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About this blog

This blog has recent full FREE email newsletters (that start with the date and Newz) plus excerpts from the email newsletters where you can post comments. This newsletter has been sent out almost every week since June, 1994. I started with 6 subscribers on Compuserve. Now it is up to 17,000 subscribers!! To subscribe to the free email newsletters and get them them when they first come out, 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: appraisal, appraisal business, Appraisal fees

7-19-19 Newz: Rates Going Down?- Appraiser Boards – AVMs Misunderstood?

AVMs Are Not Understood By A Large Swath of Non-Appraisers

Source: Jonathan Miller
Here are some recent survey results that show more than half of the respondents indicated, it is either NEVER appropriate or NOT SURE if it is appropriate for a non-appraiser to perform a valuation on a home.
So the jury is still out for a third of respondents but a third are absolutely sure it is inappropriate. One can infer that appraisers have an opportunity to convey what AVMs really are to the public.
Link to NAR AVM survey results click here
My comment: Good graphics and easy to read. Lots of topics including AVMs, desktops, bifurcated, etc. Results of a survey of NAR members. Lots of topics. Scroll down to AVMs, etc.
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Fannie Mae lowers mortgage rate forecast and says home-price growth will accelerate

Mortgage giant predicts 30-year fixed rate will average 3.7% in 2019’s second half

Excerpts: Fannie Mae issued a new forecast that predicts the average U.S. rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019, down from the 3.9% the mortgage financier called for a month ago. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.
“This continued decline in mortgage rates and our upwardly revised view on house price growth have led us to increase our forecast for single-family mortgage originations for the remainder of the year,” Fannie Mae said. “We now expect total originations to rise 7% from 2018 to $1.75 trillion, and we expect refinances to account for 32% of total mortgage originations in 2019, up from 29% in 2018.”
That would make this year the highest since the $1.8 trillion originated in 2017, according to Fannie Mae data.
To read more, click here
My comment: Lots more refi appraisals!!

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Joining Your Real Estate Appraisal Board

Interview with Cristy Conolly, current Chair of the Florida Real Estate Appraisal Board and Chief Appraiser at Nationwide Appraisal Network,
Excerpt: Buzz: What’s one thing you wish to convey to appraisers about being on the Board? Are there any common myths you’d like to address?
Cristy: I think a common misconception is Board members are scary and unapproachable. Board members are people, just like everyone else. They want to do good for the industry and their state. They aren’t “out to get” anyone. They are charged with protecting the public and sometimes that means disciplining the “bad actors,” but that typically includes educating them so they can learn from their mistakes and improve themselves.
To read the full interview click here:
My comment: Worth reading. I have never seen anything written about what it is like to be a state board member.
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18 Historic Homes that Would Be Fascinating to Appraise

Excerpt: Historic homes make for complex and interesting appraisal subjects. As one appraiser said, “I love unusual properties, and the challenge they present to appraise. I have always loved appraising large, older properties. They take us back to another world back in time.” We recently asked our appraisal community, “What famous historic home would you want to appraise?” Here’s what they said.
A few of the homes:
Frank Lloyd Wright’s Fallingwater
The White House
Norman Bates “Psycho” House
Graceland
To read the full list plus comments click here
My comment: For me, none of the above ;> Too difficult!

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What is a Bedroom?

Excerpt: Layout and Floor Plans (Fannie Mae)
“Dwellings with unusual layouts and floor plans generally have limited market appeal. A review of the room list and floor plan for the dwelling unit may indicate an unusual layout, such as bedrooms on a level with no bath, or a kitchen on a different level from the dining room. If the appraiser indicates that such inadequacies will result in market resistance to the subject property, he or she must make appropriate adjustments to reflect this in the overall analysis. However, if market acceptance can be demonstrated through the use of comparable sales with the same inadequacies, no adjustments are required.”
It is clear, then, that at least Fannie Mae depends on the appraiser to determine the definition of a bedroom and whether a room used as a bedroom meets local market acceptance, suggesting that adjustments for unusual layouts, be derived from the local market.
What does FHA say?
Then we move on to consider what FHA has to say about bedrooms. Here we receive more detailed information.
n Section II (B) 3. (v.)L “The Appraiser must not identify a room as a bedroom that cannot accommodate ingress or egress in the event of an
emergency, regardless of location above or below grade.”
FHA Handbook 4001.1 no longer contains the guidance concerning the size of windows below-grade.
To get lots more info on this critical appraisal valuation issue, read the full article, in the February 2019 issue of Appraisal Today, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.
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Should appraisers study statistics?

