Highest and Best Use For Appraisers

By on July 11, 2025   /   AMCs, appraisal how to, Appraisal Subcomitee   /   Leave a comment
Tags: , ,

Newz: Hidden AMC fees, Appraisal Subcommitee Cutbacks, Highest and Best Use

July 11, 2025

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

    • LIA AD: Borrower Wants Answers Appraiser Can’t Give
    • What is Highest and Best Use in Appraisal? Appraisal
    • By Kevin Hecht
    • Purple Rain! Vibrant Violet Villa That Would Make Prince Proud for $3,499,000
    • Could a Class Action Lawsuit Finally Unbundle Hidden AMC Fees? by Isaac Peck, Publisher WorkingRe
    • The AMC Industry Won’t Be Toppled by Code
    • Appraisal Oversight (ASC) Subcommittee Faces Cuts Amid Leadership Turmoil
    • Mortgage applications increased 9.4 percent from one week earlier

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news

————————————————-

——————————–

What is Highest and Best Use in Appraisal?

By Kevin Hecht

Excerpts: When determining property value, one of the most critical concepts in real estate appraisal is highest and best use (HBU). Professional standards require appraisers to develop an opinion of HBU when necessary for credible assignment results. HBU refers to how a property should be used to generate maximum value under specific constraints, not necessarily how it’s currently being used.

Definition of Highest and Best Use

In professional appraisal practice, Highest and Best Use is defined as “the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value” (Appraisal Institute, The Dictionary of Real Estate Appraisal, 2022). This definition emphasizes that HBU must be reasonably probable, not merely possible or speculative.

Appraisers must analyze the property as vacant land, and as improved, considering what is legally permissible, physically possible, financially feasible, and maximally productive in the current market.

Why Highest and Best Use in Appraisal Matters

Highest and Best Use gives stakeholders insight into a property’s worth at its full potential. It guides market value determinations that reflect the property’s full potential and informs development and investment decisions based on feasibility and profitability. Additionally, HBU supports lending and underwriting decisions, especially for construction loans or redevelopment projects, guiding land use planning and zoning analysis in transitioning neighborhoods.

To read more, Click Here

My comments: Well written and understandable. I was trained at an assessor’s office to first determine highest and best use for each property I appraised. For homes, issues I have had were a small house on a large lot where nearby lots were being converted to apartments. More common for homes is a possible lot split. HBU is a regular factor for appraising commercial properties in my city. The main part of the city was almost fully developed by the early 1940s. Often the HBU was not the current use.

Read more!! →

Back to Top

Pending Sales for Appraisers

By on May 30, 2025   /   AMCs, appraisal business, appraisal how to, Economic analysis, GSEs, PAVE   /   Leave a comment
Tags: , , ,

Newz: PAVE Problems, Outdated Mortgage Regulations

May 30, 2025

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

  • LIA ad: Should I Complete this Assignment?
  • Pending Sales May Be Your Secret Weapon To Accurate Listings and Appraisals
  • $3.69 Million ‘Tron’-Inspired Mansion With ’80s Speakeasy and Ferrari-Themed Office
  • The Full Measure: May 2025 Housing Market Recap for Appraisers
  • TEAPOTS Exposed: The PAVE Initiative’s Illusion of Justice
  • Outdated Mortgage Regulations
  • Mortgage applications decreased 1.2 percent from one week earlier

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news

—————————————————————————

———————————————————————————–

Pending Sales May Be Your Secret Weapon To Accurate Listings and Appraisals

Excerpts: Bottom line: Pending sales show you what’s happening now and where prices are headed. Skip them, and you’re stuck looking at yesterday instead of today.

Closed Sales Lag—Pendings Lead

The Built‑In Delay

  • A March 1 contract might not close until late April. By then:
  • Rates could move 50–75 basis points.
  • A new round of housing inventory could hit the market.
  • Economic news—jobs reports and inflation scares can spook buyers.

