OK to average adjusted comps on appraisal?
To Mean, or Not to Mean, That is the Question

By Brent Bowen

Excerpts: There seems to be a consensus among appraisal reviewers that the appraiser should not average the adjusted sales prices of their comparables in order to arrive at an indicated value of the subject from the Sales Comparison Approach. Fannie Mae is referenced as the source of this prohibition, although no such prohibition explicitly exists according to Fannie Mae’s Selling Guide.

There is a prohibition on averaging techniques, but that applies in the Reconciliation section with regards to reconciling the three approaches to value. In other words, Fannie Mae does not want you averaging the indicated values from the Sales Comparison Approach, Cost Approach, and Income Approach in order to arrive at an opinion of value. The discussion of the reconciliation of the indicated value of each comparable sale contains no such prohibition.

The conventional wisdom is that the most similar comparable be given the most weight. But that begs a question… similar how? We can fairly easily observe the comparable which is the most physically similar, but what about the one that is the most transactionally similar? In other words, which comparable deviates the least from the mean?

To read more, Click Here

My comments: Excellent analysis. One of the best I have read. Basic Appraisal, but not all appraisers know about this, especially if they “appraise to fit the form” aka form fillers. Worth reading, plus the appraiser comments.

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 Non-lender appraisals, dealing with lender hassles, real estate market, unusual homes, mortgage origination stats, etc.


$36M Beachfront Beauty on Maui Hawaii

Excerpts: What exactly makes this oceanside manse on Maui so desirable? Well, for starters, the property known as Hale Palau’ea is nearly hidden. “It’s under the radar to the public, but [still] over the top. The house is like a piece of art.”

With only one owner, the .47-acre property is perched 16 feet above White Rocks Beach (also called Palau’ea Beach), where it has 120 feet of ocean frontage.

The four-bedroom, 4.5-bath home was designed by local architect Rich Young. It took almost a decade to bring the 4,802-square-foot home to fruition. The process took several years of securing building permits, and the house was completed in 2015.

Because of local building regulations, reconstructing a property identical to this one would not only be expensive but nearly impossible.

“It’s challenging to build on Maui these days, because it’s all in a special management area,” Sayles says, adding that it’s still the case “even if you have all the money in the world.”

With this listing, “it’s already done,” he says. “You don’t have to do through a decade of challenges.”

To read more, Click Here

To see the listing, with a virtual tour and 50 photos, Click Here

My comments: Wow!! I have been to all the inhabited Hawaiian islands except Lanai and Ni‘ihau. Billionaire Larry Ellison owns 98 per cent of Lanai.


This one company owns 9,000+ homes in California

By Ryan Lundquist

Excerpts: Wall Street has invaded Main Street. It’s truly stunning to see that a company like Invitation Homes owns over 9,000 units in California.

1) MAIN STREET INVADING WALL STREET: It’s sobering to see this company’s holdings on the neighborhood level because then it starts to feel really personal. This is a very local trend – not just a national stat where we can say Invitation Homes owns about 80,000 units across the country. Anyway, there needs to be discussion here. Is this what America should look like? Should big companies become giant landlords? How does this evolve in the future? How does this affect affordability and neighborhoods?

2) NOT BLACKSTONE: Often we see Invitation Homes confused as Blackstone, but Invitation Homes is not Blackstone. There used to be an affiliation with Blackstone, but that’s no longer the case.

3) NOT BUYING RIGHT NOW: The bulk of these units were purchased five to eleven years ago. I’m not aware of any location in the state where Invitation Homes is currently acquiring a large number of units. In Sacramento, Invitation Homes went on a rampage in 2012 and 2013, and purchased more steadily in subsequent years. The last unit they bought was in mid-2022 as far as I can tell…

To read more, plus the 45+ appraiser comments, Click Here

Investor Home Purchases Are Down Over 40% in Sun Belt Pandemic. Boomtowns and down in other areas

Nationwide, investor purchases fell 30% year over year to the lowest third-quarter level in seven years, as rising mortgage rates, high home prices and a lackluster rental market made investing less attractive.

Investor purchases of U.S. homes dropped 29.7% year over year in the third quarter to 48,667—the lowest level of any third quarter since 2016. By comparison, overall home purchases fell 22.2% to 305,219—the lowest third-quarter level since 2012.

For the national market and some regions, Click Here

My comments: What’s happened in the past or now, in your market? In my city (and nearby cities) there is very little vacant land for new detached homes. 4-5 story very boring condos are taking over my small city in redevelopment areas, including across the street from my office Are you getting too many ad-only emails?


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Appraisers vs. Lenders. What Can We Do?

By Tim Andersen, MAI


What is the “norm” in real estate appraisal today?

Really, the time has come to talk of many things, including why what used to be “the norm” in real estate appraisal no longer is. This is not to endorse or condemn those changes. Rather, it is merely to present them for discussion and analysis.

Real Estate Appraisal has changed, yet we, as an industry, generally resist those changes. If something ain’t broke, there is no reason to fix it. But that assumes (1) something ain’t broke and (2) we are able to fix it, even if we don’t need to. Let us call both of those assumptions into question…

First Question: Does the real estate appraiser have to “protect the consumer/mortgagor?

The first question to talk about is this: “Does the real estate appraiser have any ethical, moral, or legal responsibility to protect the consumer/mortgagor2, 3, 4 when appraising a property for a mortgagee/client?”…

Question 2: does the lending industry owe the appraiser a living?

