Killed by Carbon Monoxide: Appraiser Blamed

Read this article on how to check CO detectors. You may save someone’s life!!

by Kendra Budd, Associate Editor, WorkingRE

Excerpts: For decades, appraisers have been gently reminded to pay careful attention to smoke alarms and carbon monoxide (CO) detectors—especially noting when they are absent altogether. Many experts advise that the state and federal standards requiring these important systems exist for a reason.

A recent case in which a young couple died from carbon monoxide poisoning while they slept highlights the life and death importance of these simple alarms—and brings this issue front and center for the real estate appraiser community as a whole.


As you might expect, it didn’t take long for both John and Suzy’s parents to hire a law firm and start going after all the real estate professionals involved.

As it turns out, both the appraiser and the home inspector had each independently inspected the home 18 months prior and both mistakenly reported a few of the smoke alarms present at the home, as CO detectors.

Consequently, both the appraiser and home inspector ended up on the receiving end of a “wrongful death” legal claim.

The legal team for the parents of the deceased young adults (plaintiffs) alleged that the appraiser, Darcy Doe (name changed for privacy), had negligently appraised the Smiths’ home and had reported the presence of a CO detector when in fact, none were present. Unfortunately for Doe, she labeled her photograph inaccurately in her own appraisal report to the lender.

CO Detector vs Smoke Alarm

One important lesson in these cases is that it can be extremely difficult to tell the difference between CO detectors and smoke alarms. This is a reminder to appraisers to take a second look at all CO detectors and smoke alarms—and to test them as well.

Rick Bunzel, home inspector and Washington firefighter was able to give us some tips on how to not only tell the difference between the two detectors, but offers additional safety tips on smoke alarms and carbon monoxide detectors as well.

For starters, the difference between a smoke alarm and a CO detector is quite simple. “The item will be clearly labeled, written on the exterior shell of the device, so you’ll be able to see it easily,” advises Bunzel. However, this can be hard to read because the signage could be the same color as the shell, so it’s incredibly important for you to get close enough to the alarm or CO detector to read it clearly (and test it!).

Bunzel was also able to provide some helpful tips for appraisers as far as how to communicate with their clients about CO detectors. For example, Bunzel says that appraisers and home inspectors should make it clear to their clients that they do not warranty if the device is working, just that it is there. “The test button doesn’t test the workability of a device—only the alarm. Just because it squeaks doesn’t mean it works,” reports Bunzel. This disclaimer language should be included in the appraiser’s report.

Another tip is to check the date of a CO alarm and smoke detector

To read more, click here

My comments: Read this article, especially how to identify and check CO detectors. The disclaimers are useful. I have CO and smoke detectors in several locations in my house. CO is much riskier than smoke as you can’t smell it.

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on Fannie and Competency, mortgage rates, extraordinary assumptions, vacant land, unusual homes, mortgage origination stats, etc.


Extraordinary Assumptions and Hypothetical Conditions – What, When, How, and Why

By McKissock (3 separate posts)

Extraordinary Assumptions and When to Use Them

Excerpts: An extraordinary assumption is something that the appraiser assumes to be true but has no way of knowing. An extraordinary assumption involves uncertainty, as it may or may not be true. If the assumption were found to be false, it could affect the appraiser’s opinions and conclusions. Read on to learn about the definition of an extraordinary assumption and when it should be used, as well as the overuse of extraordinary assumptions.

An extraordinary assumption differs from a general assumption in that the appraiser is aware that there is a possible condition that could impact value. Typically, it involves an area in which the appraiser is not an expert. If an appraiser observes minor settlement in a dwelling, then the appraiser will disclose the observed minor settlement in the report and include an extraordinary assumption that the appraisal is based on no structural defect (i.e., the observed settlement is not a result of a structural integrity failure). However, the appraiser does not have the expertise to make a determination if the settlement is a structural integrity defect. Therefore, the assumption could impact value if the assumption is wrong and there is in fact a structural defect.

Some appraisers routinely use several extraordinary assumptions in their reports as a means of limiting liability. For example, an appraiser may base the appraisal on an extraordinary assumption that the subject property is in compliance with the local zoning ordinance. As previously covered, an extraordinary assumption should only be used because the appraiser is alerted to, or aware of, a potential concern. Otherwise, it is a general assumption and most likely covered in the statement of limiting conditions and assumptions or the appraisal’s scope of work.

