ADU vs. Two-Family Property for Appraisers

By on November 21, 2025   /   ADUs, appraisal business, UAD 3.6   /   Leave a comment
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Newz: ADU vs. Two-Family Property,
Everyone Must Be Ready for UAD 3.6

November 21, 2025

What’s in This Newsletter (In Order, Scroll Down)

  • LIA: Protecting My Appraisal Report
  • How to Identify a Single-Family with ADU vs. Two-Family Property
  • $1 Million Midcentury Modern Ranch House on Lake Michigan Holds a Wild Surprise in the Basement
  • Top Appraisers Advise on How to Generate New Business
  • When One Bulb Fails… Why Everyone Must Be Ready for UAD 3.6 By Tony Pistilli
  • A Real Estate Agent’s Guide to Understanding the New UAD 3.6 Appraisal Report By Tom Horn
  • MBA: Mortgage applications decreased 5.2 percent from one week earlier

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SFR or 2 units with an ADU?

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

Excerpts: Across the country, accessory dwelling units (ADUs) are becoming more common. Cities and counties are updating zoning laws to encourage them, whether to increase housing supply, create affordable rental options, or allow families to live closer together. Appraisers need to understand how ADUs fit into their local markets, how they’re used and perceived, and how to properly distinguish them from true two-family properties.

The presence of an additional living unit can complicate the appraisal process by making 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? In this article, you’ll learn about ADU meaning and types as well as how to identify a single-family with ADU vs. two-family property.

Topics include:

  • What Is an ADU?
  • Do ADUs Add Value to a Property?
  • Types of ADUs
  • What Is a Two-Family Property?
  • Is It a Single-Family with an ADU or Two-Family Property?

To read more and watch an ADU video, Click Here

My comments: Good explanations of ADU issues. Well done short video. UAD 3.6 requires including details on ADUs.

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$1 Million Midcentury Modern Ranch House on Lake Michigan Holds a Wild Surprise in the Basement

Excerpts: 3 bedrooms, 2 baths, 2,568 sq.ft., 3.1 acre lot, built in 1959

Upon first glance, the three-bedroom home looks much like a traditional single-story bungalow, complete with a charming brick façade, covered porch, and red-framed windows.

But at the back of the Caledonia, WI, home, a very different reality presents itself: The dwelling actually dips down over the side of a hill, concealing a spacious lower level.

And what lies beneath in that basement story certainly has to be seen to be believed: an expansive private theater complete with tiered seating, professional lights, and a historical organ that takes center stage in the artistic space.

The lavish, one-of-a-kind music auditorium features chandeliers, a projection booth, and seating for 50. The furnishings were collected from nearly 50 different theaters across the country that were being demolished.

The focal point of the theater is the biggest Wurlitzer pipe organ ever built, which boasts five keyboards and four organ chambers.

The property “also sits on 3 acres with frontage along Lake Michigan,” Cape says.

To read more, Click Here

To read the listing and see an aerial view plus more photos, Click Here

My comment: Added value of a “basement” theater ???

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Top Appraisers Advise on How to Generate New Business

Excerpts: What are some ways appraisers can generate new business and new leads, outside of AMCs? How do the top appraisers market themselves? We interviewed three leaders in the appraisal profession to find out. Plus, we surveyed our larger appraisal community for additional tips and insights.

Keep reading to learn the most effective marketing strategies according to experts and seasoned appraisers, as well as techniques to get your name out there and make yourself more marketable.

Topics include:

  • Add Some Non-Lender Work into the Mix
  • Put Out a Monthly Newsletter
  • Build New Relationships
  • Leverage Online Marketing Tools
  • Diversify Your Client List

Survey results: Top three ways to generate new appraisal business,

  • Build new relationships
  • Diversify your client list
  • Leverage online marketing tools

To read more, Click Here

My comments: Many appraiser comments. Worth reading for new ideas or just to see what appraisers say. The survey results are interesting also. I have written many articles about appraiser marketing and non-lender appraisals in my monthly newsletter, starting in 1993.

I dropped all lender residential appraisals in 2005. The URAR was updated with codes in the sales comparison grid. I never updated my software so I would not be tempted to do them. I had been accepting non-lender appraisals since I started my business in 1986.

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Appraisal Today articles on UAD 3.6

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April 2025 – first article

New URAR What It Means for Appraisers

Fannie Q and As and other information available in April.

