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Bias in Housing is Not Appraisers’ Fault

Racial Bias in Real Estate: Is it the Appraisers’ Fault?
The best analysis I have ever read. 

By Maureen Sweeney, SRA

Bias in Housing is Not Appraisers’ Fault

Excerpt: The appraiser must be independent, impartial, and objective. In a mortgage transaction, the appraiser evaluates the property that is to be used as collateral in a mortgage finance transaction. The appraisal is provided to the lender, who uses the appraisal as one of the many criteria used to underwrite the loan and determine if a mortgage loan will be funded or not. Contrary to what some may believe, the appraiser does not make underwriting or lending decisions.

Discrimination, including the long list of anti-cultural, anti-national, and anti-ethnic terms, is a multi-layered, multi-cultural, and multi-generational issue. The systematic, historic, and institutional causes of the various business and government policies and practices need to be addressed and cured. We do not blame the doctor for a cancer diagnosis.

We do not blame the journalist as the cause of the natural disaster that is reported on the evening news. Why is the appraiser blamed for reporting on the real estate market?

To read more, click here

My comment: By far the best, understandable analysis I have read. No whining or ranting. Many appraiser comments and forwarding. Comprehensive post with many references. I had not heard about some of the references. Appraisers are not the problem. We have been told for many decades to be knowledgeable and aware of Fair Housing issues.

Appraisal Business Tips 

Humor for Appraisers

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Posted in: george dell, rental market, statistics, USPAP

Appraiser Capacity During the Pandemic

Spotlight: Appraiser Capacity During the Pandemic

June 16, 2021 

By Danny Wiley, Senior Director of valuation for Single-Family Credit Risk Management

Excerpt: 2020 – and the early part of 2021 – have shone a bright light on a topic that’s been a growing concern – appraiser capacity. While the scope of that concern has been different throughout the country in recent years, it’s now been brought to the forefront for every state. The pandemic fueled regulation which lowered already-low interest rates and, for a portion of homeowners, home-improvement-related refinances combined with additional factors to create a perfect storm for record appraisal volume – without a corresponding increase in the number of licensed appraisers.

The majority of the states comprising the list of the top 10 highest average GSE appraisals per appraiser were often situated in the western part of the country – and also, not surprisingly, included some of the more populated states, including California, Texas, Michigan, Arizona and Colorado. This group ranged from Ohio (165 average appraisals per appraiser), Illinois (171) and New Jersey (174) at the low end to Utah (233) and Texas (207) at the top end. Overall, the appraisers on this list were averaging about 14-19 appraisal per month from 2012-2019.

As you can see, the workload quickly escalates at this end of the spectrum – and, as you’ll find out below, 2020 showed us that a perfect storm of factors can make the situation much worse.

To see more graphs and read more, click here

My comments: Maybe someday lenders will allow trainees to sign. The Very Best Way to solve the appraiser shortage. The significant AMC hassles mean appraisals take more time.

A subscriber called me recently. She got a request for an appraisal of a home with a subsidized purchase price (Low-moderate income). The AMC appraisal request did not disclose this. She left messages to 5 of the AMC reviewers and did not get a callback. I suggested telling the AMC to get another appraiser. The easiest reason is usually to say she is not competent as the reason.

I have appraised them before. They are complicated. Typical restrictions on price if sold, etc. I was working for a local lender and contacted the very experienced chief appraiser to see what they needed and if they want to lend on these types of properties. Many appraisers are giving up on working for AMCs and quitting or retiring.

 

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Posted in: appraisal business, bias, liability

Zoning and Appraisals

The Infamous History of Zoning in the Housing Industry (Video)

Excerpts: History of zoning in the housing industry and how past practices shape the problems we are currently experienced today.

What was the purpose of zoning in the very beginning? How exactly were these practices harmful to people of color? What are some of the problems we see today because of this? These questions and much more will be answered.

To watch the video, click here

My comment: A controversial topic. Today this often involves “downzoning,” allowing for properties to have more than one unit or more density – apartments, condos and townhomes.

