What Level Appraiser Are You?
Beginner, Intermediate, or Pro?
Excerpts: How do we measure ourselves?
What is the mark of an appraiser who is at the top of his or her “game”? Is it the letters behind the name (MAI, SRA, etc.)?
The key is not the letters but the competency or skill. For example, are you competent to prepare an entire appraisal from start to finish? You might answer, “Absolutely!” But what if the appraisal form was completely blank with no boilerplate text? Do you still feel the same level of assuredness? What if you could not use the URAR form at all, but still had to produce an appraisal report that could stand up in court? Are your legs shaking? These questions help us to start to gauge our current level.
A Level 1 appraiser checks boxes. A Level 2 appraiser adds explanations, graphs, and charts to those boxes. And a Level 3 appraiser knows how to think outside the checkboxes altogether. A pro-level appraiser may use a form. However, she is not bound by it; she can prepare a narrative report if it is needed or preferred. In addition, he understands the principles of USPAP and never stops improving his craft.
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My comments: Most appraisers are not busy. Now is the time to increase your appraisal skill level. There are AMCs who want appraisers to do the “tough ones,” not just those with the lowest fees. They will pay good fees. Non-lender appraisals, with higher fees, also require a higher skill level.
Appraisal Errors from Reviewers and State Boards
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NOTE: Please scroll down to read the other topics in this long blog post – Bias, Cost cutting, slow business, unusual homes, mortgage origination stats, etc.
Surviving the Current Slowdown
by Kendra Budd, Editor, Working RE
Excerpts: While the actual volume of appraisal work has only declined to the equivalent of a slow month in 2018 or 2019, the volume of appraisals has declined over 60 percent from the busiest month in 2021 compared to the later (slower) months of 2022.
The experience of appraisers varies widely. Some local markets and some appraisers are still fairly active. Meanwhile, other appraisers report they’re only doing one or two appraisals per month! The variance between local markets and individual appraisers is stark.
The result is a general panic amongst appraisers—especially those appraisers who are getting nearly no work at all. Even the larger appraisal firms (with deep pockets) who’ve spent the last few years aggressively training and recruiting appraisers, acquiring small appraisal firms, and rolling up their competitors have rapidly changed their tone. Layoffs. Budget cuts. Retraction.
“The real estate appraisers of old used to network more, market their services, and sell themselves more than today’s modern appraiser,” remarks Mark Skapinetz, an independent real estate appraiser in Georgia who operates a 100 percent non-lender appraisal firm.
However, Skapinetz theorizes that the business model of appraisers changed substantially after the 2008 real estate crash in a post Dodd-Frank and HVCC world. “Anybody who came into the profession after the crash came into what we call a ‘nameless and faithless business.’ AMCs had taken over the mortgage-lending work. All appraisers had to do was fill out a sign-up form on an AMC’s website, give their credentials or coverage area, and their fees—then they started getting work. There’s no relationship there,” Skapinetz explains.
The result was that many appraisers became conditioned to sign up for AMCs, then sit and wait for orders to come in.
The solution? Appraisers need to focus more on relationships. Relationships matter everywhere. They’re especially important in non-lender work, but they’re still important—yet often discounted and ignored—in the AMC and lender world. Those appraisers who built strong relationships with their AMC and lender clients, who returned phone calls promptly, never “went dark” with their clients, always turned their assignments in on time (or early) — they are the ones who are still getting orders even when times are slow.
To read more click here
My comments: Well written and worth reading. I learned the hard way about lender appraisal ups and downs. In 1986, when I started my business, there were very few appraisers left, as interest rates were 18%+ in the early 1980s. I could get as much work as I wanted. I hired an experienced appraiser, a trainee, and two office staff. In the early 1990s, my market crashed. I laid off everyone except a part-time staffer and ran up over $100,000 on my credit cards. In 2005 I finally quit all residential lender work due to the huge ups and downs in business.
The lender form appraisal business is much worse now since AMCs took over, especially with big ups and downs in fees. Now is the time for you to consider diversifying relationships and increasing your skill levels.
Explore 10 of America’s Favorite Residential Architectural Styles Today
Photo above is a contemporary glass house
Excerpts: As we slide into a post-postmodern world where many architectural styles have been altered and hodgepodged to such a degree as to become unrecognizable, there are nevertheless a handful of identifiable styles visible among new-build homes popping up across the country.