Next is, “Does the real estate mortgage lending industry owe the real estate appraiser a living?” Many appraisers demand what they call “reasonable and customary fees”. Yet there is no definition of what a reasonable and customary fee is since there is no such animal as a reasonable and customary appraisal assignment…

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When to Get Property Appraised When Someone Dies?

Excerpts: An appraisal can be useful in several ways. Sometimes the value of the asset is unknown, and an appraisal can help a family make decisions about the future. Maybe another family member would like to purchase the property and there is a need to decide on a purchase price.

Often, beneficiaries disagree on the value of a property in a trust, especially if some of the beneficiaries live out of the area and don’t understand the complexities of the Nevada County real estate market.

Or possibly there is a loan on the property, or a reverse mortgage and the family needs to know how much equity is in the property. An appraisal can help with all of these situations.

To read more, Click Here

My comments: This blog post is very good for marketing ideas for you. Covers the important aspects of estate appraisals. Taxes, Capital Gains Taxes, Step up basis, etc. are confusing. I explain it verbally to executors and trustees. I need something like this on my appraisal website for marketing and informational purposes



Housing Market Update: A Record Share of Home Sellers Drop Prices As High Rates Cut Into Buyers’ Budgets

November 3, 2023

Excerpts: Nearly 7% of for-sale homes posted a price drop during the four weeks ending October 29, on average, the highest portion on record. The record comes as mortgage rates hover at elevated levels, hitting their highest level in 23 years last week and cutting deep into buyers’ budgets. High rates have forced some sellers to lower their asking price to make up for high interest rates on monthly payments.

Sale prices are still up 3% from a year ago. That’s partly because sale-price data is a lagging indicator, reflecting deals that went under contract a month or two ago. Growth in sale prices may slow in the coming months as it starts to reflect sales that went under contract as mortgage rates hit 8% in October.

U.S. highlights: Four weeks ending October 29, 2023

Redfin’s national metrics include data from 400+ U.S. metro areas, and is based on homes listed and/or sold during the period. Weekly housing-market data goes back through 2015.

To read more, Click Here

My comments: What’s happening in your market? Below is my market from a local newspaper. Graphs and stats from some regional markets are in this article. Local data is available to reporters. Above is a graphic of price drops in my market, in the San Francisco Bay Area, where the median price is around $1,200,000. Sellers “had to sell” typically because of a job loss, divorce, or other personal reason.


A Desert Flower in New Mexico: Earthship for $3.5M

Excerpts: While iconic throughout New Mexico, earthships don’t often come up for sale. Fewer than 10 of these eco-friendly dwellings are on the market nationwide at the moment.

The earthship was first conceived in the early 1970s in the Land of Enchantment by architect Michael Reynolds. His concept took off, and these residences now dot Northern New Mexico and other arid areas of the country.

Highlighted by a passive solar design, these distinctive homes are all about environmental conservation and sustainable architecture. Often built with upcycled materials, they use less electricity and are designed for desert climates.

Constructed from adobe and stucco in 1981, this luxe earthship is known as the Desert Flower. In the native Tewa language, it’s Ahkon Povi.

According to the listing, the design was inspired by Chaco Canyon National Historical Park and Pueblo Bonito, a cultural site within the park. According to the park’s website, the park is home to “massive buildings of the Ancestral Puebloan people [which] still testify to the organizational and engineering abilities not seen anywhere else in the American Southwest.”

Set on a lot of 11 acres, this earthship measures 7,913 square feet and has five bedrooms and seven baths. Glass ceilings and walls throughout provide a connection to the outdoors while also collecting heat to warm the interior spaces.

The flagstone flooring features radiant heat, and there are eight kiva-style fireplaces.

The curvy home makes beautiful use of rough wood beams throughout. One amazing highlight is a bathroom with rock outcroppings in both the shower and tub area.

For relaxation, there’s a cedar sauna and steam room. The outdoor pool is ideal for sunny days.

To read more, Click Here

To see the full listing with an aerial view showing both buildings and 41 photos, 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 www.appraisaltoday.com/order 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 2.8 percent from one week earlier

WASHINGTON, D.C. (December 6, 2023) — Mortgage applications increased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 1, 2023. Last week’s results include an adjustment for the observance of the Thanksgiving holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 43 percent compared with the previous week. The Refinance Index increased 14 percent from the previous week and was 10 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.3 percent from one week earlier. The unadjusted Purchase Index increased 35 percent compared with the previous week and was 17 percent lower than the same week one year ago.

“Mortgage rates declined last week, with the 30-year fixed-rate mortgage falling to 7.17 percent – the lowest level since August 2023. Slower inflation, and financial markets anticipating the potential end of the Fed’s hiking cycle, are both behind the recent decline in rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications saw the strongest week in two months, increasing on a year-over-year basis for the second consecutive week for the first time since late 2021. The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast. Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions.”

The refinance share of mortgage activity increased to 34.7 percent of total applications from 30.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.4 percent of total applications.

The FHA share of total applications increased to 15.0 percent from 13.5 percent the week prior. The VA share of total applications increased to 12.8 percent from 12.6 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 7.17 percent from 7.37 percent, with points decreasing to 0.60 from 0.64 (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 7.35 percent from 7.54 percent, with points decreasing to 0.44 from 0.62 (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 6.98 percent from 7.18 percent, with points increasing to 0.84 from 0.81 (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 6.80 percent from 6.88 percent, with points increasing to 0.77 from 0.52 (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 6.58 percent from 6.59 percent, with points decreasing to 0.69 from 0.76 (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

Phone: 510-865-8041

Email:  ann@appraisaltoday.com

Online: www.appraisaltoday.com

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