Appraiser’s View: How We Use Pending Sales (Even When We’re Handcuffed to Closings)

Time adjustments

Compare contract prices to 30‑60‑day‑old closings to justify ± market‑trend tweaks. If pendings are 3 % higher, you can show upward pressure — great ammo for your list price.

Feature bracketing

No pool comps closed? A pool home pending $25 k higher becomes my clue. Helps you price premium features correctly.

To read more, Click Here

My comments: Good discussion of many aspects of using pendings. Written for real estate agents, but many good tips for appraisers. I always look at pendings, including the ratio of pendings to listings. I got some good ideas from this blog post.  I have been appraising for 50 years. I like learning something new!

—————————————————————————————-

$3.69 Million ‘Tron’-Inspired Mansion With ’80s Speakeasy and Ferrari-Themed Office

Excerpts: 3 bedrooms, 3.5 baths, 4,853 sq.ft., 8,509 sq.ft. lot

Futuristic, three-bedroom mansion that was inspired by the hit 2010 sci-fi movie “Tron: Legacy” has made a high-speed return to the market in Dallas, where it is listed for $3.69 million.

The decked-out dwelling, which also boasts an auto showroom in the living room and a Ferrari-themed home office, has been driven right to the top of the week’s most popular home’s list, after pulling in a huge amount of interest from buyers thanks to its very unique aesthetic.

Opulence abounds in every room of the property, which is spread across 4,853 square feet and includes a 1980s speakeasy with “turquoise tufted walls,” as well as a dramatic two-story living room with soaring ceilings.

To see the listing with 40 photos and a virtual tour, Click Here

My comments: See the wild interior photos with Ferraris and many unusual features!

Read more!! →

Back to Top

Comparable Sales for Appraisals

By on May 23, 2025   /   AMCs, appraisal, appraisal how to, Fannie, GSEs, liability   /   Leave a comment

Newz: Curiosity and Appraisers, GSEs future, Sideline AMCs

May 23, 2025

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

  • LIA AD: Your Role as a Judge’s Appraiser
  • On Comparable Sales By Timothy Andersen, MAI
  • Futurist Architect’s Funky Spaceship-Inspired ‘Starcastle’ Hits the Market in Connecticut for $1.5 Million
  • Why Curiosity Matters in Appraisals
  • Mortgage Bankers Association head addresses ‘elephant in the room’
  • Bye Bye AMC: A Script to Sideline Appraisal Middlemen
  • Mortgage applications decreased 5.1 percent from one week earlier

Real Estate Agents and Comparable Sales – Tips for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news

—————————————————————-

 

On Comparable Sales

By Timothy Andersen, MAI

Excerpts: This short article raises issues related to what constitutes or defines a comparable sale. While it may seem arrogant to take on a topic of this import, it is necessary, since there is not currently a formal definition. There are descriptions of what a comparable sale is. But there is no formal, universally recognized definition¹. However, does there need to be? Do we have enough technical information to understand the concept of a comparable sale? This article suggests the descriptions are sufficient.

It is common for the GSEs to criticize appraisers’ poor choice of comps. Under some conditions, the GSEs’ have the justification to level these critiques. Yet, given the wealth of descriptions there are in the available literature about what constitutes a comparable sale, why do appraisers ignore those descriptions to their own peril?

To read more, Click Here

My comments: Good analysis by Tim, The USPAP Expert. GSEs vs. USPAP goes on and on. I hate it when GSEs tell me how to do my appraisals. I am so glad I quit working for them in 2005. Non-lender appraisals rarely have special requirements and reviews.

Read more!! →

Back to Top

What are the best AMCs for Appraisers?