Although architectural styles used to signify something of their region—think Craftsman homes in the Northwest, Colonial in the Northeast, or the sprawling California ranch house—today’s architectural styles are less locationally driven and more about the individual lifestyles being framed within them.
Modern and contemporary styles still have a stronghold on new construction, but as we found, they have spawned many offshoots, each of which has bloomed into a distinct aesthetic in its own right.
To read more, click here
My comments: Very interesting! If you do many custom homes, you may see some of these styles being built today. Goes way beyond the traditional architectural styles. Maybe you will see one as a comp or the subject.
The January 2023 issue of Appraisal Today had “Book Review – Identifying Residential Architectural Styles by Marc Nadeau.” Definitely the best book on this topic I have ever seen. Written by an appraiser for appraisers. If you want to increase your appraisal skills, this book is a “must-have”.
In the March issue of Appraisal Today
- Many ways to cut costs and increase profits and cash flow
- How to use less gasoline and save money with today’s high gas prices!
- Staying positive with slow business
- How to get non-lender business by networking at meetings
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Under-Valuations Unrelated to Racial Bias
Exploring Alternative Explanations for Appraisal Under-Valuation
A critique of FHFA, Brookings, and Freddie Mac reports on Racial Bias. AEI recent report.
Excerpts: The AEI Housing Center recently released an analysis revealing that reports by the Federal Housing Finance Agency (FHFA) and by Brookings, attributing the greater prevalence of under-valuations in home purchase appraisals to appraiser racial bias, suffer from the same pitfalls as Freddie Mac’s studies. All these reports arrive at the same premature and potentially flawed conclusion that suggests appraiser racial bias as the sole explanation for differences in the share of under-valuations across census tracts.
They also fail to note the size of these under-valuations. Using the Aggregate Statistics Data File and Dashboards, our analysis indicates they are relatively small, averaging about $1,100 to $1,900. These levels are too high if they are in fact due to racial bias. However, our analysis finds multiple other plausible explanations for under valuations of this magnitude such as the greater presence of first-time homebuyers or seller concessions. We also note that under valuations of this magnitude of are unlikely to depress entire neighborhoods and, they may in fact provide a disproportionate consumer benefit to minority homebuyers.
To read more, click this link appraisersblogs.com/under-valuations-unrelated-2-racial-bias
My comments: Read the report and add your comments.
My personal bias example. I am biased against young Black men and did not know about it. About 20 years ago, I was on a jury panel for a criminal trial. The defendant, a young Black man, walked in. I immediately thought he was guilty. I sent a letter to the judge saying I could not serve on the jury as I was biased. It was a horrible experience. The judge was very critical. The other jurors looked at me like I was crazy. Since then, I have tried not to act on my bias. For example, when a young Black man walks toward me, I smile and keep walking. But I still feel some fear.
My parents brought me up to treat everyone equally. That is what they did. But, I seldom saw Black people due to the segregated neighborhoods where I grew up in Tulsa, OK. Blacks lived in Greenwood, very close to Tulsa. The Tulsa race massacre from May 31, 1921 – Jun 1, 1921, destroyed many properties. Black people were killed. I never heard anything about it from anyone or any schools. I first heard about it on the 100th anniversary in 2021.
In 1986 I started working in neighborhoods in Oakland, CA, with a high percentage of Black people at that time. I regularly saw groups of young men hanging around liquor stores or in front of homes being used for drug sales. They thought I was a social worker or real estate agent, so I was never hassled. (Except for offering to sell me drugs a few times, which I declined.) Firearms became more and more used. I was afraid I might be accidentally hit.
As an appraiser, I have never been biased against anyone, except maybe for a few homes where their dogs bit me. The three Dobermans that broke down the door of a trailer to try to get to me! (I made it to my car and told the lender about the problem and to get another appraiser maybe.) When I first started appraising for an assessor, several times I was met at the door by the White owner with a shotgun telling me that I was never getting on his property or in his home. I still don’t like being met by a shotgun and might have appraised the home higher so their property taxes would go up ;>
The Real Cause of the Home Value Gap Is the Income Gap
By Mary Cummins
Blaming appraisers for the income gap will never solve the real underlying problem… Blaming appraisers for the income gap is as ridiculous as blaming appraisers for gun violence and gas prices.
