Newz: Disturbing AMC Violations, Appraiser and Real Estate Agent Communication
September 6, 2024
What’s in This Newsletter (In Order, Scroll Down)
- Top 10 Things Appraisers Wish Real Estate Agents Understood
- Divorce Appraisal Red Flags
- Carmel’s Iconic and Artistic ‘Owl House’ $3,750,000
- Housing Market Update: August 2024
- Please! Not Another Highest and Best Use Question?!
- Appraisal Regulation Compliance Council Exposes Disturbing AMC Violations
- Mortgage applications increased 1.6 percent from one week earlier
Real Estate Agents and Comparable Sales – Tips for Appraisers
Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!
——————————————————————————-
Top 10 Things Appraisers Wish Real Estate Agents Understood
McKissock Survey
Excerpts: Survey question: “What’s one thing you wish real estate agents knew about the appraisal process?”
Based on the answers we received, appraisers wish that agents knew the following:
- The appraisal process is complex and takes time
- Appraisers do not assign value
- Appraisers are unbiased and must follow guidelines
- Appraisers need their input and cooperation
- How to select appropriate sales comps
- The importance of providing accurate and detailed info in their listings
- How to determine correct GLA (gross living area)
- How renovations and upgrades affect value
- How to prepare for the appraisal appointment
- FHA/VA/USDA guidelines
Sample appraiser answers:
“How complex it really is. We don’t just pull numbers out of the air—they are market supported adjustments backed by ‘many angles“
Some brokers regard the appraiser as an adversary, who potentially can ruin their deal and end up without commission. They should learn that the appraiser is neutral and cooperating can be a benefit.”’ of research.”
“Entering an occupied home without agent or home owner present is a liability issue for appraisers—[we] need someone present to observe what we do.”
To read more, Click Here
My comments: Read the blog post and maybe get some good ideas for answering agent questions!
Many years ago a top local agent asked me why I was driving around taking photos. I explained they were similar homes (comps) I may be using in an appraisal. I realized she did not know much about what appraisers do.
When I started my appraisal business in 1986 I did presentations at all the local real estate offices, usually during their marketing meetings. I explained what appraisers do and how agents and appraisers can work together. They liked the information.
Carmel’s Iconic and Artistic ‘Owl House’ $3,750,000
Excerpts: 3 bedroom, 3 bath, 1,700 sq.ft., 8,100 sq.ft. lot, built in 1976
This architecturally significant home known as The Owl House was the only house in Carmel-by-the-Sea designed by renowned architect, Mickey Muennig, offering a terrific downtown location with Muennig’s unmistakable Big Sur style. The nautilus-influenced redwood structure bears elements of his emergent style that can be seen in his work that followed, including Post Ranch Inn.
The circular windows, unique shaped doorways, and meticulous handmade detailing throughout the interior is an impressive work of art from every angle.
The Owl House was recently acquired by acclaimed landscape architect Bernard Trainor of Ground Studio Landscape Architects and has undergone an extensive restoration.
To see the listing with very interesting 37 photos and virtual tour plus a 3D tour, Click Here
My comments: I have been to Carmel By The Sea many times. A Very Special City, with no street numbers and many homes with names.
—————————————————————————————-
Housing Market Update: August 2024
By Kevin Hecht
Excerpts:
Mortgage rate trends
Mortgage rates have been on a downward trend, with the 30-year fixed-rate mortgage averaging 6.35% as of late August 2024, the lowest level in 16 months (Realtor.com). This decline is largely attributed to the anticipated rate cuts by the Federal Reserve, which are expected to further reduce borrowing costs in the coming months. However, while lower rates are encouraging, many buyers are still waiting for more significant reductions before re-entering the market.
Summary and focus for real estate appraisers
As the real estate market navigates through these challenging times, real estate appraisers must stay informed about the latest trends in home sales, prices, and economic indicators. The fluctuations in the market underscore the importance of thorough and up-to-date appraisals.
Appraisers should focus on understanding regional market dynamics, the impact of employment trends on housing demand, and the potential influence of mortgage rate movements on buyer behavior. Additionally, it is crucial to keep a close watch on the Federal Reserve’s actions, as their decisions on interest rates will significantly influence the broader economic environment and the housing market.
