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2024 USPAP For Appraisers

By on October 6, 2023   /  Leave a comment

2024 USPAP

Source: Appraisal Foundation

The 2024 Uniform Standards of Professional Appraisal Practice is now available for purchase in physical and digital formats.

This year, for the first time, you can purchase just the book of USPAP standards for $35. This covers all Definitions, Rules, and Standards.

We also have a new product launching this year. All Advisory Opinions, Frequently Asked Questions and the recently launched Reference Manual will now be part of a standalone publication called the 2024 USPAP Guidance and Reference Manual.

This change reflects the maturation of USPAP, resulting in longer effective dates. The ASB will continue to review USPAP for changes when necessary but will shift much of its focus to providing more guidance to the marketplace. Appraisers can now buy one set of USPAP standards and keep that publication on their bookshelf for as long as that edition is effective and purchase just the Guidance and Reference Manual as needed for coursework and updates.

If you like having the USPAP standards and guidance material linked, we still have you covered. You can also purchase a linked digital version of the eUSPAP and Guidance and Reference Manual and get seamless access across both documents.

To read the full letter, click here

My comments: USPAP 2024 is effective January 1, 2024. I’ve been waiting for a very long time for longer than 2 years between effective dates. Also, there is no ending date for the 2024 version.

When USPAP started, it was very exciting as appraisers had to decide what needed to be changed or added. Lots of people wanted to be on the ASB. Over time, I quit following the updates as there were few significant changes.

2024-2025 USPAP 7-Hour Update Course is being approved or is approved, in the states. I assume a new class will be required every two years in the future. Gotta keep that money coming into the Appraisal Foundation, I guess…

I really hated the classes when there was not much to say except a rehash of the past. I taught USPAP before the ASB told you what to teach. It was my favorite class as we could focus on issues in our current market. Of course, now there is appraiser discrimination, the current hot topic. Personally, I think there is very, very little intentional discrimination by appraisers, compared with the intentional discrimination by lenders (and others). “Red Lining” still exists, some are in the same locations.

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SFR with ADU or Two Units?

By on September 29, 2023   /  Leave a comment

How to Identify a Single-Family with ADU vs. Two-Family Property

By McKissock

Excerpts:

The presence of an additional living unit can complicate the appraisal process. It may make it difficult for you, the appraiser, to know how to classify the subject property. How do you know whether you’re dealing with an accessory dwelling unit (ADU) or a second unit?

Topics include:

  • ADU meaning and types
  • What is a two-family property?
  • How to tell if it’s a single-family with ADU vs. two-family property
  • It’s more likely to be a two-family property vs. single-family with ADU if:
  • It’s more likely to be a single-family with ADU vs. two-family property if:

To read more, click here

My comments: ADUs have been a controversial topic for a long time in California as state and local governments kept changing their ADU requirements. Finally, what they are and where they can be built became standardized. Today, they are becoming popular to get extra rentals in markets low on housing. Most recently, there is a possible regulation to sell them separately from the main house. Another tricky HBU issue in California!

Check the regulations in your state, county, or city.

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NAR Member Survey on Appraisal Data Collectors

By on September 22, 2023   /  Leave a comment

NAR  Member Survey on Data Collectors

Excerpts: In May 2023, NAR surveyed its members pertaining to data collectors in the appraisal process. Here are a few of the many survey results.

Survey respondents

Sales agents accounted for the largest proportion, with 45% of participants holding this license. Brokers followed with 24%, and appraisal-certified professionals comprised 14% of the respondents. Broker-Associates and Appraisal Licensees accounted for 13% and two percent, respectively, while the remaining two percent reported holding other types of real estate licenses.

According to the survey responses, the majority of participants (76%) perceive the quality of property data collected by data collectors to be lower than that collected by appraisers themselves. Conversely, 23% of respondents believe that the quality of data collected by data collectors is comparable to that of appraisers.

The survey findings indicate that 30% of respondents reported that a data collector had given them the impression that they were the appraiser or had a role other than merely collecting property data.

Fifty-one percent of respondents expressed safety concerns with the data collection process.

To read more, click here

My comments: Now we know what NAR members think about it. Not very positive. I was surprised at how negative they were. Read the full report. Very interesting. I am working on an article on Hybrid Appraisals for the November issue of Appraisal Today. To me, the big issue is who is doing the inspections. Only appraisers do the appraisals. I see very different levels of inspectors.

