Appraisal highest and best use analysis

The Four Tests of Highest and Best Use

Excerpt:

  1. Legally permissible

You must consider whether any zoning issues or restrictions will prevent building on or improving the lot.

Some questions to answer:

  • Do you have a current survey of the property? (If not, obtain one, specifically covering boundaries to learn if easements or encroachments exist.)
  • Are there any deed restrictions?
  • Are there zoning issues, such as minimum lot size or maximum building height or size?

To read more, click here

My comments: Short and well written with good tips for the four tests. This is particularly important for vacant land and areas that are transitioning to other uses, such as changing from homes to conversion to commercial uses. Appraisal highest and best use analysis is critical.

Many residential appraisers miss these issues as most lender appraisals are for standard properties, such as subdivision homes. You can get into Very Big Trouble by just checking the check box, which is probably already checked on your form template…

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

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Time Management for Appraisers

Time Management – Appraisers Need This Skill

Excerpt: Results of a McKissock Survey

We recently asked our appraisal community, “What ONE business skill does every appraiser need to master?” By far, the most popular answer selection was “delegation and time management.” According to real-life appraisers, several business skills are important. But time management, in particular, is essential for building a successful career in real estate appraisal. Time Management for Appraisers is critical for success.

Delegation & time management (42%)

Others were Project management/Planning, Financial Management, Communication & Negotiation, Networking and Other.

Two of the comments on Time management

“I’ve watched my dad work for himself as an appraiser for the last 10+ years, and everything comes pretty easy to him except meeting deadlines. Organization and time management is key! Don’t let it be your downfall.”

“When researching a subject property, you’ve got to have a good feel for all the time involved—how long will it take to drive to the home, inspect it, research it and complete the report? You’ve got to use all of that information to appropriately plan your days so you meet your clients’ expectations.”

To get the full results and read more appraiser comments, click here

My comment: I have been writing about time management for appraisers since I started my monthly newsletter in 1992. Recently, I have been writing about it a lot as many appraisers are very busy with the refi boom. Every hour saved it an hour you can work on an appraisal and make more money. Or, take a short break!!

The October issue of the paid Appraisal Today newsletter had “Practical tips you can use today for getting more appraisals done and make more money.” The November issue has “Increase your productivity by managing your email”. See more below in my ad.

Appraisal Humor

Appraisal business tips

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What is Included in Appraisal Square Footage?

Question: Can it count in the square footage?

Roof detail house

By Ryan Lundquist

Excerpts: Can you include it in the square footage? I get questions like this almost every week. Is it okay to count an accessory dwelling in the living area? What about a pool house? How about a man cave or she shed? Let’s talk about this.

The straight dope: It’s tempting to lump something else in the backyard into the square footage, but that’s not appropriate per ANSI measuring standards. Suppose you have to walk outside of the house into something else that is not directly accessible to the house. In that case, we’re really dealing with something that isn’t considered to be a part of the main house…

To read more, click here

My comments: Written for homeowners, but has some good remarks on square footage, such as “lumped square footage” in MLS. What is Included in Appraisal Square Footage can be tricky and controversial. It can also vary by geographic area.

How accurate is the reported square footage from the tax records in your primary service area?(Opens in a new browser tab)

Marketing and Management Tips for Appraisers

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AMC Fined for Appraisal Order Blast Violation

AMC Fined for Appraisal Order Blast Violation

Excerpt: Consolidated Analytics, an AMC based in Anaheim California, was fined $3,000 for violating the Utah AMC Administrative Rules R162-2e-306 “Offering An Appraisal Assignment and Communicating with Two or More Appraisers About a Potential Assignment.

The specific part of this rule that pertains to broadcasting has been relatively effective in reducing the broadcasting of assignments. Clear Capital recently was fined $5,000 for failing to comply and there are additional complaints working their way through the system.

To read more, click here

My comment: Broadcast orders are bad for many reasons for both the AMC and the appraiser: goes to everyone on their list, no considerations about appraiser qualifications for the assignment including geographic. Hundreds of appraisers competing on fees when business is slow make it hard for appraisers to stay in business. There is always someone with a lower fee, in appraising, and any type of business.

When business is strong, such as today, AMCs have to take whatever warm body they can get. Many appraisers are way too booked up and not taking any more work.

Maybe you can get your state appraisal regulator to get a similar regulation!!

Working with difficult appraisal clients(Opens in a new browser tab)

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

Marketing and Management Tips for Appraisers

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Fact Witness vs. Expert Witness Appraisers

Excerpts: When a real estate appraiser is called to testify in a court, it could be as one of two types of witnesses. If you are called to testify as an appraiser, it’s important to determine at the time of the request which of the two types you will be: fact witness or expert witness appraisers.

A fact witness is one who testifies only to that of which he or she has firsthand knowledge and who describes only facts (as opposed to expressing opinions). There is no formal definition of a fact witness….

As an expert witness appraiser, you are allowed to express opinions. In fact, your opinions are the very reason for your testimony. The opinions are to be based on the expertise afforded by “scientific, technical, or other specialized knowledge.”