By staying ahead of these trends, appraisers can provide valuable insights that help their clients make informed decisions in a volatile market.
To read more, Click Here
My comments: Short and worth reading. Written by a very knowledgeable appraiser who is also an economics instructor.
—————————————————————————————-
Are you getting too many ad-only emails?
4 ways to get only the FREE email newsletters and NOT the ad-only emails.
1. Twitter: https://twitter.com/appraisaltoday Posted by noon Friday
2. Read on blog www.appraisaltoday.com/blog Posted by noon Friday. You can subscribe to the blog in the upper right of each blog page. NOTE: the popular ads with liability tips are below the first topic on my blog posts.
3. Email Archives: https://appraisaltoday.com/archives
(posted by noon Friday) The link is above and to the left of the big yellow email signup form. Newsletters start with “Newz.” Contains all recent emails sent.
4. Link to the 10 most recent newsletters (no ads) at www.appraisaltoday.com. Scroll down past the big yellow signup block. The newsletters have abbreviated titles, taken from their blog posts.
To read more about the 4 ways, plus information on why I take ads, etc.
—————————————————————————-
How to use less gasoline and save money today!
In the 9-24 issue of Appraisal Today
Excerpts:
Summary of ways to decrease your fuel consumption
• First step: (and most important) step: Start recording your gas mileage. Easiest
way? Use your trip odometer. Calculate to check your your Miles per Gallon
(MPG).
• Second step: Do you drive aggressively and not know it?
• Third step: How long are you sitting still at red lights?
• Fourth step: Keeping moving in traffic congestion.
• Fifth step: Slowly accelerate after stops.
• Sixth step: Your cruise control saves gas (but not by using it the way you might think).
Hang with the trucks
Ever notice how, in bad traffic jams cars seem to constantly speed up and
slow down while trucks tend to roll along at the same leisurely pace? A constant speed keeps shifting to a minimum – important to those who have to wrangle with those ten speed truck transmissions. But it also aids economy, as it takes much more fuel to get a vehicle moving than it does to keep it moving.
Rolling with the big rigs saves fuel (and aggravation) and is safer than going
in and out of lanes, speeding up and slowing down.
To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today at www.appraisaltoday.com/order.
Not sure if you want to subscribe?
Sign up for monthly auto renewal for $8.25!
Cancel at any time for any reason! You will receive a prorated refund.
$8.25 per month, $24.75 per quarter, and $89 per year (Best Buy)
or $99 per year or $169 for two years
Subscribers get FREE: past 18+ months of past newsletters
What’s the difference between the Appraisal Today free Weekly email newsletter and the paid Monthly newsletter? Click here for more info.
—————————————————————————————–
If you are a paid subscriber and did not receive the September 2024 issue emailed on Tuesday, September 3, 2024, please email info@appraisaltoday.com, and we will send it to you. Be sure to include a comment requesting it.
———————————————————————————–
Please! Not Another Highest and Best Use Question?!
By Timothy Andersen, MAI, MSc., CDEI, MNAA
Excerpts: QUESTION: When it comes to the highest and best use of an existing single-family residence, how do I go about supporting my conclusion that it is financially feasible? It’s already built, so what difference does it make about the feasibility of its construction as if new!? Is not highest and best use a jaywalking-thing when state appraisal boards should be going after bank robbers!? This all seems silly to me!
You are right! It is silly to worry about the financial feasibility of new house when the subject improvements are already up and seasoned. And the reason such an analysis is silly is because, in the context of USPAP SR1-3, or financially feasible in the context of highest and best use in the 15th ed of The Appraisal of Real Estate, that is not what financial feasibility means in the context of an already-existing house.
To read more, Click Here
————————————————————————————–
Appraisal Regulation Compliance Council (ARCC) Exposes Disturbing AMC Violations
ARCC recently published a detailed breakdown to the Consumer Financial Protection Bureau, which showed the median average AMC fee being charged to borrowers amounted to a staggering 65% of the total appraisal fee, with one AMC extracting as much as 84% in pure profit.
Below is an excerpt from full list, available in full with larger font on Page 14 (last page) of the Document sent to CFBC. In the blog post.