By on May 9, 2025   /   AMCs, appraisal business, Appraisal Institute, Fannie, liability   /   Leave a comment
Tags: , , ,

Newz: AMCs,  Appraisal Institute Is Accused of Cover-ups, Appraisal’s Perfect Storm

May 9, 2025

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

  • LIA AD: Can’t Complete Appraisal with Access Denied
  • Choosing the Right Appraisal Management Companies (AMCs): A Guide for Appraisers
  • Staggering $900K Glass Lake House in Oklahoma Surfs to the Top of the Most Popular Homes List
  • Wildly Inappropriate Behavior’: Appraisal Institute Is Accused of Cover-ups
  • 5-minute YouTube video, posted yesterday by Cindy Chance, former AI CEO regarding her lawsuit that was filed May 8
  • Appraisal Institute’s Harassment, Tests, and Dance with AMCs
  • #MeToo And Testing Fraud Applies To Appraisal Industry’s Largest Trade Group
  • Pulte defends his authority as board chairman of Fannie, Freddie
  • Upheaval at mortgage regulators leaves questions for lenders
  • The Appraisal Profession’s Perfect Storm: A Veteran’s Take on a Dying Craft
  • Mortgage applications increased 11.0 percent from one week earlier
  • Appraisal Business Tips 
  • Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news

———————————————————————————–

———————————————————————————

Choosing the Right Appraisal Management Companies (AMCs): A Guide for Appraisers

Excerpts: Today a large percentage of residential real estate valuations are coordinated by appraisal management companies. For appraisers, working with AMCs is almost a necessity.

Let’s look at how appraisal management companies work, the pros and cons, and—perhaps most importantly — how to choose the right AMCs to partner with.

Additionally, we’re sharing insights from appraisers who answered our survey question, “What’s your best tip for working with AMCs?”

How to choose the right AMCs

To prevent challenges and ensure smooth operations, it’s crucial to select the right AMCs. We recommend taking the time upfront to find a few good AMCs that value your appraisal expertise, then building relationships with that smaller group.

Use the following steps to choose the best AMC partners for your appraisal business.

Step 1: Find AMC candidates

Step 2: Investigate each appraisal management company

Step 3: Narrow your list to select the best AMC partners

Tips from Appraisers

  • Prioritize communication
  • Ensure timely delivery
  • Be friendly and polite
  • Get to know the AMCs and their practices
  • Don’t sell yourself short

To read more, Click Here

My comments: Good article on AMCs. Worth reading. Includes appraiser comments. I wrote about how to evaluate AMCS in the monthly Appraisal Today. The most recent article, including a Client Rating Grid, is in the January 2025 article: “What are your best current and former AMC/lender clients?”

Read more!! →

Back to Top

Finding Comps with Few Sales for Appraisers

By on March 7, 2025   /   adjustments, AMCs, appraisal business, Appraisal fees, Economic analysis, Trump Changes   /   Leave a comment
Tags: , , , ,

Newz: Pulling Comps in 2025, Appraiser Union? AMCs Overcharging Consumers

March 7, 2025

  • What’s in This Newsletter (In Order, Scroll Down)
  • LIA ad: Problem with An Affidavit
  • The struggle of pulling comps in 2025 By Ryan Lundquist
  • Op-Ed: Why An Appraiser Union Would Never Work By Dustin Harris
  • The Full Measure: February 2025 Housing Market Snapshot for Appraisers By Kevin Hecht
  • The Trump Administration’s Regulatory Overhaul: The Impact on CFPB, FHA, and the Housing Industry By Rob Chrisman
  • Homebuilders Warn of Rising Building Costs as Trump’s Tariffs on Canada and Mexico Take Effect By NAR
  • AMCs Overcharging Consumers? Morgan & Morgan Investigates
  • Mortgage applications decreased 1.2 percent from one week earlier

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!

 

——————————————————————-

 

———————————————————————————-

The struggle of pulling comps in 2025

By Ryan Lundquist

Excerpts:

1) SALES TELL US ABOUT THE PAST

Comps aren’t easy today. The problem is there aren’t that many sales, so it’s not so simple to figure out value. Lately, I’ve been getting a ton of questions about this, so I wanted to share some things I’m doing on my end….

2) TWO OPTIONS TODAY

We have two choices for comps. Go back further in time in the immediate neighborhood, or go out further to competitive areas. Why not do both?…

3) HOW FAR AWAY CAN YOU GO FOR COMPS?