Before Covid, I talked with various AMC upper-level managers who were testing it. What they were doing about inspectors had a wide range. They included appraisers, real estate agents, and someone with a week, a month, or online video training. They should definitely not be paid the same. An AMC can offer different levels to their clients, depending on how much reliability their lender customers want or need.

On a more positive side, I have done thousands of drive by appraisals since 1986. I drove by the house and looked at what was nearby, etc. For example, I’m appraising a Victorian built before 1910. There is no way to know what the inside looks like or the foundation (many are brick). Using MLS photos is a joke, as real estate agents don’t take photos of defects. A buyer gets a seller’s disclosure statement for that information. I would be more comfortable if someone used an app that was set up to take specific photos, do floor plan, etc. At least I would have some independent photos.

Data Collectors: Appraisers vs. Uber Drivers

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NAR Appraiser Survey July, 2023

By on September 15, 2023   /  Leave a comment

NAR Appraiser Survey July, 2023

In July 2023, NAR Research conducted a survey of all 9,800 appraiser members and 50,000 randomly-selected residential-focused non-appraiser members.

The survey results had a comparison of 2022 and 2023, which was very interesting.

  • Appraiser Topics
  • Greatest challenges in business
  • Lesser challenges with business
  • Valuations
  • Comfort with valuation tools
  • Radius in which appraisals are conducted
  • Radius by area type (rural, small town, urban, resort, suburban)
  • How often asked to conduct appraisals outside geographic area/Property type of expertise

Sample: Greatest challenges in business

(AMCs) in general among their greatest challenges. This year, this option was broken into three separate AMC-related issues. Forty-four percent cite at least one of these, with 28 percent specifically citing AMC requests for revisions.

This year, however, the single greatest challenge, cited by almost half (47 percent), is “fee pressures,” which, based on comments, is also related in many cases to pressure from AMCs. This is up sharply from 27 percent last year.

One-quarter (26 percent) cite technology fees (not an option in 2022). Appraisers are less likely this year to cite expanding regulations/interpretations of regulations, lender requirements, pressure from real estate agents/brokers, and liability concerns.

The 21 percent who cite other challenges are most likely to cite lack of business/slow market, rising interest rates, low fees, and to reiterate pressure from AMCs.

A very good graphic is included for each section.

To read the report, click here

My comments: Read the appraiser sections in the long report. Fortunately, appraiser results are in the first section. I read the full survey. Most of the questions were for all NAR members, both appraisers and non-appraiser members. Some may be of interest to you. Much of the appraiser results were what we already sort of suspected, but it is good to see actual survey results.

NAR Appraisal Survey 2022

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NOTE: Please scroll down to read the other topics in this long blog post on  GSE Appraisal Independence Update, Private money lender appraials, ADUs, adjustments, unusual homes, mortgage origination

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Appraising Airbnb Properties

By on September 8, 2023   /  Leave a comment

Problems When Appraising Airbnb & VRBO Properties

by Richard Hagar, SRA

Excerpts: Residential appraisers are being asked to appraise these properties, along with their elevated income, as “typical” residential properties. These requests involve homes in numerous vacation spots ranging from Sedona, San Diego, Montana, Lake Tahoe, to Miami, New York, Seattle, New England, and every vacation spot in between.

Appraisers are being told by their AMC clients and loan officers to appraise these as residential properties. They are told it’s fine to use the total yearly income and “simply divide by 12” to produce a monthly income that can be used to value these places using a Gross Rent Multiplier (GRM). But is it really that simple? Short answer—no. Long answer—it’s complicated.

First of all, the value of an STR has three major components:

1) the real estate,

2) personal property, and

3) the business.

The business side includes replacing worn out or damaged furniture, window coverings, bedspreads, towels, the property’s internet listings, credit card processing, weekly cleaning, and daily management decisions involved with running the STR business. On top of that, what if the credit card is stolen and the last party animal damaged the house or fell off the deck and wants to sue the owner for a defective deck railing? STRs are far more than real estate; they include a business also known as a “growing concern” or intangible property.

To read more, click here

My comments: If you want to know more, before (or after) accepting an Airbnb appraisal, definitely read this article. The article is one of the best I have read, and includes many of the AMC, USPAP, GSE, etc. issues. The article has a link to Richard’s webinar on the topic. I have known Richard Hagar for many years. He is one of my go-to appraisers for these types of issues. He is an excellent teacher. Taking his classes is definitely worth the time.