To read more click here 


Disclosure Example: Extraordinary Assumption

Excerpts: Extraordinary assumptions can be used only for situations where information is unknown or uncertain. For example, if the borrower had handed Jim a copy of the engineer’s report at the time of the appraisal inspection stating the home is not structurally sound, this factor would not be unknown. If that were the case, Jim would have no basis for the extraordinary assumption that the home is structurally sound.

However, let’s continue with the scenario in which the structural engineer is not hired to inspect the foundation until after Jim has completed his appraisal assignment. Since the structural soundness of the home is unknown or uncertain as of the effective date of the assignment results, Jim can employ an extraordinary assumption. Of course, he must disclose the extraordinary assumption in his report.

To read more click here 


Disclosure Example: Hypothetical Condition

Excerpts: When appraising a proposed new dwelling with a current effective date, a hypothetical condition is often employed to appraise the dwelling as if it were 100% complete as of the effective date. However, in reality, the property is known to be a vacant lot as of the effective date of the appraisal.

If Beverly is completing an appraisal on the proposed new building from Example 1, developed from plans and specifications, she might use the following disclosure statement:

The appraised value is based on the hypothetical condition that improvements have been completed as of the effective date of the appraisal, per the plans and specifications dated ________. The use of this hypothetical condition might have affected the assignment results.

To read more click here 

My comments: Well written, short, and understandable. These two terms are confusing for many people, including appraisers.

I rarely use EA and HC in my non-lender appraisals. I never use the terms. Instead, I explain what I did so that anyone can understand it. I have seldom used them for liability reasons. I request any reports, such as termite or home inspection, even old reports, but rarely get them. I disclose any problems, in detail, of course. Any adjustment is typically part of the overall condition adjustment.

For estates, typically, it is an issue such as buying out one beneficiary or some other situation not related to estate taxes. I appraised a 5-unit property for an estate. Later, the executor wanted to know how much to buy out a 25% interest of one beneficiary. They decided to use the current value, so I reappraised it. However, after my original appraisal for estate tax purposes, the city had required earthquake-related repairs (“soft story”) on all multi-family properties with second stories built over open parking. In the Loma Prieta earthquake in 1989, some apartment properties like this one collapsed. The family did not want to pay for the repair cost estimate at that time. I appraised it “as if” the work was completed and stated that the owners were to deduct this repair cost from the buy-out value when the structural repair report was available. I put a statement in large capital bold letters in several prominent places in the appraisal.

I have always been surprised that so many lender appraisers use EAs in their appraisals. When I did them prior to HVCC etc. in 2007-2008, few appraisers used them. I used Hypothetical Assumptions for new construction, of course.


Historic Stone Castle in Kansas for $3.5M

Excerpts: The 1.76-acre property complete with the castle and carriage house is on a riverbank. Listed on the Local, State, and National Registers of Historical Places. Built in 1888. 17 bedrooms, 19 baths, 14,622 sq.ft. Off and on the market since 2013.

The stone for the castle exterior was quarried in Kansas, but most of the interior elements were imported, including the fireplaces.

“Every room on the main level except for the kitchen and the turret have a fireplace, and those are all made out of a different precious wood,” Rich (agent) explains. “Whatever precious wood the fireplace is, the whole room is decked out in that particular wood.” The ornate woodwork took the builders two years to complete.

The Campbell Castle was built from 1886 to 1888 by Colonel Burton Harvey Campbell and his wife Ellen, and is reportedly an authentic reproduction of a Richardsonian Romanesque Scottish Castle. Many Victorians in the neighborhood.

To read more, click here 

My comment: Interesting history and photos.


Vacant Land: A Nightmare for an Appraiser

By Claudia Gaglione, Esq., National Counsel for Liability Insurance Administrators

Excerpts: It may or may not be surprising to learn that most claims arising from vacant land appraisals are caused by the appraiser actually appraising the wrong property. It is especially frustrating when, after the claim is made or

the lawsuit is filed, the appraiser admits that he or she was not certain they inspected the correct parcel, but went ahead and did the report anyway.

Other claims problems arise from parcel misidentification, such as determining the access. The appraiser drives up to what he or she thinks is the right property on a paved road, and so assumes that access is not an issue. Counsel comes to learn that the lot that was supposed to be

appraised is the adjacent lot which does not have access to that road.

There may be unrecorded easements or other issues that the appraiser would not and could not discover during the course of the inspection.

Besides looking at the right parcel, make sure there is sufficient scope of work language in the report: “Appraiser cannot guarantee that property is free of encroachments or easements, and recommends further investigation and survey.”

