Newz: Sq. Ft. Appraisal vs. Assessor, The “R” Word, HUD Appraiser Complaints
March 14, 2025
What’s in This Newsletter (In Order, Scroll Down)
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- LIA AD: Navigating value revisions in appraisals
- Why Is the Square Footage in Public Records Different from the Appraisal?
- 5 Properties With ADUs or In-Law Suites
- Open Letter to Government Efficiency Commission on HUD’s Appraiser Complaints
- The “R” word in real estate – Recession
- Going In-Depth on a Delicate Issue: The Invisible Fence of Racial Discrimination
- Mortgage applications increased 11.2 percent from one week earlier
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Why Is the Square Footage in Public Records Different from the Appraisal?
By Tom Horn
Excerpts:
Why Accuracy Matters
Square footage is one of the most critical factors in determining a home’s value, yet it is often misunderstood. Many homeowners and real estate agents assume that the square footage listed in public records is accurate, but that’s not always the case. When an appraiser measures a home, their calculation often differs from what’s in tax records. These discrepancies can lead to confusion, mispricing, and even appraisal challenges.
Why Square Footage Discrepancies Occur
Public Records vs. Appraisal Measurements
The square footage listed in public records typically comes from the county tax assessor’s office. Assessors determine square footage based on:
Builder-reported figures:…
Estimates or outdated records:…
Conversions and Additions
Another common reason for discrepancies is home modifications. If a homeowner adds square footage without the proper permits, tax records may not reflect the change. Examples include:
Unpermitted additions:…
Incorrect classifications:…
To read more, Click Here
My comments: Worth reading. Written for non-appraisers but the best explanations I have ever read about this topic. I worked for an assessor’s office for my first 4 years of appraising, starting in 1975. I was given a geographic area and appraised every residential in it. Fantastic experience. I learned a lot. I was very lucky. Very different than lender appraising, where you only appraise properties that are suitable for mortgage loans.
The March 2025 issue of Appraisal Today has a very comprehensive article for appraisers: Can you use the assessor’s assessment values for site valuation, by Tim Andersen, MAI.
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5 Properties With ADUs or In-Law Suites
Excerpts: These separate abodes are often set up to serve as their own tiny home, featuring bathrooms, kitchen appliances, and even living spaces—making them ideal for anyone who needs to house a relative or friend for the long term.
But what makes these petite properties all the more appealing is their potential as a money-making enterprise, with many ADUs serving as ideal rental properties that can be used as an additional form of income.
Sample listing (Photo Above of ADU):
1. 123 Marlborough Rd, Briarcliff Manor, NY
Price: $1,800,000
Modern luxury: This opulent residence designed by architect Ferdinand Gottlieb has a resort-style guest suite overlooking the in-ground pool.
The three-bedroom estate features floor-to-ceiling glass walls that overlook the 3.6-acre partially wooded lot with a koi pond. Other highlights throughout the 4,220-square-foot interior include exposed-beam ceilings, hardwood floors, and “gallery-like presentation walls.”
A stone patio leading to the pool connects the two structures.
To read more, Click Here
To read the listings, click on the property name.
My comments: In California, ADUs can now be sold separately from the primary residence, following the same rules as condominiums, in cities that have adopted ordinances to enable them.
ADU regulations can vary widely. Before you appraise one, find out what they are by contacting the city or other sources such as state regulations above.
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Open Letter to Government Efficiency Commission on HUD’s Appraiser Complaints
by Isaac Peck, Publisher, WorkingRE
Excerpts: Working with bright and tenacious attorneys to help defend appraisers across the country is one of the favorite parts of my job at OREP. Geoff Binney is one such attorney.
As a former FBI agent and a fierce litigation attorney in Texas, I’ve known Geoff for over five years as he’s worked tirelessly to support OREP’s Members
Based on the latest public records request that Working RE submitted to the Department of Housing and Urban Development (HUD), HUD has received and pursued close to 300 complaints alleging appraisal bias in the last five years and as of February 14, 2025 — well over half of those discrimination complaints are still open and pending. (Roughly 14 percent have been concluded with conciliation, settlement, or other agreement.)
Many appraisers have reported experiencing a deep sense of dread and stress from having a HUD complaint hanging over their heads for three or even four years and still have their complaints pending today.
Below is an open letter (slightly edited for anonymity) that Mr. Binney submitted to several U.S. Senators as well as the House Budget Committee’s Government Efficiency Commission, urging them to act and resolve the 150+ HUD bias complaints still pending against appraisers.
