How to Respond to ROV Requests: Updated Guidance
By Greg Stephens, SRA, AI-RRS
Excerpts: Suggested protocols for responding to Reconsideration of Value requests
When you receive an ROV request, some recommended steps to take include:
1. Maintain USPAP compliance – Confirm the ROV request came from your client, either directly or through the client’s AMC, acting as an agent for the client, or other party designated as an agent by the client. The importance of this cannot be overstated. Appraisers are still required to comply with USPAP when responding to an ROV request, including the confidential nature of assignment results.
2. Identify ROV content to determine next steps – take the time to analyze the content of the ROV to determine what specifically is being requested of you (the appraiser) and what level of information will be needed to respond to the requestor of the ROV. This is an opportune time to maintain a professional demeanor and not react to an ROV request as if it is an affront to your competency or experience. After receiving an ROV request, send an acknowledgement of receipt and advise the client that the ROV request will be analyzed and responded to in a timely manner.
To read more, click here
Click here to listen to Tim Andersen, MAI’s podcast, “Reconsiderations of Value: Satan’s Own Seed, Right?” (Podcast 9.5 minutes) on ROVs, included in a 12-21 issue of this newsletter, so it may look familiar to you.
My comments: ROVs are a PITA for many appraisers. Very well written and practical. Greg Stephens is a very experienced appraiser and reviewer. He worked in management positions for several large AMCs.
Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!
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 Value Reconciliation, non-lender appraisals, liabililty, USPAP, unusual homes, mortgage origination stats, etc.
The 10 U.S. Cities With the Cheapest Mansions for Sale in 2022
Here are a two of cities:
Median mansion price: $449,000
Median mansion price per square foot: $89
Joplin, MO (photo above is “typical” Joplin mansion)
Median mansion price: $627,500
Median mansion price per square foot: $110
…the very word “mansion” drips with subtext: Wealth, luxury, success.
Mansions, of course, have long played a special role in the American psyche—from Gilded Age monuments to egregious affluence in New York, from futuristic edifices for the West Coast tech elite to the larger-then-life residences of comic book titans Richie Rich, Scrooge McDuck, and Batman.
For most Americans, the idea of living in a mansion falls squarely in the realm of the daydream—one perhaps indulged while watching “The Real Housewives of Beverly Hills,” or for those old enough to still hear the unmistakable enunciation of Robin Leach ringing in their ears during an episode of “Lifestyles of the Rich and Famous.”
But here’s the reality: Even in today’s fraught, price-squeezed housing market, you don’t actually need to be rich or famous to afford a sprawling home. You just need to know where to look. For those ready to make their reveries a reality, Realtor.com®’s data team has scoured the country to pinpoint where buyers can find the best deals on oversized abodes.
To read more click here
My comments: I regularly include very expensive mansions in this newsletter, many on the West Coast. I include this to show that you don’t need to spend millions of dollars to get a mansion!
What Is a Reconciled Value?
By Jamie Owen
Excerpts: What does the appraiser do with the three different values that may be developed? The appraiser must now reconcile these three values into one final opinion of value. How?
Standards Rule 1-5 in the Uniform Standards of Professional Appraisal Practice (USPAP) states that when appraising a real property, an appraiser must:
(a) reconcile the quality and quantity of data available and analyzed within the approaches used; and
(b) reconcile the applicability and relevance of the approaches, methods and techniques used to arrive at the value conclusion(s).
If you look at the small amount of space provided in the Fannie Mae/Freddie Mac form I shared above, there’s really not enough room to adequately comment on these things. At least in my opinion. Therefore, in my reports, my reconciliation is on a separate addendum.
When performing work for banks, on a fairly regular basis, a reviewer will bounce my report back if my opinion of value in the Sales Comparison Approach is different from my reconciled final opinion of value. Usually, they think it is a typo. Respectfully, if they had read my report and not just looked at the values, they would know exactly why they are different and how I developed them.
To read more, click here
My comments: Written for home owners, but very relevant for appraisers. Includes a separate section on lenders and Jamie’s personal experiences with reviews.
Getting too many ad-only emails?
4 ways to get only the FREE email newsletters
and NOT the ad-only emails.
1. Twitter: @appraisaltoday.com (same time delivery) https://twitter.com/appraisaltoday – all recent newsletters
2. Appraisal Today blog: https://appraisaltoday.com/blog (posted by noon Friday) To get notices when newsletters are posted, sign up in the upper right of the blog. No ads in the blog post. You will receive an email to confirm.
