Strange Properties Appraisers Have Seen

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

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?

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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NAR Appraiser Survey July, 2023

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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Appraisers: Watch for Concessions and Kickbacks

Concessions, Kickbacks, and the Appraiser’s Nightmare

by Richard Hagar, SRA

Excerpts: What Appraisers Must Do

There are many steps appraisers must follow, more than I can list here. However, you should start off by listing and describing the concessions. Learn how to provide an accurate value conclusion that protects the appraiser from the potential ramifications of their bad acts.

On the first page of FNMA’s form, they ask this question:

“Is there any financial assistance [loan charges, sales concessions, gift or down payment assistance, etc.] to be paid by any party on behalf of the borrower?”

The appraiser has no choice when faced with this question, they must answer and if they get it wrong…then the appraiser is in trouble. After disclosing the information, the appraiser’s next task is to determine how the concessions have impacted the sales price. Federal law, FNMA/FHLMC guidelines and USPAP all point to a solution.

Solutions to Keep You Safe

  • Make sure you have a complete signed purchase contract.
  • In the appraisal, list how many pages of the contract you have in your possession (In case someone is hiding pages from you).
  • List the concessions on page 1 and in the final reconciliation.
  • In the sales grid, list any known concessions that were involved with the purchase of a comparable….

To read more click here 

My comments: Some good tips on how real estate agents try to deal with this. I have known Richard for many years. He is an expert and is a most excellent instructor. I have taken many of his seminars over the years.

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NOTE: Please scroll down to read the other topics in this long blog post on FHA and ADUs, non-lender appraisals, unusual homes, mortgage origination stats, etc.

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Appraisers and Local Market Analysis

Appraisers and Local Market Analysis

By Woody Fincham, SRA, AI-RRS, ASA

Excerpts: Social media and the mainstream media make a mess of these markets even in the best of times. They do not have the bandwidth to cover local markets. When you are in a metropolitan statistical area like Charlottesville and Waynesboro/Staunton you get some reporting from the local news. Still, if it is not driven to get online clicks from hyperbole it usually is not worth reporting. National data simply does not apply to the local real estate market and the closest large markets are Richmond and Washington DC. Neither are not great metrics for what our local markets are doing.

I think everyone has heard the old saying, “You can’t see the forest for the trees.” And that is true. We are in the middle of a market transition and exactly how it is transitioning is extremely hard to predict. The best market analysis is always retrospective, as they say, “Hindsight is 20/20.” Until we get past this period over the next few months it may be hard to say definitively what is exactly happening. As an appraiser, it is super important to understand how to gather and analyze relative data.

So, what metrics are worth watching?

  • Inventory levels
  • Absorption rates and marketing times
  • Actual days on market (DOM)…

To read more and see the graphs, click here

My comments: Read this article, including the case study. See if there are data types and graphs you can use in your appraisals. Your clients count on you to let them know the market today, not in the past. Of course, I agree with this. Appraisers have the most valuable data and analyses in a changing market: listings, pendings, price changes, etc.

Appraisal Neighborhood Analysis

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NOTE: Please scroll down to read the other topics in this long blog post on retirement, liability, ADUs, appraiser cartoon,  real estate market, Appraisal business, unusual homes, mortgage origination stats, etc.

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Appraiser Pressure – What To Do?

How to Handle Appraisal Pressure and Stay Ethical?

Excerpts: There’s no simple and easy way to deal with appraisal pressure. A major source of frustration for appraisers is the realization that clients do not have to follow USPAP. The ethical and performance requirements of USPAP apply only to appraisers, not to clients. In other words, USPAP doesn’t prohibit a mortgage broker from calling and asking you to develop an appraisal based on a predetermined value, but USPAP does prohibit you from accepting that assignment.

When you are faced with appraisal pressure, here are some strategies to manage the situation and still maintain your reputation as an ethical, unbiased appraiser.

1. Educate your appraisal clients

A lot of what appraisers consider pressure from clients is merely a result of the client’s lack of knowledge about appraisal standards and ethics. A lender might ask an appraiser to guarantee values beforehand simply because he or she is unaware that it is unethical for an appraiser to do so.

Avoid this by explaining why you cannot guarantee a value or remove that deferred maintenance photo from your report. You might be surprised at your client’s response if you take the time to educate him or her.

