The Power of Praise
By Rachel Massey, SRA, AI-RRS, CDEI
Excerpts: …I received a really nice compliment from a reviewer with the Farm Credit Bureau. I had completed a complex appraisal assignment and was expecting multiple revision requests, but instead, got a note saying how thorough my appraisal report was and thanking me for the work. A couple days later, I got a call from a relocation company reviewer on another mind-boggling relocation assignment. Again, I was expecting multiple questions about the report since it was complex and atypical for the area. Instead this reviewer proceeded to tell me that it was one of the most detailed and well-developed reports he had seen in all his years reviewing relocation work. Boy I wish I had that one in writing!
Granted, I tend to be a bit verbose because I like to write, and I believe that it is important that my work be understandable, and not just now but in the future. I tend to put a similar amount of effort into the communication side for all clients, and like to think that my work product is solid. This begs the question of why two reviewers went out of their way to compliment my work, when it seems that almost every mortgage assignment that I complete for a production group, comes back with stipulations.
Stipulations that I forgot to add a listing which was a requirement of the engagement agreement (yes, I missed that) or that I didn’t put a sketch of an unfinished basement in the report (yes, I missed that as well). No words of thank you for an otherwise job well done. I missed something, fix it.
To read more, click here
My comments: Rachel is one of my favorite appraisal authors. She has seen all sides of the residential appraisal profession. Rachel has shifted between lender staff appraiser and reviewer and fee appraisals. Currently, she is a reviewer for a large lender. You could send a link to this article to a Very Picky or Very Supportive reviewer.>
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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals and liability, sharing comps, Fannie Update, unusual homes, mortgage origination stats, etc.
Sculptural Home in Venice, CA, Hits the Market for $5.8M
Excerpts: The gated compound has four bedrooms and 3.5 baths, in 2,522 square feet of living space. Lot size is 2,701 sq.ft.
The unique, asymmetrical exterior is described as having “raw drama,” and that appraisal certainly fits. The home is built of concrete, glass, wood, and structural steel.
J. Stewart Burns, a TV writer and producer whose projects include “The Simpsons” and “Futurama,” purchased the wildly original Venice landmark in 2014 for $2,300,000, property records show. He recently listed the home for $5,800,000.
An outdoor bridge connects one wing of the home to another, allowing access to the spectacular rooftop deck. A bar, comfortable seating area, and expansive views make the deck one of the home’s many highlights.
The primary suite features remarkable wood built-ins, a closet, and a bath, where the windows and skylights are discreetly frosted.
To read more click here
My comments: Fascinating interior photos!
To see the listing, click here
Dos and Don’ts of Sharing Comparable Sales
Excerpts: When real estate agents provide relevant comparable sales to appraisers, it certainly benefits both parties. Agents can ensure that appraisers are reviewing comparables that match their properties and, hopefully, meet the seller’s desired price. Additionally, while appraisers still must verify the information, it can save them time. Here are some dos and don’ts to follow as agents and appraisers work together on establishing comps for appraisal properties.
Don’t use comps based on price
If the agent has a predetermined value in mind, they will find comparable sales to support that biased opinion.
Do consider neighborhood attributes
To read more, click here
My comments: Some good tips when dealing with agent-supplied comps.
Estate/trust appraisal liability advice from Peter Christensen
Here are some general pointers:
1. Never use a lending form (such as a 1004) for estate work. Yes, appraisers do this. While most of the time, appraisers get away with it (unless it’s an appraisal that goes to the IRS), it sometimes wreaks havoc for appraisers in discipline and claims.
2. Get the relevant date of value from the client or the 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.”
5. For non-lending work like estate work, you can use a good, protective engagement agreement. Be sure to get it signed. An unsigned agreement is basically worthless. In the agreement consider including limitations of liability and time limitations on claims.
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Things to Love (and Hate) About Appraising
By David Hyman
Excerpts: Is there a career with more inherent paradoxes than real estate appraising? It’s a highly social profession – and yet it’s solitary. Every appraisal decision we come to requires lots of verified data – but also our intuition and opinions. Our calendar fills up with orders when the real estate market heats up. But when the market nosedives, lenders need to reassess their portfolios – so, again, our calendar fills up with orders.
To be a real estate appraiser is to live with these strange contradictions every day. And here’s another one: There are things you’ll love – and absolutely despise – about this profession. Here are a few examples of both, at least from my standpoint, starting with things I love.