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May 2025

Review of Appraiser’s Guide to the New URAR Class

How to use Document F-1 to find what GSEs want in the PDF Report plus other introductory information and a review of the class.

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June 2025: What is new in the New URAR

Introduction to UAD 3.6 and more info on topics in May 2025 and Scenario SR 1 – Single Family, used in many demos and discussions. I go through every page of the 20 page document and include what is new with references document F-1

Additional PDFs (on Paid subscriber web page):

Sample Scenario SF1 (Single Family) PDF Report – discussed in this article

Appendix F-1 URAR Reference Guide v1.2 14 MB

Fannie Sample Scenario PDFs Combined 15MB All scenarios

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July 2025: From UAD 2.6 to UAD 3.6.

What appraisal software vendors are doing.

First article on this topic. I had live demos on Bradford, alamode, and SFREP. I asked them specific questions about fields. None of the vendors were “ready to go” on their software. 5 screen shots are included at the end of the article.

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November, 2025: UAD 3.6 Update – Software Vendors, Both Old and New and More Info

In October, none of the software vendors were ready to use software for completing appraisals. All are focusing on the Broad Production start date of January 26, 2026, but I don’t know who will complete the software by that date.

Recently appraiser Andy Arledge developed UAD 3.6 software. He

previously developed Appraiser Genie Software (Genie Cloud does adjustment support, Cost Approach and more) He now has Freedom Appraise software for UAD 3.6, similar to the other companies above.

Coming in the December Issue

UAD 3.6 Update – what software vendors are doing now. None are completely ready to go with a GSE approved report software, inspection app (critical) , AI, and “add ons” such as sketch software and other software such as DataMaster and Spark.

To read the full article, plus 4 more UAD 3.6 articles, plus 2+ years of previous issues, subscribe to the paid Appraisal Today at www.appraisaltoday.com/order .

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November, 2025 issue emailed on

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When One Bulb Fails… Why Everyone Must Be Ready for UAD 3.6

By Tony Pistilli

Excerpts: Imagine standing before a beautifully decorated Christmas tree, ready to flip the switch. You plug in the lights and nothing happens. You check the plug, the length of the wire and each bulb, one at a time, until you find that one tiny bulb somewhere along the strand is broken or loose, and its causing the entire string of lights from working.

Similarly, in complex systems, the weakest link often determines how well the system functions or whether the system functions at all. The upcoming mandate for the Uniform Appraisal Dataset 3.6 (UAD 3.6) and the redesigned Uniform Residential Appraisal Report (URAR) is such a system. If any single stakeholder in the mortgage/valuation chain fails to support the standard, the entire “string” of appraisal-to-loan delivery can go dark.

That’s why appraisal software, appraisers, appraisal management companies, lenders and even the GSEs, must all be certified and/or ready to go for UAD 3.6 to work as intended.

The intent behind UAD 3.6 is sound. The GSEs envision a future where every appraisal report flows through a standardized data structure, allowing automated checks for completeness, consistency, and reasonableness. This improves quality control, speeds up underwriting, and reduces repurchase risk. All good things for everyone involved.

For lenders, this hopefully means fewer delays and cleaner first time submissions. For AMCs and appraisal technology providers, it promises streamlined operations and transparency. And for appraisers, it’s an opportunity to be recognized not just as form fillers or report writers but as data professionals in an evolving digital mortgage process.

But this transformation requires total synchronization. UAD 3.6 isn’t simply a new “form.” It’s like an entirely new language and every participant must speak it fluently, from the moment an appraisal order is created to the moment the report is submitted to the GSE portal.

That undeniable interdependence is precisely why partial readiness won’t work. The system only functions when every “bulb” is working in unison.

Appraisers at the Center

Every modernization effort in mortgage lending eventually comes down to people. And appraisers sit at the center of this one – again.

Even if every system upstream and downstream is certified or ready for UAD 3.6, the entire process begins with the professional boots on the ground inspecting the property and completing the report. If appraisers aren’t trained, equipped, or willing to adopt the new framework, no amount of readiness elsewhere will matter.

To read more, Click Here

My comments: Definitely worth reading. The author has over 30 years of executive-level real estate valuation and lending experience including working with national banks, mortgage companies, federal agencies, and leading appraisal management firms. He is a certified residential real estate appraiser in Texas and is an AQB Certified USPAP Instructor.