Residential Appraisals and Airbnb Income?

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Appraising Unusual Properties

By on September 1, 2023   /  Leave a comment

Appraising Odd Properties: What’s the Weirdest Property You’ve Appraised Recently?

McKissock Survey

Excerpts: As a professional appraiser, you’ll likely encounter some strange properties from time to time. Odd properties tend to be challenging yet rewarding in terms of the fee. To gain insight into these types of assignments, we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” Thank you to the many respondents who shared stories about the most unique and complex properties they’ve come across lately!

Most of them fall into these categories:

  • Challenging and complex properties
  • Unique property types
  • Properties with atypical characteristics
  • Historic properties
  • Rural properties
  • Non-compliant properties

“A yurt, a space dome, and a two-story single-wide mobile home. This was two single-wide mobile homes stacked on top of each other with a spiral staircase that was encased in semi tractor trailer chemlite panels. The stories behind them are lengthy.”

 

“It was a house on three lots. It has been added on to over the years. The GLA is 3200sf and there are two separate basements with a total 1100sf. There are funky angles, two kitchens next to each other divided by a wall. It was only 3 bedroom, but had 3.1 bathrooms. It had 3 family rooms on the GLA. Lots of weird spaces.”

“A custom-built art school built by artist named Solonevich that is used as a single-family dwelling. Every couple feet was a random angle. Nearly impossible to measure accurately.”

 

To see more examples, Click Here

 

My comments: I was inspired by this post and included two unusual homes in this newsletter. The one below with a jail is a good example! Down the page is a $1 listing.

If the appraisal is for lending purposes, be sure to find out if it is “lendable” before spending much time on it. Lenders and CU/AVMs, like nice newer tract homes.

 

Whenever two appraisers meet, there is never a lack of conversational topics! This one is very popular! Be sure to get a higher fee, of course. These properties are an excellent learning experience. If your business is slow, now is a good time to do the “tough ones.”

Highest and best use are often the issues that are the most tricky for me, especially if you have to consider non 1-4 unit uses. HBU is a regular issue for the older commercial and mixed-use properties I appraise.

Every unusual home has appraisal comps

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NOTE: Please scroll down to read the other topics in this long blog post on  MLS  hacked,  Wells Fargo discrimination,  unusual homes, mortgage origination

 

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Appraiser Salaries

By on August 25, 2023   /  Leave a comment

What’s the Average Real Estate Appraiser Salary?

Excerpts: On average, appraisers earn $102,620 a year. However… the average appraiser salary varies significantly across license levels.

Trainee appraisers earn an average annual income of about $53K. Licensed appraisers earn approximately $89K per year. Certified residential appraisers earn more than $101K annually. And certified general appraisers earn the most, making approximately $145K per year.

Like with many professions, the more time you put in, the more your hard work pays off. Average earnings tend to increase the longer an appraiser is in the profession, with the greatest jump being from 0-2 years of experience to 2-5 years of experience. Appraisers who have put in 16+ years in the appraisal industry tend to make the most ($118K), while those who have less than 2 years of experience earn the least ($43K).

To read more and see the charts, click here

My comments: Mckissock results are from their own survey of appraisers. I have seen this type information before, but mostly from contacting companies, recruiters or government databases. Most res appraisers are fee appraisers, but this lets you know the relative income levels based on various factors.

If you’re thinking about upgrading your license, this illustrates the income levels. For example, I do both commercial and residential appraisals, a significant positive factor in my income. When one is slow, I do more work in the other. Of course, if you are only licensed you should upgrade ASAP.

Relatively few residential appraisers have salaried jobs, but they are available at lenders, AMCs, assessors, etc.

My first appraisal job at a county assessor’s office in 1975 paid $900 per month. I would have never become an appraiser without a salaried job. Also, due to “affirmative action” at that time, women were hired for the first time as appraisers at assessor’s offices and lenders. An appraiser I know was hired by FHA as an appraiser trainee. She was previously a secretary. There were few women at my appraisal classes.

Until the early 1990s, when lenders outsourced appraisals to fee appraisers, most res appraisers had staff lender jobs.

