Newz: 12 Appraisal Myths, Appraisal Bias Lawsuit
August 8, 2025
What’s in This Newsletter (In Order, Scroll Down)
- LIA AD: Legal Request for Old Appraisal
- 12 Common Appraisal Myths/Misconceptions by Tom Horn
- $750K Hobbit-Style Bunker in Tennessee Puts a Unique Spin on Underground Living
- The Appraiser’s Market Compass: Navigating the Summer 2025 Housing Landscape By Kevin Hecht, Appraiser and Economist
- Appraiser questions answered: Interview with Craig Capilla, Attorney
- No, Appraisers Didn’t Cause America’s Racial Wealth Gap by Jeremy Bagott
- Mortgage applications increased 3.1 percent from one week earlier
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12 Common Appraisal Myths/Misconceptions
By Tom Horn
Excerpts:
1. Appraisers Rely Primarily on Price Per Square Foot
This is probably the most common misunderstanding I run into.
Yes, price per square foot is one of many tools we use to analyze value—but it’s not the whole story.
2. Appraisals Are Just a Quick Comparison of Recent Sales
Some folks think appraisers pull the three most recent sales and call it a day.
In reality, it’s much more involved. We look at a wide range of comparable sales, analyze market trends, make adjustments for differences between properties, and apply professional judgment.
3. Appraisals and Home Inspections Are the Same
This is a big one for homeowners and buyers.
Home inspections focus on the condition and function of the property—things like the roof, HVAC, plumbing, and safety issues. The inspector is looking for problems.
Appraisals, on the other hand, are focused on value. We observe the overall condition, yes, but we don’t test systems or check for code compliance.
4. Automated Valuation Models (AVMs) Like Zillow Zestimates Are Equivalent to Appraisals
Zillow can be helpful for a ballpark estimate, but it’s not an appraisal.
AVMs use algorithms, public data, and sometimes outdated or incorrect info. They don’t know if your kitchen was remodeled last year or if the neighbor’s home was a distressed sale.
5. The Purpose of the Appraisal Changes the Value
This one trips people up sometimes.
They’ll ask, “What’s the value for a refinance?” or “How much is it worth for a divorce?” as if the answer changes depending on why we’re appraising it.
To read the details and all 12 reasons, Click Here
My comments: Read this blog post. It can help you keep out of hassles and problems when appraising. When you get asked these questions you will know how to respond. Written for real estate agents, buyers, sellers and many other people but excellent tips for appraisers.
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$750K Hobbit-Style Bunker in Tennessee Puts a Unique Spin on Underground Living
Excerpts: 3 bedrooms, 3 baths, 3,024 sq.ft., built in 2010, 38.84 acre lot
When you think of a bunker, you probably don’t imagine a three-bedroom abode that’s brimming with modernity—which is just one of the reasons that a newly listed dwelling in Tennessee comes as a surprise.
Tucked into the hillside like a doomsday bunker, this Bethel Springs residence was originally built in 2010, yet it boasts a historic Hobbit-style feel akin to the quaint homes depicted in J.R.R. Tolkien’s picturesque Shire.
But much like Tolkien’s books, this home should not be judged by its cover.
Despite its bunker-esque setting and Hobbit-inspired exterior, inside the dwelling is a modern marvel, having been thoughtfully remodeled by its current owners to include an open floor plan and design-forward finishes like granite countertops and luxury vinyl plank flooring.
To read more plus photos, Click Here
To read the listing with 50 photos, Click Here
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The Appraiser’s Market Compass: Navigating the Summer 2025 Housing Landscape
By Kevin Hecht, Appraiser and Economist
Welcome to the latest edition of The Full Measure, where we analyze the latest developments in the housing market and their impact on real estate appraisers.
As I write this, the Federal Reserve is meeting to decide whether to bow to political pressure or stick to its economic guns. Spoiler alert: they’re holding rates steady, but the drama surrounding this decision tells us everything we need to know about the crosscurrents buffeting our housing market right now (Reuters).
We’re in one of those periods when the data points in multiple directions simultaneously, creating opportunities and challenges for those of us whose job it is to determine accurate property values.
Topics:
- The Tale of Two Markets: Inventory Abundance Meets Buyer Hesitation
- The Price Deceleration: Reading the Tea Leaves
- The Federal Reserve’s Tightrope Act
- The New Home Reality Check
- The Inflation and Climate Factors
- Looking Ahead: What to Watch
The Bottom Line for Appraisers
We’re entering a period where your expertise and local market knowledge will be more valuable than ever. The days of rapidly appreciating markets that lifted all boats are behind us. What’s ahead is a more nuanced, regionally varied market where careful analysis and deep understanding of local conditions will separate good appraisal work from great work.
Market conditions are changing more rapidly than they have in years, which means time adjustments and market condition adjustments will require more sophisticated analysis. Pay attention to inventory trends in your local market, understand how your region fits the broader picture, and don’t hesitate to apply negative time adjustments when conditions warrant.
Stay sharp, stay informed, and remember: in a market this dynamic, being right matters more than being fast.
To read more, Click Here
My comments: Well written. Read this blog post to see the “big picture” for appraisers. I prefer the author’s comments as they are written for appraisers, rather than economists focusing on another audience, such as the general public.
Last week I wrote about my opinion: uncertainty for the future of our economy is a big problem, primarily regarding upcoming tariffs. This is causing many people to delay purchases, including buying homes and other types of real estate. I rely on economists’ opinions.
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Loose Lips Cause Claims (Loose Lips Lead to Lawsuits)
By Claudia Gaglione, Esq., National Claims Counsel LIA
In the August 2025 issue of Appraisal Today
We’ve seen multiple claims, lawsuits, and licensing board complaints arise simply because an appraiser-or someone close to the appraiser-said too much.
