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Appraiser values are developed and are not guesses

By on June 21, 2019   /  Leave a comment

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. Appraiser values are developed and are not guesses.

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.

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

Zillow CEO sold his home for 60 percent of the Zestimate

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Posted in: adjustments, appraisal business, appraisal regulations, bifurcated appraisals, Fannie, Mortgage applications, mortgage loan volume, real estate market, unusual home
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Suburb not well defined for appraisals

By on June 14, 2019   /  Leave a comment

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. But, suburb not well defined for appraisals.

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!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Posted in: appraisal regulations, Fannie, FHA, forecast, lender appraisals, mortgage loan volume, real estate market, weird properties
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Price per square foot not very reliable for appraisals

By on June 7, 2019   /  Leave a comment

Why price per square foot is not the appraisers choice

By Rachel Massey

Excerpt: Often, buyers and sellers are under the impression that it is simple to price a house by its square footage. Nothing is further from the truth, unless of course, all the comparable properties considered are within a couple square feet of each other and have the same quality and condition and are in the same immediate neighborhood with no variation in the value of the site.

Underneath all is the land. This means that a house that sits on a hypothetical 60×120 sqft site should have the same underlying value if the house were 1,000 sqft or 2,000 sqft. If land is selling for $50,000 for this 7,200 sqft lot, then the value of the land does not change in value because it has a larger or a smaller house on it.

For more information and to check out the graphs click here

My comment: Good explanation and graphs. Written for buyers and sellers but a good explanation when you are trying to explain why Price per sq.ft. often is not reliable. Also, a very good blog post marketing to buyers, sellers and real estate agents.

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

When 1,000 square feet doesn’t count in an appraisal(Opens in a new browser tab)

What is Included in Appraisal Square Footage?(Opens in a new browser tab)

Tax records and Square Footage in Appraisals(Opens in a new browser tab)

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Posted in: Fannie, hybrid appraisals, lender appraisals, mortgage loan volume, real estate market, square footage, Strange homes, unusual home
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Why do appraisers hit the sales price?

By on May 31, 2019   /  Leave a comment

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;>

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

What to Do When Your Appraisal Is Under Review(Opens in a new browser tab)

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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
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Don’t pick appraisal comps the old way

By on May 24, 2019   /  Leave a comment

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. Don’t pick appraisal comps the old way.

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!!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Posted in: appraisal business, hybrid appraisals, unusual home, unusual homes, va
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Dancing and Crooked Houses for Appraisers

By on May 17, 2019   /  Leave a comment

Krzywy Domek, The Very Crooked Little House of Sopot, Poland

Woops!! I forgot to include this in last week’s newsletter!!

Just For Fun!!

Excerpt: In 2004, the Polish architecture firm Szotynski & Zaleski built a wonderfully illusory building in Sopot, Poland that doesn’t quite look real. The design was based upon whimsical, fairy tale sketches of artist Jan Marcin Szancer and is quite aptly named “Krzywy Domek” or crooked little house. The building’s front facade is made up of crooked lines and distorted shapes that recall childhood cartoons, but the back of the building is a rather standard setup that leads to the main shopping area.

Check out the videos and fotos.

My comment: Fascinating!! I think this is the most crooked house I have ever seen. No photoshopping done on fotos!!
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The Famous Dancing House of Prague by Frank Gehry

Another Just for Fun House!!

Excerpts: The building is also affectionately known as “Fred and Ginger” due to its resemblance to a perpetually swaying couple. Like the Crooked House of Sopot, Poland, the unusual lines of the building stand out from the rest of the neighborhood.

Lots of fotos at:

Brief summary of details: http://architectuul.com/architecture/the-dancing-house  Can also google it for lots of background info.

My comments: Take a break from writing up your appraisal reports and Take a Look at the photos!! And be glad you don’t have to appraise a house that looks like this ;>

Be sure to scroll down to the bottom of the post to see photos of Ghery’s other strange buildings!!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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

Read more!! →

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

By on May 10, 2019   /  Leave a comment

How is Appraisal Gonna Change?

