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This blog has all my free weekly email newsletters since 2012. Plus other topics. Please note that the original email newsletter subject line has been significantly shortened. To see the original email newsletters, click here to go to the newsletter archives. The newsletter has been sent out weekly since June, 1994. To subscribe to the free email newsletters and receive them on the date they are first issued, go to www.appraisaltoday.com and sign up in the big Yellow Box!!

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Every week I send out my FREE email newsletter with info on strange and weird homes and buildings, what Fannie, FHA, AMCs, UAPAP, etc. Hot topics important to appraisers. See info on the right column for topics.

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Posted in: Uncategorized

Desktop Appraisals: Who, When, and Why

Desktop Appraisals: Who, When, and Why

Excerpts: The ability to identify property characteristics without a personal inspection is not a new concept. Retrospective appraisals, drive-by (exterior inspection) appraisals, and valuations from plans and specifications, are all valuation assignments where an appraiser develops an appraisal opinion without personally inspecting the property.

Similarly, while not identical, appraisers generally use the cited sources above to identify the physical characteristics of comparable sales in their appraisals. Thus, it’s fair to say that identifying the physical characteristics of the subject property in a desktop appraisal is a similar process to verifying comparable sales.

While they won’t replace a full appraisal for a majority of property transactions, desktop appraisals can offer a more efficient and cost-saving alternative for all involved parties and are often used in low-risk scenarios and non-GSE appraisal assignments, such as:

  • Helping sellers determine a price: A desktop appraisal provides sellers with valuable insights into their property’s market value, helping them make informed decisions when determining an appropriate listing price.
  • Home equity lines of credit (HELOCs): When homeowners apply for HELOCs, lenders may request desktop appraisals to ascertain the property’s value and determine the credit limit without requiring a full appraisal.
  • Tax Appeal Support: When there is a challenge to a tax assessment, a desktop appraisal may be used to provide a current market value.
  • Insurance purposes: Lenders or other clients may order desktop appraisals for insurance purposes to determine the property’s replacement cost or insurable value.
  • Managing Investments: For investors who own multiple properties, desktop appraisals provide rapid updates on property values.

To read more, Click Here

My comments: Although the web page title includes “for new appraisers,” this post has ideas for all appraisers. The list of non-lender uses is very good. I have done drivebys for estate appraisals when the home had been sold and I had no access.

Desktop appraisals okay for some Fannie Loans March 2022

Fannie Wants Desktop Appraisals

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals, using new construction comps for existing homes, master planned communities, unusual homes, mortgage origination stats, etc.

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North Carolina’s Most Expensive Listing – $50M

Excerpts: 7 bedroom 7.5+ baths, 14,450 sq.ft., 40 acre lot, Built in 2005

“The village of Highlands is some of the most expensive real estate in the Carolinas,” Jackson (listing agent) says. “It was just selected as the Best Small Mountain Town in America by Travel + Leisure. It’s a very exclusive area.”

“The wall coverings, to call it wallpaper is kind of a crime—most of them were shipped in from Europe, and some of them were hand-upholstered,”

He notes that the home’s craftsmanship is unlike anything he has ever seen—one standout example being the hand-painted hallway ceiling that subtly changes from gold to silver.

Meanwhile, a three-bedroom, three-bath guesthouse is connected by a covered breezeway and is fully outfitted with a kitchen, laundry area, and living space.

There’s also a hidden media room downstairs.

“It’s actually behind a bookcase, and you open it up, and there’s a two-level media room with dual gaming stations,”

Part of the “eight-figure, decade-long enhancement” included the addition of a multipurpose, outdoor amphitheater which is also a helipad. Those additions alone cost at least $1.5 million. The estate is a short helicopter ride from a few smaller airports.

To read more, Click Here

To see the listing with 40 photos Click Here

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Can a New Construction Sale be Used as a Comp for an Older Home?

By Tom Horne

One of the biggest issues, if not the biggest, in using a new construction sale as a comp for older homes is accounting for the depreciation. As noted previously, this depreciation typically comes in the form of aging of the components of the building. Even though some parts of the house may have been replaced other parts are original.