3. Email Archives: https://appraisaltoday.com/archives(posted early Friday) The link is above and to the right of the big yellow email sign-up form. Newsletters start with “Newz.” Contains all recent emails sent.
4. Link to 10 most recent posts and newsletters (no ads) at www.appraisaltoday.com scroll down past the big yellow signup block.NOTE: When you have set up one of the choices above, and it is working, you can unsubscribe from this email list, which includes getting ads, by clicking the unsubscribe button at the bottom of every email newsletter.
Estate/trust appraisal liability advice from Peter Christensen
2. Get the relevant date of value from the client or client’s attorney. The date of value can be a legal issue and the appraiser should not be the one accepting responsibility for whether the date of value is correct for whatever the use is (such as an estate tax return).
3. Keep the definition of intended users as narrow as possible. If an executor of an estate is hiring you, for example, just say the executor is your client and only intended user (add the IRS if it’s relevant). Do not say the intended users are all the beneficiaries of an estate or trust. Doing so potentially expands your liability to all those parties.
4. Keep your definition of intended use as narrow as possible to describe how your appraisal will be used by your client. For example, you don’t want your appraisal for the executor being used by a beneficiary down the road to sell the property to someone. So, don’t say something open ended like: “the intended use is to provide a fair market value of the property.” Say, instead, “the intended use of this appraisal is for the executor’s use in administrating the estate of . . . The appraisal should not be used for any other purpose.”
To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
If this article helped you understand Estate appraisal liability from an Expert, it is worth the subscription price!
=========================================================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 September 2022 issue emailed on September 1, 2022, please email email@example.com, and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.
The Grudge (Al Ba’sa) Beirut, LebanonBeirut’s thinnest building was the result of feuding brothers.
Excerpts: A sliver-thin house in Beirut,SLIVER-THIN HOUSE, built in 1954, is the ultimate display of how deep sibling annoyance can go. Known as The Grudge, or Al Ba’sa in Arabic, the house is just a bit over 13 feet at its widest point, and just around 2 feet at its narrowest.
At a side view, the “house” built of brotherly spite looks more like a wall than a place to live. But despite its narrow dimensions, Al Ba’sa is habitable, and is the skinniest building in the city.According to urban myth, a Lebanese man built a skinny building to block his brother’s seafront view. After inheriting a smaller portion of land, he built “the Grudge” to devalue his brother’s property. The architect Sandra Rishani told Insider no new structure can be built in its place because of zoning laws. (source: second link below)
My comments: Wow! And I thought Alameda’s Skinny House in my city was thin!!
USPAP – What’s Important Now? Podcast (11 minutes)By Tim Andersen, MAI
Excerpt: USPAP – what’s important now? As usual, in a real estate appraiser’s life, USPAP is always important. But in this podcast, Tim talks about some of the more important stuff – right now. For example, i-buyers. Because of the housing shortage, investors are buying single-family residences. But not one at a time. Those investors are buying in bulk. So they are paying investment value, not market value. How does this affect you? Please listen to the podcast to find out.
With USPAP, what’s important now is changes in market trends. So, how does the appraiser adjust for changes in interest rates over time? Generally, as interest rates increase, the trend is for prices to fall. This is because higher interest rates mean higher monthly payments in which less of the monthly payment goes to the principal, while more goes to interest. So, does the appraiser adjust the comparable sales for this trend, or just ignore it? Please listen to the podcast to find out.
When it comes to USPAP, what’s important now is also what will happen in the future. Chances are, as prices fall from their unsustainable past high rates, there will be some pain among appraisers. How so? Thirty-six months from now, will that $500,000 house someone bought in a frenzy of offers and low interest rates be worth more than $500,000? Who knows?
But ROVs, Tidewater initiatives, upset owners, and those who will play the racist card will be omni-present. How does the appraiser get through such anti-appraiser gyrations? Training. Have a bulletproof workfile is a great way, too.T
To read more and listen to the podcast, click here
My comments: Listen to the full 11 minute, very timely podcast. The topics are very relevant today. The August 2022 issue of Appraisal Today had this article by Tim: “Markets are changing. What does USPAP say about trends”. Very detailed and worth reading. He is a regular contributor to the monthly Appraisal Today. He wants to help appraisers do better appraisals and appraisal reports. More information at www.theappraisersadvocate.com
Home appraisers are fed up with how their industry is run
Read this article!!!
