How to Identify a Single-Family with ADU vs. Two-Family Property

By McKissock


The presence of an additional living unit can complicate the appraisal process. It may make it difficult for you, the appraiser, to know how to classify the subject property. How do you know whether you’re dealing with an accessory dwelling unit (ADU) or a second unit?

Topics include:

  • ADU meaning and types
  • What is a two-family property?
  • How to tell if it’s a single-family with ADU vs. two-family property
  • It’s more likely to be a two-family property vs. single-family with ADU if:
  • It’s more likely to be a single-family with ADU vs. two-family property if:

To read more, click here

My comments: ADUs have been a controversial topic for a long time in California as state and local governments kept changing their ADU requirements. Finally, what they are and where they can be built became standardized. Today, they are becoming popular to get extra rentals in markets low on housing. Most recently, there is a possible regulation to sell them separately from the main house. Another tricky HBU issue in California!

Check the regulations in your state, county, or city.

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NOTE: Please scroll down to read the other topics in this long blog post on  non-lender appraisals, VA, flood and fires no insurance, retirement,  few lender appraisals, unusual homes, mortgage origination


$22M Modern Mansion on 130 Acres in Napa Has Its Own Cabernet Vineyard

Excerpts: 6 bedrooms, 6.5+ baths, 7,154 square feet, 130 acre lot

The sprawling property boasts two parcels with a pair of bold, all-white, contemporary homes, situated atop Mount Veeder.

The main “villa” residence has four bedrooms, a wood-paneled library/office, fitness center, and kitchen, as well as living and dining areas.

“When I first drove up to the property, my first response was, ‘Wow, where did this come from?’” recalls listing agent Arthur Goodrich, of Sotheby’s International Realty–St. Helena Brokerage. “I have never seen something this contemporary before in Napa Valley. It looks like a sculpture sitting on top of Mount Veeder. The uniqueness of the homes and the landscape sitting on a hill is just stunning.”

The grounds include more than 8 acres of premium cabernet vineyards and several wells that provide water to the homes and vineyards. The grapes grown here have produced award-winning wines, the listing notes.

To see the listing’s virtual tour and 45 photos, click here

My comments: Definitely a different house for the Napa wine growing area! For many of homes with vineyards, in this area, the vineyards are leased to wine makers to grow grapes. The vineyards have a wide range of sizes.


Mortgage Application Volume Nearing Historic Low
Appraisal Volume Way Down

Excerpts: Per the Mortgage Bankers Association (MBA), the loan application volume is at another low point in our history. The article in Mortgage News Daily titled “Mortgage Application Volume at Lowest Levels Since 1996” in this link provides context.

For a related perspective, the article contains a graph, which can be expanded to show mortgage rates and application volume for decades, from 1971 to today. (Graph above)

Many appraisers, yours truly included, became associated with this profession roughly two decades ago, when rates were going down and appraisal work was increasing. As the graph indicates it’s been a roller coaster ride, but generally speaking up to late in 2021 to early in 2022, it’s been financially rewarding for many appraisers.

Some appraisers, a true minority, have been able to transition to private, non-mortgage-lending appraisal work, but that’s not as easy as some advocate. And many appraisers who only know how to do mortgage lending assignments are reluctant to market themselves outside that confined space. They then become collateral damage recipients that they themselves control.

To read more, click here

To see the original graphs, which can be manipulated, click here

My comments: Why is it so bad now? There were no foreclosure sales needing appraisals! That got me through all the other downturns

I started appraising in 1975 and have been through many ups and downs in mortgage lending in Northern California. This graph includes the worst time for lender appraisers, from 1980 to 1985, with rates over 15%. The GSEs started keeping track in 71. Data before 1971 is minimal.

I am one of the few res appraisers who has always done non-lender appraisals since I started my business in 1986. I had never seen a Fannie form, so all types of clients were new. I did not like lenders telling me how to do my appraisals, so I always preferred non-lender appraisals. I decided what to do.

Half my non-lender work is from my website, set up in 1998, and referrals. The easiest and free way to get online is to set up a Google Business Profile, including a free web page. I have written about them. In some ways, they are better than a website. Your profile can go to the top of the search page.

Some types of non-lender appraisals have little competition, and marketing can be done quickly. You can get them now, such as bail bonds, tax appeals, and private money lending. I have written about all three.

Estate and divorce require heavy networking over time with real estate agents, the primary referral source.

Unfortunately, most res appraisers are unwilling to try new clients where you decide what is in your appraisal reports and what you do in your appraisals. They prefer the AMC Rat Race, I guess.