Excerpts: … In particular, I was already used to the fact that for both general and residential work, the data available to me included all, or substantially all, the sales in my area. I benefited from the fact that San Diego public records, assessor information, and even GIS (geographic information) was also ahead of data availability and quality in most other parts of the country. But one thing stood out. There was a conflict between what I was being taught in most of the PhD-level stats classes, and the reality of what I saw as a practicing appraiser.
The conflict was simple, yet convoluted by a belief system. The confusion mostly has to do with the difference between a sample, and a population.
… It’s time for our appraisal organizations to recognize the laws surrounding these fallacies, and cease teaching what has been fully debunked in a statement by the American Statistical Association itself.
Now is the time.
For more info, click here
My comment: I had the same problem with my appraisal classes in the 1980s. Very out of date, especially after I got my MBA and did multiple regression studies. Don’t get me started on the out of date stuff taught in commercial appraisal classes. The 3 approaches have not changed since the 1930s.
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A Truth About Bifurcation

By Robert Murphy, former Director, Property Valuation and Eligibility at Fannie Mae
Excerpt: The third-party inspection piece is the part of the bifurcation appraisal process which has garnered the most discussion. Don’t get me wrong, the discussion regarding who should be completing the inspection is understandable and justifiable. Should it be done by an appraiser or appraiser trainee? A home inspector or insurance inspector? Some random third-party? Unfortunately, as with many things today, we must be able to sort out the truths from the half-truths, and pure nonsense. There needs to be clarity on this issue prior to any type of bifurcated appraisal process becoming mainstream.
However, I believe there needs to be some focus given to the second step of the process. I have been hearing, anecdotally, of appraisers who have been completing bifurcated appraisals without ever having appraised in the specific market/geographical area where the subject is located. Therefore, a discussion regarding competency requirements might be useful.
To read the full article plus lots of appraiser comments, click here
My comment: Interesting analysis from Bob Murphy about appraiser geographic competency. I have spoken with appraisers who have done bifurcated appraisals all over the country. Bob started appraising in 1978 and worked for Fannie for many years. Very savvy. Leave your own comment.
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Homebuyer Bidding Wars Are Fading Fast, Even in San Francisco

Excerpt: Here’s how rapidly the U.S. housing market has cooled: Buyers are now about four times less likely to face a bidding war than they were just a year ago.
In June, 12% of buyers faced competition compared with 52% a year earlier, according to an analysis by brokerage Redfin of offers written by its agents. While San Francisco is the most competitive market, the share of listings that got multiple offers fell to 28% from 65%.
To read more, click here
My comment: What’s happening in your market? Mine is lot less competition for listings. Keeping a close watch for any price drops…
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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 issue go tohttps://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7AM to noon, Pacific
time.

Mortgage applications decreased 1.1 percent from one week earlier

WASHINGTON, D.C. (July 17, 2019) – Mortgage applications decreased 1.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 12, 2019. Last week’s results included an adjustment for the Fourth of July holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 24 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 87 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index increased 21 percent compared with the previous week and was 7 percent higher than the same week one year ago.
“Mortgage rates increased across the board, with the 30-year fixed rate mortgage rising to its highest level in a month to 4.12 percent, which is still below this year’s average of 4.45 percent,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Coming out of the July 4th holiday, applications were lower overall, with purchase activity slipping almost 4 percent. Refinance applications increased, with activity reaching its highest level in a month, driven mainly by FHA applications. Historically, government refinance activity lags slightly in response to rate changes.”
Added Kan, “Buyer interest at the start of the second half of the year continues to outpace year ago levels, with activity last week up 7 percent.”
The refinance share of mortgage activity increased to 50.0 percent of total applications from 48.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.9 percent of total applications.
The FHA share of total applications increased to 10.6 percent from 10.1 percent the week prior. The VA share of total applications decreased to 12.9 percent from 13.2 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 4.12 percent from 4.04 percent, with points increasing to 0.38 from 0.37 (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 $484,350) increased to 4.07 percent from 4.03 percent, with points decreasing to 0.21 from 0.27 (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 4.01 percent from 3.97 percent, with points decreasing to 0.28 from 0.30 (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 3.48 percent from 3.42 percent, with points remaining unchanged at 0.32 (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 3.58 percent from 3.56 percent, with points decreasing to 0.27 from 0.28 (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
2033 Clement Ave. Suite 105, Alameda, CA 94501
Phone 510-865-8041 | Fax 510-523-1138
Posted in: AMCs, appraisal classes, AVMS, bifurcated appraisals, Mortgage applications, state appraiser regulators, statistics, weird homes

