5 Tips for Appraising Green Homes
By McKissock
Excerpts:
1. Consider each home on a case-by-case basis
You must independently determine whether there is sufficient information available to develop a reliable opinion of market value for each individual property. That will depend on the extent of the differences between the green home and other types of houses in the neighborhood. It will also depend on the number of such properties that have already been sold in the neighborhood.
5. Compare improvements to those in the neighborhood
Any improvements should conform to the neighborhood in terms of age, type, design, and materials used for their construction. If there is market resistance to a green home property because its improvements are not compatible with the neighborhood or with the requirements of the competitive market because of adequacy of plumbing, heating, or electrical services; design; quality; size; condition; or any other reason directly related to market demand, address the impact to the value and marketability of the subject property.
To read more, click here
My comments: I have “Mediterranean” (mild) weather, without much solar. If you live in an area with high summer and/or low winter temperatures, there are probably more solar installations. Many classes are offered by various appraisal CE providers. Check with education providers, such as McKissock, the Appraisal Institute, and local offerings.
What are Pass through Bedrooms for Appraisals
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NOTE: Please scroll down to read the other topics in this long blog post on desktops, nonbanks, alternative financing, unusual homes, mortgage origination stats, etc.
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The Circular Sun House in Arizona
Excerpts: Overlapping concentric circles that intersect and interact with each other create a unique floor plan that flows from one room to another.
The 3,095 square foot home has three bedrooms and three bathrooms on over 1.3 acres. The master bedroom and bathroom enjoy incredible views, outdoor access, and honed Italian rose marble floors and bath.
To read more and see lots more photos, click here
My comments: Very interesting! I definitely would use CubiCasa to measure it. In 2020/2021, it was listed for $7,950,000 after being completely redone. I could not find any information on a sale.
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Is anyone doing desktops?
Desktop Appraisals for Eligible Loan Transactions Survey
May 4, 2022
A recent survey from Appraisal Buzz: How do you feel about Fannie Mae accepting desktop appraisals for eligible loan transactions?
Results include about ¾ of respondents said they “Will not be pursuing this type of work.”
To read the full results, click here
My comments: A recent WorkingRe survey had 53% saying No, 30% saying “Not sure – need more information”, and 16% Yes.
I have heard that not many appraisers are not being contacted for desktops by lenders and AMCs. Hybrids are coming. I have no idea what appraisers will say about them. My May paid newsletter had a long article, Desktops – Yes, No, or Maybe? I read a lot, interviewed knowledgeable people, took webinars, etc. Personally, if I were doing lender appraisals, I would consider them if the client met all my criteria. My requirement list was in last week’s newsletter.Getting too many ad-only emails?
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Do Tandem Bedrooms and Garages Impact Value?
By Jamie Owen
Excerpts: Occasionally, I will see a home with tandem bedrooms. Tandem bedrooms mean you have to walk through one to get to the other. The picture to the left may help you to imagine what this is like. The room that has to be walked through to get to the rear bedroom is less desirable.
In this configuration, the two bedrooms might also be said to be
uncomfortably close. There is less privacy in the one bedroom because it
must be walked through to get to the other bedroom. This is considered to be functional obsolescence.
This type of situation is most often found in older homes. I have seen this
many times on the second floors of many bungalow or cape cod style dwellings I have appraised. Although, it can exist in any style of home.
While this type of configuration is clearly less desirable than two bedrooms that are not tandem, this does not automatically mean that the market value of the rooms is less. In my experience, generally, the market value of two tandem bedrooms is less than two bedrooms that are not tandem.
However, I have seen times when the market was not paying less for
tandem bedrooms. Whatever the case is, the appraiser has to do the research to make the proper determination as to how the market is reacting to this layout.
Sometimes I can find comparable sales with tandem bedrooms. It’s not
always easy, though. Real estate agents may count the tandem bedroom as a bedroom in their description of a home they are listing. However, they don’t typically mention that two of the bedrooms are tandem in their comments.
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CFPB to use “dormant” Dodd-Frank power to regulate “risky” nonbanks
Excerpts: About 70% of first-lien originations made in 2021 came from nonbank originators. Watchdog says it will use power to conduct supervisory exams on nonbanks and other fintechs.
The Consumer Financial Protection Bureau (CFPB) plans to revive “dormant” Dodd-Frank Act powers that would allow the watchdog to conduct supervisory exams on nonbanks or any “fintech” it believes is risky.
“Given the rapid growth of consumer offerings by nonbanks, the CFPB is now utilizing a dormant authority to hold nonbanks to the same standards that banks are held to,” said CFPB Director Rohit Chopra in a statement. “This authority gives us critical agility to move as quickly as the market, allowing us to conduct examinations of financial companies posing risks to consumers and stop harm before it spreads.”