Since May 2025 I have been writing about UAD 3.6, more recently focusing on the software vendors. Only one new vendor (Aivre) plus SFREP have GSE “approved” report software (per Fannie website) Aivre still working on their mobile app, AI features, etc.

Appraisers cannot learn how to do the new UAD 3.6 reports if the software is not available.

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A Real Estate Agent’s Guide to Understanding the New UAD 3.6 Appraisal Report

By Tom Horn

Excerpts: This update doesn’t just affect appraisers. It also changes how agents, buyers, and sellers read and understand the report.

I recently spoke with an office of real estate agents discussing the new UAD 3.6 and how it affects them. I thought I would create this post to help educate other agents who are interested in learning more about this new report format.

How It Helps Agents

For agents, the biggest benefit of the UAD 3.6 appraisal report is clarity.

It’s easier to see how the appraiser arrived at the opinion of value without getting lost in technical terms.

Here’s what that means for agents:

  • Easier conversations with buyers and sellers about how value was determined.
  • Fewer misunderstandings when the appraised value is higher or lower than expected.
  • A clearer picture of how updates and repairs were considered.

4. How It Helps Agents

For agents, the biggest benefit of the UAD 3.6 appraisal report is clarity.

It’s easier to see how the appraiser arrived at the opinion of value without getting lost in technical terms.

6. Here’s what that means for agents:

  • Easier conversations with buyers and sellers about how value was determined.
  • Fewer misunderstandings when the appraised value is higher or lower than expected.
  • A clearer picture of how updates and repairs were considered.

To read more, Click Here

My comments: A local appraiser I know gave a presentation on this topic recently. He included copies of a sample report (SR1) and used Fannie slides for illustration. He compared the current form reports to the UAD 3.6 reports. They liked the new reports much better than the old forms.

You can try doing a presentation yourself to real estate agents. Most Excellent Marketing opportunity for you. This will also help you explain the new reports to real estate agents.

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.

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 go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. We are all waiting for rates to drop lower in 2025.

Mortgage applications decreased 5.2 percent from one week earlier

WASHINGTON, D.C. (November 19, 2025) — Mortgage applications decreased 5.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 14, 2025.

The Market Composite Index, a measure of mortgage loan application volume, decreased 5.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7 percent compared with the previous week. The Refinance Index decreased 7 percent from the previous week and was 125 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 7 percent compared with the previous week and was 26 percent higher than the same week one year ago.

“Mortgage rates increased for the third consecutive week, with the 30-year fixed rate inching higher to its highest level in four weeks at 6.37 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Application activity over the week was lower, with potential homebuyers moving to the sidelines again, although there was a small increase in FHA purchase applications. Refinance applications decreased as borrowers remain sensitive to even small increases in rates at this level. The overall average loan size across both purchase and refinance applications dipped to its lowest level since August of this year, driven by another drop in the ARM share.”

The refinance share of mortgage activity decreased to 55.4 percent of total applications from 55.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5 percent of total applications.

The FHA share of total applications increased to 19.9 percent from 19.4 percent the week prior. The VA share of total applications increased to 15.2 percent from 14.8 percent the week prior. The USDA share of total applications increased to 0.3 percent from 0.2 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.37 percent from 6.34 percent, with points remaining unchanged at 0.62 (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 $806,500) decreased to 6.39 percent from 6.46 percent, with points increasing to 0.42 from 0.38 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 6.14 percent, with points increasing to 0.84 from 0.76 (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 5.83 percent from 5.70 percent, with points increasing to 0.69 from 0.64 (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 5.65 percent from 5.50 percent, with points decreasing to 0.81 from 0.85 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.