It’s not how far you can go, but where you should go. Read that again. This is true in any market. And where would buyers go for comps? That’s also a viable question. No matter where you’re getting comps, be sure they are a good substitution…

To read lots more plus see graphs and read appraiser comments, Click Here

My comments: Read This Article! Few sales are common in many areas. I prefer going back in time. I have been doing time adjustments since 1975, when prices were going up 5% per month in a semi-rural Northern California county. The GSEs seem to be making it way more complicated. I do them on every appraisal. If not needed, I always comment that the market is stable. It is the only adjustment I make on my non-lender appraisals, except for features that are unusual.

I have no idea why the GSEs complain that many appraisers are not doing them when needed. Maybe the appraisers never learned how? Many dollar adjustments are needed on the grid and can be much more difficult than time adjustments.

Read more!! →

Back to Top

Appraisers: Advice On Staying Current

By on February 28, 2025   /   AMCs, appraisal, appraisal how to   /   Leave a comment
Tags: , ,

Newz: AMCs Fee Skimming Lawsuit, Appraising a Hobbit Hole

February 28, 2025

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

  • LIA ad: Disclosing Identity of Complaining Party
  • On Staying Current By Timothy Andersen, MAI
  • Futuristic $177 Million Bel-Air Megamansion With Its Own Private Jazz Club Hits All the Right Notes
  • Appraising a Hobbit Hole: The Property Value of Bag End
  • AMCs Deceptive Fee Skimming Exposed in Lawsuit
  • The 10 Most Expensive Home Listings and Home Sales in the U.S.
  • February 21, 2025
  • Mortgage applications decreased 1.2 percent from one week earlier

———————————————-

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!

————————————————

 

On Staying Current

By Timothy Andersen, MAI

Excerpts: In this monograph, we discuss the absolute necessity of developing more than one skill set as part of becoming a competent and professional real estate appraiser.

Real estate appraising is a complex practice that requires a diverse range of skills and knowledge, from understanding current market conditions to understanding and interpreting complex legal and financial documents. If you want to be your own boss, it also requires business acumen.

At its core, real estate appraising involves the due diligence necessary to form a credible opinion of the market value of a particular property. This requires a deep understanding of the appraiser’s local real estate market, as well as of the physical, legal, and economic factors that influence property values in it. However, becoming a successful real estate appraiser requires more than mere market knowledge.

It also requires a range of other skills, including the ability to conduct thorough research, analyze mountains of data, communicate persuasively and effectively with and to other professionals, and manage complex projects. These are all aspects of being an appraiser they do not teach us in appraisal school.

Most importantly, successful appraisers must adapt to changing market conditions and trends. Currently there are so many of these ongoing, especially as the GSEs are about to inaugurate UAD-2 to replace their archaic appraisal reporting forms. This means continually learning and developing new skills to stay ahead of the curve.

To read more, Click Here

My comments: Good analysis of appraising. I have been appraising for 50 years and I still love it. I am easily bored, but every property is different and market conditions change regularly where I work. I am always learning something new.

If this seems overwhelming to you or other post-licensing appraisers, it is not your fault. Unfortunately, after licensing started many trainees hired other trainees. Almost all had poor training and classes. I was unable to refer wannabes to professional associations as they only wanted classes for members, not for new appraiser. Changing what you learned when you started is very difficult to do. I was very fortunate as I started before licensing and had very active local chapters of AIREA and SREA predecessors of the Appraisal Institute. The appraisers I met had lots of experience. They helped me whenever I had any questions. I learned how to lender appraisals plus many types of non-lender appraisals correctly from them.

