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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!!

Looking for a topic? Use Search box on the right side. There are hundreds of posts on this blog, starting in 2012. 

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Posted in: Uncategorized

More Crazy Appraiser Stories!

More Crazy Appraisal Stories!

Excerpt:

Restraining Orders & Appraisals – Never a Great Mix

Eric VanderWaal

The majority of my appraisal work is on divorces and estates, both of which have their fair share of crazy stories.

I was appraising a home for a divorce several years ago. The husband had contacted me for the appraisal, but it was the wife who was living in the home. We met at 9:30 am, which was an odd time that he requested. When I arrived at the home, he said that she wasn’t home and had locked all the doors, so he called a locksmith to come to open the back door. The locksmith arrived shortly and started to work on the backdoor. The husband said that his wife was aware of the appraisal appointment and should have left the home unlocked.

I started on the outside and about ten minutes later, a woman comes to the backyard where the husband, myself, and the locksmith were and starts yelling at the husband about him not being allowed to be there. I thought it was the wife, but it turned out to be a neighbor. The wife was at an appointment which is why, I figured out, that he wanted the appointment at 9:30 am rather than 10:00 am. After several minutes of the husband and neighbor yelling at each other, the locksmith got the back door open. The neighbor left and we went inside…

To read more, click here

My comments: We all have these stories ;> Divorce is the best non-lender option for residential appraisers. Very little competent competition and very high fees for expert witness testimony.

You will probably be going up against an MAI. Your attorney says to the MAI: How many house appraisals have you done this year? Answer: 4. Your answer: much more than 4! Your attorney is happy at winning the case, and you get lots more divorce work.

I will be writing about this in an upcoming issue of the monthly Appraisal Today, with lots of marketing and expert witness tips.

Many thanks to Appraisal Buzz for the image above. My favorite appraiser image ;>

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on Graphs and Trendlines, Market Value definition, appraisal forms, unusual homes, mortgage origination stats, etc.

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Big Houses, Sprawling Estates, and Cool Compounds: Tour 12 Extra-Large Properties

Gardens, guest houses, home spas — no matter how you slice it, these homes are undeniably enviable

Excerpts: There are few fantasies more persuasive or alluring than that of the expansive estate. When you think of big houses, your mind may immediately jump to the McMansions of yore, those garish homes you’d expect to see on an episode of MTV Cribs.

The ones we can’t stop daydreaming about more closely resemble graceful, though still boldly luxurious, homes like the central property of Downton Abbey or the setting of Bodies, Bodies, Bodies before the horror film took a dark turn.

13 New Structures and Four Existing Ones at a Maryland Compound (photo above)

As a child with an entrepreneurial mind, David Williams owned a lawn maintenance business. “I would cut grass at these beautiful Bucks County estates with stone walls and many outbuildings,” he reminisces, “and I always said to myself, someday I will have a farm like this.” After moving to Maryland for college, it became clear that the perfect location for this envisioned weekend getaway would be along the states’ storied coast. So when an old farm property on the Chester river went up for sale, everything fell into place.

Over the course of 10 years, perfecting the design and layout for his newly purchased compound became a passion…

To read more and see lots of photos, click here 

My comments: A good specialty for appraisers is appraising luxury homes for lenders and other purposes. Not much competent appraiser competition. Get on lenders’ Special Lists, which are short. Cubicasa works well for measuring them.

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Visualizing Market Activity Using Graphs & Trendlines

By Dave Towne, November 18, 2022 Update

Excerpts: Appraisers, this article will highlight the process I use to bring clarity to my research and analysis of ‘comparable’ properties. This completed process becomes an exhibit in all my appraisal reports because it helps the Intended User(s) visually see what the market has been doing over a known time period. The exhibit graph also indicates a daily rate of change for the sales over the time period, which can then be applied as a ‘time’ (market) adjustment to each comp in the report – if warranted.

Before launching into the process, I want to acknowledge appraisers David Braun, Patrick Egger, George Dell, Joe Lynch and Steven R. Smith for teaching the importance of, and processes for, analyzing and using data and graphs in appraisal reports to me and other appraisers. Additional input has been derived from other educational sources, primarily for the use of Excel.