By Kyle Campbell, Staff Writer, American Banker, September 7 2022
Excerpts: The field is too difficult to get into, too easy to get booted out of and too bogged down with bureaucracy, appraisers around the country say. The ranks of appraisers are too old, too white and too male. And for banks and other lenders, especially those in rural communities, there aren’t enough appraisers to keep up with demand.
Then there’s the issue of racial and anti-minority bias. A deluge of research data and press-reported anecdotes about Black and Hispanic homeowners routinely having their homes assessed below market value has put real estate appraisal in the Biden administration’s crosshairs as it looks to root out institutional contributors to racial inequality.
The problems are numerous and there is ample blame to be spread around. Many in the field point fingers at The Appraisal Foundation, a nonprofit industry group with congressional authority to write the rules on appraisal licensure and best practices.
To read more click here
My comments: This could have been written by an appraiser! I subscribe to American Banker email updates. This is the first time I have seen an article about appraisers. The writer knew whom to contact. I recognized many of the names in the article. Fortunately, it is not behind a paywall, so we all can read it.
Nothing new for appraisers, but few know the details of the current issues. To be published by American Banker gets it out to a lot of people, from a very reliable, objective source.
Starts with Lori Noble and her state board hassles. Topics include: Appraisal Foundation, USPAP, ASC, shortage of appraisers, Bias, and more.
The Role of Appraisal Review in the Risk System – Appraisal Revisions
By Ken Dicks
Excerpt: Today, while there still remains some stickiness to the QC revision process, a recent survey completed by The STRATMOR Group commissioned by appraisal management technology company Reggora, indicates 25% of appraisal reports require some form of revision. While that number may seem high to some, in the context of lending and property complexities, that is a 54% improvement in performance cited earlier in this article (10 years ago). Is there room for more improvement?
Of course, there is always room for process improvement, but on the face of it, some process improvements appear to be yielding results.
The exact reasoning behind the drop in rates is unknown, they may just be two separate observation points at separate points in time. However, this author is optimistic that process changes from each of the root causes for revisions have had some level of contribution to the decline. Lenders are utilizing more technology for their appraisal processes, with increased usage of modern order management platforms improving communications between lender appraisal desks and appraisers and incorporating both automated and manual processes in their underwriting of appraisals.
To read more, click here
My comments: This is Part 3 of a 3-part review series (links to the previous blog posts in the article. ROVs, reviews, risk systems. Appraising was so much easier when I worked for an assessor in the late 1970s. My job was property value equalization, so every property owner paid their “fair share” of property taxes. Fortunately, I was not involved in taxpayer appeals. Note: Stratmor report link was not working yesterday. The report is behind a paywall.
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.mba.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 go to www.appraisaltoday.com/order Or call 510-865-8041, MTW 7 AM to noon, Pacific time.My comments: Rates are going up. Some appraisers are very busy, some have decreasing appraisal requests and others have little work. Varies widely around the country. Seems to be dependent on the number of affordable homes.
Mortgage applications decreased 0.8 percent from one week earlier
Mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 2, 2022.The Market Composite Index, a measure of mortgage loan application volume, decreased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 83 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 23 percent lower than the same week one year ago.
“Mortgage rates moved higher over the course of last week as markets continued to re-assess the prospects for the economy and the path of monetary policy, with expectations for short-term rates to move and stay higher for longer,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “With the 30-year fixed rate rising to the highest level since mid-June, application volumes for both purchase and refinance loans dropped. Recent economic data will likely prevent any significant decline in mortgage rates in the near term, but the strong job market depicted in the August data should support housing demand. There is no sign of a rebound in purchase applications yet, but the robust job market and an increase in housing inventories should lead to an eventual increase in purchase activity.”
The refinance share of mortgage activity increased to 30.7 percent of total applications from 30.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8.5 percent of total applications.
The FHA share of total applications increased to 13.3 percent from 13.0 percent the week prior. The VA share of total applications decreased to 10.8 percent from 11.1 percent the week prior. The USDA share of total applications remained unchanged at 0.6 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 5.94 percent from 5.80 percent, with points increasing to 0.79 from 0.71 (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 5.46 percent from 5.32 percent, with points decreasing to 0.4 from 0.48 (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 5.61 percent from 5.57 percent, with points decreasing to 1.06 from 1.09 (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 5.23 percent from 5.10 percent, with points increasing to 0.86 from 0.82 (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 4.81 percent from 4.78 percent, with points increasing to 0.88 from 0.61 (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.