Sometimes, confidential information was explicitly disclosed. Other times, the
appraiser believed they were just making polite conversation, only to be blindsided later.
The Importance of Confidentiality
Every appraiser knows that USPAP’s Ethics Rule requires
confidentiality-not just in the written report but in all aspects of the assignment.
Unfortunately, appraisers sometimes let their guard down during friendly or
informal discussions.
According to USPAP (2024 Edition):
Confidential information is defined as information that is either:
• identified by the client as confidential when providing it to an appraiser and
that is not available from any other source; or
• classified as confidential or private by applicable law or regulation.
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In the Appraiser’s Corner: Interview with Craig Capilla, Attorney
by Isaac Peck, Publisher WorkingRE
Excerpts: Real estate appraisers have faced myriad legal and regulatory challenges and risks over the last five years.
From the roughly 2,000 loan buybacks and state board complaints (per year) initiated by Fannie Mae and Freddie Mac to the nearly 300 discrimination complaints filed with HUD and the numerous discrimination-related lawsuits filed against appraisers in court (including one by the Department of Justice), appraisers have been feeling the heat.
With a new Administration in the White House and political shockwaves running through the federal government, where do appraisers stand today?
Some of the questions:
Working RE: How often do you work with appraisers who get coverage denied because they didn’t notify their insurance carrier of a board complaint or a “potential” claim?
Working RE: There’s been a lot of buzz about discrimination complaints filed with the U.S. Department of Housing and Urban Development (HUD). Our latest data indicates that just under 300 complaints have been filed in the last five years. What are you seeing on that front?
Working RE: What about GSE policy? Do you think the movement to ban certain words in appraisals will be rolled back? And the new ROV rules?
Working RE: Do you see the new UAD 3.6 and the GSE’s moves towards more hybrid valuations changing the liability environment for appraisers in the next few years?
To read the answers to these questions and all the questions, Click Here
My Comments: Definitely worth reading. The author answers many appraiser questions.
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No, Appraisers Didn’t Cause America’s Racial Wealth Gap
by Jeremy Bagott
Appraisers are being dragged into the racial wealth gap debate, but the real gap is between racial accusation and actual evidence, and courts aren’t buying it.
After years of feckless payouts by insurance companies and corporations, the era of using the courts to harass appraisers for their value opinions has ended.
Last week, a U.S. District Court judge in Maryland threw out a discrimination lawsuit on summary judgment. It was brought against an appraiser by a militant professor at Johns Hopkins University and his wife, who passed away since the filing of the suit. She, too, was a professor at Hopkins.
The Maryland appraiser, Shane Lanham, relied partly on crowdfunding to stitch together a successful defense against the spurious allegations. He received an assist by a key ruling in April in which a U.S. District Court judge in Ohio dismissed a similar meritless discrimination lawsuit against an appraiser. Both lawsuits were based on hunches and disparate-impact quackery. The lawsuits were so flawed as to be shocking.
The two dismissals were a blow to the deep-pocketed housing lobby – the Realtors, homebuilders and lenders – and their captured patrons in government.
The housing lobby has sought to delegitimize and sideline third-party appraisers for decades. Cheerleading these lawsuits seemed like a new low, even for this bunch. It was a scorched-earth campaign that inflicted severe harm on random individuals for simply doing their jobs. For a subset of academics and agitators, the lawsuits were about providing justification for radical mortgage-lending policies grounded in the tenets of DEI and critical-race theory.
To read more, Click Here
My comments: Worth reading the full article. Finally some good news on appraisal bias! Bagott is definitely an investigative reporter. I have been reading his articles about many different topics for a long time.
Appraisers who worked for lenders participated in “red lining”, including in my city. Appraisers were told to comply with the appraisal textbooks and lender guidelines.
Redlining primarily started in the 1930s and continued until the late 1960s. Specifically, the Home Owners’ Loan Corporation (HOLC) began creating redlining maps in 1933, and the practice was officially outlawed with the passage of the Fair Housing Act in 1968.
Restrictive covenants are recorded for my former home, built in 1945. “Negroes and Chinese” persons could not purchase or live in the home unless they were servants. They are not legal. In California, racially restrictive covenants can be removed by submitting a Restrictive Covenant Modification (RCM) form to the county recorder, along with a copy of the original document with the discriminatory language redacted.
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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 increased 3.1 percent from one week earlier
WASHINGTON, D.C. (August 6, 2025) — Mortgage applications increased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 1, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 18 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 18 percent higher than the same week one year ago.
“Mortgage rates moved lower last week, following declining Treasury yields as economic data releases signaled a weakening U.S. economy. As a result, the 30-year fixed rate decreased for the third straight week to 6.77 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week. Purchase activity continued to lead 2024’s pace, as increasing for-sale inventory of homes has been supporting homebuying, but on the other hand recent weakness in the economic environment has deterred some prospective homebuyers.”
Added Kan, “Refinance applications increased to their strongest pace in four weeks after being on a downward trend the prior three weeks. The refinance share increased to almost 42 percent, its highest level since April.”
The refinance share of mortgage activity increased to 41.5 percent of total applications from 40.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.5 percent of total applications.
The FHA share of total applications decreased to 18.5 percent from 18.8 percent the week prior. The VA share of total applications increased to 13.3 percent from 12.2 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 ($806,500 or less) decreased to 6.77 percent from 6.83 percent, with points decreasing to 0.59 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 6.65 percent from 6.74 percent, with points increasing to 0.59 from 0.51 (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 6.47 percent from 6.56 percent, with points decreasing to 0.81 from 0.83 (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 6.03 percent from 6.12 percent, with points increasing to 0.66 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 6.06 percent from 6.22 percent, with points decreasing to 0.49 from 0.51 (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
Online: www.appraisaltoday.com
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