By George Dell

Excerpt: What new “appraisal methods and techniques” have we seen? As I speak to reviewers who see valuations from around the country, there seems to be a degradation of quality. Less analysis rather than more. Less explanation rather than clearer logic. More “trust me” and less “see my reasoning.”

What does the world really need? Trust my opinion-or see the result? Trust my comps-or see market parameters.

Competitors for valuation, risk, and investment needs want “better, faster, cheaper.” For now, lets just look at “better.” What is “better?”

“Better” is actually fairly simple. There are only three parts: 1) is the right question being asked; 2) is the result true (accurate); and 3) how sure (precise) is the result? So, let’s look briefly at each of these needs, and how each can be helped with today’s technology.

https://georgedell.com/how-is-appraisal-gonna-change/

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Posted in: adjustments, appraisal how to, george dell, marijuana license, Mortgage applications, mortgage loan volume, Uncategorized
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Residential Appraisal Errors

By on May 3, 2019   /  Leave a comment

25 Common Errors in Appraisal Reports

A compilation of the most common errors and deficiencies found in appraisal reports by reviewers, regulators, and appraisal boards. Residential Appraisal Errors

Here are a few:
– Not providing enough analysis for the intended user or reader to understand the report properly.
– Inconsistencies between the description of the subject property in the improvements section and the photographs, sketch, sales comparison grid, and other areas in the report.
– Inappropriate use of boilerplate commentary in the appraisal report to describe the neighborhood or to explain the reconciliation of the sales comparison approach.
– Failure to summarize the analysis and rational that supports the Highest and Best Use opinion.
– Not complying with the most current USPAP.
Read the full list here:

My comments: Reminders are always good. For unknown reasons, I don’t see much CE or writing on these problems. These apply to all appraisals because we are licensed, not just lender appraisals.
It was soooo nice in the “old days” before licensing ;> Two Rules: Tell the  truth and disclose what is bad. No USPAP changing every two years, overzealous appraisal boards, renewal fees, etc.. Of course, the reason we have licensing is the lender mess in 1989, resulting in FIRREA,  regarding bad commercial property development loans by S&Ls
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Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

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Posted in: AMCs, appraisal management company, Mortgage applications, real estate market, weird properties, zillow
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Appraising Hobbit Houses

By on April 26, 2019   /  Leave a comment

Hobbit Houses in Charlevoix, Michigan

Just For Fun!!

Excerpts: Growing up in northern Michigan in the early 1900s, Earl Young was obsessed with boulders. Glacial boulders, to be exact-ones moored in fields, forests, and on lake coastlines across the state thanks to the slow march and retreat of glacial ice during the Precambrian age. Appraising Hobbit Houses in Michigan is a challenge.
The homes he designed will stop you in your tracks, as one did the last time I was there, passing by on a bike. Call them “mushroom houses,” “hobbit houses,” “boulder houses”; everyone has a different name for them. They’re often described concisely, if vaguely, as “organic.” Though some see Frank Lloyd Wright’s influence, they’re distinctly Young.

Fascinating! Lots of fotos and info at:
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Lord of the Rings – Hobbit houses from the movie(Opens in a new browser tab)

Hobbit House of Montana(Opens in a new browser tab)

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

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

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Posted in: AMCs, Appraisal Foundation, Appraisal Qualifications Board, appraisal regulations, Appraisal Standards Board, marketing, Mortgage applications, mortgage loan volume, Strange homes, unusual home, unusual homes, weird homes
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Reliable MLS Data important for appraisals

By on April 18, 2019   /  Leave a comment

The Importance Of Accurate MLS Information

Accurate MLS Information Is Necessary For Reliable Appraisals

By Tom Horn

Excerpt: Topics include
– Accurate MLS Information Helps With Adjustments
– Square Footage Should Be Accurate
– You Can’t Measure It If It’s Not Described
Read the full article plus the comments.

My comment: Written for real estate agents. Maybe you can use some of it in your appraisal blog focusing on real estate agents. Of course, with Big Data, MLS inaccuracies are propagated and used for AVMs, including CU’s AVM.
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Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

Generally speaking, how accurate do you find MLS data in your area?

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Posted in: Appraisal Foundation, Mortgage applications, real estate market, state appraiser regulators, Strange homes, unusual homes, weird homes
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