Meeting new people
This is my favorite thing about being an appraiser. I love talking to people, learning about their homes, but also about their jobs and lives. I’ve appraised properties for a professional surfer, a jeweler, a mortgage executive, a famous rapper, single people living alone, married couples with five kids in the house—you name it. And most of these people are eager to chat.
How many other professions let you spend quality time with such a wide cross-section of humanity?
A few years ago, appraisers could work directly for mortgage companies without any issue. Then… well, you know what happened… and now we can’t. A few years ago, the standard 1004 residential appraisal form was a handful of pages. Now, if my math is correct, it’s about 10,780 pages (front and back).
The rules governing the appraisal industry can swing wildly and often. And that can be frustrating…
To read more, click here
My comments: Short. Worth reading. What do you like and dislike about appraising? Does it change over time? I have been appraising for over 45 years and still love it! Every appraisal is a challenge. I really like being in the field, out of my office. Of course, I gave up residential lender appraising in 2005, before AMCs took over but I liked lender appraising except for the huge ups and downs in business. I have always loved non-lender appraising.
25 Animal-Shaped Buildings from Around the World 0k 3-23
Just For Fun. We need it!!
A kindergarten shaped like a cat, a skyscraper shaped like an elephant, a hotel shaped like a crocodile — these are just a few of the forms that animal-shaped architecture has taken. Whether to reflect the role of the building, like a fisheries department shaped like a fish, or just for the sheer whimsy of it, like roadside attractions shaped like dinosaurs and whales, this “zoomorphic” style appears all over.
Here are a few:
Cat Kindergarden (Photo above)
Lucy the Elephant
To read more, click here
My comments: Take a break and scroll through. Funny, strange, and sorta practical. And More. One of my favorite links!
Fannie Mae March 2023 Update
Email dated 3-21-23
Email excerpts: Welcome to our March 2023 Fannie Mae Appraiser Update. Our focus in this edition is on recent changes to Fannie Mae policies and programs, and how they may impact you.
In March we announced a new collateral option called value acceptance + property data. Here we share ideas on how property data collection (PDC) may be a business opportunity for you.
In some cases, PDC may lead to a hybrid appraisal assignment, so we also share baseline requirements for completing hybrid appraisals.
Keep reading for an update on three new types of Appraiser Quality Monitoring letters and learn what you can do to avoid those deficiencies in your reports.
We also cover recent changes to the MH Advantage® program, other manufactured home reminders, and tips on what must happen to decommission an accessory dwelling unit (ADU).
To read the full report (PDF), Click here
My comments: Mostly discussion on hybrids, but good appraiser information on Appraiser Quality Monitoring (AQM) new letters. Worth reading. Fannie has not said much about AQMs for appraisers. Fannie keeps trying to “sell” hybrids to appraisers. I would probably not do them as Iike field appraising, but it may work for some appraisers, especially since business is slow now for lender appraisals.
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 increased 3.0 percent from one week earlier
Mortgage applications increased 3.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 17, 2023.
The Market Composite Index, a measure of mortgage loan application volume, increased 3.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 36 percent lower than the same week one year ago.
“Treasury yields declined last week, driven by uncertainty over the health of the banking sector and worries about the broader impact on the economy. Mortgage rates declined for the second week in a row, with the 30-year fixed rate dropping to 6.48 percent, the lowest level in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “However, mortgage rates have not dropped as much as Treasury rates due to increased MBS market volatility. The spread between the 30-year fixed and 10-year Treasury remained wide at around 300 basis points, compared to a more typical spread of 180 basis points.”
Added Kan, “Both purchase and refinance applications increased for the third week in a row as borrowers took the opportunity to act, even though overall application volume remains at relatively low levels.”
The refinance share of mortgage activity increased to 28.6 percent of total applications from 28.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.6 percent of total applications.
The FHA share of total applications decreased to 12.3 percent from 12.9 percent the week prior. The VA share of total applications decreased to 11.7 percent from 11.9 percent the week prior. The USDA share of total applications remained unchanged at 0.5 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 6.48 percent from 6.71 percent, with points decreasing to 0.66 from0.79 (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 6.30 percent from 6.39 percent, with points decreasing to 0.55 from 0.61 (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 6.32 percent from 6.58 percent, with points decreasing to 1.07 from 1.20 (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 6.02 percent from 6.14 percent, with points decreasing to 0.60 from 0.77 (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 5.58 percent from 5.69 percent, with points decreasing to 0.75 from 0.87 (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 94501