More Objective Appraisals: A Practical Guide for Appraisers

By Scott Reuter Single-Family Chief Appraisal Officer, Freddie Mac

Excerpts: Changing the Mindset – Facts First

What’s the number one thing appraisers should be doing when they develop an appraisal? Stick to the facts. Here are a few more best practices that can help appraisers achieve more objective appraisals.

  • Don’t think like a salesperson – avoid words that may be common in Multiple Listing Service (MLS) and used to help sell a home.
  • Don’t use shorthand – both ‘123 Church Street’ and ‘123 Church’ could refer to an address but might come across differently in an appraisal.
  • Don’t copy and paste – avoid copying from Wikipedia or old appraisal reports or commonly used templates when providing neighborhood descriptions for similar communities.
  • Use pre-screening practices – while you can implement your own pre-screening process, some appraisal companies can implement them too.

To read more, click here 

My comments: Read this article! Not just a list of words and phrases. Excellent examples and analysis. The author started as a second-generation practicing residential appraiser. He knows what you want.


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 effect of low rates on existing home loans, Liability, Bias, FHA manufactured home changes, unusual homes, mortgage origination stats, etc.


Glass-Front Residence in Fayetteville, AR, for $1.3M


4 bedroom, 3 bath, 3,100 square feet, 0.6acre lot, built in 1973

This home in Fayetteville, AR, stands out by actually blending in with the surroundings. The glass-fronted abode has an innovative design that reflects the trees and nature around it.

“A lot of our properties in Arkansas are really cookie-cutter, your typical three- or four-bedroom, three-bath home,” says listing agent Nicky Dou, with Collier & Associates-Bentonville Branch. “This one was designed by the late world-renowned architect James Lambeth, who in Arkansas is a big deal.”

Originally constructed in 1973, an 1100 ht.sq.ft. addition in 2011 expanded its footprint and modernized its features also adding a 4-car garage. A highlight of this exceptional home is its recently updated kitchen, completed in 2022.

To see more text and photos click here

To see the full listing with a 3D tour and 64 photos, click here


Lock-in Effect’ Not the Only Reason for Housing Supply Woes

By Fannie Mae

Excerpts: Many market observers, including us, have often attributed the decline in home listings to the so-called mortgage rate “lock-in effect” – or the disincentive for existing homeowners to sell their homes because their current mortgage rate is well below current market rates.

Going into the study, our hypothesis was that a large majority of mortgage borrowers would say they planned to stay in their homes longer than originally intended due to having a significantly lower mortgage rate than current rates. However, the research findings did not show this.

To better understand this effect, in the first quarter of 2023 we asked homeowners via our National Housing Survey® if they planned to stay longer in their current homes than originally intended and, if so, why. In summary, we found that:

Only 29% of mortgage borrowers told us that they plan to stay in their homes longer. Importantly, of that population, 21% said this was primarily due to having a low mortgage rate, a subset that would represent only 6% of all mortgage borrowers. The other top reasons for staying put were “I like the home/location” at 19% and “home prices are too high to buy” and “my job and family are located here” at 13% each…

To read more (PDF) and see additional graphs, click here

My comments: Interesting analysis. I am never selling my duplex with the 3.5% non-owner-occupied loan!


Don’t Make the Same Mistake Twice

By Claudia Gaglione, Esq.,

In the world of real estate appraisals, a cardinal rule should always be “Don’t Make the Same Mistake Twice!” Unfortunately, there have been recent incidents that underscore the importance of treating each appraisal assignment as a unique endeavor rather than a mere repetition of the past.

Problems tend to emerge when appraisers or appraisal firms simply recycle information from older reports into new ones without conducting thorough checks and verifications.

It should never be assumed that all the information from previous appraisals is infallible. Any errors made in prior reports can compound into significant problems when they are perpetuated in subsequent ones. The most common issue arises

with square footage figures, but it can extend to zoning categories and flood zone classifications as well. These repeated errors not only reflect poorly on appraisers but can also lead to claims and complaints filed with licensing boards.

Property conditions can change over time. Additions may be constructed, outbuildings added, and zoning regulations updated. It’s crucial not to rely solely on old data. Public records should always be consulted, and due diligence performed.

Consider these three cases below as examples…

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What we can expect down the road for the mortgage industry?

By Jim Morrison, Appraisal Buzz

Just as we were all arriving in Philadelphia for the Mortgage Bankers Association (MBA) Annual meeting, the Fed made a major announcement that they would not be increasing the interest rate at this time. That set the tone at this year’s MBA Annual Meeting. This has been a really tough year for everyone in the industry, with volume at its lowest point since 1985. We heard from some of the biggest names in the mortgage industry about the market and what we can expect down the road. Here are some of the highlights of what we learned.