In addition to the physical depreciation, the house may reflect functional differences such as the floor plan layout. Some older homes have bedrooms that you must pass through to get to another bedroom.

Even though an older home has been extremely updated it can be difficult to use new homes as comps because of the superior market perception of new construction. Everybody likes new things and knowing that a home has not been lived in and is made of new construction materials will result in it selling for more.

There are situations, due to limited sales, where it may become necessary to use a new home as a comparable sale. This is not an ideal scenario and should be avoided if at all possible. I believe it would be much better to look in a competitive market area to the subject to locate sales more similar in age or use a sale with a slightly older date of sale and adjust for time.

Even though an older home has been extremely updated it can be difficult to use new homes as comps because of the superior market perception of new construction. Everybody likes new things and knowing that a home has not been lived in and is made of new construction materials will result in it selling for more.

There are situations, due to limited sales, where it may become necessary to use a new home as a comparable sale. This is not an ideal scenario and should be avoided if at all possible. I believe it would be much better to look in a competitive market area to the subject to locate sales more similar in age or use a sale with a slightly older date of sale and adjust for time.

To read more, Click Here

My comments: Of course, you should use the comps you think are best. But if for lending, it might be rejected on review by GSE computers or humans. I had never seen anything written about this situation. Thanks to Tom for writing this blog post. It is written for real estate agents and has general information on appraisal at the beginning. I was lucky to have never had to use new construction as a comp on an existing home. But in today’s market with relatively few sales, it may be needed.

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What types of non–lender appraisals are best for you?

Types of non-lender work – samples

  •   Estate and Trust – the most popular non-lender appraisals.
  •   Divorce Appraisals – much higher fees than AMC/lenders.
  •   Assessment Appeals – Marketing, Reassessment Opportunities, Fees, Critical dates, etc. Very easy marketing – letters or postcards.
  •   Home Measurement Services – How to Use Your Appraisal Skills to Make More Money
  •   Expert witness for residential appraisers – high fees, little competition
  •   Bail Bond Appraisals – all cash, very high fees, little competition

How non-lender appraisals differ from lender appraisals. To help you decide if you want to do them.

  • Pluses and minuses of the many different types of non-lender appraisals to help you choose what you want to do
  • Communicating with non–lender clients: Very different from lenders. Side-by-side comparisons will help you understand.

To read much more about non-lender appraising, plus 2+ years of previous issues, subscribe to the paid Appraisal Today. I have been writing about this since 1992 and have done many types of non-lender appraisals.

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What are Master Planned Communities (MPCs)?

Excerpts: MPCs are a growing trend in new construction in which developers aim to offer homebuyers nearly everything they might desire—grocery stores, restaurants, hiking, and biking trails, a gym, a swimming pool, a golf course, and more—within walking distance or a short drive.

While some people might confuse an MPC with a traditional new-construction subdivision, they are distinctly different. Both include dividing a larger parcel of land into smaller plots for homebuyers. An MPC usually covers at least 2,500 acres, sometimes spanning as much as 10,000 (over 15 miles).

The defining feature of an MPC is that the entire community is mapped out on a “site master plan,” or blueprint laying out how the land will be used for development, what types of buildings will be constructed and where, the layout of streets and sidewalks, park and public spaces, and all of the other features.

In other words, every facet is meticulously orchestrated.

“Master-planned communities will typically have hundreds of homes, several different options for recreation, and even retail/commercial businesses located within minutes of the residences,” adds Tiffany Sears, a broker and agent with The Sears Group in Charlotte, NC.

Nationwide, Realtor.com® data shows that about 0.4% of listings mention “master-planned” or some variation of this in their description.

Master-planned listings are highly concentrated in the South and West, with the highest among the top 150 metros being Provo, UT (2.9%), Houston (2.3%), and Charleston, SC (2.0%). Interestingly, in all three of these metros, listings that signify they are part of a master-planned community are priced lower per square foot than the typical listing for the area. That might come as a surprise to many given all the amenities they offer.

To read more, Click Here

My comment: Worth reading. The best article I have read on MPCs. There is one in my city. Construction started in the 1970s.

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Why Doesn’t Anyone Want Tulsa’s Frank Lloyd Wright-Designed Home?