To read more click here
My comments: I have been worried about nonbanks for a long time, maybe causing another crash. What is a nonbank? Nonbank banks are financial institutions that are not considered full-scale banks because they do not offer both lending and depositing services. Nonbank banks can engage in credit card operations or other lending services, provided they do not also accept deposits.
Quicken Loans is a very large mortgage non-bank lender. Two others are LoanDepot and PennyMac Financial. They don’t offer checking and savings accounts. Instead, they borrow the money on a line of credit and sell mortgages on to investors.
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1 In 5 Homebuyers Have Used Alternative Financing: Survey
Excerpt: Alternative financing has been used by 36 million homebuyers, including 7 million who are currently using the practice to purchase a home.
Alternative financing arrangements include land contracts, lease-purchase agreements (rent-to-own), personal property loans, and seller-financed mortgages. The survey found that personal property loans were the most commonly used.
According to the Pew report, research indicates that alternative financing loans are generally riskier, more costly, and subject to far weaker consumer protections and regulatory oversight than traditional mortgages.
The survey said that they are also more likely to be used by minorities and lower-income borrowers. At 34% of the respondents to the survey, Hispanics were the biggest users, followed by Blacks at 23%, and whites at 19%.
To read more, click here
Link to original Pew Report: click here
My comments: I have followed the Pew Charitable Trust Reports for many years. They are well done and reliable.
When I worked for an assessor’s office in the 1970s, one year we checked property ownership records to be sure they were correct. I was amazed how many people living at the property did not own the property or have a recorded mortgage, but thought they were making “mortgage” payments, not paying rent.
In a land contract, the buyer makes payments to the real estate owner, or seller, until the purchase price is paid in full.
I had a 100% seller-financed home purchase in 1995 (first and second mortgages). The market was very slow, but no offers in two years on the house. It was owned by a neighbor, a local well-known real estate broker I knew personally, so I was not worried. But, I made sure they were properly recorded.
Recently, I read about people who had been making payments, but it was a scam. The properties went into foreclosure as the owner kept the money and did not make mortgage payments. They lost all the money they had paid and had to move out.
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Crescent House Is Listed for $23.5M
Excerpts: Three years ago, the Wallace Cunningham-designed Razor House in La Jolla, CA, made waves with a record-setting sale of $20.8 million, to buyers Alicia Keys and Swizz Beatz.
This mansion was built in 2003 on an oceanfront street, on one of the neighborhood’s larger lots. It has 74 feet of ocean frontage and a 6,329 square foot house.
The property could not be duplicated today due to the limits of the current building codes, according to listing agents Kelly Howard and Lisa Waltman, of Compass.
The home is shaped like a crescent moon, wrapping around a similarly curved infinity pool. Known as Crescent House, the concrete, glass, and titanium structure took three years to build.
To read more and see some interesting photos, click here
My comment: I wrote about the Razor House in 11-19-21.
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ANSI Z765-2021 Resources Web Page at www.appraisaltoday.com/ANSI
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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 comments: Rates are going up. Make money while the market is still good!!
Mortgage applications increased 2.5 percent from one week earlier
Mortgage applications increased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 29, 2022.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 0.2 percent from the previous week and was 71 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 11 percent lower than the same week one year ago.
“Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings. The 30-year fixed rate was 5.36 percent, up over two percentage points from a year ago. The 127-basis-point jump in rates over the past two months has triggered a 49 percent drop in refinance activity,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications increased for conventional, FHA, and VA loans and were up 4 percent overall. This is potentially a good sign for the spring home buying season, which has seen a slow start thus far. The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments. The ARM share remained unchanged at around 9 percent, which is well below the 30 percent mark observed in the mid-2000s.”
The refinance share of mortgage activity decreased to 33.9 percent of total applications from 35.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 9.3 percent of total applications.
The FHA share of total applications increased to 11.1 percent from 10.6 percent the week prior. The VA share of total applications increased to 10.3 percent from 10.2 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 ($647,200 or less) decreased to 5.36 percent from 5.37 percent, with points decreasing to 0.63 from 0.67 (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 $647,200) increased to 4.92 percent from 4.89 percent, with points decreasing to 0.43 from 0.47 (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 decreased to 5.27 percent from 5.29 percent, with points decreasing to 0.85 from 0.88 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 4.68 percent, with points decreasing to 0.76 from 0.80 (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 decreased to 4.25 percent from 4.28 percent, with points increasing to 0.78 from 0.74 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
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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