Newz: AMCs Fee Skimming Lawsuit, Appraising a Hobbit Hole
February 28, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA ad: Disclosing Identity of Complaining Party
- On Staying Current By Timothy Andersen, MAI
- Futuristic $177 Million Bel-Air Megamansion With Its Own Private Jazz Club Hits All the Right Notes
- Appraising a Hobbit Hole: The Property Value of Bag End
- AMCs Deceptive Fee Skimming Exposed in Lawsuit
- The 10 Most Expensive Home Listings and Home Sales in the U.S.
- February 21, 2025
- Mortgage applications decreased 1.2 percent from one week earlier
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On Staying Current
By Timothy Andersen, MAI
Excerpts: In this monograph, we discuss the absolute necessity of developing more than one skill set as part of becoming a competent and professional real estate appraiser.
Real estate appraising is a complex practice that requires a diverse range of skills and knowledge, from understanding current market conditions to understanding and interpreting complex legal and financial documents. If you want to be your own boss, it also requires business acumen.
At its core, real estate appraising involves the due diligence necessary to form a credible opinion of the market value of a particular property. This requires a deep understanding of the appraiser’s local real estate market, as well as of the physical, legal, and economic factors that influence property values in it. However, becoming a successful real estate appraiser requires more than mere market knowledge.
It also requires a range of other skills, including the ability to conduct thorough research, analyze mountains of data, communicate persuasively and effectively with and to other professionals, and manage complex projects. These are all aspects of being an appraiser they do not teach us in appraisal school.
Most importantly, successful appraisers must adapt to changing market conditions and trends. Currently there are so many of these ongoing, especially as the GSEs are about to inaugurate UAD-2 to replace their archaic appraisal reporting forms. This means continually learning and developing new skills to stay ahead of the curve.
To read more, Click Here
My comments: Good analysis of appraising. I have been appraising for 50 years and I still love it. I am easily bored, but every property is different and market conditions change regularly where I work. I am always learning something new.
If this seems overwhelming to you or other post-licensing appraisers, it is not your fault. Unfortunately, after licensing started many trainees hired other trainees. Almost all had poor training and classes. I was unable to refer wannabes to professional associations as they only wanted classes for members, not for new appraiser. Changing what you learned when you started is very difficult to do. I was very fortunate as I started before licensing and had very active local chapters of AIREA and SREA predecessors of the Appraisal Institute. The appraisers I met had lots of experience. They helped me whenever I had any questions. I learned how to lender appraisals plus many types of non-lender appraisals correctly from them.
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Futuristic $177 Million Bel-Air Megamansion With Its Own Private Jazz Club Hits All the Right Notes
Excerpts: Villa Siena: This 35,000-square-foot Bel-Air megamansion boasts a primary suite with a retractable roof, an outdoor sauna pod, and an auto showroom.
Other astounding amenities include a suspended, bronze-finished staircase; a reflecting pool; a screening room; and a wine room accessed by 200-year-old, antique doors.
The spa, which is “designed to feel like it’s in the forest,” has hot and cold plunge pools, a hydrotherapy chamber, and LED screens offering tropical scenes.
Located above Bel-Air Country Club, the 1.22-acre lot also has a six-car “auto gallery” that also doubles as a jazz club.
To read more, Click Here
To read the listing with 37 photos, Click Here
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Appraising a Hobbit Hole: The Property Value of Bag End
Excerpts: Have you ever wondered what it might be like to live in a Hobbit hole like Bag End? Or how much it would appraise for?
Architecture of a Hobbit Hole
The iconic Bag End Hobbit hole, owned most famously by Bilbo Baggins, features rounded doorways, low ceilings (and pesky chandeliers), winding hallways that twist into many rooms stacked with books, littered with papers and snacks, and warmed by hearth fire.
As Tolkien described it, “The best rooms were those on the left side of the passage for they had deep-set round windows with a view of the garden and meadows beyond down to The Water” (J.R.R. Tolkien, The Hobbit, “An Unexpected Party”).
The Appraisal Process:
Valuing a Hobbit Hole Like Bag End
The valuation process of Bag End takes some extraordinary assumptions, if we are to appraise the home as a residential property. Thankfully, due to its cozy structure and dreamy surroundings, many copycat homes have been built around the world for our comparison purposes….
Market Conditions in Middle Earth
Now, if an agent is out there selling a Hobbit hole to a needy Sackville-Baggins, in theory, our appraiser would need to evaluate the market conditions in Middle Earth, and more specifically, in the Shire.
The War of the Ring brought near-apocalyptic times to the Shire, with many Hobbits captured by Saruman’s evil allies, and forced industrialization threatening the Hobbit way of life. Post-war, however, saw a miraculous comeback, ushering in one of the most prosperous times in Hobbit history. It’s likely that a market in this condition would be highly favorable for Hobbit holes like Bag End.
To read more, Click Here
My comments: Check out the many other very interesting photos and analyses. I like this blog post!
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Appraisal: Profession, Industry or Trade?
By Martin Wagar, MNAA, ASA, IFA, RAA
Editor’s comments: This issue is very controversial with many different opinions. The first printed comments were in 1932, in the Appraisal Journal, published by AIREA, (predecessor of the Appraisal Institute) Volume 1, Number 1 and republished in October 1982 edition.
INDUSTRY
“Industry refers to an economic activity that deals with the production of goods lik iron and steel industry, extraction of minerals like coal mining industry and the provision of services like tourism industry. The industry is divided into three sectors as primary, secondary, and tertiary sectors.”
