Debate on Appraising Short-Term Rentals

By Julie Friess, SRA, AI-RRS, MA

Video 22 minutes. Worth Watching!

Excerpt: What can appraisers learn when it comes to short-term and long-term rentals? What role does an appraiser take when sorting between the two? What can appraisers learn when it comes to short-term and long-term rentals? What role does an appraiser take when sorting between the two? These questions and much more will be answered.

My comments: Julie is not referring to an owner-occupant renting out a spare room in their house for a short term. She is talking about an investor buying and renting many rooms in a house, sometimes changing the floor plan. The photo above is a good example: an exterior door for access to a bedroom. This is not typical for a single family home

In the video, Joan Trice and Julie disagreed on how to appraise Short Term Rentals. I have been a commercial appraiser for over 40 years. It is obvious to me that you need experience and knowledge of what to do when appraising them as commercial properties.

If the GSEs are unclear on this, that is their problem, not yours. Just Say No! Don’t Risk Your License! 

Julie has lived for decades in Sedona, a popular vacation location. Many homes were changed to investor-purchased Airbnbs with few home rentals available for local residents. Julie and a group of other concerned residents are now preparing for August 5, 2022, when there is an election for new city council members.

Julie and I are co-hosts every Thursday at 2 PM Pacific Time in our Clubhouse group (Real Estate Appraisal Questions). To attend, download the Clubhouse app on your smartphone. All sessions are recorded and available. Recent topics include Water rights, views, location, and more. Short-term Rentals. Zoning, Highest, and Best Use. Past, Present, and Future of Residential Appraising.


Two articles by Julie on my website:

Residential Appraisals and Airbnb Income?

Click here to read

Excerpts from the article: Don’t get caught like a deer in the headlights! State appraisal boards ARE disciplining appraisers across the country for improperly using the business income (Short term Rental – STR) from AirBnBs on the residential 1007 Fannie Mae form. 

Lenders and AMCs want residential appraisers to value these properties as both the real estate and the business values of these properties – Wrong!!

Tales of a Trainee at Appraisal Camp Sedona

Click here to read

Residential Appraisals and AirBnb Income?

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 Cubicasa, Desktops, FHA, unusual homes, mortgage origination stats, etc.


Mirai House – a cluster of arches to shade from India’s desert heat

Excerpts: The architecture is designed as a direct response to the hot and dry climate of its desertous context — the city is located just outside the massive Thar Desert which covers nearly seventy percent of the Rajasthan state. Integrating passive design strategies, shaded terraces, and lush gardens, the house introduces a cool oasis for its occupants.

Designed for a family with 3 generations living together, the house has 3 levels, with 4 bedrooms, 2 living rooms, a gym, and a study. Sectionally, the heights within it are varied with an interesting play of volumes in each part of the house, including bedrooms of a single volume, a dining area of a double volume, and a living area of an intermediate 1.5 level volume.

A curvilinear punctuated envelope surrounds the house, creating interstitial, semi-open spaces all along the perimeter, with deeper recesses on the garden-facing sides. This envelope reduces the heat gain substantially while providing sheltered open spaces around the house to each room. Designed to mitigate heat gain in response to the hot avid climate of its location, this envelope keeps the entire house cool in the hot summer months, when temperatures rise in excess of 40°C for 8 months of the year.

To read more and see many more inside and exterior photos click here 


Is A Cubicasa Scan an Inspection?

By Jamie Owen

Excerpts: Using this technology is a form of data collection. Therefore, some may consider scanning a home to generate a floor plan and obtain measurements to be an inspection. However, simply scanning a property for these purposes doesn’t fall into the definition of a “personal inspection” made by the appraiser, based on USPAP’s definition…

By the way, just scanning a home using Cubicasa’s technology does not provide the appraiser with all the information needed about the property being appraised. It’s simply a tool to create a detailed floor plan and measure a home.

I don’t see any issues with using another individual, including a homeowner, to scan a property using Cubicasa as part of the appraiser’s data collection process. It really depends on the scope of the work for that assignment and our client’s requirements and expectations. We just need to disclose what we did or did not do when it comes to a property inspection.

To read more, click here

My comments: Good discussion on what is an inspection and who can do it. Plus Jamie’s experience with Cubicasa and some fun videos and animated gifs ;>


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Retirement: To Stay or Not to Stay.

That is the question!

Excerpts: Many appraisers are retiring now. Most are from the baby boomer generation, born between 1946 and 1964. They’re currently between 58-78 years old. This results in a significant “brain drain” for many professions, including appraising.

Social Security – delay until age 70

My monthly Social Security payment is $3,773. I am still working, and it goes up every year. I am 79 and started collecting Social Security at age 70. Why? I don’t have a pension or a hefty 401k and am not married (two sources of income). I am planning on living to 100, longer than my parents or grandparents. I will need highest Social Security payment I can get as I get older.

If you start at your full retirement age (such as 66), you’ll get 100 percent of the monthly benefit. If you start at age 70, you get 132% of your age 66 benefit. But, only 3% of all seniors wait until 70. Every year you wait, you get 8% more. If you don’t want to wait until age 70, you will receive more benefits every year you delay, after age 62.