We’ve made the decision to republish this letter because we believe appraisers on both sides of the political spectrum may appreciate Mr. Binney’s framing of the challenges that appraisers have faced around this thorny issue. (Working RE is published for appraisers on both sides of the political aisle.)
Re: Wasteful Spending on the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE)…
To read more, including the full letter, Click Here
My comments: I have been hearing about this issue for awhile. Appraisers being trapped in this is a big problem. Thanks to WorkingRE for this comprehensive article on the issue.
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If people can’t contact you, they can’t order an appraisal or give you a referral
In the August, 2024 issue of Appraisal Today
This article discusses phone, email and website communication. All are critical for your business at all times, but especially when business is slow. Now is the time to work on better communication.
The easiest to change is your Phone Communication. Do it as soon as you
can.
How easy are you to find online? Google your name as though you are searching for an appraiser. Can you locate yourself? Can you be reached or are you difficult to find? Can you easily get your phone number or email address? How much time do you spend looking for a company or service if there is no online contact information?
Do you just go to the next company if it is difficult or impossible? Do you hang-up if the voicemail message is only a phone number? What if a company’s website has no contact information? Most of us move on to the next company.
When business is slow, answering your phone calls is very very important.
When we are swamped with work, it is not as critical. I give a lot of referrals to other appraisers. But, if I cannot find their contact info, they don’t get my referral.
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The “R” word in real estate
March 5, 2025
By Ryan Lundquist
Excerpts: I’m starting to hear so much more chatter about the “R” word, so let’s talk about it. What happens to the housing market during a recession? What happens to homes prices and jobs? I have some new visuals to help us talk through this. Also, let’s look at some spicy issues to keep an eye on.
1) PRICES DON’T ALWAYS GO DOWN DURING A RECESSION
Lots of people say prices go down during a recession, but what do the stats show? Well, sometimes prices do drop or flatten. But other times they don’t.
2) LOCAL MARKETS COULD BE DIFFERENT
National stats are cool, but let’s always try to digest local trends.
3) UNEMPLOYMENT RISES DURING A RECESSION
Like clockwork, the unemployment rate shoots up during a recession (or it could start to increase before one happens).
4) THE GREAT RECESSION ISN’T THE NEW TEMPLATE
What happened in 2008 isn’t the new template or formula for every future recession and housing market correction.
Questions: What stands out to you the most above? Have you been having more “R” word conversations? Anything else you are watching in the market right now?
To read more and see many graphs, Click Here
Warning: some of the first appraiser comments were political. Comments after that are about the topic worth reading.
My comments: I have been wondering for awhile what the “R” word was. I did not know for sure that it was “recession” until I read Ryan’s comprehensive blog post with lots of graphs.
I have been appraising for 50 years and experienced many recessions. In the Bay Area, where I live, prices go up and down regularly. When there are foreclosures, I had lots of business. I had lots of foreclosures in the 2008 recessions, with price declines up to 80%.
When I did driveby pre-foreclosures, the homeowners were seemed to always be in the front yard watering the lawn with a water hose (and watching for me), even after I drove around the block a few times.
When I appraised a house that were in foreclosure I never assumed it was vacant. I always knocked loudly and announced that I was the appraiser. Some other appraisers did not do that and found squatters when they entered the home.
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Going In-Depth on a Delicate Issue: The Invisible Fence of Racial Discrimination
by Isaac Peck, Publisher, WorkingRE
Excerpts: Lightbox reports that some of the nation’s largest banks, including Wells Fargo and JPMorgan Chase, are initiating ROVs (reconsideration of value) processes to allow for challenges to appraisals when there are concerns of bias.
There is, perhaps, a silver lining. The conversations around these issues are driving the profession to look at things previously unexamined in its distant past, and plot a course for the future that opens up opportunities for professional development and dialogue, mentoring roles, and a new, energized public image for the profession. Even the push towards the use of more objective words may turn out to improve the professionalism of the appraisal practice.
In terms of professional development around these issues, Byron Miller, who is Black, and Craig Harrington, who is white, are the authors of a relatively new course called “Valuation Bias: The Invisible Fence of Racial Discrimination.” The course covers the history, structures, and effects of discrimination in valuation. Miller is a boots-on-the-ground Minnesota-based appraiser and the chair of the North Star Chapter of the Appraisal Institute’s State Government Relation Committee. In this role Miller, has helped pass over half-a-dozen laws protecting appraisers in Minnesota. Harrington, also from Minnesota, received the Appraisal Institute’s Lifetime Achievement Award in 2018.
