appraisal business

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Remove all bathtubs from home?

By Ann O'Rourke on March 8, 2024 / adjustments, appraisal business, BATHROOMS, Economic analysis, forecast, modernization, real estate market / Leave a comment

Tags: adjustments, appraisal business, BATHROOMS, desktop appraisals, Economic analysis, forecast

Is it a problem to remove all bathtubs in a house?

By Ryan Lundquist

Excerpts: I’ve been asked this question twice this week. Is it a problem to remove the tubs from each bathroom? People planning a remodel asked if it was a big deal or not to only have a walk-in shower in each bathroom. Here are my thoughts, and I really want to hear from you too. Anything to add?

It’s not a black and white answer: There’s not one black-and-white answer that applies to every house, price range, location, or market. Bottom line. But backing up, part of the fun of working in real estate is figuring out how to answer questions like this in a way that is balanced and hopefully reflective of the sentiment in the marketplace.

CubiCasa – Home Measurement From Inside A House

Appraising Luxury Homes

By Ann O'Rourke on March 1, 2024 / appraisal, appraisal business, bias, real estate market / Leave a comment

Tags: appraisal business, bias, real estate market

What Are the Top Luxury Markets in North America Right Now?

Excerpts: Where are the hottest high-end real estate markets? Whether you’re looking to specialize in luxury home appraisals or you’re simply reading up on the latest market trends, you may want to pay attention to areas where luxury homes are in high demand.

According to the Institute for Luxury Home Marketing’s February 2024 report¹, the single-family luxury home segment is showing promising signs of growth. Both inventory levels and new listings increased significantly in recent months, leading to an 18 percent increase in sales and a 1.6 percent increase in the median sold price. Even more telling, contract signings for homes priced at $1 million or more have increased by 11 percent over last year, and demand remains high among affluent buyers.

Top list of luxury home markets in 2024. You may be surprised!

To read more, Click Here

My comments: In this newsletter, I always know what are hot topics. Constant Contact gives me the number of clicks. Most popular is usually Claudia’s advice at the top of every email. Also popular are large luxury homes with a photo.

I have been thinking for a while about including appraising luxury homes, since my subscribers like to read about them. Maybe a possible specialization? There were not many where I worked, so I did not specialized in them But, I see my area, East Bay California is listed now! The median home price in the Bay Area is around $1,300,000.

Check out the list of areas in the article to see if any are close to you.

Lenders have always had special, very small lists of appraisers who can appraise these homes. I assume the AMCs have these types of lists. Some may not have them. You definitely must get a higher fee for them.

I know several appraisers who have been doing them in my area for a long time. To do them, it is best to work in an area with many luxury homes. You need to network with the brokers that sell them.

The post above is also a promo for McKissock’s Certified Luxury Home Appraiser Program. 14 hours of CE for $650. I have not taken it, but I don’t know of many other types of diversification with a certificate. Might be interesting even if you don’t know if you want to do them.

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2024 USPAP For Appraisers

USPAP Myths for Appraisers

By Ann O'Rourke on January 5, 2024 / appraisal, appraisal business, bias, humor / Leave a comment

Tags: appraisal business, bias, humor

Five USPAP Myths Dispelled in 2024 USPAP

By Daniel A. Bradley, SRA, CDEI, McKissock Learning

On May 5, 2023, the Appraisal Standards Board (ASB) voted to adopt changes to the Uniform Standards of Professional Appraisal Practice (USPAP), which will become effective January 1, 2024. These represent the first changes to USPAP in four years. Many of the changes will not have a significant impact on the way appraisers practice but are nevertheless important for public trust.

Appraisers and the public have traditionally held several misconceptions about USPAP, and these changes should help to dispel some of those myths. There are five myths and misconceptions that are addressed in the changes to the 2024 USPAP.

Myth 1: USPAP Allows Discrimination as Long as the Appraiser’s Conclusions are Supported

Myth 2: The Removal of the Definition of Misleading from USPAP Reduces Liability for Appraisers

Myth 3: An Inspection of the Subject Property by a Third Party is the Equivalent of a Personal Inspection by an Appraiser

Myth 4: Appraisers are not Required to Analyze Prior Non-Sale Transfers of the Subject Property

Myth 5: The USPAP Update Course Cycle is the Same as the USPAP Publication Cycle

To read more, Click Here

My comments: It’s worth reading, especially if you do residential lender appraisals. Lender issues are a significant factor in USPAP and Myths 1 to 4. I suppose it is because most appraisals are done (now) for residential lending purposes. Many thanks to Dan Bradley for writing about the 2024 USPAP changes.

