Top Ten Reasons Why It Is Great to be an Appraiser!
10. Dazzle your friends with your knowledge of external obsolescence.
9. The wonderful world of rats, bats, and spiders.
8. Be a part of the profession blamed for the collapse of the savings and loan industry.
7. See places in people’s houses that usually require a search warrant to access.
6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.
5. Chance to really irritate annoying real estate salespeople.
4. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.
3. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway.
2. See that some people really do hang those black velveteen pictures of Elvis on their living room walls.
1. Be one of a handful of people who know that USPAP is not a medical term.
Many thanks to reader Joe Ibach, MAI, for this great list! He doesn’t know the source…seems like it is one of those email/send/resends now floating around the Internet!
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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 AMC fees, Real estate forecast, Google Business Profile, unusual homes, mortgage origination stats, etc.
Record Share Of Sellers Give Concessions To Buyers
Excerpts: ‘Buyers are asking sellers for things that were unheard of during the past few years.’
Home sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter, the highest share of any three-month period in Redfin’s records, according to a report from the technology-powered real estate brokerage.
Home sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter. Concessions increased over 30% in the previous quarter and the fourth quarter of 2021.
A record 22% of home sales in the fourth quarter included both a concession and a final sale price below the listing price.
Sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.
Concessions were less common in some metros compared to last year, including Austin, Texas, where sellers gave concessions to buyers in 33.3% of home sales, down from 38.1% a year earlier (-4.8 ppts). Next came Philadelphia (-2.7 ppts), New York (-2.4 ppts), and Chicago (-1.6 ppts).
Concessions were the most common in San Diego, with sellers giving concessions to buyers in 73% of home sales in the fourth quarter — another record for the highest share among the metros Redfin analyzed. San Diego also had the highest share a year ago. Next came Phoenix (62.9%); Portland, Ore. (61.6%); Las Vegas (61.3%); and Denver (58.4%).
To read more, click here
My comments: It has been a while since appraisers made negative concession adjustments. This is national data. What is happening in your market? MLS info can be unreliable. You may need to call agents to see the amount of concessions offered and make an adjustment based on its effect on market value.
Read Ryan Lundquist’s blog post below on how appraisers handle concessions.
Average AMC Appraisal Fee to the Appraiser
By Dave Towne 12-29-22
Average AMC appraisal fee to the appraiser: AMCs are taking far more of the borrower-paid fee this year than last year.
Excerpts: Appraisers, I recently sent out a message asking appraisers to send me three data points comparing borrower-paid appraisal cost, and average AMC paid assignment fees in October, November 2021 and the same months in 2022 – for SFR assignments. My intent was to provide actual useful AMC-paid fee data compared to what the borrower pays for ‘the appraisal’, without revealing specific fees in any particular location.
Based on this extremely limited data, here’s what was revealed:
Average ‘appraisal cost’ paid by borrowers is $802
Average AMC appraisal fee to the appraiser in 2021: $713, or 11.1% retained by the AMC
Average AMC appraisal fee to the appraiser in 2022: $591, or 26.3% retained by the AMC
This limited survey reveals exactly what appraisers have been reporting across many communication platforms. That being, AMCs are taking far more of the borrower-paid fee this year than last year. As the data shows, the AMC portion has increased more than double from the previous year.
A few of the 40+ appraiser comments:
I solved this AMC issue in my business about 3 years ago. I STOPPED working for AMCs.
Located in Northern California. We appear to be similar to Southern CA, if we bid over $375, ETA 3 days, we always get “outbid” by lower fees… Sorry, I’m not going to participate in a race to the bottom.
Most of this doesn’t matter.
Fee Appraisers will be gone in 5 years being relegated to measuring houses, property inspection, and basic condition reporting. If we’re lucky, we’ll get a 2075 for $25 to verify the subject is still there.
The puppet masters don’t like appraisers or the appraisal process, and the AVM’s will take over and Fannie, Freddie, et al, will do to whatever lobbyists and politicians tell them to do. We are on borrowed time, make the most of it.
Maybe the AMC’s will fade away along with the appraiser.
To read more, click here
My comments: Read the 40+ appraiser comments and add your comments. The sample size was small, but at least Dave researched this controversial topic. Fee cycle volatility again: from way up to down.
This never happened before AMCs took over. Direct lender (and mortgage broker) fees had slight declines and increases, whatever happened to the number of originations.
A $1M Contemporary Home Designed for Musicians Sets the Tempo in Ohio
Excerpts: 2 bed 2.5 bath 6,873sqft 1.97acre lot
The spectacular style of the two-bedroom dwelling was the talk of the town when it was custom-built in 2004 for a married musician couple.
“People call it modern, but I think it’s more a contemporary style with its open spaces, large expanses of windows, and unconventional volumes of space,” says listing agent Pradnya Martz, of Keller Williams.
“The owners were professional musicians. She just retired from teaching the cello, and her late husband was a principal oboist at Oberlin Conservatory of Music. They used to entertain here and hold small concerts on the first level. There are beautiful acoustics in the house, so, of course, the home has already attracted many musicians and artists.”
Located just a few doors down from the Frank Lloyd Wright–designed Weltzheimer Johnson House, the 6,873-square-foot home has an unusual floorplan as well.
To read more and see lots of photos click here
My comments: I am a musician and converted a one-car garage into a recording studio. Performance and practice space in my house. Wow!!
How to get a FREE Google Business Profile.
An excellent way to get more appraisal business!