For 8 more reasons, click here

My comments: Appraiser Pressure – What To Do? Can you learn to be an ethical appraiser (or person)? Do you try to be ethical in whatever you are doing? Does it depend on who trained you? Or, do you learn from your parents when growing up? A Very controversial topic!

The Good Appraiser (for anyone who wants their number) Always gives us what we need: – Unethical Appraiser. The Bad Appraiser: A deal killer – Ethical Appraiser.

I was trained at an assessor’s office with no pressure to appraise high or low, fail to disclose defects, etc. I was very lucky. Fee appraisers are under lots of pressure. You learn that people are always looking for a value. for example, when doing an appraisal for a divorce, I always say, “If neither spouse likes my value, it must be okay.” For new clients, I make it very clear that I will not be unethical by giving them what they want upfront. I have lost many clients over the years because I was ethical.

Working with difficult appraisal clients

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NOTE: Please scroll down to read the other topics in this long blog post on Real estate market changes, ADUs, AMC interview, unusual homes, mortgage origination stats, etc.

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Fannie and ADUs

Fannie and ADUs

Video/Slides
Excerpt: Accessory dwelling units (ADUs) are becoming more and more common. Want to brush up on your knowledge of Fannie Mae’s ADU policy? Take this short elearning course to explore information about ADUs, including requirements, construction types, and how to report ADUs in an appraisal report.
To watch, click here
Note: use two arrows at the lower right to move between slides.
My comments: I received an email notification of this on 8/24/21. Worth watching. Well done. Of course, ADU requirements vary by location. They are more being built in many areas of the country. I was recently listening to an appraisal online discussion. Appraisers were from all over the country and some had appraised homes with ADUs.
My MLS recently added a section on ADUs. Not many sales there yet, but anything can help!! In my city, most new ADUs are behind a large home. Many of the owners plan on living there when they retire and renting out the much larger home. Over the past few years, the local planning and building departments have become much easier to work with. Some local MLS listings mention “ADU possible”, a relatively new trend.

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Appraising Weird Stuff is Challenging!

How to Handle the Weird Stuff: Appraisal Methods from an Experienced Florida Appraiser

Excerpt: Going further away or back in time

One method is to go further back in time for comparable sales.. Another method is to use sales that are more distant to find data to utilize. Both of these techniques have long been available to appraisers. When using these appraisal methods, most often a comparison is made between properties with similar characteristics to the question at hand to extract a ratio/percentage which is then brought current or to the locale and applied. This could work for the above illustration with only four houses on leased land and no similar nearby sales. Most appraisers are familiar with and have utilized these techniques… Appraising Weird Stuff is Challenging!

Well written and worth reading. To read more, click here

My comments: Lots of good tips. All of us are asked to appraise the “weird ones”. Of course, sometimes we don’t know a house is weird until we drive up and see it!! A very good discussion of methods. I have used all of them except the depreciated cost, which is a good method. Plus, lots of tips on doing them for lenders. Of course, sometimes I just say “no” as it will take too long.

I have learned that they often are money losers due to the increased time. This is what can happen with lender UAD appraisals for AMCs due to the excessive amount of questions and trying to fit the appraisal on the form. I sometimes accept the weird ones for non-lender work with no time pressures. They can be very interesting and challenging.

Appraisal Process Challenges(Opens in a new browser tab)

Common Appraiser Violations(Opens in a new browser tab)

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Working with difficult appraisal clients

Advice for Working with Difficult Appraisal Clients

Excerpt: Even if the bulk of your appraisals are fairly cut and dried, and require minimal interaction with a human client, any appraiser will occasionally have to work with a difficult client. The assignment might require you to work with a specialty property that is hard to appraise, or with a client who is personally disagreeable, or exceptionally exacting, or who has an agenda that you don’t understand or can’t go along with. Here are some tips for working with difficult clients. Three of the topics:

– Working with AMCs and banks: Time management

– Working with non-lenders: Expectations management

– Deal with complaints immediately

To read the tips, click here

My comment: Some great, practical tips!! Maybe I will try some of them instead of Firing clients, my most popular option ;>

My motto: Appraising would be great except for the darn clients!!

Which Appraisal Clients are used the most?(Opens in a new browser tab)

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

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