To read more, click here

My comments: See how Dave uses graphs to explain what he is doing. I have been reading Dave’s emails with lots of useful information for a long time. Having some of them on www.appraisersblogs.com lets you make comments!

To subscribe to Dave’s emails, send an email with state of license, regional/city name & request to Dave Towne dtowne@fidalgo.net

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New in the December 2022 issue of Appraisal Today. Available December 1.

  • 2022 year-end tax planning for appraisers. It’s not too late to save on your 2022 taxes!
  • Book Review: Residential Market Analysis and Highest and Best Use by Mark Ratterman, MAI, SRA Reviewer: Joe Lynch
  • Appraisers’ Heavy Loads USPAP, GSEs, Public Trust, Protect the Client by Tim Andersen, MAI Interesting comments from Tim. Not what you would expect!
  • Marketing with Holiday Gifts and Cards – An Easy, Excellent Marketing Tool! Good ideas, especially if business is slow.

To read more about these topics, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If these articles helped you save money on your 2022 taxes or gave you some good ideas, it is worth the subscription price!

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>

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How to Pull Comps on a Complex Property

By McKissock

Excerpts: When you are comparing like properties, pulling comps isn’t all that difficult. However, when it comes to atypical properties, the process becomes much more challenging. Experts almost always recommend that appraisers use an “apples to apples” approach when researching comps, but what do you when there isn’t another “apple” to compare?

Start with the low-to-high range

No doubt, this could be a wide range, but it at least provides you with some insight about where the value of the property is likely to fall. If either the low or high property doesn’t align at all with the subject property, you’ll know that you must do some additional digging and broaden your search.

Conduct deep research

The status quo is to look for houses of similar size and condition, within the same neighborhood, that sold within the last six months. However, that likely won’t apply with atypical properties. You may need to go back years, expand outside your neighborhood, or consider properties that only have some similar characteristics (e.g., the style is similar, but the square footage is different) to find a comparable property. Then make sure you adjust up or down to reflect market trends.

Other topics include: Previous sale of subject, Broaden your search to other competitive areas, and don’t be afraid to tap your appraiser network

To read more, click here

My comments: Worth reading. I have used the low to high method for many years for difficult appraisals. A friend of mine recently purchased a home and needed to refi. (He had to take an expensive private loan to close in time.)The refi appraisal used his sale as Comp 2. I explained to him that there was only one other similar sale. Other sales were from different neighborhoods. His sale was very useful. Without it, the appraisal would have been very difficult!

The November issue of Appraisal Today has an excellent article Tips for dealing with complex residential appraisals. The December issue has a review of the new book Residential Market Analysis and Highest and Best Use by Mark Ratterman, MAI, SRA.

Note on photo above. The well-known Fish House, located in Berkeley, CA. Appraisers I know appraised it for a lender and told me about the home!

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Is the Definition of Market Value Outdated?

Guest Post from Bruce Hahn, SRA, MAI, CRE, CCIM

Excerpts: Why has the current definition of market value been around without change for so long? Many decades in fact! Not much of it seems applicable to the realities of at least the last decade nor the rest of this decade. Consider the definition from page 4 of the current FNMA 1004 – the URAR form.

There are problems with just about every element of this definition because they have not described the market conditions for the last decade plus in America. Item 4 stands out in particular. Why don’t appraisals consider the impact of financing on market value? Payment in terms of cash in US dollars or financial arrangements comparable thereto…..

Forget the other problems with the definition of market value! It is very clear that financing terms have not been equal to cash recently. The first line after the definition of value on page 4 of the URAR has the following comment: “*Adjustments to the comparables must be made for special or creative financing or sales concessions.” Isn’t a mortgage interest rate that is negative in real terms special financing?

So why is the definition of market value so hopelessly out of date? And why do appraisers not consider the impact of financing/leverage on market value? Clearly it matters!

To read more and see the graphs, click here

My comments: Worth reading. I have known Bruce for over 30 years. He is a very savvy appraiser who does both residential and commercial properties. Bruce is on my short list of appraiser experts to call when I need help. At the bottom of the post are links to other blog posts by George Dell on Market Value. On the right side of the post is a link to “Price Indexing in Changing and Declining Markets – a three-hour webinar”.

