Appraising Odd Properties: What’s the Weirdest Property You’ve Appraised Recently?

McKissock Survey

Excerpts: As a professional appraiser, you’ll likely encounter some strange properties from time to time. Odd properties tend to be challenging yet rewarding in terms of the fee. To gain insight into these types of assignments, we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” Thank you to the many respondents who shared stories about the most unique and complex properties they’ve come across lately!

Most of them fall into these categories:

  • Challenging and complex properties
  • Unique property types
  • Properties with atypical characteristics
  • Historic properties
  • Rural properties
  • Non-compliant properties

“A yurt, a space dome, and a two-story single-wide mobile home. This was two single-wide mobile homes stacked on top of each other with a spiral staircase that was encased in semi tractor trailer chemlite panels. The stories behind them are lengthy.”

 

“It was a house on three lots. It has been added on to over the years. The GLA is 3200sf and there are two separate basements with a total 1100sf. There are funky angles, two kitchens next to each other divided by a wall. It was only 3 bedroom, but had 3.1 bathrooms. It had 3 family rooms on the GLA. Lots of weird spaces.”

“A custom-built art school built by artist named Solonevich that is used as a single-family dwelling. Every couple feet was a random angle. Nearly impossible to measure accurately.”

 

To see more examples, Click Here

 

My comments: I was inspired by this post and included two unusual homes in this newsletter. The one below with a jail is a good example! Down the page is a $1 listing.

If the appraisal is for lending purposes, be sure to find out if it is “lendable” before spending much time on it. Lenders and CU/AVMs, like nice newer tract homes.

 

Whenever two appraisers meet, there is never a lack of conversational topics! This one is very popular! Be sure to get a higher fee, of course. These properties are an excellent learning experience. If your business is slow, now is a good time to do the “tough ones.”

Highest and best use are often the issues that are the most tricky for me, especially if you have to consider non 1-4 unit uses. HBU is a regular issue for the older commercial and mixed-use properties I appraise.

Every unusual home has appraisal comps

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on  MLS  hacked,  Wells Fargo discrimination,  unusual homes, mortgage origination

 

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$274K Bedford, Pennsylvania Mansion Comes With Its Own Jail

Excerpts:

5 bedroom, 1.5+ bath, 7,880 square feet (House is 3,500 sq.ft., built in 1905) 0.66 acre

A brick mansion on prime property in Bedford, PA, has plenty of historical charm, plus a place to put unruly guests.

An attached, two-story building comes with, yes, 18 jail cells.

 

“This is the first jail I’ve ever had listed,” says Gary Green, with Century 21 All Service. “The mansion is where the warden lived.”

The 3,500-square-foot mansion dates back to 1895, and the jail building is still set up with barred cells. Perhaps someone with a taste for history might appreciate it? The mansion has five bedrooms and one full bathroom.

“It’s kind of creepy, to be honest—but really, really cool,” Green says. “It’s in the exact state [it was left in], with all of the drawings from when the prisoners were in there.”

 

“It’s just gorgeous architecture, with the turrets and seven fireplaces—one in every bedroom and in the living room and dining room,” he says. “It just needs some tender, loving care.”

The house needs a new roof and various other repairs. The roof on the jail building is actually newer. But the bulk of the necessary work awaits in the jail’s interior.

 

To read more and see lots of photos, click here

My comments: Highest and Best Use? The listing includes links other homes with former jails on the right side of the page.

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The Most Significant Alleged Appraisal Discrimination Case

Wells Fargo Mortgage Discrimination Litigation

 

By Peter Christensen

 

Excerpts: The most significant pending case about alleged appraisal discrimination doesn’t name an appraiser or appraisal management company as a defendant; it names only Wells Fargo Bank. Here’s some basic information about the case.

In March 2022, Bloomberg News published an article entitled “Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom.” In sum, Bloomberg’s researchers found that Wells Fargo approved Blacks and Hispanics for refinances at much lower rates than Whites – for example, the research showed that in 2020 the bank approved 72% of applications from White applicants but only 47% from Black applicants and 53% for Hispanic applicants.