$AMC $appraiser $AMC Profit %Profit Tech feeAppraisal Regulation Compliance Council (ARCC) Exposes Disturbing AMC Violationsisal Regulation Compliance Council (ARCC) Exposes Disturbing AMC Violations
Excerpts: Driven by a non-partisan mission, ARCC has spent the last two years diligently collecting, vetting, and organizing comprehensive data on lender appraisals conducted by Appraisal Management Companies (AMCs).
Their meticulous research has uncovered a disturbing pattern of violations of key regulations intended to protect consumers, including the Appraiser Independence Rules (AIR), the Uniform Standards of Professional Appraisal Practice (USPAP), the Truth in Lending Act (TILA), and Title XIV of the Dodd-Frank Act. Alarmingly, these violations are often disguised under the pretense of a so-called “firewall” that is meant to safeguard appraiser independence.
To substantiate these concerns, ARCC recently published a detailed breakdown to the Consumer Financial Protection Bureau, which showed the median average AMC fee being charged to borrowers amounted to a staggering 65% of the total appraisal fee, with one AMC extracting as much as 84% in pure profit.
The Appraisal Regulation Compliance Council (ARCC) is a crucial non-profit organization that specializes in providing fact-based research and expertise on the complex web of appraisal regulations and compliance issues. Driven by a non-partisan mission, ARCC has spent the last two years diligently collecting, vetting, and organizing comprehensive data on lender appraisals conducted by Appraisal Management Companies (AMCs).
Their meticulous research has uncovered a disturbing pattern of violations of key regulations intended to protect consumers, including the Appraiser Independence Rules (AIR), the Uniform Standards of Professional Appraisal Practice (USPAP), the Truth in Lending Act (TILA), and Title XIV of the Dodd-Frank Act. Alarmingly, these violations are often disguised under the pretense of a so-called “firewall” that is meant to safeguard appraiser independence.
To read more of this blog post and over 70 appraiser comments, Click Here
To read more about ARCC, Click Here
Note: There is limited info now on their website, but worth checking out.
My comments: If you work for AMCs or want more “insider” info, read/skim the the full 14-page document with many very interesting details and other documents sent to CFPB in the blog post, which includes a fascinating view of AMCs. Letters to and from appraisers and within the AMC, etc.
The table above has been online for a few weeks, thanks to Dave Towne. I did not know much about ARCC except a from a few people who knew the Chairman.
Why would a lenders care about AMCs and do all this research? Lenders are paying very high fees to AMCs shopping for the lowest appraisal fee, assuming all appraisers are equal.
Of course, AMCs do not always have so much profit on an appraisal. Sometimes they lose money.
My opinion: AMCs are destroying residential lender appraising.
—————————————————————————————-
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.
WE ARE ALL WATING FOR MORTGAGE RATES TO DROP AND REFIS GO WAY UP!
Mortgage applications increased 1.6 percent from one week earlier
WASHINGTON, D.C. (September 4, 2024) — Mortgage applications increased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending August 30, 2024.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.2 percent compared with the previous week. The Refinance Index decreased 0.3 percent from the previous week and was 94 percent higher 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 4 percent lower than the same week one year ago.
“Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43 percent. Purchase applications increased more than 3 percent over the week and are inching closer to last year’s levels, with government purchase applications leading the increase,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Refinance applications were slightly down but continued to show strong annual gains as borrowers with higher rates have been refinancing to lower their monthly payments. Similar to purchase activity, refinance activity has picked up across the various loan types.”
Added Kan, “The refinance share of applications averaged almost 46 percent in August, the highest monthly average since March 2022.”
The refinance share of mortgage activity decreased to 46.4 percent of total applications from 46.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.5 percent of total applications.
The FHA share of total applications decreased to 14.6 percent from 15.3 percent the week prior. The VA share of total applications increased to 16.7 percent from 15.9 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.43 percent from 6.44 percent, with points increasing to 0.56 from 0.54 (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 $766,550) decreased to 6.73 percent from 6.75 percent, with points decreasing to 0.35 from 0.39 (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 6.30 percent from 6.36 percent, with points remaining unchanged at 0.80 (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 increased to 5.98 percent from 5.88 percent, with points decreasing to 0.64 from 0.68 (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 remained unchanged at 5.98 percent, with points increasing to 0.76 from 0.65 (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.
———————————————————————————
Ann O’Rourke, MAI, SRA, MBA
We want to know what you think!! Please leave a comment.