In my appraisal practice I have used many definitions of value. Some of them I make up myself. For example family members are fighting over values for various reasons. There are also different definitions of “market value”. Estates, condemnation, relocation, etc. also have different types of value names and definitions.

We are Totally Trapped with the current URAR definition. No changes to the form itself since 2005. Lender appraisals are going downhill fast. No URARs used for non-lender appraisals. You pick the report type you want. Your appraisal software has many forms.

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Frank Lloyd Wright’s Restored Fawcett Farm House Hits the Market for $4.25M in Los Banos, California

Excerpts: $4,250,000 Est. 7 bed, 6 bath, 4041 square feet, 76.16 acre lot, built in 1961. Listed 8/3/22 Previous sale: 6/22/12 for $1,600,000.

Sited amid acres of agricultural land in Los Banos, California, Frank Lloyd Wright’s 1961 Fawcett Farm hits the market at $4.24 million. The gated residence originally belonged to renowned Chicago Bears player Buck Fawcett before Ken & Carrie Cox, its current owners, came into the picture.

Upon their request, Fawcett Farm underwent a multi-award-winning and extensive restoration consulted by the architect’s grandson, Eric Lloyd Wright. Today, tucked within a peaceful island of greenery, the refreshed property stands ready to become someone else’s dream home.

For many, Fawcett Farm perfectly exemplifies the ‘Usonian’ home, a term first dubbed by Frank Lloyd Wright when designing for the archetypical American middle-class family: L-shaped, one-story, hugging a garden or a terrace, large cantilevered overhangs, local materials, clerestory windows and, most importantly, a strong indoor-outdoor visual flow. ‘We have no longer an outside and an inside as two separate things.

Now the outside may come inside, and the inside may and does go outside. They are of each other. Form and function thus become one in design and execution if the nature of materials and method and purpose are all in unison,’ the architect once wrote.

To read more, click here

My comments: Los Banos is in an agricultural area in central California, near Merced. Surprising to see this home there!

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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, go to www.mba.org 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. No one knows when they will stabilize. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications increased 2.2 percent from one week earlier

Mortgage applications increased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 18, 2022. Last week’s results include an adjustment for the observance of Veterans Day.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 41 percent lower than the same week one year ago.

The 30-year fixed-rate mortgage fell for the second week in a row to 6.67 percent and is now down almost 50 basis points from the recent peak of 7.16 percent one month ago,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The decrease in mortgage rates should improve the purchasing power of prospective homebuyers, who have been largely sidelined as mortgage rates have more than doubled in the past year. As a result of the drop in mortgage rates, both purchase and refinance applications picked up slightly last week. However, refinance activity is still more than 80 percent below last year’s pace.”

Added Kan, “With the decline in rates, the ARM share of applications also decreased to 8.8 percent of loans last week, down from the range of 10 and 12 percent during the past two months.”

The refinance share of mortgage activity increased to 28.4 percent of total applications from 27.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.8 percent of total applications.

The FHA share of total applications decreased to 13.4 percent from 13.5 percent the week prior. The VA share of total applications decreased to 10.5 percent from 10.6 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.67 percent from 6.90 percent, with points increasing to 0.68 from0.56 (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 $647,200)decreased to 6.30 percent from 6.51 percent, with points increasing to 0.74 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 30-year fixed-rate mortgages backed by the FHA decreased to 6.66 percent from 6.93 percent, with points increasing to 1.01 from 0.99 (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 6.08 percent from 6.27 percent, with points decreasing to 0.70 from 0.73 (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 increased to 5.78 percent from 5.73 percent, with points increasing to 0.73 from 0.65 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.

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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

www.appraisaltoday.com

Posted in: appraisal forms, appraisal how to

Fannie Mae Takes A Closer Look at Appraisals

Sins of the Past Are Back to Haunt Appraisers

Fannie Mae Takes A Closer Look at Appraisals

By Richard Hagar, SRA

 

 

Excerpts:

In the recent past, when appraisers were swamped

Even with the Collateral Underwriter program review, appraisers were overwhelmed. Every lender and AMC were seeking and hiring review appraisers in order to keep up with demand. Due to the shortage of review appraisers (exacerbated by low fees and time pressures), tens of thousands of poorly created appraisals were accepted without receiving adequate review.

