IS DEFINED IN THE Z765-2021 STANDARD. IN SHORT, THE STANDARD CONSIDERS ANY AREA THAT HAS EVEN A FRACTION OF IT’S OVERALL BELOW-GRADE AREA TO BE COUNTED IN WHOLE AS BELOW-GRADE SF. THERE IS ONE POSSIBLE EXCEPTION, AS INDICATED IN THE STANDARD. HOWEVER, I LEAVE THAT TO APPRAISERS TO READ FOR THEMSELVES IN THE STANDARD.

* And what about the concern regarding using the comparables? USE THE SAME APPROACH THAT YOU CURRENTLY DO IN DEALING WITH MULTIPLE DATA SOURCES.

My comment: I interviewed Byron for my ANSI articles. He was on the consensus committee when ANSI Z756 2021 was approved. He is an ANSI expert and a

good speaker.

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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. 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 7AM to noon, Pacific time.

My comment: When rates are going up, make money while you can!!

Mortgage applications decreased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 15, 2022.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 14 percent lower than the same week one year ago.

“Ongoing concerns about rapid inflation and tighter US monetary policy continued to push Treasury yields higher, driving mortgage rates to their highest level in over a decade. Rates increased across the board for all loan types, with the 30-year fixed rate hitting 5.2%, the highest level since 2010,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The 30-year rate has increased 70 basis points over the past month and is 2 full percentage points higher than a year ago. The recent surge in mortgage rates has shut most borrowers out of rate/term refinances, causing the refinance index to fall for the sixth consecutive week. In a housing market facing affordability challenges and low inventory, higher rates are causing a pullback or delay in home purchase demand as well. Home purchase activity has been volatile in recent weeks and has yet to see the typical pick up for this time of the year.”

Added Kan: “The ARM share of applications reached 8.5% last week, its highest level since 2019. As ARM loans typically have lower rates than fixed rate mortgages, and as this spread has widened, ARM loans have become more attractive to borrowers already facing home purchase loan amounts close to record highs.”

The refinance share of mortgage activity decreased to 35.7 percent of total applications from 37.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.5 percent of total applications.

The FHA share of total applications increased to 9.9 percent from 9.5 percent the week prior. The VA share of total applications increased to 10.1 percent from 9.9 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 5.20 percent from 5.13 percent, with points increasing to 0.66 from 0.63 (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 4.76 percent from 4.68 percent, with points increasing to 0.46 from 0.37 (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 5.11 percent from 4.95 percent, with points increasing to 0.90 from 0.75 (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 4.44 percent from 4.34 percent, with points increasing to 0.77 from 0.65 (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 4.09 percent from 4.06 percent, with points decreasing to 0.56 from 0.68 (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.