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The 9th National Risk Assessment: The Insurance Issue. Risk to Home Values.

Source: First Street Foundation

Sept. 20, 2023

Excerpts: The First Street foundation Wildfire Model (FSF-WFM) results reveal that there are huge numbers of properties at risk of rising insurance rates and non-renewals due to the growing risk of wildfires for nearly 4.4 million properties, 23.9 million properties for wind, and 12 million properties for flood across the US not included in FEMA SFHAs.

These millions of properties across the US represent a significant subset of the larger real-estate market which has not adequately priced the cost of climate risk into its valuation. The unrealized climate-corrected valuation gap represents a growing climate bubble which is just starting to be recognized and quantified.

In some cases, this will lead to homeowners foregoing insurance while in all cases, the value of their property will be impacted as the cost of ownership increases with rising premiums. These dynamics are visible in some areas of the country where rates are increasing, and private insurance companies are effectively labeling areas as uninsurable, with state-backed “insurers of last resort” becoming the only option for many homeowners.

Without the ability to insure properties in high risk areas with relatively affordable policies, homeowners will not be able to afford the cost of ownership associated with homes in those areas and property values will deflate, leading to a realization of the current climate-driven overvaluation in the market.

The First Street Foundation’s updated models and the property-specific estimates of risk and loss add to the existing understanding of climate risk across the nation, so that decision-makers may be better informed regarding risk in the current year and 30 years into the future. First Street Foundation makes this property-level information publicly available through its Risk Factor® website, where every property owner may find their Flood Factor®, Fire Factor®, Wind FactorTM and Heat Factor® and the estimated damages associated with their risk. More broadly, this information is available for communities, states, and governments to help inform decisions regarding this wildfire risk so that people, properties, and communities may be adequately protected from climate risks.

To read more and download the full report, click here

My comments: Whether or not appraisers are responsible for verifying that an owner has flood or fire insurance is controversial. I recently read a long email discussion online about it, pros and cons, in the National Appraisers Forum, my go-to place to check out appraisal topics. To join, go to


US Home Insurance ‘Bubble’ Closer to Popping as Climate Risks Mount: Report

September 20, 2023

Source: Insurance Journal

Excerpts: Home insurance costs that have soared in much of the US may get even higher.

Tens of millions of properties around the country are insured at prices that haven’t caught up with the danger of hurricanes, wildfires and floods, according to a new report from the First Street Foundation, a nonprofit that works to define and communicate risks posed by climate change.

“The over-reliance of property owners on the state-run insurers of last resort is a big flashing sign that standard practices in the insurance market cannot keep up with our current climate reality,” said Matthew Eby, First Street’s executive director.

Eby said that when the market correction happens, it will render millions of homes essentially uninsurable and therefore cause their value to drop.

To read more, click here

My comments: Thanks to Robert Wiley from LIA for this interesting article from an insurance publication! The recent fires in Hawaii dramatically illustrate this problem. Warning sirens were set up for tsunamis, which was their prime hazard. However, many knew about the fire hazards from the plants growing in the former sugar cane fields, but nothing was done.

I look out my windows and see a hazardous fire hazard in the Oakland Hills. In 1991, a firestorm leveled over 3,700 homes, and 25 lives were lost. I had appraised many of the homes. After the fire, only the brick chimneys were left. The concrete foundations had been destroyed. It was a small part of the risky area.

Nothing much has been done since then to mitigate the problems. Residents would not pay for any changes. The California state government is trying to get something done about the fire insurance problem.

I am located on an island in San Francisco Bay. Parts of the island are close to the bay water level now, with some flooding with high winds and “king” tides (Extreme tides raising the water level). FEMA rezoned many homes (about 10 years ago) to require flood insurance. What was the local reaction? How can I get out of paying flood insurance by having my place surveyed?

I am above any flood risk and have very low fire risks. My personal risk is earthquakes, as I live 10 miles from two major earthquake faults. I have never seen any effect on values, even if located on top of the fault. Few people will pay for the state policy, with limited coverage and very high deductibles. I pay for it. I have several apps on my cell phone to detect any earthquakes nearby. Maybe I will have 5 minutes warning :<


VA Appraisal Requirements and How to Become a VA Appraiser

By McKissock

Excerpts: If you’re interested in becoming a Veterans Affairs appraiser, you’ll need to learn about VA appraisal requirements and what these assignments entail. You may have questions like, “What obligations do appraisers have when performing a VA appraisal?” and “How is it different
VA appraiser selection

The U.S. Department of Veterans Affairs does not originate or underwrite individual loans, but the VA does select the appraiser who will complete the appraisal for each VA loan. It uses a rotation system to select appraisers to complete appraisals on VA loans in a certain geographic area.