Unfortunately, because many appraisals were rarely rejected or required corrections, appraisers developed the false notion that poorly crafted appraisals were okay to turn in. Many appraisers were bragging about their ability to fill out two or three appraisal forms a day and receive no call-backs from lenders.

However, time and time again we’d review appraisals, that were accepted by lenders, but had failures such as:

• No highest and best use analysis (as if vacant and improved).

• Failure to make appropriate time/market adjustments (positive or negative).

• Using only a single approach to value.

• Incorrect land values.

• Square footage costs and depreciation based more on opinion than reality.

• Unsupported adjustments (adjustments based on “my 30 years in the business” instead of facts).

• Failures to personally inspect and photograph comparables.

What’s happening now

FNMA indicates that their 2022 lending volume is down 47% from 2021 and is expected to drop by another 50% in 2023. So, it’s pretty safe to state that the “appraiser shortage” of yesteryear is over, and reviewers now have more time on their hands.

Which appraisers are going to survive when the loan volume is down 75-85% and the poor appraisals of the past are catching up with the appraiser today? Well, for the most part, it’s based on the quality of the appraisals delivered to lenders over the past five years.

Do you believe that the quality of your work ranks you as a tier 1 appraiser or do you have a little concern about your rating? Tier 1 appraisers have little to fear but tier 2 and 3 appraisers…

What you can do today

Today, you likely have more time on your hands, so slow down and take more time improving the quality of your work. Superior quality appraisals can set you free.

Learn how to accurately determine adjustments. Follow the ANSI standard when measuring the subject (even if you disagree with the method — it’s the requirement). Take more classes! Don’t stop taking classes just because you have enough CE credit to meet your next renewal; that mentality is for the bottom tier of appraisers.

I typically obtain double the CE credit hours necessary to renew my certificate…double! Why? Because I want to do things better, obtain higher fees, and survive the purge that is coming. Lenders have more choices, and you need a way to stand out from the bottom tier and low fee appraisers.

To read more, click here

My comments: Worth reading. Hagar is one of the best residential appraisal instructors. I have known him for over 30 years and have taken many of his classes. Richard can be a bit negative but states what is really happening and what you need to do. Many thanks to Ryan Lundquist’s 2020 blog post for the very appropriate image above!

I also think that now is the time to increase your appraisal skills by taking classes and seminars. I also have always had more CE hours than I need.

I am an appraiser because it is challenging and never boring. I quit working in labs because it was boring after 7 years but have never been bored appraising. I want to be the best appraiser I can be. (I have always been an over-achiever).

Consider doing non-lender appraisals. I have been doing them since 1986 and writing about them in my monthly newsletter since 1992. No CU, UAD, reviews, many pages of differing AMC requirements etc. Your requirements are in USPAP.

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Reliable MLS Data important for appraisals

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on State board complaints, non-lender appraisals, mortgage forecast, real estate market changes,  unusual homes, mortgage origination stats, etc

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Posted in: appraisal business, Fannie, future, real estate market, state appraiser regulators

Unacceptable Appraisal Practices from Freddie Mac

12 Unacceptable Appraisal Practices from Freddie Mac

10-5-22

 

 

Here are 5:

  • Reliance in any appraisal analysis on inappropriate comparable sales, or the failure to use comparable sales that are more similar to or nearer to the subject property without adequate explanation
  • Use of unsupported or subjective terms to assess or rate, such as, but not limited to, “high,” “low,” “good,” “bad,” “fair,” “poor,” “strong,” “weak,” “rapid,” “slow,” “fast” or “average” without providing a foundation for analysis and contextual information
  • Use of comparable sales data provided by interested parties to the transaction without verification by a disinterested party
  • The use of inordinate adjustments for differences between the subject property and the comparable sales that do not reflect the market’s reaction to such differences, or the failure to make proper adjustments when they are clearly necessary
  • Development of value and/or marketability conclusions that are not supported by available market data

To read more, click here

My comments: From Freddie Mac’s Selling Guide with links to more information. Nothing new, but good reminders.