7-12-19 ASC Approves ND Waiver – Neighborhood Names – 27 Inspiring Bridges

How much is a neighborhood name worth?

Excerpt: Despite some anecdotal examples, there’s little statistical evidence supporting the notion that a neighborhood’s brand or name contributes to a higher sales volume or a premium on price, according to Jonathan Miller, chief executive of the appraisal firm Miller Samuel.

“You’ll see buildings trying to hook into adjacent, better-known neighborhoods as a marketing ploy, but we don’t see that translate into a premium or more sales for doing that,” Mr. Miller said.

To read more, click here

My comment: Some interesting stories. I’m not sure if “renaming” works, but I do know that in some older established neighborhoods in the Bay Area, including my city, the name does make a difference in value.

Read more!!

Posted in: adjustments, appraisal business, appraisal how to, appraisal regulations, appraisal waivers, computers, rental market, weird properties

7-5-19 Newz: Zillow Past and Future – Coester- Lots More Info – North Dakota Waivers

Zillow – the past and the future

Zillow’s new photo algorithm

Zillow’s New algorithm uses photos of your home to check quality and curb appeal plus a look back at when Zillow started, and info on their ibuyer service

Excerpt: “We’ve taught the Zestimate to discern quality by training convolutional neural networks with millions of photos of homes on Zillow, and asking them to learn the visual cues that signal a home feature’s quality,” Stan Humphries, Zillow’s chief analytics officer & chief economist, said in a Medium post announcing the new algorithm. “For instance, if a kitchen has granite countertops, the Zestimate now knows — based on the granite countertop’s pixels in the home photo — that the home is likely going to sell for a little more.”

To read more, click here

My comment: I am trying not to think about this…… Maybe North Dakota can try using Zillow on their rural properties….

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Zillow – tales from when it started plus ibuyer

Excerpt: Every night for five months before the launch of Zillow’s website in February 2006, employees gathered their Dell desktops on Ping-Pong tables, connected them to harness their combined processing power, and strung together extension cords to get them all running. To avoid overloading the circuits, they unplugged the office refrigerator and banned Christmas lights. Then, while most of them slept, this jury-rigged supercomputer analyzed a decade of property records and American housing market data in order to spit out price estimates for 43 million homes.

To read more, click here

My comment: Published in Forbes. Well written and researched. I liked Zillow’s history plus a good analysis of their ibuyer service – the new wave of purchasing homes and selling them later.

Read more!!

Posted in: appraisal how to, appraisal waivers, appraiser shortage, real estate market, state appraiser regulators, weird properties, zillow

6-28-19 Newz: Coester Loses Lawsuit – Fannie Appraiser Update – Secret Stairways

What I think about bifurcated appraisals

Have you ever done a comp check for a mortgage broker or lender in the past? They are appraisals. You only have public records and maybe MLS. You may have driven by the property, but probably not.

What about drivebys? You drove by the outside, but never saw the rear or interior.

With bifurcated appraisals, at least you have photos, measurements of the exterior, descriptions of what the exterior and interior rooms look like, etc.

What about having trainees do them, under your supervision? A great way to get new appraisers started. I spoke with one appraiser who is doing this.

All appraisers rely on public records, MLS photos and descriptions, etc. We don’t know how accurate this data is.