Mortgage Bankers Association

1919 M Street NW

5th Floor

Washington, DC 20036

(202) 557-2700

(800) 793-622

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone: 510-865-8041

Email:  ann@appraisaltoday.com

Online: www.appraisaltoday.com

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Top 3 Appraiser Mistakes

By on July 25, 2025   /   ADUs, appraisal how to, bias, liability   /   Leave a comment
Tags: , , ,

Newz: Top 3 Appraiser Mistakes, Bias Lawsuit Dismissed, ADUs

July 25, 2025

What’s in This Newsletter (In Order, Scroll Down)

  • LIA ad: Why Do Claims Get Settled?
  • Top 3 Mistakes Appraisers Make in Their Appraisal Reports By Bryan Reynolds
  • Founding Father John Hancock’s Boston Home Is on the Market for First Time in Half a Century — More Than 250 Years After It Was Built
  • Appraiser Vindicated: Lanham Discrimination Lawsuit Dismissed in Maryland
  • A Complete Guide to Geocodes
  • Bipartisan legislation would make it easier to finance accessory dwelling units
  • Mortgage applications increased 0.8 percent from one week earlier

Appraiser Mistakes

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Top 3 Mistakes Appraisers Make in Their Appraisal Reports

By Bryan Reynolds

Excerpts: After doing more than 2,000 appraisal reviews over the years, Bryan and his team have seen these same errors crop up again and again. Know them and avoid them.

I was an investigator for the state of Tennessee for many years. These days, I primarily help appraisers who find themselves in trouble. Sometimes we’re successful in resolving the issue entirely, or at least reducing the impact. Other times, it becomes a learning moment — we recognize mistakes, take responsibility, and strive to do better.

Mistake #1: Omitting a key statement about an extraordinary assumption or hypothetical condition

Appraisers can gain some leeway with the right scope of work, and by properly using extraordinary assumptions and hypothetical conditions. But you must meet minimum reporting requirements.

Mistake #2: Not summarizing the results of your analysis of the subject property’s prior sales

Saying “the subject sold last year for $150,000” is not analysis. That’s just a statement of fact. What USPAP requires is a summary of your analysis. You’ve got to explain what that sale means in the context of your current appraisal, not just list the data point.

Mistake #3: Including comps that aren’t really comparable

The 1004 form, or the Uniform Residential Appraisal Report form, is what most appraisers use. This is a form many of you are very familiar with. At the top of page two, it says:

“There are ___ comparable properties currently offered for sale in the subject’s neighborhood, ranging from ___ to ___.”

“There are ___ comparable sales in the subject’s neighborhood within the past 12 months, ranging from ___ to ___.”

Now, if you truly are in an area where all the listings and sales in a neighborhood are in a competitive state for the same properties, then I guess you’d fill that in accordingly. But how often does that happen? I mean, are the two-bedroom homes competing for the same buyers as the four-bedroom homes?

To read more, Click Here

My comments: Definitely worth reading! I would have never thought these 3 were the most common mistakes.

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Founding Father John Hancock’s Boston Home Is on the Market for First Time in Half a Century — More Than 250 Years After It Was Built

Excerpts: Used as offices now, 7,622 sq.ft., 2,178 sq.ft. lot, Originally built in 1660s

The iconic dwelling, which is known as the Ebenezer Hancock House in honor of John’s younger brother who used it while serving as the deputy paymaster of the Continental Army, is thought to have been built in 1767.

According to the listing, which is held by Dave Killen of LandVest, the building is the “last extant property associated with the founding father in Boston” and stands as a living time capsule, having been meticulously maintained by its current owners over the last five decades.

An asking price for the property has not been released, but the structure was most recently valued at $1.65 million by city officials. Given its historical significance, the building could well sell for much more.

The original structure dates to the 1660’s, when the site was owned and occupied by William Courser, Boston’s first Town Crier. In 1737, the property was owned by James Davenport, the brother-in-law of Benjamin Franklin.

To read more and see many interesting photos, Click Here

My comments: Our country’s 250th anniversary is coming. This is a look into when we started.

Read more!! →

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Appraisal Sq. Ft. Appraisal vs. Assessor/Public Records

By on March 14, 2025   /   adjustments, ADUs, bias, Economic analysis, real estate market, Trump Changes   /   Leave a comment
Tags: , , , ,

Newz: Sq. Ft. Appraisal vs. Assessor, The “R” Word, HUD Appraiser Complaints

March 14, 2025

What’s in This Newsletter (In Order, Scroll Down)

    1. LIA AD: Navigating value revisions in appraisals
    2. Why Is the Square Footage in Public Records Different from the Appraisal?
    3. 5 Properties With ADUs or In-Law Suites
    4. Open Letter to Government Efficiency Commission on HUD’s Appraiser Complaints
    5. The “R” word in real estate – Recession
    6. Going In-Depth on a Delicate Issue: The Invisible Fence of Racial Discrimination
    7. Mortgage applications increased 11.2 percent from one week earlier

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Why Is the Square Footage in Public Records Different from the Appraisal?