I’ve been a real estate appraiser in Los Angeles, California for 40 years. I’ve been a licensed California Certified Residential Appraiser since licenses were first offered in 1993/1994. I’m a Latino woman who speaks English and Spanish. I appraise property in the diverse county of Los Angeles and state of California.
There is no denying that racism exists in our country. We must do all we can to stop racism, sexism, ageism and all the other isms. As an appraiser I support fair, unbiased appraisal practices and valuations. I support using the scientific method and facts in order to identify the real problem in order to solve it.
I witnessed a lot of misinformation and disinformation during the hearing. Marcia Fudge the head of HUD and some of the specifically chosen speakers made racist and other statements which are not supported by facts and evidence.
While there is an income, wealth and home value gap among whites, blacks and Latinos it’s not caused by real estate appraisers. It’s caused by the income gap.
That is the real problem which must be solved. Blaming appraisers for the income gap will never solve the real underlying problem.
To read more, click here 50+ appraiser comments
My comments: I agree with the substantial income and wealth gaps for many Black persons. I did not attend the event but have heard many of the speakers before, including the first hearing when appraisers were blind-sided by what they said. I was shocked.
The Emancipation Proclamation was a presidential proclamation and executive order issued by United States President Abraham Lincoln on January 1, 1863, during the Civil War. Now, 160 years later (not that long ago). We have still not resolved all the issues resulting from slavery.
Purple Reign: Castle Clad in Royal Hues in Pacific Northwest
It’s not often that a castle pops up on the Pacific Northwest rental market—but that’s exactly the case for this five-bedroom chateau in Sequim, WA.
Nestled on a family-owned, 200-acre farm, the 6,000-square-foot living space comes fully furnished. Highlights include a steam shower, a wood-burning fireplace, luxury linens, and spare mattresses for up to 20 guests.
Available for $7,000 a month or $1,000 a night (with a two-night minimum), the Gate Keepers Castle has easy access to the Olympic Discovery Trail and Miller Peninsula State Park.
This isn’t just any old European castle. It was built in 1908 and inspired by medieval design—but it boasts a bright and whimsical exterior painted a brilliant gold and purple.
“The overall building style and grounds are very unique,” says Koon. “Stained glass, one-of-a-kind furniture pieces, beach access, and even a commercial-grade kitchen.”
Large interior communal spaces, private balconies, and magical outdoor setting make this a regal rental opportunity.
To read more, click here
My comment: Just For Fun!! Appraise “as if” it was repainted a more standard color and deduct the cost of painting? Comps? Water view – sorta?
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, click here.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 and down. Some appraisers are very busy, and others have little work. Varies widely around the country.
Mortgage applications decreased 13.3 percent from one week earlier
Mortgage applications decreased 13.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 17, 2023.
The Market Composite Index, a measure of mortgage loan application volume, decreased 13.3 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 2 percent from the previous week and was 72 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 18 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 41 percent lower than the same week one year ago.
“Mortgage rates increased across all loan types last week, with the 30-year fixed rate jumping 23 basis points to 6.62 percent – the highest rate since November 2022. The jump led to the purchase applications index decreasing 18 percent to its lowest level since 1995,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “This time of the year is typically when purchase activity ramps up, but over the past two weeks, rates have increased significantly as financial markets digest data on inflation cooling at a slower pace than expected. The increase in mortgages rates has put many homebuyers back on the sidelines once again, especially first-time homebuyers who are most sensitive to affordability challenges and the impact of higher rates.”
Added Kan, “Refinance applications declined last week and remained more than 70 percent behind last year’s pace. Given that rates are over 2.5 percentage points higher than a year ago, we expect that refinance activity will remain depressed for some time.”
The refinance share of mortgage activity increased to 32.5 percent of total applications from 32.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.6 percent of total applications.
The FHA share of total applications decreased to 12.1 percent from 12.6 percent the week prior. The VA share of total applications decreased to 12.0 percent from 12.6 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) increased to 6.62 percent from 6.39 percent, with points increasing to 0.75 from0.70 (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 $726,200)increased to 6.44 percent from 6.26 percent, with points increasing to 0.53 from 0.43 (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 6.39 percent from 6.25 percent, with points increasing to 1.16 from 1.14 (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 5.98 percent from 5.85 percent, with points increasing to 0.93 from 0.81 (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 5.66 percent from 5.53 percent, with points increasing to 0.97 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
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