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Chuck Norris eats 7% mortgage rates for breakfast

By Ryan Lundquist

Excerpts: Housing trends are changing by the week, and it’s time to start believing the Fed when they talk about resetting the housing market.

Three things on my mind:

1) These rates don’t phase Chuck Norris (but we’re not Chuck Norris):

Sorry to state the obvious, but quick rate changes are poised to take more demand out of the market. This doesn’t bother Chuck Norris one bit because the man eats 7% mortgages rates for breakfast. But this is a massive deal for buyers in today’s market who are trying to afford a house.

This visual (below) from Mortgage News Daily shows another spike in mortgage rates over the past month. Keep in mind it’s going to take a number of months before we completely see the effect of higher rates in data for closed sales, but we should see it soon in things like price reductions, days on market, open house traffic, and stories from the trenches.

2) Believe the Fed about wanting a housing market correction:

Look, it’s time to start believing the Fed about wanting to see the housing market reset. I don’t say this as a housing bear (really), but Fed Chairman Jerome Powell was blatant last week about a correction. It’s as if the housing market is the sacrificial lamb on the altar of Fed strategy to curb inflation. My advice? Start believing the Fed about their intent to change the housing market.

To read more, click here

My comments: Of course, No One Knows about the national, regional, or local future. There are lots of aggregated national or regional statistics available. But only “boots on the ground” appraisers analyze the local market and its segments. Lenders want to know what is happening. Lenders have been successful at doing fewer full appraisals with market analyses. Too bad for them. I have no sympathy. Hard to sue an AVM if prices drop and the loans go bad.


Mortgage rates from May 25, 2018 to September 26, 2022


Fannie Mae September Appraiser Update – Competency

Excerpts: “In this edition, we explore the topic of competency. First, we focus on why competency matters and the important role appraisers have. Next, we dive into a discussion of how to gain and maintain competency.”

Competency requires: 1. The ability to properly identify the problem to be addressed; 2. The knowledge and experience to complete the assignment competently; and 3. Recognition of, and compliance with, laws and regulations that apply to the appraiser or to the assignment.”

One important distinction between USPAP guidelines and our (Fannie) Selling Guide is that we require the appraiser to be competent before accepting the assignment. Fannie Mae does not allow the flexibility of becoming USPAP-competent after assignment acceptance.

The first step to growing competency is identifying which knowledge areas are lacking or in need of refreshing. Is a property type unfamiliar? Is a market unexplored but open to expansion? After determining the area of focus, the appraiser can then build competency to produce credible assignment results

for future appraisals.

Let’s take a moment to talk about geographic competency. Geographic proximity does not equal competency. The reverse is also true. Extensive knowledge of a market doesn’t disappear overnight, even if the appraiser relocates farther away.

However, while geographic proximity does not equal competency, proximity is advantageous for developing competency.

Appraisers can gain competency in a variety of ways:

• Learn through doing.

• Learn from peers.

To read more, click here

My comments: Short, well written, and worth reading. To me, competency can be difficult to determine and can have differing opinions. How much knowledge and experience should you have? For example, I have been appraising for 35 years in my small town. Every time I do an appraisal here, I learn something new. I know much less about other cities where I appraise. Most of us appraise in multiple cities or areas.

When I moved to the Bay Area 35 years ago, I worked in a wide geographic area and had to obtain competency in all the areas. At that time, Fannie allowed you to become competent after accepting the assignment. I spoke with an appraiser who was assigned a VA appraisal that he did not feel competent to do. The VA said to take the steps he needed to become competent and do the appraisal.


$900K New Mexico Home Looks To Be Carved From Surrounding Stones

Excerpts: 1 bedroom, 1.5 bath, 2,414 sq.ft., 5.18 acre lot.

Casa de Roca is a one-of-a-kind, 2,414-square-foot home in Lamy, NM. It’s listed for $899,000.

“When you drive up, it looks like a cloud kind of sitting on the hill and you’re kind of looking at it going, ‘I’ve never seen anything like this,’” says Maya Hiersoux (agent). “The great thing about this space is that it’s multidimensional, and [there are] several different levels with windows everywhere,” Hiersoux adds. “It’s magical.”

The home looks like it’s carved into the rock, but it actually isn’t. An artist and jeweler built the residence so that it blends into the surroundings, and the exterior has held up since its construction in 1989.

