Quality Adjustment Research and Methodology: The Basics
Excerpt: Quality and condition are not the same. Quality refers to the quality of items, materials, and construction. When making appraisal adjustments, examine the quality of your data and remember that any quality ratings in your county records or MLS are not always reliable. Here are some basic things to consider regarding quality adjustment research and methodology.
Reliability of data
You need to consider: What is this data telling me? How reliable is that data? If you’re using county data, and you’re looking at quality ratings in there, how reliably do they rate properties? Should you even be using that data?
To read more, click here
My comments: The blog post has a link to Quality Ratings. Quality is sometimes difficult to determine on the subject and very tricky on the comps. Another appraisal challenge!
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NOTE: Please scroll down to read the other topics in this long blog post on adapting to changes in appraisal, appraisal volume, unusual homes, mortgage origination stats, etc.
Contemporary Home in the Hamptons (NY) for $27.5M
Excerpts: Five bedrooms, 7.5 baths, 9,700 sq.ft. on 1.6 acres. Amenities include a wet bar, gym, media room, elevator, four-car garage, pool cabana, and private dock.
Just above the heated, illuminated pool is a sleek glass bridge that connects the home’s two wings.
To see the very interesting photos, click here
Where pickleball and real estate meet
By Ryan Lundquist
Excerpts: Pickleball is all the rage, and today I want to talk about how the growth of the sport is becoming much more noticeable in real estate listings. I also have an interview with a friend who built a pickleball court in his backyard. For the record, I actually don’t play (yet), but a friend is trying to convert me. I’m just fascinated with how I see pickleball fitting into real estate.
Pickleball has grown exponentially as a sport, and we’re seeing that reflected in real estate listings in the Sacramento region. The sport has been mentioned nearly 900 times in real estate listings through the years. Last week I tweeted that pickleball has been brought up 480 times, but it turns out it’s important to search “pickleball” and “pickle ball” in MLS to capture the full picture.
Okay, now an interview with Jacob Brewster. He’s an appraiser colleague in Utah, and I’ve known him for a number of years. I thought Jacob’s story would be really interesting to share.
Ryan: Why did you build a pickleball court in your backyard?
Going from park to park only to find all the courts taken up was not uncommon. I decided that not only do I want to play whenever I want (and not fight over courts), I also want to drill and practice at will. A home court was the best solution. Notice I didn’t say I wanted to build a court to increase my property’s value. This was a very personal decision.
To read more, click here
My comments: I have been playing pickleball regularly for 7 years. Our local Senior Center set up 4 pickleball courts on an old tennis court with big cracks in the asphalt. Two years later, the courts were resurfaced.
Pickleball provides fun exercise and very easy socializing. During the pandemic, it was the only time I saw people without masks as we played outside. I play about 3 times a week now.
You can’t think about any problems in your business, or personal, life as you will miss hitting the ball! The Great Escape ;>
Anyone can play. We have kids to adults over 90, of all experience levels. All are welcome for open play, including beginners.
Today, courts here are packed, and finding a practice court is very difficult. Same problems as Jacob had. I WANT MY OWN COURT!!
What do you need? Paddle and a pickleball. Paddle prices range from under $20 to hundreds of dollars. Balls cost $1 to $3 each.
I know lots of former tennis players with bad knees who play pickleball. The top pickleball players are all former tennis players, as they started taking tennis lessons when they were very young.
Want more info? Google pickleball. Don’t get discouraged when watching national tournament winners playing on youtube. All “recreational” players are welcome. I don’t play in tournaments.
I strongly recommend lessons, so you won’t be a total beginner when you start playing. You will learn how to play correctly. Just like appraising, if you don’t get trained correctly, it is hard to change later. Watch youtube if you play tennis or another racquet sport, especially badminton and table tennis.
What’s the difference between the Appraisal Today free weekly email newsletters and the paid monthly newsletter?
These free weekly email newsletters are very different from the monthly newsletter. They are “blog style” with many short sections and include the most recent appraiser-related news, such as the Freddie Mac Appraisal Volume graphs in this email. They are advertiser supported.
There is a very wide range of topics each week. They are links to online articles with brief excerpts. I write short comments. I get lots of emails with information every day, plus blog posts. I look for the most interesting topics and include them. I write the newsletter on Wednesday and Thursday, to go out early Friday morning.
I do not typically plan what is in these email newsletters. It is very last minute, as I try to make the content as recent as possible, appropriate for a weekly newsletter. Weird homes are often the most popular topics. Plus, business and appraisal “how to” tips. It is advertiser supported.
Deciding what to put in the newsletter and finding out which topics are the most popular is a lot of fun. Unusual houses are very popular!