Review appraiser liability

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on barndominiums, liability, declining prices, non-lender marketing, Freddie bad appraisal practices, unusual homes, mortgage origination stats, etc.

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Read more!!

Posted in: appraisal how to, Freddie, non-lender appraisals, real estate market

Practical Tips for Working With AMCs

Appraisers Share Their Best Tips for Working with AMCs

By McKissock

Excerpts: In a nutshell, our survey respondents recommended that you should:

1) do your research and get to know the AMCs,

2) build a relationship with them,

3) treat the relationship as a partnership, and

4) prioritize communication.

Build a relationship

“Be personable so they remember you.”

“Make yourself known by being efficient as well as timely with your reports. Be friendly—even when you feel like the UW’s question may be redundant or was already answered in the report. I promise you that this will make you known in your area.”

“Have a very responsive credo. Keep them up to date in every step of the report so that they can keep the Lender (and the Buyer/Seller/Realtor/Closing Attorneys when applicable) all in the loop on the progress of the report. Remember when they look good and trust you—you look good

Communicate, communicate, communicate!

“Update the orders quickly.”

“Keep them informed.”

“Over communicate!”

“Always communicate—even if it feels like too much. Our office updates AMCs on every scheduling attempt with details, every inspection appointment set and completion, and any materials needed ASAP in the assignment. They really appreciate it, and it ensures you can complete assignments on time as you had planned (no one likes waiting for a legal description only to have it show up on your day of 4 inspections!). It’s truly a win-win.”

“Stay in communication. Appraisers tend to get annoyed with constant emails from the AMC about inspection date, completion, report submission, etc. I make it a point to update them and answer their emails ASAP. In my opinion, that’s good business. And if you do need more time, more info, they are more willing to oblige.”

To read more, click here

My comments: Read this blog post with practical tips from practicing appraisers. It can help you get more business from AMCs (and other lender clients). Savvy appraisers I know who mostly do non-lender work also have a limited number of carefully vetted AMCs they work for, plus a few local lenders and “private” lenders.

Advertising Disclaimer: McKissock is one of my regular email advertisers. I keep my advertising clients and this newsletter’s content separate. But, McKissock’s blog posts are short, well written, and popular with readers, so I include them regularly.

LIA runs an informational ad at the top of each email newsletter. The ads regularly get the largest number of “hits,” indicating that readers like them. We all like free Liability advice!

Practical real estate appraisal writing tips for AMC questions

Reconsideration of value and Appraisers

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on AMCs, non-lender appraisals, liability, ROVs,unusual homes, mortgage origination stats, etc.

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Posted in: adjustments, AMCs, liability, non-lender appraisals, ROVs

VA Update for Appraisers

VA Update for Appraisers

Interview with VA’s Chief Appraiser

By Isaac Peck

Excerpts: …the United States Department of Veteran Affairs (VA), is known throughout the valuation community for respecting the work of appraisers and maintaining reasonable fee schedules.

The questions:

  • Fannie Mae and Freddie Mac are making desktop appraisals a permanent fixture in their valuation offerings. Is the VA looking at these types of valuations and what are some of the considerations?
  • There’s been a lot of buzz about measuring homes to ANSI standards in the appraisal industry–what can you tell us about the VA’s stance on ANSI? Do you anticipate requiring ANSI on VA appraisals in the future?
  • There is a lot of concern about discriminatory appraisals—what is the VA doing to protect Veterans from discrimination and what are your thoughts on the topic?
  • What’s new at the VA? Any final thoughts?

To read the answers and more, click here

My comments: I have always strongly recommended doing VA appraisals, especially since AMCs took over other lenders’ appraisal management. VA wants you to help veterans. Lenders want to make more money. I wrote a long article about VA in the past, available to paid subscribers. I interviewed VA appraisal employees, fee appraisers who liked VA, and other appraisers who did not want to work for VA.

Appraisers and local market analysis

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on real estate market, mortgage forecast, Halloween haunted homes, unusual homes, mortgage origination stats, etc.

