Excerpt: We continue to see claims alleging that the rural property appraiser failed to adequately identify or report details surrounding a water source. In one claim, the appraiser correctly noted that the property was serviced by a “private water well.” It was later discovered that the well was not located on the property which was appraised. Unfortunately, the well was actually located on an adjacent lot that, at one time, was part of the subject lot prior to the lots being subdivided.

My comments: An appraiser lost a lawsuit because he said the vacant parcel had public water access. It did not even though many lots nearby were developed. Nearby, I noticed a large water tank. It was shared by four nearby homes. This was not in a rural area. I worked for 4 years in rural areas. Water access was critical. If there was no access, trucks had to bring the water.

Appraisers – check the water source!

10-12-17 Newz//FHA-Appraisers responsible for water quality reporting?, Hybrid appraisal survey)

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 real estate market, USPAP and contracts, unusual homes, mortgage origination stats, etc.


My Comments on Market Changes

My inbox is flooded with news emails about opinions on what is happening now and forecasts for the future. (Most of the information in these newsletters comes from emails. I am on many email lists.) It looks like the change is starting because of increasing mortgage interest rates. I have included some of the articles below.

Fannie and Freddie have long said that they want appraisers to tell them about their markets. Include graphs and charts in your appraisal to show your clients what is happening now and why they need human appraisers.  

It is extremely important for appraisers now to closely track changes in your local markets at least once every day and tell your lender clients about it. When will it affect your market? No one knows if there will be foreclosures or when they will start. The number of potential buyers will decrease as rates go up in many markets.

Segments may be very different from the overall stats. A few examples:

  • Different price ranges – first-time homebuyers, high end
  • New homes – what is happening?
  • Detached vs. townhomes and stacked condos.
  • All cash and investors
  • How many offers
  • No inspections or appraisals?


Today is NOT the same as 2008+, with its massive fraudulent loans made to unqualified buyers. Computer modeling did not predict the 2008 crash. Many were in denial that it was coming and refused to listen to appraisers. We have never seen a pandemic real estate market before. Did anyone think in early 2020 that home values all over the country would go off the charts? No one did. Appraisers wrote up long disclaimers about how they did not know the effects. Some still include them in their appraisal reports today.

Watch the excellent 4-minute video with Mark Zandi, “There’s a comeuppance coming in the housing market”. It discusses how today is different from 2008 and what is happening today. Before becoming the chief economist of Moody’s Analytics, he was a real estate economist. I listened to him for many years about real estate economics. He is very savvy. I agree with what he says about real estate. I am unsure about inflation. To watch the video, click here

I have been writing about these upcoming changes in these newsletters for a while now. Ryan Lundquist writes about this almost every week. He has lots more details and examples of graphs that can help you see what is happening in your market. www.sacramentoappraisalblog.com He writes for the Sacramento, CA market but what he writes is relevant for other markets also.

Two days ago the Fed raised rates by 0.75%. Recession? Lower inflation? Real estate market?


$50M Orange County Mansion Known as Ocean’s 13

Excerpts: the 14,500-square-foot modern home where almost every room offers an excellent view. Six bedrooms and 10 bathrooms. “All the doors pocket, so you literally can just open them up, and the house becomes truly massive once you start going outside,” says Gary(owner).

Outside, there’s a large pool, kitchen, and 2,500 square feet of entertaining space with a fire pit that seats 25. And the fire pit is in the pool.

“We went through three architects because no architect could figure out how to build this home with unobstructed views without having large columns supporting the substantial overhangs,” Gary explains. “The way that we did that was through cantilevers and using structural engineers and steel to help us to construct the home that we absolutely wanted.”

To read more and see lots of photos, click here


USPAP and the Contract

8-minute podcast

By Tim Andersen, MAI and USPAP Guru

Excerpt: But USPAP and the contract have a very unique relationship. Some appraisers do not like having a copy of the contract. They think it is a contract to hit (it isn’t). It might bias them toward the contract price rather than market value (it might). Therefore, they say, keep the contract! But USPAP tells you when to read the contract, and it’s not as the start of the process. OK, so if that does not happen at the start of the appraisal, when does it start?

Read SR1-5, not for what it contains, but for what it means. Given that SR1-5 comes after SR1-4, the proper time to consider USPAP and the contract is after you’ve formed a preliminary value opinion. When you hold it until then, it cannot influence you one way or the other. Your value conclusion has its base in market data, not in the contract. There is no way to accuse you of the bias of anchoring to the contract. You didn’t read it until you formed your value opinion. Then you include that contract as the last comp. In the reconciliation, you then give it the weight it deserves in the final value opinion.

To read more and listen to the podcast, click here

My comment: I have always been uncomfortable that USPAP requires analyzing the sales contract. This is the best advice I have heard on this topic.Getting too many ad-only emails?


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Blasts from the Past!!!