PROFESSION
“A profession is a type of occupation that requires specialized
education, training, and expertise. It’s typically governed by a set of standards or ethics and often involves a commitment to ongoing learning and development. Professions usually have formal qualifications, such as degrees or certifications, and are often associated with a professional body or association that oversees the standards and practices within that field. Examples include doctors, lawyers, engineers, and teachers.”
TRADE “Trade jobs involve skilled manual labor or technical work in specific trades. These roles often require vocational training or apprenticeships and focus on hands-on skills.”
While real estate appraising leans toward a “profession”, the language of
apprenticeships also rings true in a Trade with minimum hours required for levels of licensure. That said, the appraisal of real estate clearly is not an industry.
Regardless of the definition, neither tends to succeed by marketing to their
customers based only on speed of services. Imagine selecting your electrician
based on their speed alone?
To read the full article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today. What do you think? I have always considered myself as a professional appraiser. I am not in an “Industry”.
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AMCs Deceptive Fee Skimming Exposed in Lawsuit
February 25, 2025
Excerpts: The class action lawsuit, Timmins v. Clear Capital, et al., filed on November 1 in the Superior Court of California, County of Stanislaus, sheds light on the deceptive and unfair business practices allegedly perpetrated by ClearCapital.com, Inc., Core Valuation Management, Inc., and Rocket Mortgage, LLC in relation to the appraisal fees charged to borrowers in home mortgage transactions.
The complaint asserts that these defendants engaged in a deliberate scheme to misrepresent and inflate appraisal fees, which were significantly higher than the actual cost of the appraisal services rendered. This allowed the appraisal management company (AMC) middlemen to line their pockets at the expense of unsuspecting consumers. According to the lawsuit, Rocket Mortgage mandates appraisals before closing on home mortgage transactions and employs AMCs like Clear Capital and Core Valuation to hire appraisers.
However, while Rocket Mortgage determines the “appraisal fee” that borrowers are required to pay at closing, the AMCs retain a substantial portion of this fee for themselves – often an astounding 60-80% or more based on recent research – despite providing no tangible benefits or services to the borrower.
The appraisers who actually perform the labor-intensive appraisal work, which includes visiting the property, conducting thorough market analysis, and preparing the detailed appraisal report, receive a mere pittance of the appraisal fee paid by the borrower.
To read more, Click Here
My comments: Appraisers have been complaining about this since soon after AMCs started becoming dominant after 2008. But many people don’t even know what appraisers do. Instead of complaining about appraisal fees, I have always advocated focusing on the effects on borrowers, a very large group.
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The 10 Most Expensive Home Listings and Home Sales in the U.S.
February 21, 2025
Excerpts: Coastal Florida and Southern California dominate the list of the nation’s most expensive homes for sale.
Half of the nation’s 10 most expensive home listings are in coastal Florida, three are in Southern California, one is in New York City and one is in Lake Tahoe. All are asking more than $100 million–and two are asking more than $200 million.
We also took a look at the homes that fetched the highest sale prices last month. Coastal Florida was home to three of January’s most expensive sales, and another three were in Manhattan. Two sales in Los Angeles and two in Aspen, CO round out the top 10.
These are today’s 8 most expensive active listings in the U.S.:
- 1960 S. Ocean Blvd, Manalapan, FL 33462: Listed for $285 million and the photo above.
- 100 Bay Road, Naples, FL 34102: Listed for $210 million
- 1261 Angelo Dr., Beverly Hills, CA 90210: Listed for $195 million
- 1949 Glenbrook Inn Rd., Glenbrook, NV 89413: Listed for $188 million
- 2200 Gordon Dr., Naples, FL 34102: Listed for $175 million
- 190 Palm Ave., Miami Beach, FL 33139: Listed for $150 million
- 217 W. 57th St, Units 217 and 218, New York, NY 10019: Listed for $150 million
- 31062 Casa Grande Dr., San Juan Capistrano, CA 92675: Listed for $150 million
To read more and see MLS details on all the homes, Click Here
My comments: Check out the listings and sales. Each one has a link to the listing or sale of the property in the article. Some listings may have sold since this article was published Feb. 21.
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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. We are all waiting for rates to drop in 2025.
Mortgage applications decreased 1.2 percent from one week earlier
WASHINGTON, D.C. (February 26, 2025) — Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 21, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 45 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 0 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 3 percent higher than the same week one year ago.
“Treasury yields moved lower on softer consumer spending data as consumers are feeling somewhat less upbeat about the economy and job market. This pushed mortgage rates lower, with the 30-year fixed rate decreasing to 6.88 percent, the lowest rate since mid-December,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Applications were about one percent lower for the week, which included the President’s Day holiday, as purchase applications stayed flat from a week ago while refinance applications saw a small decline. Purchase applications were up 3 percent from the same week last year. Increasing for-sale inventory in some markets has provided prospective buyers more options as we approach the spring homebuying season.”
Added Kan, “Although overall refinance application activity remained fairly weak, FHA refinance applications saw an 8 percent increase over the week. Compared to last year, overall refinance applications were up 45 percent.”
The refinance share of mortgage activity increased to 38.9 percent of total applications from 38.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.4 percent of total applications.
The FHA share of total applications increased to 17.4 percent from 16.6 percent the week prior. The VA share of total applications decreased to 13.4 percent from 14.2 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.88 percent from 6.93 percent, with points decreasing to 0.61 from 0.66 (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 7.00 percent from 7.03 percent, with points decreasing to 0.37 from 0.53 (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 6.57 percent from 6.70 percent, with points decreasing to 0.80 from 0.87 (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 6.25 percent from 6.31 percent, with points decreasing to 0.59 from 0.70 (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 6.05 percent from 6.08 percent, with points decreasing to 0.44 from 0.77 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. 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
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