Working RE: What do you think makes your course different than other classes on valuation bias and fair housing?
Miller: Our treatment of the issue is what makes our course different. We go into the history: the historical context of how we got here today. Some other courses tend to focus on the “naughty words.” That is, Fannie and Freddie’s “do not use” words. These courses are focused on telling the appraiser how to “stay out of trouble” with state regulators.
Our course is more about providing information. I like to think of this as meeting people where they’re at. I’ve talked to hundreds of appraisers on this topic. Typical discussion goes like: I’m not biased, I’m not racist. My response is: I’m not saying you are, but we all have biases—let’s look at how they come up. We’re trying to be as balanced as we can be, we’re not going to promote pseudo-science, we’re very careful about that. We’re providing information and history and letting people draw their own conclusions.
If you are interested in taking the course, Valuation Bias: The Invisible Fence of Racial Discrimination Click Here
To read more of the article, Click Here
My comments: Worth reading. It is long but has some of the best, practical bias ideas I have read.
When I wrote about the new ANSI measurement requirements I interviewed Byron Miller as he was on the ANSI committee. He was definitely an expert on the history of this topic. A few years ago he was nominated for the AI vice presidency. I strongly recommended him in one of these weekly newsletters. He did not get nominated, unfortunately.
I have attended too many required bias classes. USPAP’s current 7 hour required class has a long section on bias. Almost all were a waste of time. Hopefully the new 5 hour Appraisal Institute class will be better. The interview also discusses commercial appraisal.
Discrimination/bias is part of being human. For example, Some people don’t like fat people or appraising a very cluttered home that smells bad. Here’s a google quote from one of many articles on the topic : “Bias serves as a fundamental protective mechanism for human beings. Psychologist Joseph LeDoux has referred to bias as an unconscious “dan- ger detector” that determines the safety of a person or situation, before we even have a chance to cognitively consider it.”
I am biased against young black men. I found out when I was on a jury in a criminal case about 20 years ago. A young Black man was the defendant. When I saw him I thought he was guilty. I realized I was biased and could not be objective. I sent a note to the judge explaining my problem. The judge excused me, but I was very embarrassed.
Since then I have wondered how many others have my bias and don’t say anything about it or write a note to the judge. I had appraised in Oakland, CA for about 15 years at that time. I was warned when I started not to stop at a corner convenience store as it may be a drug store. I never felt personally unsafe. I always try to smile and not avoid them.
I am so glad I have not done any lender appraisals since 2005. They have gone out of control with AMCs, bias required classes, GSE increasing requirements, new URAR, etc.
Many appraisers are quitting or retiring. Worrying about being accused of bias, with your name all over the internet, is one of the reasons. Another reason is the New URAR. The April issue of Appraisal Today will have an article on the new URAR, the first of many articles.
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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 and stabilize in 2025.
Mortgage applications increased 11.2 percent from one week earlier
WASHINGTON, D.C. (March 12, 2025) — Mortgage applications increased 11.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 7, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 11.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The Refinance Index increased 16 percent from the previous week and was 90 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 7 percent from one week earlier. The unadjusted Purchase Index increased 8 percent compared with the previous week and was 4 percent higher than the same week one year ago.
“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate dropping to 6.67 percent, the lowest level since October 2024. As a result, applications increased over the week and were up 31 percent from a year ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “As we enter the spring homebuying season, the purchase index was more than 4 percent higher than a year ago, and activity was up across all loan categories. Government purchase applications experienced an 11 percent increase – helped by the FHA rate dropping to 6.34 percent. Additionally, average loan sizes were higher, with the purchase loan amount hitting $460,800, the highest in the survey dating back to 1990.”
The refinance share of mortgage activity increased to 45.6 percent of total applications from 43.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.2 percent of total applications.
The FHA share of total applications decreased to 16.1 percent from 16.7 percent the week prior. The VA share of total applications increased to 15.9 percent from 14.6 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.67 percent from 6.73 percent, with points increasing to 0.63 from 0.60 (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 $806,500) decreased to 6.68 percent from 6.83 percent, with points increasing to 0.48 from 0.47 (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 6.34 percent from 6.42 percent, with points decreasing to 0.74 from 0.79 (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 6.04 percent from 6.12 percent, with points increasing to 0.68 from 0.64 (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 5.81 percent from 5.85 percent, with points increasing to 0.72 from 0.41 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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
Online: www.appraisaltoday.com
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