Experts Say Zoning Changes Are Most Effective Path to Boost Housing Supply for a More-Balanced Market

Excerpt: A Zillow survey of economists and other real estate experts finds high costs are expected to slow construction and may lower homeownership among today’s 30-somethings. Relaxing zoning rules is what the panel says would be most productive to increase new housing supply.

Other ways include:

  • Ease the land subdivision process for landowners
  • Relax local review regulations for projects of a certain size
  • Accelerate adoption of new construction technologies (e.g., modular building, 3D printing of certain components)

To read more, including details and the full list of survey suggestions, click here

Zoning in the Appraisal Process

Appraisal Business Tips 

Humor for Appraisers

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

Appraising vs. the Public Good?

Has Appraising Failed the Public Good?

by Steven R. Smith, MSREA, MAI, SRA

Excerpts: The term Public Good is in the opening paragraph of the Uniform Standards of Professional Appraisal Practice (USPAP). An appraiser friend once wrote that our regulations and guidelines are intentionally ambiguous—and that may be. But what is crystal clear to me is that the industry has put the interests of its clients before the public good.

The Public Trust statement and the Ethics Rule have been largely ignored over the years with loan production put first…

What can an individual appraiser do to support the public good, even before they start an assignment? For me, the answer always has been to appraise the client and the appraisal assignment. There are some clients and assignments that simply should be avoided because of the wants, needs and desires of the client, with respect to the assignment results.

To read more, click here

My comments: I have known Steve Smith for a long time. To read more comments from Steve and other savvy appraisers, join the National Appraisers Forum, an email discussion group. I have been a member since it started. It is my “go-to” resource for appraisal topics. Moderated. Very different from Facebook and other appraiser online discussion groups where filling out forms and dealing with AMCs are discussed.

The future of residential appraising

Appraisal Business Tips 

Humor for Appraisers

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Posted in: appraisal, appraisal business, bias, cost approach, liability, trainees, USPAP

What Types of Sales For Appraisals

Arm’s Length or Another Type of Sale? The 7 Sale Types Explained

What types of sales for appraisals

Excerpts: As a real estate appraiser, whether you’re considering the current terms of sale or analyzing previous sales of the subject property or comparable sales, it is imperative to know whether a sale is an arms-length transaction or a different type of sale. Sales due to a job relocation, estate settlement, foreclosure, or divorce may sell for less than the property’s market value.

By knowing the type of sale, you are better able to reconcile a current opinion of market value that falls above or below a current or recent transaction for the subject property.

Here are the seven valid sale types, explained in detail below:

  • REO sale
  • Short sale
  • Court ordered sale
  • Estate sale
  • Relocation sale
  • Non-arm’s length sale
  • Arm’s length sale

To read more, click here

My comment: Worth reviewing. Some good tips, especially for today’s crazy sales market!

Using home’s previous sales in appraisals

Appraisal Business Tips 

Humor for Appraisers

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Posted in: adjustments, appraisal business, FHA, george dell, USPAP

What Should Appraisers Wear?

What Should Appraisers Wear?

Excerpt:

Professional Dress

When we are observing properties, it is important that we dress professionally. If we are doing an appraisal for lending, we are a representative of our client. Although we are not an employee of the client, we do represent them. Often, we are the only person actually seen by participants in the transaction.

Photo above by BBH Singapore on Unsplash

Also, we represent ourselves, our business, so we want to dress professionally. We are professional licensed appraisers performing our work and should look as such. That said, what works for walking around properties, in between bushes, in the mud, etc.?

To read more and add your comments click here

My comments: Very interesting. From a female appraiser perspective, but applies to guys also.

Over my 45 years of appraising, I had differences in what I wear, from very professional (commercial) to casual for protection from bushes, dogs, etc. For residential appraisals, I prefer to keep my clothes from being damaged (heavy pants, strong jacket, collared polo shirts, and very sturdy shoes) from gravel, unknown stuff under weeds in the back yard, etc.). I live in a mild Mediterranean climate, so I don’t do much else except raincoats and a heavier jacket.  I don’t even want to think about snow, slush, and mud!!