Excerpts: 5 bedrooms, 4.5 bath, 10,405 sq.ft., 1.49 Acre lot, Built in 1929

With a nearly half-price discount, a Frank Lloyd Wright-designed home in Tulsa, OK, is back on the market.

The 10,405-square-foot manse was designed in 1929 by the famed architect for his cousin, Richard Lloyd Jones. It was listed last spring for $7,995,000 with Rob Allen, of Sage Sotheby’s International Realty.

But a buyer didn’t materialize, so the home was slated to be put up for auction, with starting bids expected to range from $1,500,000-$3,250,000.

However, the seller ended up taking the home off the block before the Dec. 14 auction date.

Now, it’s back on the market with a $4.5 million price tag. The residence is known as both the Lloyd Jones House or Westhope. And even with the reduced price, it’s still Tulsa’s third-most expensive single family home for sale.

So, will anyone go for the architectural gem this time around?

“At $4.5 million, it is far more within the Tulsa comparables,” Allen says, adding that pricing is tricky. “It’s not like looking at other 10,000-square-foot homes in Tulsa. Who would be in the market for a Frank Lloyd Wright house? You try to compare it to other architecturally significant homes.”

In 1972, the property was added to the National Register of Historic Places.

In 2021, local developer Stuart Price snapped up the five-bedroom, four-bath home for $2.5 million. Then he embarked on a major (and we have to believe, pricey) restoration.

To read more, Click Here

To see the listing with 40 photos, Click Here

My comments: Tricky appraisal! I was born in Tulsa in 1943. My parents lived in Washington, DC, but Mom went back home for my birth. We moved back to Tulsa when I started high school. I cannot imagine how this house was built there in 1929 (or today)! Tulsa went from a cow town to a boom town in 1901 with the discovery of oil.

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Senators Cramer, Tester Introduce Bipartisan Legislation to Improve Home Appraisal Process in Rural Areas

Excerpts: “Across rural America, housing markets have a shortage of trained appraisers,” said Cramer. “Increasing the number of appraisers is essential to making the homebuying process faster for North Dakotans while also improving access to the housing market.”

Recommendations include:

  • Add representation from the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture’s (USDA) Rural Housing Service (RHS) on the Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council.
  • Add state credentialed trainee appraisers to the national Appraiser Registry run by the ASC.
  • Allow the Appraisal Subcommittee to decrease annual registry fees if they determine that the fees adversely impact functions.
  • Renew licensed residential appraisers’ ability to conduct appraisals on FHA properties.

To read more, Click Here

My comments: I have only done a few rural appraisals for lenders, and they are often challenging. For many years, I have been saying that rural appraisers will always be needed. The GSE databases are mostly built on conforming tract homes, and Zillow (and GSEs) computerized valuations don’t work well.

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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. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.

Rates will eventually go down. Appraisers that remain in business will be swamped with appraisal orders at good fees.

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Mortgage applications increased 0.1 percent from one week earlier

WASHINGTON, D.C. (April 10, 2024) — Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 5, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 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 increased 10 percent from the previous week and was 4 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 23 percent lower than the same week one year ago.

“Mortgage rates moved higher last week as several Federal Reserve officials reiterated a patient posture on rate cuts. Inflation remains stubbornly above the Fed’s target, and the broader economy continues to show resiliency. Unexpectedly strong employment data released last week further added to the upward pressure on rates,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate increased to 7.01 percent, the highest in over a month. Purchase applications were down almost five percent to the lowest level since the end of February, but refinance applications were up 10 percent, driven particularly by VA refinance applications.”

The refinance share of mortgage activity increased to 33.3 percent of total applications from 30.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.9 percent of total applications.