By Tom Horn

Excerpts:

Why Accuracy Matters

Square footage is one of the most critical factors in determining a home’s value, yet it is often misunderstood. Many homeowners and real estate agents assume that the square footage listed in public records is accurate, but that’s not always the case. When an appraiser measures a home, their calculation often differs from what’s in tax records. These discrepancies can lead to confusion, mispricing, and even appraisal challenges.

Why Square Footage Discrepancies Occur

Public Records vs. Appraisal Measurements

The square footage listed in public records typically comes from the county tax assessor’s office. Assessors determine square footage based on:

Builder-reported figures:…

Estimates or outdated records:…

Conversions and Additions

Another common reason for discrepancies is home modifications. If a homeowner adds square footage without the proper permits, tax records may not reflect the change. Examples include:

Unpermitted additions:…

Incorrect classifications:…

To read more, Click Here

My comments: Worth reading. Written for non-appraisers but the best explanations I have ever read about this topic. I worked for an assessor’s office for my first 4 years of appraising, starting in 1975. I was given a geographic area and appraised every residential in it. Fantastic experience. I learned a lot. I was very lucky. Very different than lender appraising, where you only appraise properties that are suitable for mortgage loans.

The March 2025 issue of Appraisal Today has a very comprehensive article for appraisers: Can you use the assessor’s assessment values for site valuation, by Tim Andersen, MAI.

Read more!! →

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Appraisal ADU Price Per Sq.Ft.?

By on February 14, 2025   /   ADUs, climate change, liability, Mortgage interest rates, time adjustments   /   Leave a comment
Tags: , , ,

Newz: ADU Price per Sq.ft.? Time Adjustments Insanity

February 14, 2025

What’s in This Newsletter (In Order, Scroll Down)

  • LIA AD: Divorce – no interior access allowed
  • Should accessory dwellings be valued at the same price per square foot? By Ryan Lundquist
  • $4 Million Midcentury Modern ‘Casita’ Complete With a Wacky Circular Kitchen in Rancho Mirage, CA
  • Time Insanity, Part 7 of a 12 part series: GSE Guidelines Time Adjustments
  • The irony of replacing appraisers with technology By Tony Pistilli
  • Home Values To Plunge in ‘Climate Abandonment’ Zones Total loss of property value projected to reach $1.47 trillion
  • Mortgage applications increased 2.3 percent from one week earlier

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Should accessory dwellings be valued at the same price per square foot?

By Ryan Lundquist, February 4, 2025

Excerpts: Should accessory dwelling units be valued at the same price per square foot as the main house? This question came up recently, and many people believe the price per sq ft of the house should simply extend to the ADU. This post isn’t targeted at any one person, but I have a different perspective that I’d like to share.

Comps

When we look at comps with an ADU, do we see a value that resembles anywhere close to what the ADU equation above suggests? In other words, if the house was worth $800,000 and we added a 750 sq ft ADU, would that really add $200,000 in value? Or would a 400 sq ft ADU on a $450,000 house really add $163,640 in value?

What do the comps say? That’s the question we ask about solar panels, a kitchen remodel, a new driveway, or a house with an ADU. I find looking to the comps can sound like a very frustrating solution, but the focus is really simple. What are buyers willing to pay? That’s always the question.

Closing thoughts

I realize there are situations where the appraised value of an ADU legitimately comes in too low, and there is no excusing that. So, just as I recommend caution in using an arbitrary math formula, appraisers need to be careful to not just pick a number that doesn’t make any sense when we think about data and the income being produced by the ADU.

All I’m saying is the ideal is to scour comps, do our best to discover value, and support the value in whatever credible way we can. And my concern is if listings are priced without consideration of comps or data, it could result in properties not selling and/or appraisal issues in the future. Know what I’m saying?

To read more, including over 40 comments, Click Here

My comments: Read the article. Good examples, tables and graphs, but too long to put in this newsletter.

Read more!! →

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FHA Appraisal ROV Q&As

By on October 18, 2024   /   ADUs, AMCs, Fannie, FHA, liability, Mortgage interest rates, ROVs, UAD   /   Leave a comment
Tags: , , , , ,

Newz: FHA ROVs, Avoiding Court, ADUs and Sq.Ft.