A session of particular interest to appraisers was the final break-out session, “The path to a touchless and trusted appraisal.” Danny Wiley, Freddie Mac, mentioned how they have been focusing on computer vision, language AI, and condition ratings, getting better accuracy, better fairness, and getting the right people in the right place with the right controls. Jake Williamson jumped in and mentioned that they are making sure the AI understands the uses of all language and not just blindly accepting it. He mentioned a case where the AI flagged the use of “Asian,” but the appraiser was talking about the Asian Pear trees producing fruit on the property. They are working to eliminate these issues in their system.

Jake Williamson discussed the scalability of these products. Currently, only 2% of home loans are eligible for VA+PD, but in the future, they would like to get that number to 10%. Existing options for use are pretty contained, but they would like to expand those to other options with a higher LTV. They are working closely with FHFA on how to handle the risk associated with that—things like accuracy, condition, default risk, fair lending, and city vs rural. Data structures on these options are changing. He asked, if we deviate from appraisals, where does the data come from to implement the other options? He asked, if we deviate from appraisals, where does the data come from to implement the other options?

Danny Wiley said: All these technology options are required to use ANSI standards, and there have been adopted data standards and independence requirements for all property data collectors. There will be detailed training requirements and background checks.

Eventually, through technology, we may get to a place where we don’t need humans to collect the data at all.

To read more, click here 

My comment: The valuation/appraisal part of the article is near the end. It’s worth reading this part.


Bozeman Montana Mountain Estate Contemporary $3,995,000 Excerpts: For the outdoorsy buyer looking for a luxurious retreat with contemporary design. The 4,417-square-foot, four-bedroom home sits on a 4.24-acre lot and is listed for $3,995,000.It was custom designed by renowned architect Larry Pearson, as part of an exclusive residential community that was developed to take full advantage of the natural surroundings.

The home features a range of luxurious finishes throughout, including barn wood, white-oak cabinetry, porcelain and quartz countertops, and premium Thermador appliances.

Indoor-outdoor flow is another highlight, and there’s a large rooftop deck that’s ideal for summer evenings.And for those who love to host but still want privacy, there are attached guest quarters with a kitchenette and bathroom. The space is accessed via a breezeway that’s perfect for parties, with its barbecue area and fireplace.

To see more information and photos, click here

To see the listing with 50 photos, click here


FHA Update to the Sales Comparison Approach for Manufactured Housing Mortgagee Letter 2023-18, November 2, 2023

Effective immediately, FHA’s updated policy for the valuation of manufactured homes certified under the Fannie Mae and Freddie Mac programs requires appraisers to use the most appropriate site-built-home comparable sales when there are less than two comparable sales of these certified manufactured homes available.

Manufactured homes certified under the government-sponsored enterprise (GSE) programs, also known as CrossMods, include design features that make them nearly indistinguishable from many site-built homes and address regulatory barriers in effect in some jurisdictions that have historically restricted the placement of manufactured homes.“Updating FHA appraisal requirements to align with the Fannie Mae and Freddie Mac certification programs supports our comprehensive efforts to increase both the supply and affordability of manufactured homes,” said Federal Housing Commissioner Gordon. “Today, we’ve removed another roadblock limiting the effectiveness of FHA programs in serving buyers of these manufactured homes. We hope it will facilitate the continued growth and adoption of this important source of affordable and energy-efficient housing.”

To read more, click here

To read the original Mortgagee Letter 2023-18 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. Many appraisers are not busy. Some are busy, usually with non-lender appraisals. ==================================================
Mortgage applications increased 2.5 percent from one week earlier

WASHINGTON, D.C. (November 8, 2023) — Mortgage applications increased 2.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 3, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.5 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 2 percent from the previous week and was 7 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 20 percent lower than the same week one year ago.

“The 30-year fixed mortgage rate dropped by 25 basis points to 7.61 percent, the largest single-week decline since July 2022,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Last week’s decrease in rates was driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market. Applications for both purchase and refinance loans were up over the week but remained at low levels. The purchase index is still more than 20 percent behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”The refinance share of mortgage activity increased to 31.4 percent of total applications from 31.2 percent the previous week.

The adjustable-rate mortgage (ARM) share of activity decreased to 9.8 percent of total applications.

The FHA share of total applications remained unchanged at 14.7 percent from the week prior. The VA share of total applications increased to 10.5 percent from 10.1 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 7.61 percent from 7.86 percent, with points decreasing to 0.69 from 0.73 (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 7.58 percent from 7.80 percent, with points decreasing to 0.65 from 0.67 (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 7.36 percent from 7.57 percent, with points decreasing to 0.91 from 1.03 (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 6.98 percent from 7.14 percent, with points decreasing to 0.88 from 1.22 (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 6.76 percent from 6.77 percent, with points decreasing to 0.80 from 1.46 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.I

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

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