The FHA share of total applications increased to 12.1 percent from 11.7 percent the week prior. The VA share of total applications increased to 14.0 percent from 12.1 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 ($766,550 or less) increased to 7.01 percent from 6.91 percent, with points remaining at 0.59 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 7.13 percent from 7.06 percent, with points decreasing to 0.56 from 0.57 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.80 percent from 6.74 percent, with points increasing to 0.93 from 0.90 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.46 percent from 6.35 percent, with points increasing to 0.60 from 0.56 (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 increased to 6.41 percent from 6.37 percent, with points decreasing to 0.67 from 0.68 (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.>

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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

Posted in: adjustments, non-lender appraisals, real estate market

Why Appraisal Workfiles Are Important

Why an Organized Workfile is Your Best Defense

By Craig Capilla

Excerpts: We all know that the Uniform Standards of Professional Appraisal Practice (USPAP) set the baseline for what must be included in a workfile. We’ve all also heard ad nauseum that USPAP is a minimum standard. Still, all too many appraisers seek only to meet that minimum standard and little more. That’s where the trouble begins. Particularly when speaking about the workfile, for my money, the most dangerous words in USPAP are “or references to the location(s) of such other data, information, and documentation.” There it is, right there in plain English: USPAP permits appraisers to maintain a reference to the data, information, and documentation considered as a part of the assignment, and the appraiser is NOT obligated to keep a contemporaneous copy of those items.

That minimum standard is all well and fine until one day many months later, when an enforcement agency demands that the appraiser produce that information, usually on a tight timeline, and the information is no longer available or the source now shows different information than what was available at the time of the assignment.

Believe me when I tell you that it is not a good feeling when a regulator asks you to explain why you didn’t consider a particular piece of information, and you cannot summon an answer. Similarly, there are few things more liberating than producing a document that shows the information you are being asked about was not available to you at the time you performed the assignment. I’ve seen this happen. Systems fail. MLS aggregators have software glitches. Public record updates at its own pace. And sometimes, that one crucial piece of information isn’t there anymore when you need it.

To read more, Click Here

My comments: The article also discusses bias. Capilla is an attorney who defends appraisers. Newer appraisers are lucky. Scanning work files is easy. I started appraising before the Internet and easy scanning and filing. My office and home garage are filled up with paper files! I have PDF copies of all the appraisals I have done as a fee appraiser on my main computer, except those done before PDFs were available.

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on appraiser discrimination lawsuit, waivers, staying positive with slow business, appraiser’s economic forecast, unusual homes, mortgage origination stats, etc.

Read more!!

Posted in: appraisal business, bias, Economic analysis, USPAP, waivers

Functional Obsolescence in Appraisals

Functional Obsolescence Can Be Challenging

By McKissock

Excerpts: For appraisers, functional obsolescence can be a challenging concept because the elements that influence property values may not be obvious or immediately apparent. To help you better understand what it means and how to pinpoint it, we’re exploring some examples, the different types of functional obsolescence, and how it can influence property values.

Additionally, we’re sharing insights from appraisers who answered our survey question, “When dealing with functional obsolescence in real property appraisal, what aspect do you find most challenging?”

Topics include:

  • Types of functional obsolescence
  • Curable obsolescence
  • Incurable obsolescence
  • Superadequacy

What aspects of functional obsolescence do appraisers find most challenging? We asked our appraisal community, “When dealing with functional obsolescence in real property appraisal, what aspect do you find most challenging?”

The top two answers were “supporting adjustments for it” and “finding comparable properties with similar obsolescence.” Here are the full survey results, followed by comments from appraisers who shared further insights into these two common challenges related to functional obsolescence:

Supporting adjustments: 46%

Finding comps: 33%

Sample appraiser comments:

“Functional obsolescence is not a searchable criterion in any MLS database I’ve found. The ability to find a credible impact on other homes repeatedly is an anomaly. So, I may be able to generate a factor or dollar difference but having only one comp to determine with leaves you deciding on credibility or making no deduction if you don’t feel it’s a credible adjustment.”

To read more, Click Here

My comments: We all encounter Functional Obsolescence when appraising. The blog post is well-written and understandable. It is worth reading the full blog post and the appraisers’ comments. Plus, the explanations about functional obsolescence are good reminders.

Functional Obsolescence for Appraisers

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on home gets 147 offers, cutting costs, manufactured homes, appraisal analysis, unusual homes, mortgage origination stats, etc.

Read more!!

