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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.

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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.

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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!

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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

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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!!

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

5-10-19 Newz: Fannie Changes – Appraisal Changes – Very Crooked House

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/

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

5-3-19 Newz: AMC Shockwave – Zillow Accuracy – 25 Appraisal Errors

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.

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

4-26-19 Newz: Praising Appraisers – Hobbit Houses – New York AMC law

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.
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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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