October 18, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • Avoiding Court: A Common Sentiment Among Appraisers By Claudia Gaglione, Esq.,
  • FHA Q&A on ROV Policy
  • One of America’s Biggest Homes Hits the Market for $195 Million
  • UAD/URAR Threat, Opportunity, Confusion, Part 2 By George Dell, MAI, SRA
  • Why didn’t the appraiser add the ADU in the square footage? By Ryan Lundquist
  • Choosing the Right Appraisal Management Companies (AMCs): A Guide for Appraisers
  • Mortgage applications decreased 17.0 percent from one week earlier
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    Appraisal Business Tips 
    Humor for Appraisers

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Q’s and A’s Now Available from Appraisal Review and ROV Industry Briefing Webinar

FHA INFO 2024-70

October 10, 2024

FHA Posts Appraisal Review and Reconsideration of Value Policy

Questions and Answers from Industry Briefing Webinar

Today, the Federal Housing Administration (FHA) posted a questions and answers document that addresses inquiries received from stakeholders regarding FHA’s Mortgagee Letter (ML) 2024-07, Appraisal Review and Reconsideration of Value (ROV), announced in FHA INFO 2024-24 on May 1, 2024.

To prepare mortgagees and other stakeholders for the implementation of the ROV policy, FHA hosted a live webinar on August 8, 2024. During this webinar, FHA subject matter experts briefed participants on the ROV policy and processes and addressed questions submitted prior to and during the webinar. Due to time constraints, not all questions were answered during the webinar; therefore, today’s FHA INFO includes a summary of the questions addressed during the webinar as well as those that were not.

Mortgagees are reminded that while the provisions outlined in ML 2024-07 may be implemented immediately, they must be implemented for FHA case numbers assigned on or after October 31, 2024, as announced in ML 2024-16. Additionally, the technology updates announced in FHA INFO 2024-43, will also be available in FHA Connection (FHAC) beginning October 31, 2024.

The questions and answers and recording of the ROV webinar are available for viewing on HUD’s Single Family Housing Archived Webinars web page.

To read the full Q&As (PDF), Click Here

Read more!! →

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SFR or 2 units with an ADU?

By on August 2, 2024   /   ADUs, appraisal, AVMS, liability   /   Leave a comment
Tags: , ,

What’s in This Newsletter (in Order, Scroll Down) August 2, 2024

  • Avoiding Court: A Common Sentiment Among Appraisers
  • When Is Single-Family a Multi-Family Appraisal?
  • What Is a Superhome? 10 Must-See Mansions That Define the High-End Trend
  • Accurate Appraisal Underreporting
  • How Confidential is Your Appraisal?
  • Agencies Issue Final Rule to Help Ensure Credibility and Integrity of Automated Valuation Models
  • Mortgage applications decreased 3.9 percent from one week earlier

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How to Identify a Single-Family with ADU vs. Two-Family Property 9-29-23-

Appraisal Business Tips 

Humor for Appraisers

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When Is Single-Family a Multi-Family Appraisal?
SFR or 2 units with an ADU?

by Richard Hagar, SRA

Excerpts: Once upon a time, it was easy to classify single-family homes, duplexes, triplexes and multi-family buildings. Though there have always been exceptions, if a property was zoned single-family residential (SFR) and there was a single home on the site, you’d use a 1004 form for bank appraisals.

If a property was zoned multi-family and there were two to four units on the site, an appraiser would use the 1025 form. And, if there were five or more units on the site, it would be something a commercial appraiser would handle via a narrative format.

Ah, the good old days. Then, along came accessory dwelling units (ADU), which in some states and cities are messing with established appraisal and lending systems.

Things Get Twisted – ADUs

Many counties and cities that allow ADUs do not “change” the official zoning; SFR 5000 still means one single-family home per 5,000-square-foot lot (and allow an ADU). What a few politically and emotionally driven cities have done is bypass the normal requirements for changing zoning (public hearings, notifications, etc.) and passed laws that overlay additional uses and requirements on to existing zoning codes. It’s their “clever” way of changing things without following the historic path to … well, changing things without informed consent by the citizens.

So, here we are: appraisers looking at zoning codes trying to determine the highest and best use for the subject’s site (as if vacant) and the structure as improved. We see SF7500 and say, “great, single family.” But did you look to see if there are overlay additions to the code? If so, did you read them? Did you look at regulations related to accessory dwelling units? If you didn’t, you’d better start looking because these things are popping up in numerous counties and cities across the United States, and they have a massive impact on unit density, the highest and best use, land values and depreciation rates.