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Posted in: adjustments, future, real estate market, va

Appraisers and Local Market Analysis

Appraisers and Local Market Analysis

By Woody Fincham, SRA, AI-RRS, ASA

Excerpts: Social media and the mainstream media make a mess of these markets even in the best of times. They do not have the bandwidth to cover local markets. When you are in a metropolitan statistical area like Charlottesville and Waynesboro/Staunton you get some reporting from the local news. Still, if it is not driven to get online clicks from hyperbole it usually is not worth reporting. National data simply does not apply to the local real estate market and the closest large markets are Richmond and Washington DC. Neither are not great metrics for what our local markets are doing.

I think everyone has heard the old saying, “You can’t see the forest for the trees.” And that is true. We are in the middle of a market transition and exactly how it is transitioning is extremely hard to predict. The best market analysis is always retrospective, as they say, “Hindsight is 20/20.” Until we get past this period over the next few months it may be hard to say definitively what is exactly happening. As an appraiser, it is super important to understand how to gather and analyze relative data.

So, what metrics are worth watching?

  • Inventory levels
  • Absorption rates and marketing times
  • Actual days on market (DOM)…

To read more and see the graphs, click here

My comments: Read this article, including the case study. See if there are data types and graphs you can use in your appraisals. Your clients count on you to let them know the market today, not in the past. Of course, I agree with this. Appraisers have the most valuable data and analyses in a changing market: listings, pendings, price changes, etc.

Appraisal Neighborhood Analysis

Appraisal Business Tips 

Humor for Appraisers

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on retirement, liability, ADUs, appraiser cartoon,  real estate market, Appraisal business, unusual homes, mortgage origination stats, etc.

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Posted in: ADUs, appraisal business, E&O, humor, real estate market

Appraisal Risk, Reviews, and Revisions

Appraisal Risk, Reviews, and Revisions

By Ken Dicks

Excerpts: This is part three of a three part series on appraisal review – Read parts one and two. I am often posed with the following question “How do you know when you are looking at a “good” appraisal?” The reality is there is no universal acceptance of a single method of measurement to differentiate “good” from “bad.” After many years of reading appraisal reports, my response is “One that leaves the reader with few unanswered questions, allows the data to tell the story, keeps appraiser interventions to a minimum and is able to present a case for what a property is worth, as well as what it is not worth.”

Today, while there still remains some stickiness to the QC revision process, a recent survey completed by The STRATMOR Group commissioned by appraisal management technology company Reggora, indicates 25% of appraisal reports require some form of revision. While that number may seem high to some, in the context of lending and property complexities, that is a 54% improvement in performance cited earlier in this article (from 35% 10 years ago). Is there room for more improvement? Of course, there is always room for process improvement, but on the face of it, some process improvements appear to be yielding results.

Consistent application of both quality control and quality assurance processes for appraisal review may also be in part a reason for improvement, as appraisers have a better understanding of what is needed by their client. Additionally, the tools available to both appraisers and appraisal reviewers have undergone iterative process changes and users have advanced further up the learning curve. Lastly, many lenders have progressed beyond the initial risk identification stage, or the “gotcha stage” to a holistic and strategic approach that accepts risk into their business objectives. Today lenders and stakeholders have the ability to gain risk insight beyond the initial transaction stage and utilize pattern and trend identification.

To read more, click here

My comments: Links to Part 1 and 2 are in the first line of the post. View from the AMC/Lender side. Good that reviews and reconsideration requests have gone down. Appraisers and AMCs spend less time and have fewer hassles.

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, mortgage origination stats, etc.

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on Reviews and Revisions, AMC layoffs, real estate market, unusual homes, mortgage origination stats, etc.

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Posted in: adjustments, AMCs, appraisal business, lender appraisals, non-lender appraisals, real estate market, Reviews

NAR Appraisal Survey 2022

NAR Appraisal Survey 2022

Excerpts from NAR Report (link below):

In May 2022, NAR Research conducted a survey of all 9,700 appraiser members and 50,000 randomly-selected non-appraiser members.

54% of appraisers report that appraisal management companies (AMCs) have been among the greatest challenges in their businesses in the past year; 30% cite expanding regulations.

The typical appraiser reports a 40-mile radius in which they conduct appraisals. 68% report practicing within a radius of 20–59 miles.