Check out the company doing bifurcated appraisals and their forms software data handling. Do not work for one that requires that you manually fill in a 1004P, for example. How long have they been in business? Are there appraisers in management?

Whether or not you do them is a business decision. They are less risky than comp checks and drivebys. You have more information, assuming they do not make up the photos, sketch, etc.

The Bottom Line: appraisers don’t like change, just like most people. Some adapt, some decide not to change.

Read more!!

Posted in: AMCs, appraisal how to, appraisal management company, bad appraisers, bifurcated appraisals, Fannie, hybrid appraisals, Mortgage applications, real estate market, weird properties

6-21-19 Newz: MLS Cyber Attack – McMansions – FHA and Risky Loans

Valuation Is Not A Guessing Game, It’s a Development Process

Excerpts: If you’ve ever had an appraisal of your home completed, perhaps you can relate to the following scenario: insert image

The appraiser arrives at your home. You know that they have probably done a little research on what potentially comparable sales in the neighborhood are selling for.

The appraiser views each room in your home, taking photos and notes as they go. The appraiser asks you about any improvements you have made to your home in recent years.

At the end of the inspection, you assume that the appraiser has to have some idea about what the value is likely to be. You ask the appraiser, “Well…What do ya think?” What you’re probably really wanting to know is what the appraiser thinks your home is worth. At this point the appraiser is likely to give an evasive reply that doesn’t answer your question. Why?

To read more and see the funny animated fotos and gifs click here

My comment: written for homeowners, but some good ideas for appraisers. You can use for ideas for speaking to real estate agents, for example. Or, can give (or send) the owner a link to this article.

Read more!!

Posted in: adjustments, appraisal business, appraisal regulations, bifurcated appraisals, Fannie, Mortgage applications, mortgage loan volume, real estate market, unusual home

6-14-19 Newz: Refis up 47% – Appraisal Hearing – Suburb Definition

Lender Overlays and FHA Appraisal Requirements

Excerpt: FHA requirements re: approaches to value

Regarding the approaches to value, the HUD Handbook states, “The Appraiser must consider and attempt all approaches to value and must develop and reconcile each approach that is relevant.”

Translation: If the appraiser determines an approach is necessary for credible assignment results, the appraiser must develop that approach. When appraising new construction or a dwelling that is one year old or less, it is likely that the appraiser will need to develop the cost approach. As in any appraisal, if the appraiser decides not to develop one or more of the approaches, he or she will need to support that decision.

For info on site requirements, etc click here

My comment: AMCs and lenders can have some strange requirements. It’s always good to know what FHA says.

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How Should We Define the Suburbs?

Excerpt: The problem (lack of a definition) stems from the fact that U.S. statistical agencies (the Census Bureau and Office of Management and Budget) do not provide a systematic definition for suburbs. They offer classifications for metropolitan areas and micropolitan areas, a classification of urban and rural areas, and a category of principal cities, but nothing of the sort for suburbs.

Very interesting with a good table To read more, click here

My comment: Appraisers have to identify on forms if a property is urban/suburban/rural. Also percent built up. Rural can affect loans sometimes. I have never seen any clear definitions. Now I know why!

Read more!!

Posted in: appraisal regulations, Fannie, FHA, forecast, lender appraisals, mortgage loan volume, real estate market, weird properties

6-6-19 Newz: What’s Fannie Doing and Why – Shadow Banks – Photoshopping

Tracking the Economy Through New-Home Square Footage

Excerpt: The U.S. housing market may not be synonymous with the business cycle, as a famous 2007 paper proclaimed, but the ups and downs in housing, which represents a big part of the economy, usually do offer hints about what’s going on more broadly.

That’s why economists closely watch housing market indicators like sales volumes and home prices — as well as how Americans are accessing the market and managing their obligations to mortgages, rental costs, taxes, and so on.

To read more, click here

Read more!!

Posted in: Fannie, hybrid appraisals, lender appraisals, mortgage loan volume, real estate market, square footage, Strange homes, unusual home

5-31-19 Newz: Hit the Sales Price – Hybrid Warning – Guitar shaped Hotel

Why do appraisers hit the sales price?