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Functional Obsolescence for Appraisers

By Ann O'Rourke on December 29, 2023 / appraisal business, bias, real estate market / Leave a comment

Tags: appraisal business, bias

Understanding Functional Obsolescence in Appraisals

By: McKissock

Excerpts: For appraisers, functional obsolescence can be a challenging concept because the elements that influence property values may not be obvious or immediately apparent. To help you better understand what it means and how to pinpoint it, we’re exploring some examples the different types of functional obsolescence, and how it can influence property values.

Functional obsolescence may or may not be caused by trends in buyer or market preferences, outdated design, or even advances in technology. Let’s look at a few examples:

A home has three bedrooms, but to reach the third bedroom, you have to walk through the other secondary bedroom. Buyers are likely to see this as a flaw in the floor plan regardless of trends.
A home has a separate formal living room, an enclosed kitchen, and a separate dining room. Today’s buyer prefers a more open, casual layout and may find the separate rooms a flaw in the floor plan, though this may change with market trends.
A home with radiator heat and window unit air conditioning may be seen as functionally obsolete, and thus less valuable, as more modern homes have forced air furnaces and central air conditioning.

Measuring functional obsolescence and its effect on a property’s value can be challenging for even experienced appraisers. To ensure accurate reports, it’s essential you stay up to date and aware of market trends, and even code and building updates, as these changes over time do determine both curable and incurable obsolescence.

To read more, Click Here

My comments: All appraisers see functional obsolescence. Making adjustments can be tough. You need to know the market reaction.

For example, there are many Victorians in my market. They were built without closets and used armoires (free standing closets). It is not considered functional obsolescence as it retains a classic feature in many Victorian homes. I always wonder about what appraisers from tract home areas think about Victorians. I assume (hope) they ask local agents. When I started appraising them, that’s what I did.

I regularly tell local agents that “tandem” rooms don’t count as bedrooms. I’m trying not to think about how many listings have an incorrect number of bedrooms!

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Market Your Appraisal Services: 59 Ways to Get More Business Now

Superadequacy Adjustments for Appraisals

By Ann O'Rourke on December 22, 2023 / adjustments, appraisal business, bias, humor, statistics / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, bias, statistics

How to Account for a Superadequacy

By: McKissock

Excerpts: What is superadequacy?

Per The Dictionary of Real Estate Appraisal, 6th Ed., superadequacy is defined as “an excess in the capacity or quality of a structure or structural component; determined by market standards.” It’s a type of functional obsolescence in which the structure or one of its components is overly improved to a capacity or quality than a prudent buyer or owner would build or pay.

While we provide more detailed illustrations below, a simple example would be a 5,000 square foot luxury home built in a neighborhood comprised of two and three-bedroom mid-century ranch homes.

Example #1: Superadequate custom fireplace

Example #2: Superadequate 12-car garage

To read more, Click Here

My comments: Although the blog post references luxury homes, this can occur anywhere. Have you ever driven closer and closer to your subject and noticed that the homes are much smaller or have standard designs? You keep getting closer, hoping it is not your subject. It Is! This definitely has happened to me. Large unusual additions, two large kitchens, very extensive landscaping, etc.

Maybe you were busy and forgot to check it out in public records, MLS or speaking with the owner or agent (if a sale) when scheduling the appointment.

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The UAD and Appraisers – Past, Present, and Future

UAD and Forms Redesign Update for Appraisers

By Ann O'Rourke on December 15, 2023 / appraisal business, appraisal forms, bias, Economic analysis, forecast / Leave a comment

Tags: appraisal business, appraisal waivers, bias, Fannie, future

UAD and Forms Redesign Update

Excerpts: Improving the Quality and Consistency of Appraisal Data

Freddie Mac and Fannie Mae (the GSEs) have worked on the UAD redesign since 2018, leveraging extensive stakeholder input to update the appraisal dataset, align it with current mortgage industry data standards (MISMO® v3.6), and replace the GSE appraisal forms with a single data-driven, flexible, and dynamic appraisal report for any residential property type.

To watch the Excellent UAD and Forms Redesign Video (3 min. 47 seconds) Click Here

For more detailed information on web page Click Here

My comments: Watch the short video. On the links list on the right side of the webpage, GSE Experts Answer Your UAD Redesign Questions is short and understandable.

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Why Comp Photos in Appraisals?

Appraisals: Using Comps Across a Freeway?

By Ann O'Rourke on December 1, 2023 / adjustments, appraisal business, non-lender appraisals, waivers / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, non-lender appraisals, waivers

Pulling comps from the other side of the freeway

By Ryan Lundquist

Excerpts: It can be a REALLY bad idea to pull comps from the other side of the freeway, but not always. Today I have some thoughts about location, comp selection, and lenders freaking out when schools are mentioned in appraisal reports.