Virtually all appraiser respondents (97 percent) have conducted an in-person appraisal, and 79 percent have done so by desktop/drive-by appraisal. Eleven percent cite evaluations (non-appraisal opinions of value). The eight percent who cite other valuation methods most often explained that they use a hybrid approach or mostly an exterior appraisal.

Two-thirds of appraisers (66 percent) are asked monthly or more often to conduct appraisals outside of the geographic area or the property type in which they feel their expertise is. Close to one-third conduct an appraisal outside their area of expertise on a weekly basis. Twenty-three percent of appraisers report never having to conduct an appraisal outside of their geographic area or area of expertise.

Appraisers are significantly more likely than other members to say that the most competent are not being selected most of the time (22 percent vs. nine percent) or at all (16 percent vs. six percent) and much less likely to say they are being selected most of the time (12 percent vs. 23 percent).

A few comments:

  • “Appraisal Management Companies are destroying our profession.”
  • “Appraisers are the “truth tellers” in this process. While agents can “puff” we cannot! If a property is listed at $315k, with an offer of $345k, do not harass the appraiser when the appraisal comes in at list!! If it had a market value of $345k, it would have listed at $345k!”
  • “AMCs are a significant issue for not only appraisers but for the consumer. They bid out each appraisal to maximize their profit, usually harming turn times and passing on costs to the appraiser and to the borrower.”

To read the report, click here

My comments: Read the PDF report. Easy to read with good graphics, similar to the graphic above. Since it was done in May, it focuses on appraiser shortages and delays, mostly from the non-appraiser respondents.

It has both appraiser and non-appraiser survey questions, which is a bit tricky to read. Some of the questions are relevant today, such as AMCs. Other questions are not as relevant, such as fees, as the appraisal market in many areas is not as strong as in May when the survey was done.

How much appraisers travel was interesting. I only work in my island city, 1 mile by 3.5 miles. I hate leaving the Island! Island mentality, I guess ;> I used to work in a much larger area, of course.

What is the farthest you have traveled to complete an appraisal and still be considered geographically competent?

Appraisal Business Tips 

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Posted in: appraisal business, Bad lenders, Fannie, real estate market

Appraisers: How and Why To Check Carbon Monoxide Detectors

Killed by Carbon Monoxide: Appraiser Blamed

Read this article on how to check CO detectors. You may save someone’s life!!

by Kendra Budd, Associate Editor, WorkingRE

Excerpts: For decades, appraisers have been gently reminded to pay careful attention to smoke alarms and carbon monoxide (CO) detectors—especially noting when they are absent altogether. Many experts advise that the state and federal standards requiring these important systems exist for a reason.

A recent case in which a young couple died from carbon monoxide poisoning while they slept highlights the life and death importance of these simple alarms—and brings this issue front and center for the real estate appraiser community as a whole.

Lawsuit

As you might expect, it didn’t take long for both John and Suzy’s parents to hire a law firm and start going after all the real estate professionals involved.

As it turns out, both the appraiser and the home inspector had each independently inspected the home 18 months prior and both mistakenly reported a few of the smoke alarms present at the home, as CO detectors.

Consequently, both the appraiser and home inspector ended up on the receiving end of a “wrongful death” legal claim.

The legal team for the parents of the deceased young adults (plaintiffs) alleged that the appraiser, Darcy Doe (name changed for privacy), had negligently appraised the Smiths’ home and had reported the presence of a CO detector when in fact, none were present. Unfortunately for Doe, she labeled her photograph inaccurately in her own appraisal report to the lender.

CO Detector vs Smoke Alarm

One important lesson in these cases is that it can be extremely difficult to tell the difference between CO detectors and smoke alarms. This is a reminder to appraisers to take a second look at all CO detectors and smoke alarms—and to test them as well.

Rick Bunzel, home inspector and Washington firefighter was able to give us some tips on how to not only tell the difference between the two detectors, but offers additional safety tips on smoke alarms and carbon monoxide detectors as well.

For starters, the difference between a smoke alarm and a CO detector is quite simple. “The item will be clearly labeled, written on the exterior shell of the device, so you’ll be able to see it easily,” advises Bunzel. However, this can be hard to read because the signage could be the same color as the shell, so it’s incredibly important for you to get close enough to the alarm or CO detector to read it clearly (and test it!).