Read more!! →

Back to Top

The Sales Comparison Approach in Appraisals

By on January 24, 2025   /   AMCs, appraisal how to, state appraiser regulators, Trump Changes   /   Leave a comment
Tags: , , , ,

Newz: Shadowy AMC Fees, State Board Complaints, Borrower Questions

January 24, 2025

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

  • LIA AD: Borrower Wants Answers Appraiser Can’t Give
  • The Sales Comparison Approach: A Cornerstone of Real Estate Appraisal
  • Waterfront Home in Boca Raton, FL $25,000,000
  • Metrics – What Poetry and Data Analysis Have in Common
  • The Shadowy AMC Fees Draining Billions from Homebuyers
  • Why Report a State Board Investigation or Complaint?
  • Trump signs executive order to reduce housing costs, but will it work?
  • Mortgage applications increased 0.1 percent from one week earlier

—————————————————————————————–

The Sales Comparison Approach: A Cornerstone of Real Estate Appraisal

By Kevin Hecht

Excerpts: For experienced real estate appraisers, the sales comparison approach is more than just a method — it is a reflection of their expertise and competency in the marketplace. By mastering this approach and staying informed about industry standards and technological advancements, appraisers can ensure that their work meets the highest standards of professionalism and accuracy.

Challenges and Best Practices

While the sales comparison approach is a powerful tool, it is not without challenges. Appraisers may encounter situations where there is a lack of recent sales data or where the subject property is unique. In such cases, appraisers must exercise judgment and creativity to develop credible results.

Some common challenges include:

Inadequate Market Data: In markets with limited sales activity, finding comparable properties can be difficult. Appraisers may need to expand their search geographically or consider older sales, making appropriate adjustments for time.

Dissimilar Comparables: When the subject property has unique features, it may be challenging to find truly comparable sales. Appraisers must carefully analyze and adjust for these differences.

Unsupported Adjustments: Adjustments must be based on market evidence. Unsupported or arbitrary adjustments can undermine the credibility of the appraisal.

To overcome these challenges, appraisers should:

  • Conduct thorough market research to identify the best available comparables.
  • Use both quantitative and qualitative analysis to support adjustments.
  • Document their reasoning and methodology clearly in the appraisal report.

To read more, Click Here

My comments: Good reminders of the Sales Comparison Approach.

—————————————————————————————-

—————————————————————-

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!

——————————————————————–

Waterfront Home in Boca Raton, FL $25,000,000

Excerpts: 12 bedrooms, 11 baths, 12,709 sq.ft., 0.53 Acres, Built in 2016

Direct Intracoastal Point Lot with 256 ft of Waterfrontage and .53 Acres. Built of John Ross/ ROSSCO Const, the beauty of the lot is that it is sited on an expansive Nautical turn of the Intracoastal so it captures the gorgeous long North views.

There are 2 staircases, one with Marble & tile work by a Canadian Artist and banister designed by a metal artist and the owner, the other is a tree staircase The best part is you do not have to climb down the stairs as there is a hand crafted wooden Dragon Slide from the second floor to the foyer. The central slide seen from the front door is artizanally made from oak by local artist. The observation deck (covered) offers stunning views of the Intracoastal, and it includes another outside shower, and solar panels.

In the middle there is a 20 sitting Norse carved table with Helga and Magnus dragons protecting it. There are tile murals, stained glass windows and ceiling paintings all over the house, also thematic. The kitchen is dedicated to the Elements of Air and a story of its power is depicted on its ceiling.

To see the listing and 209 Photos, Click Here

My comments: Thanks to Joe Lynch for this listing with very colorful exterior and interiors!

Read more!! →

Back to Top

Q4 2024 Fannie Appraiser Update

By on December 27, 2024   /   AMCs, appraisal, appraisal waivers, Fannie, george dell, Mortgage interest rates, waivers   /   Leave a comment
Tags: , , ,

Newz: Q4 Fannie Appraiser Update, 2025 Mortgage Rates Forecasts Are Now Wrong

December 27, 2025

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

  • LIA ad: Disclosing Identity of Complaining Party
  • Q4 2024 Fannie Mae Appraiser Update
  • Dramatic Concrete-and-Glass Santa Monica CA Masterpiece Designed by Famed Architect Ray Kappe Lists for $4 Million
  • Is Ethics a Spiritual Principle By George Dell, SRA, MAI, ASA, CRE
  • All those 2025 mortgage rates forecasts are now wrong
  • The New Con: Hybrids, Waivers & AMCs Threaten Public Trust
  • MBA: No data released until January 2, 2025

CHANGE THE YEAR ON YOUR TEMPLATES NOW TO 2025!
DON’T WAIT UNTIL AFTER 1/1/25!