Posted in: adjustments, appraisal business, FHA, real estate market

How to select appraisal comps

Dos and Don’ts of Selecting Appraisal Comps

Excerpts: Follow these dos and don’ts to help ensure that relevant comparable sales are established:

Here are a few topics

  • Do welcome relevant comparable sales from real estate agents
  • Don’t limit the number of comparable sales to three
  • Do consider objective characteristics when selecting competing neighborhoods

Don’t use appraisal comps based on price

As an appraiser, you must provide an unbiased opinion of value. Selecting comparable properties based on price may inadvertently favor properties within a predetermined price range, rather than those genuinely similar to the subject property in terms of location, size, condition, and other relevant characteristics. To maintain objectivity and credibility, you should evaluate sales based on criteria that most accurately reflect comparability, rather than focusing on price.

Do focus on characteristics of the property

Identify properties with comparable square footage (including finished basements), number of bedrooms and bathrooms, lot size, view (e.g., waterfront), and amenities. Prioritize features that are highly sought-after in the property type and market. For instance, in the subject’s market, a mountain view could significantly impact the demand and marketability of a vacation condominium home.

To read more, Click Here

My comments: Worth reading. Good analysis of factors in comp selection.

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on Fannie March Update, Bias and not using time adjustments, Climate change effects on risk and values, answer your phone if you want more appraisal business,  unusual homes, mortgage origination stats, etc.

Read more!!

Posted in: appraisal business, bias, climate change

How To Appraise Rural Properties

How To Appraise Rural Properties

Excerpts: Appraising residential properties in rural areas can be both challenging and rewarding. Unlike the standardized expectations of urban and suburban properties, rural properties often present unique characteristics that require a nuanced approach to valuation. Whether you’re a seasoned appraiser or new to the field, having a better understanding of rural properties is essential for providing credible appraisals. In this guide, we’ll explore what defines a rural property, the challenges appraisers face, reasons for conducting rural appraisals, strategies for finding comparables, and tips for writing a compliant appraisal report.

  • Defining rural properties – USDA and GSEs
  • Challenges of appraising rural properties
  • Appraising rural properties presents unique challenges due to their diverse characteristics and market dynamics.

Topics include:

  • Diverse property types and uses
  • Unique property characteristics
  • Limited market activity and more
  • Writing your rural property appraisal report – good ideas

To read more, click here

My comments: Worth reading, if only to find out about rural appraising. Well written. There are relatively few residential lender appraisals available now. This is an excellent diversification opportunity, with little competition from other appraisers or the GSEs use of other ways to get a value without human appraisers.

What if there are few rural areas near you?

You can expand your area to include rural appraisals to get more business.

When I worked for a northern California assessor’s office with rural areas I learned a lot about almond growing (the main crop) and other ag topics. It is not hard to learn the valuation factors. I had niece who had several horses for many years where she lived. There are equestrian facilities within 5 miles from my house in Oakland hills and in farther out Bay Area cities with larger lots. You may have some similar rural experience now!

The American Society of Farm Managers and Rural Appraisers www.asfmra.org has a specialty in Rural Appraising, but it requires a Certified General. There may be seminars available. Another reason for upgrading!

Urban, Suburban, Rural in Appraisals

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on USPAP and Personal Inspection, GSE Appraisal Modernization, Transaction costs and values including real estate commissions, unusual homes, mortgage origination stats, etc.

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Read more!!

Posted in: appraisal business, appraisal how to, modernization, Uncategorized, USPAP

Remove all bathtubs from home?

Is it a problem to remove all bathtubs in a house?

By Ryan Lundquist

Excerpts: I’ve been asked this question twice this week. Is it a problem to remove the tubs from each bathroom? People planning a remodel asked if it was a big deal or not to only have a walk-in shower in each bathroom. Here are my thoughts, and I really want to hear from you too. Anything to add?

It’s not a black and white answer: There’s not one black-and-white answer that applies to every house, price range, location, or market. Bottom line. But backing up, part of the fun of working in real estate is figuring out how to answer questions like this in a way that is balanced and hopefully reflective of the sentiment in the marketplace.

Other topics include:

  • It’s never just about resale value
  • 55+ communities
  • Splitting hairs to prove an adjustment

To read more, including Ryan’s many comments, fun images and graphics, his Twitter X and Instagram surveys, plus 50+ comments, Click Here

My comments: This is the only analysis I have ever seen about this appraisal topic and it is great! I started appraising in 1975 and this was an issue then, continuing today.