I don’t normally pull comps across a highway

In so many cases it’s an awful idea to cross a major road or highway to pull comps because a highway sometimes separates markets that are far different in age, square footage, lot size, architecture, price point, school district, etc….

But, crossing the highway does work here

With that said, I want to show you an example of a local neighborhood where I have zero hesitation about pulling comps from both sides of the highway. The areas north and south of Highway 50 below represent the College-Glen area…

Why it’s no biggie to pull comps like this

A) Prices are similar: Prices are similar on each side of the highway. I’ve found this when pulling comps through the years, and I’ve also shown this when making graphs. I will say the north side tends to have a slightly larger square footage than the south side (same with west vs east), which is something to consider when we compare stats. But it’s still not a major difference.

B) Buyer Behavior …

C) School System …

To read lots more, plus maps and many appraiser comments, Click Here

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Appraisers Riding the Waves of Up and Down Mortgage Rates

By Ann O'Rourke on November 24, 2023 / appraisal business, state appraiser regulators / Leave a comment

Tags: appraisal business, liability, va

The Surfing Appraiser

Riding the Waves of Up and Down Mortgage Rates

By Mark Buhler

Excerpts: Riding the waves of the appraisal profession can result in a range of outcomes and emotions over time. Appraisers, and surfers, have varying levels of experience, and experiences. Most appraisers have been through some extremely busy seasons that have been very positive. Those same appraisers have gone through droughts, where appraisal orders dried up.

Appraisers have been blessed to have the independence and autonomy to create whatever they want for themselves. Most workers in America do not have the same opportunities for success and advancement that appraisers have. Look at this lull as a time of opportunity. A time to finally work on and execute a plan for your business.

During the refinance boom of the early 2020’s, the majority of appraisers did not have time to come up for air. The waves of work kept them down, and every time they got a chance-they grabbed the next order (or wave) and maximized the opportunity while it was there. Appraisers were busy cranking out appraisal reports. Now appraisers are not busy, but they should be. Do not get out of the water and put your surfboard away. Stay out there, splash around in the calm ocean, there are waves coming.

To read more, Click Here

My comments: Read the full article! This article uses surfing as an excellent illustration. In my 20s, I lived in my van for a few years and parked it near my surfer friends’ house in Santa Cruz, CA. They surfed every morning when the waves were good (Steamer Lane), cold or raining. When the waves were low, they stayed home or went over to see if there were any changes. I watched and listened to them talk about it and learned a lot. A very good analogy to appraising.

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NAR Member Survey on Appraisal Data Collectors

Appraisers and Property Data Collectors

By Ann O'Rourke on November 17, 2023 / appraisal business, bias, modernization / Leave a comment

Tags: appraisal business, bias

4 Myths About Property Data Collection

By McKissock

Excerpts:

Myth #1: PDC is the same thing as property appraisal

As a professional appraiser, you know very well that what a property data collector does is not the same as what you do — even if your clients don’t always understand the difference. While there is some overlap, being qualified to perform an appraisal requires much more training, education, and expertise, and the job goes far beyond gathering physical data.

Myth #2: Data collectors are going to replace appraisers

There’s a lot of buzz right now about PDC possibly replacing traditional property appraisal, but the intent of this service is to fill a gap in the lending process. The job assignments given to property data collectors are often the types of assignments that wouldn’t come across an appraiser’s desk. For example, property data collectors (PDCs) may be engaged by lenders for very low-risk loans where an appraisal is not required.

Myth #3: PDCs are not properly trained or qualified

While there isn’t a license, PDCs are still required to be trained and competent to do their job. Both Fannie Mae and Freddie Mac require that PDCs must be professionally trained and vetted. They must adhere to Fannie Mae or Freddie Mac’s property data standards which set forth the minimum requirements for collection of the subject property data.

Myth #4: PDC is bad for appraisers

Probably the most prevalent myth is that PDC is bad for appraisers and bad for the profession in general. But in actuality, it may offer some significant upsides for appraisers. In particular, becoming a property data collector may be beneficial for:

Appraisal trainees in need of extra income
Busy appraisers who are looking to delegate tasks
Older appraisers who are looking to reduce physically demanding tasks or may be transitioning into retirement
Any appraisers wanting to grow their bifurcated and hybrid appraisal services

To read more, click here

My comments: We all know that appraisers would be the best PDCs. My article in the November issue of Appraisal Today has lots of information, including lists of which AMCs use PDCs. “Property Data Collectors (PDCs) Will Be Widely Used by Lenders in the GSEs Value Acceptance + Property Data Option”

This is an excellent diversification opportunity while business is slow. Trainees can do them.

Data Collectors: Appraisers vs. Uber Drivers

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