——————————————–

Mortgage forecast – loans predicted to drop 30% in 2014

———————————————

——————————————————————–

Read more!! →

Back to Top

Appraiser Humor

By on December 20, 2024   /   AMCs, data, humor, liability   /   Leave a comment
Tags: ,

Newz: Appraiser Humor, Data Cancer In Comps,
AMC Panel “Requirements”

December 20, 2025

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

  • LIA ad: AMC Panel “Requirements”
  • 12 Days of Appraiser Christmas
  • Santa’s House returns to Zillow with new ‘Let Santa Know You Moved’ feature
  • The Town Where Santa’s Sleigh Is a Surf Boat in Mooloolaba Australia
  • You Are Not a Business Owner!

  • Data Cancer In Your Comps

  • Mortgage applications decreased 0.7 percent from one week earlier

 

================================================

12 Days of Appraiser Christmas

NOTE on video: Click on image and it opens in Youtube.

Very funny!! 3.5 minute video

Here are two of the days: 8 mega mansions, 5 REOs

Many thanks to Gary F. Kristensen, SRA, ASA, AGA at A Quality Appraisals in Portland, Oregon.

=================================

 

Read more!! →

Back to Top

Market Trends and Market Conditions Adjustments Appraisals

By on December 6, 2024   /   adjustments, AMCs, appraisal how to, state appraiser regulators, waivers   /   Leave a comment
Tags: , , ,

Newz: GSE New Market Conditions Policy, State Board Complaints, Waivers

December 6, 2024

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

  • LIA ad – Navigating Value Revisions in Appraisals
  • Market Trends and Market Conditions Adjustments.
  • A Ferrari Inspired Masterpiece With 20K square Feet of Luxury Resort Amenities Listed at 55 Million in Delray Beach FL
  • November 2024 Real Estate Market Update By Kevin Hecht
  • 5 Tips to Handle Appraisal Board Complaints
  • Correcting the Record: Accurate Group’s Commitment to Compliance and Industry Excellence
  • FHFA’s Massive Expansion of Appraisal Waivers: What It Really Means
  • Mortgage applications increased 2.8 percent from one week earlier

————————————————–

———————————————————-

Market Trends and Market Conditions Adjustments

Working through the new Market Conditions policy and advisory from Fannie Mae

By Ken Dicks

Excerpts: Did Fannie Mae just throw a wrench into how residential appraisal reports for mortgage transactions are completed with their recent announcement on Market Conditions?

As an appraiser, it is highly likely at some point you will see the following or a similar request soon after your appraisal is submitted to your client, or even months after your appraisal is accepted by your client: Please provide support for your market conditions adjustment conclusions.

Appraisal Quality Control and Appraisal Quality Assurance create a revision request minefield filled with Lender and Investor tailored appraisal reporting requirements and preferences. Review of the appraisal reports is required by the lender or whoever the lender chooses to delegate this requirement to (i.e. Appraisal Desk, AMC, etc.).

As a practicing appraiser, the announcement and accompanying exhibit prompted a series of questions in my mind.

  • Does Fannie Mae want to see this specific graph in all appraisals?
  • What does USPAP say?
  • What level of data and analysis does an appraiser need to present when providing support for market conditions adjustments?

The following is where I have arrived at developing answers:…

To read more, Click Here

My comments: Worth reading the full article, plus the appraiser comments.

I am so glad I have not done any GSE appraisals since 2008! I don’t care what the GSEs say. I comply with USPAP. Of course, I always make market adjustments on my residential appraisals or explain why no adjustments was needed. It is the only dollar adjustment I make on non-lender forms unless the subject has an unusual feature requiring research and analysis.

—————————————————————————–

Read more!! →

Back to Top