The paid monthly newsletters are very different – magazine style with longer articles. No advertising
They are typically about a few appraisal and business topics. I sometimes work on an article idea for several years before finally writing it up. I do the research and writing, plus I have guest authors. The newsletters are 12 to 17 pages long and take a long time to write up. Since they are in PDF format, the newsletters can be any length. The articles are much longer than this email, from 1 to 8 (or more) pages for each topic.
All the articles have original content, not just a link and an excerpt. Many of the articles are written by myself, but I have always had contributors. I like to write about business topics, so there are lots of marketing, etc. articles. When there are hot topics, such as ANSI, I write about them. Plus, other appraisal related topics done by contributors.
I never run out of topics to write about. I regularly get ideas by communicating with other appraisers by phone or email. If there is a topic you would like to read about, send an email to firstname.lastname@example.org or hit the return button.
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As Cruise Ship Captains or Harbor Pilots, Real Estate Appraisers Face a New Horizon
By Ernie Durbin
In the 19th and 20th centuries, technological advances, including steamships, radar, and electronic navigation systems, revolutionized the maritime industry. The role of harbor pilots evolved alongside these innovations. While their expertise in local conditions remained vital, they also had to adapt to new technologies, taking charge of increasingly complex vessels.
The appraisal industry mirrors this transformation, with real estate appraisers navigating new territories in their valuation assignments. Advances in technology, regulatory changes, and GSE (Government-Sponsored Enterprises) requirements have significantly influenced valuation practices, leading to new responsibilities for appraisers.
To respond to these changes, appraisers need to embrace and implement the Scope of Work rule. This implies recognizing that valuation is a multifaceted process. Appraisers may be asked to perform desktop assignments (Hybrids) based on reports provided by property data collectors.
Although these desktop hybrid assignments may initially be exception-based, such as when loan terms change, or when the property data collection uncovers complexity that requires the appraiser, they are expected to expand into other areas of valuation practice, including default, equity line, and securitization assignments.
To read more, click here
My comments: Many negative appraiser comments, of course. Worth reading. I had never thought about the maritime industry and have known several local harbor pilots for San Francisco Bay. It can be very hazardous going from the small pilot boat and climbing up to the deck of a very large container ship in heavy seas, before entering the Bay.
Ernie Durbin had an appraisal business before he worked for AMCs. I chatted with him a few times at conferences. He is very savvy.
Boulder, Colorado Home With Circular Design for $3,650,000
Excerpts: The 5,111-square-foot, three-bedroom abode is situated atop Sunshine Canyon, on a nearly 2-acre lot. And the secluded sanctuary takes full advantage of its remarkable surroundings.
“It was designed to capture the spectacular views from every room in the house,” said listing agent Zach Zeldner, of Compass. “There are views of the entire Boulder Valley to the east and west, to the Indian Peaks Wilderness. The views are outstanding, and the privacy and quietness are really impressive, along with its close proximity to downtown Boulder, just about 12 minutes away.”
A heated, eight-car garage has a radial motor court for easy vehicle access and features a separate workshop. A media room and two home offices are also arranged on the first floor.
“The owner is a car enthusiast, so the garage is incredible,” Zeldner says. “It is heated, has high ceilings and an in-floor, hydraulic lift.”
To read more and see lots of photos, click here
Freddie Monthly Appraiser Capacity Update May 2023
UCDP Appraisal Volume 2015-2023
GSE Appraisals per Appraiser – State View
Link to pdf (easier to read images): click here
My comments: I will be including these graphs when they are published!
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 1.4 percent from one week earlier
WASHINGTON, D.C. (June 7, 2023) — Mortgage applications decreased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 2, 2023. This week’s results include an adjustment for the Memorial Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 12 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 42 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 27 percent lower than the same week one year ago.
“Mortgage rates declined last week from a recent high, but total application activity slipped for the fourth straight week. The 30-year fixed rate dipped to 6.81 percent, 10 basis points lower than last week but still the second highest rate of 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications were more than 30 percent lower than a year ago, as borrowers continue to grapple with the higher rate environment. Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers. There was less of a decline in government purchase applications last week, which was consistent with a growing share of first-time home buyers in the market.”
The refinance share of mortgage activity increased to 27.3 percent of total applications from 26.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.8 percent of total applications.
The FHA share of total applications increased to 13.2 percent from 12.7 percent the week prior. The VA share of total applications increased to 12.5 percent from 12.1 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.81 percent from 6.91 percent, with points decreasing to 0.66 from 0.83 (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 6.74 percent from 6.78 percent, with points decreasing to 0.56 from 0.76 (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 6.73 percent from 6.85 percent, with points decreasing to 1.15 from 1.26 (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 6.25 percent from 6.41 percent, with points decreasing to 0.62 from 0.84 (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 increased to 5.93 percent from 5.39 percent, with points increasing to 0.96 from 0.46 (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.
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