The VA differs significantly from the FHA when it comes to appraiser selection. For FHA, the lender (or the AMC working as an agent of the lender) is permitted to select the appraiser. For VA loans, the VA selects the appraiser, period. The originating lender has no input into who is selected to complete their appraisal.

VA appraisal fees

Another difference is that the VA sets appraisal fees. These are maximum allowable fees which are based on geographic areas. The fee schedule is available on the website of the VA Regional Loan Center (RLC) that has jurisdiction. This is in direct contrast to FHA, which does not set or establish fees. An appraiser may negotiate with the lender or AMC to establish an FHA appraisal fee that is agreeable to all parties; not so with VA.

To read more, click here

My comments: I wrote a long article about this in the past and spoke with many people. Most appraisers were not interested in doing VA appraisals, so I never updated the article.

Many appraisers on the VA panel mention they still have some VA work now.

What those on the VA panel did not like: difficult to turn down work. Difficult to get on the panel. Please be persistent, since it can take a while. The VA panel only opens when the VA Regional Loan Center (RLC)

A few tips: To get started, request a county far away and/or other appraisers don’t want to work there. Location near a military base is a significant plus, as more veterans will live nearby.

VA is the only type of lender appraisal I ever recommend. The VA wants to be sure the veteran has an appraiser to ensure there are no defects and that they did not overpay. I don’t know of any other requested res lender appraisals that do this at all. Appraisers are just deal killers, take too much time, etc. etc.


Iowa Schoolhouse Reimagined as a Luxe Estate $1,750,000

Excerpts: 4 bedroom 5.5+ bath, 13,872 square feet, 3.25 acre lot

According to the Ames Tribune, the school sat vacant for nearly 20 years before Dean and Dianne Jensen purchased it in 2007. After a painstaking renovation of the 13,872-square-foot property, they moved in in 2012. Now,

Built in 1923, the three-story brick structure known as “Prairie Castle” features an eye-popping interior that still pays homage to the school’s legacy. The interior features ceiling heights that soar up to 23 feet, “exposed structural and brick elements,” original maple flooring, and a gymnasium-turned-ballroom. There are four bedrooms, five bathrooms, two full kitchens, and three “morning” kitchens. An elevator offers access to all three floors.

The property receives extra credit for the garage and shop area, which could be used to house equipment or be turned into an art studio.

To read the listing and see lots of photos and virtual tour, 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, 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 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. Those with non-lender work are keeping busy.


Mortgage applications decreased 1.3 percent from one week earlier

WASHINGTON, D.C. (September 27, 2023) — Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 22, 2023.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2 percent compared with the previous week. The Refinance Index decreased 1 percent from the previous week and was 21 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 2 percent compared with the previous week and was 27 percent lower than the same week one year ago.

“Mortgage rates moved to their highest levels in over 20 years as Treasury yields increased late last week. The 30-year fixed mortgage rate increased to 7.41 percent, the highest rate since December 2000, and the 30-year fixed jumbo mortgage rate increased to 7.34 percent, the highest rate in the history of the jumbo rate series dating back to 2011,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Based on the FOMC’s most recent projections, rates are expected to be higher for longer, which drove the increase in Treasury yields. Overall applications declined, as both prospective homebuyers and homeowners continue to feel the impact of these elevated rates. The purchase market, which is still facing limited for-sale inventory and eroded purchasing power, saw applications down over the week and 27 percent behind last year’s pace. Refinance activity was down over 20 percent from last year and accounted for approximately one third of applications. Many homeowners have little incentive to refinance.”

The refinance share of mortgage activity increased to 31.9 percent of total applications from 31.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.5 percent of total applications.

The FHA share of total applications decreased to 14.1 percent from 14.2 percent the week prior. The VA share of total applications decreased to 10.9 percent from 11.0 percent the week prior. The USDA share of total applications increased to 0.5 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 7.41 percent, the highest level since December 2000, from 7.31 percent, with points decreasing to 0.71 from 0.72 (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 7.34 percent, the highest level since the series’ inception in January 2011, from 7.32 percent, with points decreasing to 0.78 from 0.80 (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 7.16 percent, the highest level since March 2002, from 7.08 percent, with points increasing to 0.96 from 0.92 (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 6.73 percent, the highest level since July 2001, from 6.62 percent, with points increasing to 1.17 from 1.08 (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 6.47 percent from 6.42 percent, with points increasing to 1.58 from 1.10 (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
Phone 510-865-8041

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