Excerpt: An example of how Google Business Profiles work
Recently, a woman called about getting a 4-unit Alameda property appraised, as one of the owners wants to sell his interest in the family-owned property. She searched the Internet and found many appraiser names in Google Business Profiles.
I was the only one with an Alameda address. I did not work in a large geographic area and was not a big company. She went to my website and found my qualifications.
She called me. Of course, she did not remember how she searched for an appraiser, but she said “the internet.” My Google Business Profile, with a link to my website, is usually close to the top of the Google list.
I charge well above the typical fee for lender appraisals.
After explaining that I had been working in Alameda since 1986, owned Alameda rental property, and had appraised many apartment buildings, I got the order.
I also explained that our rent control made appraisals much more difficult. Using a local Alameda appraiser experienced in apartments was the best option. This article has many practical tips on reviews, geographic areas, Google reviews and many more.
To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
If this article helped you understand How Google Business Profile can help you get more appraisal business, it is worth the subscription price!
How are appraisers handling concessions?
January 16, 2023 By Ryan Lundquist
Excerpts: How are appraisers handling concessions to the buyer? Could a seller credit damage the chance of appraising at the purchase contract? These questions weren’t asked a year ago, but welcome to the 2023 housing market.
Question: When a buyer comes in over list price and asks for a concession from the seller, how is that viewed from an appraiser’s mindset?
1) No effect on value: The appraiser needs to look to the comps to establish value. Bottom line. The seller can give 3% or more if the lender allows, but this shouldn’t have any bearing on the appraised value theoretically because the proof of value is found in the comps – not the terms of the contract. In other words, if the comps suggest a value at $500,000, it doesn’t matter if the subject is in contract at $500,000 with the seller giving 3% back for closing costs. However, if the only comps at $500,000 are ones with fat credits, and comps without any concessions are coming in closer to $485,000, then that tells us the comps with concessions are maybe closing high due to the concessions…
2) Inflated contract price: All that said, when a property has been on the market for a long time, and it gets into contract at a higher level with a huge credit, it’s only human to wonder whether it’s really worth that amount. It sounds a bit suspect, right? In other words, would buyers really pay the contract price if the seller wasn’t giving a fat concession? This is a viable question, and the appraiser is going to record the full listing history of the subject property and scrutinize the terms of the contract in the appraisal report.
This means the underwriter is going to see everything too. But still, the most weight needs to be given to the comps, so even if the contract price initially looks iffy based on the listing history alone, appraisers have to be careful to be objective about looking to the comps for value rather than the listing history alone. There is no ignoring the listing history though because it might be a clue about value. But then again, maybe there was a problem tenant who wouldn’t allow access, a lack of open houses, or some other reason why the property was on the market for longer than expected…
3) But the seller wants a higher price: A strategy I sometimes see today is to raise the price and give the buyer a credit back for the amount the price was raised. The idea is to help the seller net more and keep the buyer happy with a credit.
To read more and see lots of tables and graphs, click here
My comments: These are excerpts above. Be sure to read Ryan’s full post, plus all the appraiser comments! Written for real estate agents and is very useful for appraisers so we can understand why concessions are made.
Taos NM Mesa Studio Earthship
4 guests Studio 2 beds 1 bath
Excerpts: Brand new studio Earthship as seen on Off Grid Build! Just search for “Off The Grid Build” to find it. Experience Off Grid living with all the modern amenities in the beautiful high desert mesa just outside Taos, NM.
I built this house myself over 3 years while living in a tent. It was one of the hardest things I have done, but so worth it.
This house is called an Earthship, a totally off grid house that catches its own rain water, generates its own electricity and stays at a steady 72 degrees all year round without the use of any fuel or electricity what-so-ever!
Don’t let the term “Off Grid” fool you, this house has all the modern amenities. fast WiFi, Netflix with a flat screen tv, large refrigerator, large oven/range with a powerful exhaust hood, large bathroom with a luxuriously deep tub and stone all around. There is even a high efficiency washing machine in case you need to do laundry.
To read more and see the 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.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, and others have little work. Varies widely around the country.
Mortgage applications increased 27.9 percent from one week earlier
Mortgage applications increased 27.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2023.
The Market Composite Index, a measure of mortgage loan application volume, increased 27.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 32 percent compared with the previous week. The Refinance Index increased 34 percent from the previous week and was 81 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 25 percent from one week earlier. The unadjusted Purchase Index increased 32 percent compared with the previous week and was 35 percent lower than the same week one year ago.
“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Despite these gains, refinance activity remains more than 80% below last year’s pace and purchase volume remains 35% below year-ago levels.”
Added Fratantoni, “Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall. As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”
The refinance share of mortgage activity increased to 31.2 percent of total applications from 30.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 percent of total applications.
The FHA share of total applications decreased to 13.0 percent from 13.4 percent the week prior. The VA share of total applications decreased to 11.8 percent from 13.2 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 ($726,200 or less) decreased to 6.23 percent from 6.42 percent, with points decreasing to 0.67 from0.73 (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 $726,200)decreased to 6.08 percent from 6.09 percent, with points decreasing to 0.4 from 0.66 (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 6.26 percent from 6.39 percent, with points increasing to 1.05 from 1.03 (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 5.58 percent from 5.94 percent, with points decreasing to 0.54 from 0.62 (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 5.31 percent from 5.37 percent, with points increasing to 0.74 from 0.72 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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 94501Phone 510-865-8041