By George Dell

Excerpt: A recent study includes a graph which shows that some 90% of appraisals hit the sale price exactly, or were higher, while only some 10% were below the sale price (when the sale price is known).

Is this a bias on the part of appraisers, or is the bias the cause of the system? What could possibly cause this strong upside skew?

First, ignore the ongoing pressures from the entire ‘loan industry’ to make the loan, make the commission, make the quota, make the bonus, and look successful. Ignore the claimed purpose of the public trust (of our quasi-governmental standards and licensing quagmire).

The goal of protecting the public trust failed, and will fail again— this time with different excuses and blaming— but it will fail again.

Let’s look at some underlying economic truths and social/governmental policy. What economics and public policies come into play here? Three come to mind immediately:

To read the full, very interesting post click here

My comment: When I started my appraisal business in 1986, I was told by local very experienced appraisers to appraise at the sales price or I may be kicked off a lender’s approved list. Of course, since I was trained at an assessor’s office, I was shocked and refused to do this… There was always another lender client I could get.

Dell’s blog has very short posts. My June paid newsletter will have a much longer article written by him: “Old Versus New: Conflict or Opportunity?” It has a brief look into the past, including a photo of an acoustic coupler for connecting to remote sites. Plus, of course, comments on the future! I remember 30 baud transmission rates in the early 1980s connecting from my home PC to my company’s servers;>

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Posted in: adjustments, bifurcated appraisals, commercial appraisal, humor, hybrid appraisals, Mortgage applications, real estate market, state appraiser regulators, Uncategorized, weird properties

5-24-19 Newz: Hybrids the new normal? – $9 million lot – Refi boom over?

Are you violating USPAP every day?

If you pick comps the old way, you may be violating USPAP every day!

Excerpts: (In the past) Data was hard to get. I was taught it was only necessary to use only three or four comps. And only a few comps were available. I did learn the importance of bracketing from my trainers (it was nowhere in my appraiser education). I was diligent, and of course, I picked my necessary and available comps carefully.

Then things changed. No one noticed. MLS came on line. Income properties came online. Public records came online.  All relevant sales became available. Instantly. Without thinking, I ignored the “as available” rule. But stuck to the ‘as necessary’ rule. And heck, everybody used just three comps. In fact, USPAP says I should do what my peers would do. And they all used just three or four.

So, what changed?

Today in most areas, all the sales are available. But are they necessary? Well no. All my peers use just three or four, so it is ok. But what if I want to do more than achieve credible results?

To read more, click here

My comment: I love George’s Most Excellent headlines plus his writings!! His blog posts are short, as they should be. But, sometimes we want to read more. The June issue of the paid Appraisal Today will have his 6-page article: “Old Versus New: Conflict or Opportunity?” about the past, current and future in appraisal analysis. Very interesting!!

Read more!!

Posted in: appraisal business, hybrid appraisals, unusual home, unusual homes, va

5-17-19 Newz: Dancing and Crooked Houses – Will Appraisals Be Transformed??

Will Fintech Transform/Disrupt Appraisals?

Bifurcated appraisals is the “tip of the iceberg” in changes coming to lender appraisals

I recently attended Jeff Bradford’s excellent presentation on coming changes in the type of valuation used in the residential mortgage industry. I also attended a webinar “New Valuation Trends Disrupting the Industry” that focused on the lender side, especially loan originations. Both saw significant changes coming in the next 5-10 years, going from legacy to digital lending that will transformational.

Both used the term “Fintech” regularly.
Here are two definitions “computer programs and other technology used to support or enable banking and financial services” and “fintech is one of the fastest-growing areas for venture capitalists”. I have written about several VC funded appraisal companies in this newsletter, both residential and commercial, working on new ways to make appraisals more efficient.

Both presentations talked about many ways, such as using AI, photos and data to evaluate interior condition, estimating square footage without measuring, “real time” google earth, etc.

I will be writing about both presentations in the next month’s issue of the paid Appraisal Today.

For more info, google Fintech and mortgage lending and/or Fintech and mortgage lending appraisals. FYI, I did not know what fintech referred to and had to google it after the presentations;>
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Read more!!

Posted in: hybrid appraisals, marketing, mortgage loan volume, real estate market, unusual homes, weird homes