Significant changes in 1980s and 90s

• Computers – 1981 – first IBM PC, 1993 – first digital cameras, 1996 – Windows replaces DOS

• Internet – 1993: first usable web browser (Mosaic), 1995 – some appraiser live chats on AOL and Compuserve and limited use of Internet

• Mortgage Lenders – 1989 – FIREEA and appraiser licensing, 2009- HVCC and AMCs took over

• Appraisal forms – Early 1980s – first forms software, 1987 – First URAR

• EDI to UAD, 1994 – EDI maybe, 2011 – UAD

Appraisal data sources from 1986 to today

  • In 1986, “Comp books” came out once a quarter. I still have my comp books starting in 1986. I don’t know when they started. Starting in 1980, in my small city, a local broker sent (by postal mail) a weekly list of listings, pendings and sales.
  • Public records data was spotty. In California, only larger counties had to release the data. I remember having to guess on square footage for comps from the street.
  • Access to MLS current data was limited to licensed real estate agents and brokers. In my area, there were multiple MLSs, with different DOS software, using dial-up. Now they are all in a regional MLS with licensed appraiser access.
  • In California, CMDC (California Market Data Cooperative) was started by Southern California lenders in the 1970s. Lenders and fee appraisers submitted their appraisals for the comp books. It shut down in the early 2000s.
  • The Internet changed everything. Licensing gave appraisers access to MLS. Public records were online in most areas. Many listings are free online. Google maps and street views plus many other resources are now available. There is easy access to Fannie, public records, regulatory and other documents.

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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 June 2022 issue, emailed on June 3, 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.


Prepare Yourself: ‘The U.S. Housing Market Is at the Beginning Stages of the Most Significant Contraction in Activity Since 2006’

June 10, 2022

Excerpt: ‘I don’t think that home sales are going to grind to a complete halt. They’ll just slow. People will still be able to sell homes, but it may take you just a little bit longer than what it’s been.’ Len Kiefer, deputy chief economist at Freddie Mac

Mortgage applications as a data point “gives you a sense of where the market might be headed,” Kiefer said in an interview with MarketWatch, “because that’s the early stages of when people are looking to buy a home. And if the volume of applications falls, that tends to indicate that in a month, month and a half, mortgage originations of home closings will also decline.”

Kiefer expects home sales to henceforth “slow quite a bit over the summer.”

To read more click here

My comments: From realtor.com which does not like to send out bad news. Includes a link to the full Twitter comments from Keifer with more graphs and replies, plus around 100 comments. Note: probably requires a Twitter account, which you need to read posts on critical topics when referenced in articles and other posts. I have had one for many years with over 2,500 followers.


Real estate firms Compass and Redfin announce layoffs as the housing market slows

June 14, 2022


  • In filings with the Securities and Exchange Commission, Compass announced a 10% cut to its workforce, and Redfin announced an 8% cut.
  • Mortgage rates have taken off since the start of this year, rising from 3.29% in early January to 6.28% now, according to Mortgage News Daily.
  • Home sales have been dropping for several straight months, and the fall is expected to worsen.

“Due to the clear signals of slowing economic growth we’ve taken a number of measures to safeguard our business and reduce costs, including pausing expansion efforts and the difficult decision to reduce the size of our employee team by approximately 10%,” a Compass spokesperson said.

The Redfin filing had an attachment from CEO Glenn Kelman, who writes a regular blog on the company’s website. In the blog posted Tuesday, Kelman wrote, “With May demand 17% below expectations, we don’t have enough work for our agents and support staff, and fewer sales leave us with less money for headquarters projects.”

To read more, click here

My comments: Both Compass and Redfin stocks are publicly traded. They were aggressive in expanding.


An Architect Couple’s Experimental Home Using Recycled Materials in Melbourne Australia

Excerpts: In 2005, recently graduated architects Asha Nicholas and Chris Stanley bought a tiny worker’s cottage in the Melbourne suburb of East Brunswick—and they spent the next 15 years experimenting and evolving the space into a three-bedroom home as they started a family. At the heart of the transformation is a rich palette of recycled materials and an unusual floor plan with an abundance of nooks and angles that introduce light while maintaining privacy.

The top edge of the timber cladding is deliberately uneven. “I like a soft edge on buildings—it’s like looking at a skyline and seeing a broken line, rather than a hard, horizontal line,” explains Chris. “It also provided a bit of privacy for the rooftop bath.”

To read more and see lots of photos, click here


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 you can!!


Mortgage applications increased 6.6 percent from one week earlier

Mortgage applications increased 6.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 10, 2022. Last week’s results are compared to the prior week, which included an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 6.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 17 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week and was 76 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index increased 18 percent compared with the previous week and was 16 percent lower than the same week one year ago.

Mortgage rates increased for all loan types, with the 30-year fixed rate last week jumping 25 basis points to 5.65 percent – the highest level since 2008. Mortgage rates followed Treasury yields up in response to higher-than-expected inflation and anticipation that the Federal Reserve will need to raise rates at a faster pace,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the increase in rates, application activity rebounded following the Memorial Day holiday week but remained 0.29 percent below pre-holiday levels. With mortgage rates well above 5 percent, refinance activity continues to run more than 70 percent lower than last year.”

Added Kan, “Purchase applications were down more than 15 percent compared to last year, as ongoing inventory shortages and affordability challenges have cooled demand, coinciding with the rapid jump in mortgage rates.”

The refinance share of mortgage activity decreased to 31.7 percent of total applications from 32.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.1 percent of total applications.

The FHA share of total applications increased to 11.8 percent from 11.3 percent the week prior. The VA share of total applications increased to 11.7 percent from 11.4 percent the week prior. The USDA share of total applications increased to 0.6 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) increased to 5.65 percent from 5.40 percent, with points increasing to 0.71 from 0.60 (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 5.25 percent from 4.99 percent, with points increasing to 0.54 from 0.44 (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 5.36 percent from 5.30 percent, with points increasing to 1.00 from 0.79 (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 4.79 percent from 4.62 percent, with points increasing to 0.80 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 4.57 percent from 4.51 percent, with points increasing to 0.8 from 0.68 (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.


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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