Appraisal Business Tips 

Humor for Appraisers

Wearing shoes in a house for appraisal(Opens in a new browser tab)

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

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

Tips on doing appraisals for AMCs

Top 10 Tips for Working with AMCs

Excerpt: 6. Make appointments quickly

Schedule appraisal assignments as you receive them, within 24–48 hours. Many AMCs will score you on this task. If you’re working in a small area, and you get two assignments in one day that are close together, make the appointments. Get them on the books and schedule them as quickly as possible.

7. Update the AMC with any delays

Be sure to update the client if any delays or problems come up during the appraisal process. See item #2 above: Update your order statuses. This will preserve your SLAs with AMCs.

To read all the tips, click here

My comment: Nothing new, but some good reminders. Of course, you may not agree…

Appraisal Business Tips 

Humor for Appraisers

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Posted in: adjustments, AMCs, appraisal waivers, george dell, hybrid appraisals, real estate market

Appraisers and The Psycho Kitty

Favorite Crazy Appraisal Stories – The Psycho Kitty

Excerpt: Psycho Kitty

I had an appointment at a home in the country out in the woods. The access instructions said the cat MIGHT be caged. Got to the home and the cat was at the front door and hissed at me as I went in. I tried to make friends with the cat, but it didn’t work, so I ignored the cat and started my inspection.

As I came out of the first-floor master, he was waiting. He stood on his hind legs, teeth showing, hissing, and came at me. Once again, I used my clipboard and ran to the laundry room where I was able to shut the door. I was safe…

To read more strange and/or funny appraisal stories, click here

My comment: We all have appraisal stories, of course!! In my 45 years of appraising I have never been attacked by a cat. My creepiest cat encounter was appraising the home of a cat foster parent for a local animal shelter. Large outside cat enclosure full of cats, multiple cats on top of dressers and other places, looking at me (looked like they were hungry). I wish I could forget about all the cat eyes looking at me :<

Appraisal Business Tips 

Humor for Appraisers

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Posted in: appraisal how to, appraisal waivers, humor, real estate market, state appraiser regulators, statistics, unusual home, waivers

What’s Happening in Appraisal Now?

The State of the Appraisal Industry

Jonathan Miller speaks about new appraisers and other topics 

Video – 29 minutes

Miller is an excellent speaker and worth listening to. He discusses mostly getting new appraisers (first 15 minutes or so), after commercial break, discusses tips on non-lender work and other issues.

My comments: I don’t like the term “appraisal industry” and prefer “appraisal profession.” I am an “old-timer” of 45 years and have always thought of myself as being in a profession.

I have been reading Miller’s Housing Notes for a long time. Lots of graphs from his markets, and he often has fun, strange, and controversial comments on appraisal issues.

To subscribe to his posts, click here

 

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 unusual homes, FHA and Fannie changes, crazy real estate market, mortgage origination stats, etc.

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Posted in: Fannie, FHA, real estate market

The UAD and Appraisers – Past, Present, and Future

The UAD and Appraisers – Past, Present, and Future

30 minute video

Speakers: Sean Murphy and Danny Wiley of Freddie Mac

Excerpt: They offer some insightful looks into the process and delve into the specifics that appraisers need to know.

What are some of the key updates for 2021? What can appraisers expect with these changes in the UAD? How will these changes impact the appraisal industry? These questions and much more will be answered between Sean, Danny, and Joan (moderator) as they dive into more about the UAD and Freddie Mac.

 

If it does not display, to watch the video, click here

My comments: Danny Wiley is an excellent speaker (starts after the first speaker). Worth listening to. Wiley is Freddie Mac’s Senior Director of valuation for Single-Family Credit Risk Management. Sean Murphy is the Credit Policy Risk Analytics Manager. Danny has been around for a long time, starting as a fee appraiser. He knows what is happening and what it means for you.>

Appraisal Business Tips 

Humor for Appraisers

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

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Posted in: appraisal business, bias, UAD, unusual homes