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on property data collectors, economic analysis, managing your email inbox,  unusual homes, mortgage origination stats, etc.

Read more!!

Posted in: adjustments, appraisal business, BATHROOMS, Economic analysis, forecast, modernization, real estate market

Appraising Luxury Homes

What Are the Top Luxury Markets in North America Right Now?

Excerpts: Where are the hottest high-end real estate markets? Whether you’re looking to specialize in luxury home appraisals or you’re simply reading up on the latest market trends, you may want to pay attention to areas where luxury homes are in high demand.

According to the Institute for Luxury Home Marketing’s February 2024 report¹, the single-family luxury home segment is showing promising signs of growth. Both inventory levels and new listings increased significantly in recent months, leading to an 18 percent increase in sales and a 1.6 percent increase in the median sold price. Even more telling, contract signings for homes priced at $1 million or more have increased by 11 percent over last year, and demand remains high among affluent buyers.

According to the Institute for Luxury Home Marketing’s February 2024 report¹, the single-family luxury home segment is showing promising signs of growth. Both inventory levels and new listings increased significantly in recent months, leading to an 18 percent increase in sales and a 1.6 percent increase in the median sold price. Even more telling, contract signings for homes priced at $1 million or more have increased by 11 percent over last year, and demand remains high among affluent buyers.

Top list of luxury home markets in 2024. You may be surprised!

To read more, Click Here

My comments: In this newsletter, I always know what are hot topics. Constant Contact gives me the number of clicks. Most popular is usually Claudia’s advice at the top of every email. Also popular are large luxury homes with a photo.

I have been thinking for a while about including appraising luxury homes, since my subscribers like to read about them. Maybe a possible specialization? There were not many where I worked, so I did not specialized in them But, I see my area, East Bay California is listed now! The median home price in the Bay Area is around $1,300,000.

Check out the list of areas in the article to see if any are close to you.

Lenders have always had special, very small lists of appraisers who can appraise these homes. I assume the AMCs have these types of lists. Some may not have them. You definitely must get a higher fee for them.

I know several appraisers who have been doing them in my area for a long time. To do them, it is best to work in an area with many luxury homes. You need to network with the brokers that sell them.

The post above is also a promo for McKissock’s Certified Luxury Home Appraiser Program. 14 hours of CE for $650. I have not taken it, but I don’t know of many other types of diversification with a certificate. Might be interesting even if you don’t know if you want to do them.

CubiCasa – Home Measurement From Inside A House

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Posted in: appraisal, appraisal business, bias, real estate market

How to Find Comps With Few Sales

The challenge of pulling comps in 2024

By Ryan Lundquist

February 14, 2024

Excerpts: Pulling comps in 2024 is tough. Think about it this way. If we have 40% fewer sales happening, that means there are 40% fewer comps. Yikes. Let’s talk about this. I also have some market recap visuals to unpack what’s been happening in 2024 so far.

GO BACK FURTHER IN TIME:

One of the things I’m doing more often today is looking at older comps in the immediate neighborhood. I find myself scouring 2021 onward especially. The truth is there are portions of 2021 and 2022 where prices are exactly the same as today too, so if I use an older comp, I don’t always need to adjust for the way the market has changed. But backing up, I can look at older stuff for the sake of research, but this doesn’t mean I’ll use a super old comp in a report. In short, it’s not enough today to go back 90-180 days because there just aren’t enough data points in so many cases…

WATCH THE MEDIAN TREND

The median price for the region doesn’t translate rigidly to neighborhoods, so be careful about saying stuff like, “The median is up 3% this year, so neighborhood prices are up 3%.” Maybe. Maybe not. Look to the comps most of all. In my experience, some people get really upset when I share median trends because the sentiment is the median isn’t a perfect metric (true)…

EXPAND TO OTHER NEIGHBORHOODS:

Looking up other nearby neighborhoods is something I’ve done much more of lately since sales volume has plummeted. The ideal is to compare areas with similar prices, but even if the price point is a bit different, it can be valuable to see what is happening in a different nearby neighborhood. I may or may not use comps from a different neighborhood. I’m just trying to understand what the market is doing…

To read more and see the graphs with excellent illustrations, Click Here

My comments: Very good tips from Ryan. Market conditions is the easiest adjustment to make. This is my first choice for any unusual homes without current data in any market. I quit making dollar adjustments on form appraisals many years ago, but I always do market conditions adjustments when needed. I appraise a lot of 2-4 units and regularly go to other neighborhoods for comps.