“So that house itself is a regular, normal house made with regular framing and a little bit of cinderblock,” Hiersoux explains. In fact, the original owners applied spray foam on top of a structure to create the appearance of limestone. “Even with the weathering of time, it truly looks like the rock. It’s kind of hard to [see] where the rock ends and where the house begins,” Hiersoux says.

To read more, click here

NOTE: if images don’t show on the link above, go to the MLS listing

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 go to Or call 510-865-8041, MTW 7 AM 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.


Mortgage applications decreased 3.7 percent from one week earlier

Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 23, 2022.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 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 11 percent from the previous week and was 84 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.4 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 29 percent lower than the same week one year ago.

“Applications for both purchase and refinances declined last week as mortgage rates continued to increase to multi-year highs following more aggressive policy measures from the Federal Reserve to bring down inflation. Additionally, ongoing uncertainty about the impact of the Fed’s reduction of its MBS and Treasury holdings is adding to the volatility in mortgage rates. The 30-year fixed rate was 6.52 percent, its highest level since mid-2008. After a brief pause in July, mortgage rates have increased more than a percentage point over the past six weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “With rates now more than double what they were a year ago, the pace of refinancing is running at a 22-year low and last week was more than 80 percent below last year’s level. Similarly, purchase activity was 29 percent lower than a year ago, with higher rates and economic uncertainty weighing on buyers’ decisions.”

Added Kan, “With the recent jump in rates, the ARM share reached 10 percent of applications and almost 20 percent of dollar volume. ARM loans remain a viable option for qualified borrowers in this rising rate environment.”

The refinance share of mortgage activity decreased to 30.2 percent of total applications from 32.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 10.4 percent of total applications.

The FHA share of total applications decreased to 12.5 percent from 13.3 percent the week prior. The VA share of total applications decreased to 10.7 percent from 10.9 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 6.52 percent from 6.25 percent, with points increasing to 1.15 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 6.01 percent from 5.79 percent, with points increasing to 0.7 from 0.46 (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 6.17 percent from 5.85 percent, with points increasing to 1.31 from 1.15 (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 5.70 percent from 5.40 percent, with points increasing to 1.33 from 1.06 (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 5.30 percent from 5.14 percent, with points increasing to 1.28 from 0.99 (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


  1. Good article, but a profoundly complicated problem. Labeling smoke, CO, or combination alarms / detectors (there is a difference) the same color as the body of the alarm, and so small it cannot be read when the alarm is ceiling mounted….. let alone the age or expiration dates….is pure negligence as far as I am concerned, and the negligence is compounded when appraiser are held responsible, and apparently liable, for the information in an appraisal report relied upon by both known and unknown persons. Add to that the fact that appraisal requirements include terrible information, like presence AND functionality of only ONE alarm / detector when both the manufacturer and every building code I am aware of require multiple alarms / detectors and specifically where they are to be located. With that kind of liability placed on unqualified and typically unable to determine age, functionality, and code compliance during an appraisal inspection….. and certainly not each and every such device if there are several of them in different locations……

    And, suppose we find one out of several that is faulty, and report it. Loan delays, 1004D assignments, really pissed off agents, and a self determination and proclamation of expertise if there is another one, even in another property, that the same appraiser missed, is simply not acceptable. This problem is not limited to alarms. Consider water heater double straps. Each manufacturer has specific requirements, each state/county/town jurisdiction has requirements, and an appraiser can’t really tell if the straps are mounted to studs or just drywall, whether the screws are 3 inches or 1/4 inch long, and in reporting the strapping (like in a garage) we again become self proclaimed experts as to proper elevation, protection from vehicle impact, length, material, and proper installation of pressure relief valve diversion pipes, exposed wiring, strap proximity to natural gas or diesel fuel controls…. and the list goes on.

    An appraisal is an opinion of value based on market indicators and valuation competency. If detailed analysis of each and every health and safety issue is a concern of the lending industry, then they need to retain such detailed inspections by qualified and licensed professionals BEFORE calling the appraiser in. And, of course, I have the same problem with pest control and home inspection issues. Do that first, and provide the findings to the appraiser before retaining them, and the problems, if any, can be effectively analyzed and reconciled in the final appraisal and report. But then, what do I know.

    • Thanks. Very good comments! It did make me think about how checking them is a good idea. I checked mine yesterday. The first time in months!! Fortunately I have not done any res lender appraisals since 2005 before it was required. Best to put in the disclaimer in the article. I quit doing FHA appraisals after one year in 1986. They wanted too much information that I did not feel qualified, and did not want, to provide.

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