 

After publication of the article, a half-dozen class actions were filed swiftly against Wells Fargo by Black and Hispanic borrowers who had been denied loans. The Federal District Court in Northern California consolidated these cases earlier this year under the new title In re Wells Fargo Mortgage Discrimination Litigation, U.S. District Court, N.D. Cal., Case No. 3:22-cv-00990.

 

How many discrimination cases have been filed against individual appraisers? There are currently fewer than 10 federal court cases alleging discrimination against individual appraisers – not exactly a tidal wave. But there are over 100 investigations pending before HUD. I cover more precise details in my presentations and classes for appraisers.

 

To read more, click here

My comments: I wrote about this in the 4-21 and 3-22 newsletters. Of course, there is intentional bias and discrimination by lenders. Appraisers are an easy target, but Wells Fargo and other lenders are much bigger targets with lots more affected borrowers’ money involved.

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MLS Down. What to do?

Fannie Mae Letter on No MLS Access

8-25-23

Excerpts: “Data and verification source(s) for each comparable sale must be reported on the appraisal report form. Examples of data sources include, but are not limited to, a multiple listing service, deed records, tax records, real estate agents, builders, appraisers, appraiser’s files, and other third-party sources and vendors. The appraiser must state the specific data source (such as tax records or deed records), and refrain from using broad categories, such as “public records.” Data source(s) must be reliable sources for the area where the subject property is located.

 

Examples of verification sources include, but are not limited to, the buyer, seller, listing agent, selling agent, and closing documents in certain situations. Regardless of the source(s) used, there must be sufficient data to understand the conditions of sale, existence of financing concessions, physical characteristics of the subject property, and whether it was an arms-length transaction.

 

To read more, click here

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MLS Hack: What to Do When Your Data Source Goes Down

By Steven W. Vehmeier, McKissock

Excerpts: What can appraisers do in the case of an MLS hack, or any situation where their data source goes down? Possibilities include:

  • Notify the client of potential for delays in delivery dates.
  • Make a list of alternative data sources that might be available.
  • Check out some of the free online sources.
  • Try using sales from your files that might be applicable.
  • Go on vacation.
  • Cry.

The first four strategies are probably what you’d want to start with. Numbers two and three immediately bring to mind a word defined in USPAP: credible, meaning “worthy of belief.”

 

So, what do you do if there’s an MLS hack?

When an appraiser doesn’t have their trusty old MLS available, and has to rely on untrusted sources like the above or sources with conflicting data, what do they do? In other words, if an appraiser must utilize a source that does not have the reliability of traditional sources, how should they handle this?

Personal verification of data has never gone out of style. Back in 1876 there was this guy named Alexander Graham Bell who invented a thing called a telephone. Now is the time to pick one up and get to work.

 

To read more click here

My comments: Worth reading with practical tips and examples. Fortunately, my MLS was not affected. I was lucky.

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Tiny Price and Hilarious Description Trigger Dozens of Offers on Michigan Home Pending Sale

Excerpts: The $1 list price is a real attention grabber, but the comically candid description of “the world’s cheapest home”—on the market in Pontiac, MI—steals the show.

As we’ve seen in the past, humor can save the day when trying to sell a woebegone home.

 

This listing reads, in part: “Priced at a mind-boggling $1 (yes, you read that right), this home is not just a house—it’s a ticket to the real estate adventure of a lifetime. Step inside and experience the thrilling rollercoaster of emotions as you discover every nook and cranny that’s begging for your creative touch.”

The price and description are the brainchild of listing agent Chris Hubel, with Good Company.

 

“It’s kind of my personality wrapped up into a listing description,” he says. “I’m somebody who believes in being your authentic self and not putting on a suit and tie if that’s not who you are. I essentially call out flaws in properties and just kind of make it a more comical approach to real estate, and it seems to work pretty well for me.”