I have been doing this for many years. I do a lot of estate appraisals, which are not current value.

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Posted in: appraisal, bias, Fannie

Appraising Historical Homes

Historical Properties and Their Unique Appraisal Approaches

Excerpts: Appraising historical properties involves a complex interplay of factors, making it a specialized field within real estate valuation. This article provides an insight into the appraisal process of historical properties, emphasizing the role of market data, potential buyers, specialized databases, appraisal methods, and the significant impact of preservation restrictions.

The appraisal process begins with a thorough analysis of market data, focusing on sales of properties that share historical or antique characteristics. This comparative market analysis extends beyond standard parameters like size and location to include age, architectural style, and historical significance. The scarcity of historical properties often requires appraisers to expand their search to find comparable sales, both geographically and over longer time frames.

The distinction between a historic property with preservation restrictions and an old house without them is crucial in the appraisal process. Preservation restrictions, often governed by the National Register or local historical commissions, can add value by ensuring the property’s integrity. However, these restrictions may also limit modifications, potentially affecting the property’s market appeal.

To read more, Click Here

My comments: If you don’t want to appraise a historic property, be sure to check it out before accepting the assignment!

Worth reading. A good summary. I suspect that a company based in Boston, MA sees lots of historic homes!

For many years I appraised in the nearby city of Berkeley, CA. There were definitely adjustments for homes built by famous, widely known, architects. Fortunately, their names were listed in the MLS.

In my small city, there are a few homes by famous architects. One was sold about 20 years ago by a famous architect, Julia Morgan. She designed more than 700 buildings in California during a long and prolific career. She is best known for her work on Hearst Castle in San Simeon, California. No effect on value. I was surprised. If it was in Berkeley, there would be a substantial adjustment.

Some cities have large historic buildings, such as the City Hall in my city, built in 1895, twenty years after the city charter in 1872. The Gold Rush in California started in 1848, which brought many people to Northern California.

But, in my city, there are many restrictions on what can be done with older homes, such as Victorians. For example, window replacements must replicate the original windows, plus some other restrictions on exterior modifications. Restrictions are from the city, the county, and the state. In my city of 78,000 population, there are over 10,000 buildings constructed prior to 1930, including many classic Victorians.

Many downtown mixed-use buildings (retail and apartments) are in my city. I appraised many of them, but never noticed any effect, plus or minus, for historic designation.

Knowing what modifications are allowed is very important for the appraiser. Many people don’t like them. You need to know the market. Sometimes buyers like them and sometimes not.

See how many historic homes and buildings are where you do appraisals and where you live. You may be surprised!

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Posted in: adjustments, appraisal classes, bias, non-lender appraisals

Appliances for FHA appraisals

How does the FHA define appliances?

By Daniel A. Bradley, SRA, CDEI

In September of 2015, FHA revised Handbook 4000.1 to provide a specific definition, which includes:

Refrigerators

Ranges/ovens

Dishwashers

Garbage disposals

Microwaves

Washers and dryers

It’s important to note this does not include garage door openers, swimming pool pumps, intercoms, sound systems, and security systems.

How do appraisers consider appliances?

FHA Handbook 4000.1 also clarifies when appliances are required to be operational by stating, “Appliances that are to remain and that contribute to the market value opinion must be operational,” and, “The Appraiser must note all appliances that remain and contribute to the Market Value.”

FHA requirements for appliances: Is a house required to have a stove?

To read more, Click Here

My comments: Worth reading if you do FHA appraisals. Short and understandable. I did FHA appraisals for a few years in the mid-80s. Too many requirements so I quit doing them, but they helped me get started in my appraisal business.

 

Appraisers Riding the Waves of Up and Down Mortgage Rates

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Posted in: bias, liability, real estate market