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Apps for Appraisers

By on August 18, 2023   /  Leave a comment

7 Must-Have Apps for Appraisers

By: McKissock

Excerpts:

1. Dragon Anywhere

Dragon Anywhere is a dictation and speech-to-text app that allows you to create, edit, and share documents from your mobile device. This professional-grade dictation service could save you tons of time on typing reports and taking notes in the field. The company boasts a 99% accuracy rate as well as powerful voice editing capabilities. Dragon is very well-liked among appraisal professionals, making it number one on our list of must-have apps for appraisers.

6. Genius Scan

This app gets a lot of love from appraisers. Genius Scan makes it easy to scan, upload, and share documents using your mobile devices. It can even scan handwriting and convert it into text. This tool is excellent for making copies of tax records, floor plans, etc. Over 200 million users and thousands of small businesses are currently using Genius Scan. This app could be a lifesaver for your workfile creation.

To read about the other 5 apps, click here

My comments: Worth checking out. When business is slow is an excellent time to look for new apps, learn how to use your MLS and forms software, etc. etc. Dragon has been around a long time and is popular with commercial appraisers.

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Fannie: Words and Phrases in Appraisals

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ChatGPT for Appraisers

By on August 13, 2023   /  Leave a comment

ChatGPT: Valuable Tool or a Replacement for Real Estate Appraisers?

by Dustin Harris, The Appraiser Coach

Excerpts: ChatGPT: A Game-Changer for Appraisal Work

For those who have embraced it, ChatGPT has been transforming multiple aspects of appraisal work, such as:

Appraisal Work:

  • Writing narrative
  • Market analysis
  • Market-specific information
  • Descriptions of adjustments
  • Terminology
  • ResearchMarketing:
  • Creating lists
  •  Writing emails and messages to current and potential clients
  • Crafting blogs
  • Strategizing networking and relationship development
  • Writing presentations for ‘lunch and learn’ events with real estate agents
  • Crafting the perfect apology letter when you upset a key loan officer in your small town
  • To read lots more, click here
  • My comments: Many thanks to Dustin for writing this article! I have not had time to use it, but have been reading and watching demos about how it can be used for appraisers for awhile. It definitely can be very useful, as Dustin explains. It can be tricky at first to use, but Dustin explains it.

I recently had to renew my California Driver’s license, as I am over 70 and had to do a written exam and eye test. I had difficulty setting up an appointment and clicked on “Chatbot”. It was much friendlier than any other Chat support I have used. I recognized the use of software similar to ChatGPT.

Appraisal Business Tips 

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Fannie: Words and Phrases in Appraisals

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The End of Lender Appraisals?

By on August 4, 2023   /  Leave a comment

The End of Home Appraisals?

By Jeremy Bagott, MAI

Excerpts: In his 1946 essay “Politics and the English Language,” the late British novelist, essayist and critic George Orwell examined the connection between political orthodoxies and the debasement of the English language. In a truly Orwellian move, mortgage giant Freddie Mac recently announced its intent to censor an arbitrary collection of words such as “desirable,” “safe,” “well-kept,” “student” and “crime” when they appear, in any context, in the hundreds of thousands of appraisal reports it relies on in mortgage underwriting. It would be hard to make this up.

As with all banned words, Freddie’s list will lead to the need to ban additional words over time as appraisers, expunging the word “desirable,” will find synonyms when analyzing market reaction to the views of two homes or to the cul-de-sac location of a home versus the midblock location of a comparable. When discussing how market participants view side-by-side school districts, appraisers will figure out they can use synonyms like “advantageous,” “preferable,” or “beneficial” instead. Soon, these words, too, will need to be banned. In a college town, the banned word “students” will become “matriculants,” a word that will likewise need to be banned.

The attack on the protected speech of independent appraisers erodes their ability to describe how the properties they appraise relate to the preferences of market participants. The censorship is part of a march toward what appraiser and podcaster Phil Crawford has coined “universal basic home value” – a utopian vision among idealogues in which government technocrats dictate the supposed value of a property using algorithms and machine learning. The censorship began with Fannie Mae, and has now predictably spread to Freddie Mac.

To read more plus appraiser comments, click here

My comment: Worth reading. Lots more AMC/lender appraisal correction requests. Last week’s email had a discussion of the “words” which got a lot of clicks by appraisers wanting more information.

The Future of Residential Lender Appraisers

Appraisal Business Tips 

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Fannie: Words and Phrases in Appraisals

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