“Let’s talk about the unique features that make this place stand out—like the avant-garde floor hole art installation conveniently located next to the furnace. Who needs a traditional open-concept layout when you can have an open floor plan thanks to an authentic, unfiltered glimpse into the crawl space?”

Whoa! What?

Hubel explains: “I’m assuming the hot water heater just had a leak, so [the seller] cut out the subfloor and then never replaced it before listing it.”

 

To read more, click here

My comments: Wow!! I have appraised many fixers doing estate appraisals, but never saw any creative and hones listing of them, with no repair work done! I always tell the estate beneficiaries to remove the clutter and personal items if they don’t have any money to fix them. The most important is to clean it up so you can eat off the floors and countertops and remove stuff (trash, old cars, very high weeds, etc. from outside.

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Imaginary Adjustments?, Part 1

By George Dell, MAI

Excerpts: You MUST make adjustments. Everybody knows that!

Or not.

In USPAP and The Appraisal of Real Estate (TARE) we have two predominant topical sources.

The USPAP standards do not require adjustments. The word “comparable” is not defined, nor is the word “adjustment” found in USPAP. Nothing about adjustments nor picking comps. However, we note that the USPAP Scope of Work Rule has the user expectations and peers’ actions test of “acceptability.” (Basically just do what everyone does, right or wrong.)

(As a side note, after much ado — the real property Standard 1 has only one word change in five years.)

 

The current official unofficial Advisory Opinions of the Foundation reference the 2018-2019 version of USPAP. While the word “adjustment” is used many times, there is no help on how to reckon an “appropriate adjustment.”

On the other hand, in TARE (Appraisal Institute), “adjust” or “adjustment” shows up 687 times – so it must be important. In particular it says use the words “extreme care,” and use only “truly comparable” comps, and always use “special care” in reckoning adjustment amounts. In spite of all this, there is no unified theory (nor algorithmic practice of adjustments).

 

To read more, click here

My comments: For decades, George has been trying to “modernize” how appraisals are done. A Man On a Mission! I quit making dollar adjustments on non-lender appraisals many years ago, except for market conditions and high value features such as a view, when needed.

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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 lender appraisers are very busy, and others have little work. Non-lender appraisers are generally doing fine, of course.

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Mortgage applications increased 2.3 percent from one week earlier

WASHINGTON, D.C. (August 30, 2023) — Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 25, 2023.

 

The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week and was 28 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 decreased 0.3 percent compared with the previous week and was 27 percent lower than the same week one year ago.

 

Mortgage rates were mostly unchanged last week, with the 30-year fixed rate remaining at 7.31 percent – the highest since December 2000. Treasury yields peaked early in the week and did move lower by the end, which may have spurred some activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Mortgage applications for home purchases and refinances increased for the first time in five weeks but remained at low levels. Purchase applications increased but were still 27 percent lower than a year ago, as elevated mortgage rates and tight housing inventory continue to weigh on home buying activity.”

Added Kan, “The refinance market continues to be slow despite last week’s gain, which was driven by a 7.9 percent spike in conventional refinances. Government refinance applications dropped more than 10 percent last week.” 

 

The refinance share of mortgage activity increased to 30.1 percent of total applications from 29.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5 percent of total applications.

The FHA share of total applications decreased to 13.2 percent from 14.3 percent the week prior. The VA share of total applications remained unchanged at 11.6 percent from 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) remained unchanged at 7.31 percent, with points decreasing to 0.73 from 0.78 (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) increased to 7.28 percent from 7.27 percent, with points decreasing to 0.66 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 30-year fixed-rate mortgages backed by the FHA increased to 7.10 percent from 7.09 percent, with points decreasing to 1.09 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 remained unchanged at 6.72 percent, with points increasing to 1.11 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 decreased to 6.48 percent from 6.50 percent, with points increasing to 1.20 from 1.03 (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.

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com 

www.appraisaltoday.com

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