Conflict With Lending

The Federal National Mortgage Association (FNMA) will buy a loan where the single-family home has a single ADU. Look at the below form (Figure 1) and note the two options: Units “One” and “One with Accessory Unit.” There is no space on the 1004 form to identify a second ADU.

Now we have a conflict between cities allowing two or more ADUs and the lending world of FNMA, the Federal Home Loan Mortgage Corp. (FHLMC), the VA and FHA. These entities will not buy loans with two or more ADUs. And when FNMA won’t buy (or VA and FHA insure) a loan from a lender it results in fewer lenders offering loans, higher interest rates and possibly larger down payments. In a city’s zeal to lower the cost of housing, they’ve increased the cost of housing.

Required Information

When you run across properties with ADUs, all sorts of additional information is required in the appraisal. ANSI requires the square footage to be separately indicated. Fannie Mae needs additional information specific to the ADU, and just wait until you see FNMA’s new appraisal “form,” along with its 20-plus new information fields in the special ADU section. If you want an example of how we provide square-footage information, email me (See author bio) and I’ll provide you with a copy of the form we use.

The appraisal will also require fully supported adjustments, explanations on how you determined the adjustments, and the ADUs impact on value measured by the cost, income and sales comparison approaches.

To read more, Click Here

My comments: Read this detailed article if you appraise any properties with ADUs. It is a comprehensive analysis of all the new issues. Richard Hagar is one of my favorite appraisal instructors.

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Are Appraisers Professionals?

By on July 12, 2024   /   ADUs, Appraisal Qualifications Board, liability   /   Leave a comment
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Valuing Appraiser Professionalism: A Blueprint for Survival

By Jo Traut, McKissock Learning

Excerpts: Having spent nearly three decades in the field of real estate appraisal, I’ve witnessed firsthand the evolution of our profession, particularly with respect to technological advancements. However, alongside these positive changes, I’ve also observed a troubling trend toward increased unprofessionalism. This phenomenon isn’t unique to our discipline. It’s permeated other careers, from medical professionals to teachers to business managers.

What professionalism means in the appraisal profession and how we can all work toward achieving it.

Integrity

Remain steadfast in your commitments, stay true to your word, and uphold your principles, even if this requires declining an appraisal assignment or future work with a client or their agent. By staying honest and true to your values, others are more likely to trust and collaborate with you or recommend you and your business.

Expertise

Professionals strive for proficiency in their field, continually enhancing their knowledge through education, webinars and personal development efforts. It’s not just about acquiring designations but staying informed about market dynamics, industry changes and emerging trends.

Commitment to Excellence

True professionals are prepared, which entails advance planning, dedicating sufficient time and giving proper attention to tasks. Before delivering work to clients, conduct a thorough review to mitigate potential errors. Acknowledge and address any skill gaps or lack of competency promptly and transparently, ensuring a commitment to excellence in every endeavor.

To read more, Click Here

My comments: I have always done “Remain steadfast in your commitments, stay true to your word, and uphold your principles.” I was first trained as a scientist, starting with my high school biology class. After graduation, I worked in labs for 7 years.

I have always been a professional appraiser since I started in 1975, trained at an assessor’s office to do what is in this article. I hate the word “industry” when applied to appraisers. I try to avoid using the word “industry”. Since licensing, residential appraising has become more of a “trade” than a professional career. I quit residential lender appraising in 2005. I know about the conflicts, which have been getting worse.

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NOTE: Please scroll down to read the other topics in this long blog post on Easement Liability, college degree requirement AQB, Fannie June Update, ADUs, unusual homes, mortgage origination stats, etc

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Strange Properties Appraisers Have Seen

By on October 27, 2023   /   adjustments, ADUs, appraisal business   /   Leave a comment
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Strange Encounters in Property Appraisal

By: McKissock

Excerpts: Property appraisal is not typically thought of as a “dangerous” profession per se. However, you may encounter some strange—or even spooky—properties from time to time. Recently we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” While some appraisers discussed atypical and challenging properties, others shared stories of strange encounters ranging from surprising to creepy to downright scary.