Bunzel was also able to provide some helpful tips for appraisers as far as how to communicate with their clients about CO detectors. For example, Bunzel says that appraisers and home inspectors should make it clear to their clients that they do not warranty if the device is working, just that it is there. “The test button doesn’t test the workability of a device—only the alarm. Just because it squeaks doesn’t mean it works,” reports Bunzel. This disclaimer language should be included in the appraiser’s report.

Another tip is to check the date of a CO alarm and smoke detector

To read more, click here

My comments: Read this article, especially how to identify and check CO detectors. The disclaimers are useful. I have CO and smoke detectors in several locations in my house. CO is much riskier than smoke as you can’t smell it.

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Posted in: appraisal how to, Fannie, real estate market

Appraisal in Changing Markets

Sellers Chasing the ball down the road in real estate

By Ryan Lundquist

Excerpts: Commentary from a (Ryan) appraisal: Here is a bit of commentary in one of my recent appraisal reports. This is only part of what I say because I’m a man who needs a few paragraphs. One box just isn’t enough.

“At the least we ought to describe the market as showing a downward seasonal shift, though it’s possible we can call this a downward cycle if the trend persists over time. For now, it is most reasonable to categorize the market as having growing uncertainty and blatantly inflamed downward seasonal price declines compared to a normal seasonal trend. At the least, properties are clearly selling for less than they did several months ago. The regional median price has ticked down about 7% since May, which is $45,000. This doesn’t mean every property is worth $45,000 less, but it’s been clear buyers have been resisting paying higher prices.”

Okay, one last thing about size: During the beginning of the pandemic there was a blatant spike in home size due to a greater focus on larger homes at higher prices. This spike basically peaked one year ago as size has started to normalize. Now let’s keep watching to see what happens to size. Will we see smaller homes more often as first-time buyers flood the market? Will we see fewer sales at the highest prices? To be determined.

To read more, click here

My comments: Scroll down the page for more comments from Ryan. Markets are changing in many areas, but are complicated by price range, size, etc. I remember the easy days of market condition adjustments 1% per month up or down, for example, to apply to all detached home appraisals. Ryan has been writing about the ups and downs of his market for a long time. Maybe you can use some of his ideas, graphs, and/or explanations in your appraisals.

==========================================

Navigating a Changing Market

by Isaac Peck, Editor

Excerpts: … senior leaders at AMCs, lenders and the GSEs have noted that slower appraisal volume will favor those appraisers who can stay in communication with their clients and provide faster turn times. “During the heyday of 3 percent interest rates, it was acceptable for appraisers to take three to four weeks to complete an appraisal and forget to update the client. Now that volume has declined to normal levels, those appraisers who aren’t providing good customer service may see their businesses suffer,” remarked a senior executive at a major bank.

At the end of the day, (Ryan) Lundquist says his goal is to report what is happening in the market right now—accurately and without sensationalism. “I’m constantly changing what I say in my appraisals, and I’m very careful of boilerplate and canned statements. A quick change in interest rates has led to a quick change in the market. My appraisals talk about more stable prices in my area but also about uncertainty regarding the future. Pending volume is softening, available listings are skyrocketing, and it is taking longer to sell—but there are still stats that suggest there is heavy competition for certain homes. It changes by the week. There’s no easy way to quickly do this, it takes effort. There’s no such thing as being a market expert without putting in the time to be an expert,” argues Lundquist.

To read more, click here  

My comments:  This article uses AEI data, graphs, and reports from June. Some are out of date in September. I follow AEI (American Enterprise Institute), which has excellent data and reports. For more info on AEI, click here 

The MBA data, loan application volume (see below) is the future of appraisal volume. Using recent September data, loan applications are below the levels in 2019 and still dropping. I have a graph of this every month in my paid monthly newsletter. Loan applications went up this week but are still below 2019 levels.

The upcoming October issue of the monthly Appraisal Today has an article, “Which are your best current and former AMC/lender clients? What do they want?” The Big Three: Turn Time/Quality/Fee. I discuss what lenders want and how to provide better service and get more business. Number 1 for lenders (AMCs’ clients) has always been turn time.

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Posted in: appraisal business, non-lender appraisals, va