Short and well written. Includes legal references. To read more, click here

My comments: This is a never-ending hot issue for many appraisers. They don’t understand the difference. The difference is you get paid a minimal fee as a fact witness (similar to a witness of an auto accident, for example). As an expert witness, you are paid very well for prep for expert witness testimony, depositions, waiting outside the courtroom, and testifying. I have written about this in my paid Appraisal Today newsletter.

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Appraisal Process Challenges

The Most Challenging Part of the Appraisal Process

Appraisal Process Challenges
Excerpts: Number 1: Data analysis (34%)

“When comps are limited, or when sales prices vary by as much as 50% for what appear to be very similar properties in the same neighborhood (which seems to be more and more common in the Denver metro area), selecting the best comparable properties can be a very time consuming and stressful process.”

Number 2. Site value opinion (17%)

“I choose ‘Site Value Opinion’ as the most challenging since there are very few vacant land sales in the areas that I appraise in. With very few sales, it’s very difficult to provide an opinion of value for many sites.”

To read more comments from appraisers and the other 7 challenging parts of the appraisal process click here

My comment: Lots of good appraiser comments. Data Analysis is my number one choice also. Tract homes are sorta boring but can be a welcome break from all the non-tract homes I appraise. Also, with Covid, I don’t connect with real estate agents every week at open houses to find out what is happening (behind the data).

Appraising Weird Stuff is Challenging!(Opens in a new browser tab)

Common Appraiser Violations(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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Should Appraisers Pay to Be on AMC List

By Dustin Harris

Excerpt: Should appraisers pay to be on an AMC’s approved appraiser list? Is this one way to get new clients? If an AMC solicited you, would you check it out?

Now, I work for some AMCs that, frankly, you might not choose to work for. That’s fine. It’s a choice we all make. Understand that most of the areas I work are rural, so AMCs are generally willing to pay more because of this. Some AMC are very demanding. Yet, when I meet those demands, I get a lot of well-paying jobs from them.

To read more, plus lots of appraiser comments, and listen to the podcast, click here

My comment: A never-ending very controversial topic ever since AMCs took over residential lender appraisals after the mortgage crash around 2008!

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

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So Many Appraisal Cost Approach Questions

So Many Appraisal Cost Approach Questions!
So Few Answers! Such Low Fees!

By Tim Andersen, MAI

Excerpt: It is clear most appraisers do not like to do the Cost approach. Generally, we are not too familiar with it. So, it is clear that most appraisers, because of this, do not appreciate the deep analytical power the Cost approach really has. So Many Appraisal Cost Approach Questions!

Therefore, I’m going to ask you 10 questions on the Cost approach (and stuff related to it). After you’ve finished reading them, you probably will still not like to tackle the Cost approach. Nevertheless, you just may have a better understanding of, and appreciation for, its powerful analytical capacities.

First Question: On the 1004 form is the indication that Fannie Mae does not require the Cost Approach to Value. Where does the form instruct the appraiser not to complete the analytics of the Cost approach?

To read the other questions and answers click here

My comment: Appraisers, including myself, seem to have a love/hate relationship with the Cost Approach. But, it can be useful. Tim’s much longer article “But Fannie Mae says I don’t have to do the Cost Approach!!” will be in the September issue of the paid Appraisal Today.

Appraisal Process Challenges(Opens in a new browser tab)

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

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What to Do When Your Appraisal Is Under Review

Excerpts: Residential appraisers will often — if not just about always — have their work reviewed by another appraiser. Usually, this is a routine procedure that the original appraiser barely notices. Sometimes, the review appraiser will come back with requests for extra information, or doubts, that the original appraiser might find annoying. To be sure, the reviewer’s questions might sometimes seem nit-picky, and answering them can distract from other work. However, the issues the reviewer raises almost always turn out to be legitimate. What to Do When Your Appraisal Is Under Review

We asked review appraiser Doug Nakashima (Glenview, Illinois) for advice on how to make reviews as painless as possible if you’re the one being reviewed.

Topics:

  • Remember that reviewers are on your side
  • Look out for these common points of contention
  • Avoid future revision requests

To read more, click here

My comments: Sorry, no comments section for ranting, etc. ;>

If you’re doing AMC work, the tough appraisals tend to go to reviewers. The first “reviews” are from underwriters, clerks, computer software, etc.

I don’t know of any other profession where almost all reports are reviewed by clients. Personally, I think it has resulted in appraisers being overly critical of other appraisers’ work, state boards sometimes being too aggressive, etc. Worse, some appraisers try to send in reports with as as few “problems” as possible, to minimize call backs and doing whatever it takes.

Review appraiser liability(Opens in a new browser tab)

Appraisal Process Challenges(Opens in a new browser tab) Read more!!

Which Appraisal Clients are used the most?

Survey: Which Appraisal Clients Make Up the Majority of Your Client Base?

Excerpt: What types of clients do property appraisers serve? Do most of their assignments come from lenders vs. non-lenders? To help answer these questions, we recently asked our real estate appraisal community, “What type of appraisal client makes up the majority of your client base?” Or, which Appraisal Clients are used the most?

While most appraisers said that the majority of their work comes from lenders (most often through AMCs), some said the bulk of their client base is made up of other types of appraisal clients, such as attorneys or private individuals.

To read the results and appraiser comments click here

Marketing and Management Tips for Appraisers

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