We’ve organized the strange and spooky properties described by our survey participants into the following categories:

  •  Vacant and secluded homes
  •   Spooky historic properties
  •   Properties in horrible condition
  •   Other surprising and strange site visits

“Vacant house that neighbors told me had not been occupied for almost 3 years. They were concerned that the electric was still on and could pose a danger as you could hear an electrical buzzing sound. Once I entered the house, the sound was evident and I looked for the source, probably a light fixture with a bad ballast or short-circuit. However what I found was a massive wasp nest that was approx 4′-5′ tall in one of the bedrooms.

When I opened the door, it clearly agitated them and I got out quickly and advised the lender to send in an exterminator ASAP. They were far too aggressive for me to even snap a photo. The AMC rep wanted to know if I could simply hit the nest with a can of wasp spray! Is this the actuality of ‘walking into a hornet’s nest’?”

To read more, click here

My comments: We have all encountered strange homes. I worked for an assessor’s office for 5 years in my first appraisal job. I appraised everything in a specific geographic area. I saw a lot of weird homes, especially in the more rural hillside areas. Lenders would have never loaned on them!

An appraiser I have known for many years saw a ghost in a haunted B&B he stayed in when traveling in Montana. He is about the last person you would think who saw an apparition of a woman. The owner and other visitors had seen her also.

Haunted House Appraisal Adjustments

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NOTE: Please scroll down to read the other topics in this long blog post, appraisers with increased income, ADUs in California can be Condos , unusual homes, mortgage origination and more!

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Fannie Files Complaint Against Appraiser

By on October 20, 2023   /   ADUs, manufactured housing, non-lender appraisals, real estate market   /   Leave a comment
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Fannie Mae Filed a Complaint Against Me

October 18, 2023

Excerpts: In June of 2021, I completed an appraisal for a conventional purchase. The appraisal was ordered by an AMC on behalf of a lender. At that time, the real estate market was still being wildly affected by the COVID pandemic. Remote work was in full swing, and consumers were desperately seeking to get out of the cities. Prices for all types of residential properties were rising rapidly, and this held especially true for niche properties that consumers believed would make a good short-term rental.

My subject was a mountain cabin, in reasonably close proximity to a National Park. This approximately 900sf, 1.5 story, 2-bed, 1-bath cabin was situated on a critically sloped 2.5 acres of wooded land. This is not unusual at all. Many similar properties exist, but they are spread across a wide area. The inspection was uneventful. I was given a lockbox combination and inspected the vacant home. It was unremarkable. A basic Q4, C3 home.

Five days after the report has been delivered, I received a revision request. The AMC stated that the lender indicated the appraisal received a high risk score by Fannie Mae. Fannie Mae provided two sales and two listing based on their “model”. In addition to the sales provided by Fannie Mae, I was asked to provide at least two better comps. As anyone who has been an appraiser for more than five seconds can attest, you use the best comps available. There were no “better comps” to be used.

In June of 2022, one year after completing the original appraisal report, I received an email from the AMC stating the lender had received a repurchase demand from Fannie Mae. The demand letter cited an accounting error during the origination of the loan (not an appraisal issue) and the appraisal as the reason for the buy back. This was the first time I had ever experienced this problem. None of their comments seemed to make any sense. I had a terrible time understanding why this appraisal was such a problem for Fannie Mae. I have attached the Fannie Mae comments and my responses below. I have redacted the areas that could reveal sensitive information.

To read more, plus appraiser comments, click here

My comments: I have heard that Fannie’s repurchase demands can trigger problems for the appraiser. The post is long. Be sure to read the Final Thought on the last page with a link to Jeremy Bagott’s always interesting analysis, “Insider: Fannie’s Loan Buyback Sophistry Relies on Modifying Analyst’s Behavior,” posted on October 13, 2023

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SFR with ADU or Two Units?

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NOTE: Please scroll down to read the other topics in this long blog post Modular Homes Data Plates,  ADU income, Pickleball courts and other interesting home improvements,   , unusual homes, mortgage origination and more!

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SFR with ADU or Two Units?

By on September 29, 2023   /   ADUs, climate change, future, non-lender appraisals, real estate market, retirement, va   /   Leave a comment
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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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NOTE: Please scroll down to read the other topics in this long blog post on  non-lender appraisals, VA, flood and fires no insurance, retirement,  few lender appraisals, unusual homes, mortgage origination

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