For an appraiser, retirement usually means giving up your license.

I always advise appraisers to keep their licenses for a while after retiring to decide if they want to work part-time. Your state may allow you to get your active license back within a specified period of time.

Purchase “Tail” (Extended Reporting Period) E&O coverage before you retire

You will be sued after you do an appraisal. Don’t take the risk of being uninsured. Appraiser E&O claims go up when prices decline. Remember 2008? My insurer (and some others) offer it free for long-time customers.

To read lots more on this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

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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 July 2022 issue, emailed on July 1, 2022, please send an email to and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.


FHA increases time limits for appraisals and appraisal updates. The effective date is on or after June 1, 2022

Mortgagee Letter 2022-11, July 12, 2022

Multi-Subject: FHA Implements Revised Appraisal Validity Period Guidance & Appraisal Logging Changes in FHA Connection

This Mortgagee Letter (ML) increases the Federal Housing Administration (FHA) initial appraisal validity period to 180 days from the effective date of the appraisal. This ML also extends the appraisal update validity period to one year from the effective date of the initial appraisal report that is being updated.

To read more click here

Online appraiser comment: Interesting that FHA is extending the shelf life of appraisals at a time where many markets are seeing price declines. I wonder if checking the “declining market box” changes anything?


Wee Nook- a Hobbit Hole in McEwen, TN

Excerpt: Wee Nook is a 360 square foot living space with a full kitchen and bathroom. It is tucked underground in the middle of the woods. $166 per night

As JRR Tolkien said: “In a hole in the ground there lived a hobbit. Not a nasty, dirty, wet hole, filled with the ends of worms and an oozy smell, nor yet a dry, bare, sandy hole with nothing in it to sit down on or to eat: it was a hobbit-hold, and that means comfort.”

To read more, click here

My comment: Look for links on the web page to get more photos and info.


Desktops Are Being Done WRONG!

By Dave Towne

Excerpts: Based on the recent Desktops submitted and observed, basic trends have been discovered:

Appraisers have not carefully read over the Desktop Scope of Work, Assumptions and Limiting Conditions, and Certifications on the Desktop form and appraisal protocols from Fannie Mae or Freddie Mac for Desktop assignments… Appraisers are ‘cloning’ a “traditional” full inspection report and using those for a Desktop report assignment! Some appraisers are adding a second Certification page with verbiage that contradicts the original ‘cloned’ report.

Reports are being submitted with incomplete or insufficient property data, floorplan, etc., which is required before any Desktop assignment can be done. If you cannot obtain this data, request that the assignment be converted to a “traditional” full appraisal. Lenders have been informed that this is a possibility. Don’t let any AMC ‘clerk’ brow-beat you into doing the assignment…

Quite frankly, after doing research on these Desktops, they are far more complicated to do than a traditional full inspection assignment we are all used to doing. Don’t kid yourself believing otherwise. So be darn careful about what you are doing if you choose to do Desktop assignments.

To read more, click here

My comments: Worth reading with lots of practical tips on staying out of trouble. I only did a few desktops, back in the mortgage broker days, giving them a “comp check” value before you get the assignment. I tried a few but was always too far off when I went to the subject. The new Desktops want way too much information.


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 

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 or send an email to . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

My comments: Rates are going up. Some appraisers are very busy and others have little work. Varies widely around the country.

I remember when Fed increased rates to 18% in the early 1980s because of inflation. Most lender staff appraisers lost their jobs. In 1986, when I started my fee appraisal business, rates went down and there was a significant appraiser shortage. I was very, very lucky!


Mortgage applications decreased 1.7 percent from one week earlier

Mortgage applications decreased 1.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 8, 2022. This week’s results include an adjustment for the observance of Independence Day.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 18 percent lower than the same week one year ago.

“Mortgage rates were mostly unchanged, but applications declined for the second straight week. Purchase applications for both conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “After reaching a record $460,000 in March 2022, the average purchase loan size was $415,000 last week, pulled lower by the potential moderation of home-price growth and weaker purchase activity at the upper end of the market.”

Added Kan, “Refinance applications increased slightly last week, driven by an uptick in conventional and FHA refinances. The overall refinance index remained 5 percent below the average level reported in June. With the 30-year fixed rate 265 basis points higher than a year ago, refinance applications are expected to remain depressed.”

The refinance share of mortgage activity increased to 30.8 percent of total applications from 29.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.6 percent of total applications.

The FHA share of total applications decreased to 11.7 percent from 12.0 percent the week prior. The VA share of total applications increased to 11.2 percent from 11.1 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) remained at 5.74 percent, with points decreasing to 0.59 from 0.65 (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) decreased to 5.25 percent from 5.28 percent, with points decreasing to 0.38 from 0.44 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.49 percent from 5.60 percent, with points increasing to 1.08 from 0.89 (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 decreased to 4.93 percent from 4.96 percent, with points increasing to 0.72 from 0.68 (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 increased to 4.71 percent from 4.62 percent, with points increasing to 0.77 from 0.72 (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


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