Appraisal News and Business Tips

Appraisal Foundation

4-12-18 Newz//What’s a Comp?, Multiple offers way over list, Rotating House

What’s a comp?

 
By George Dell, MAI, SRA

Excerpts: Our education tells us a comp is similar and competitive. So how do we measure “comparability”? If our job entails studying market data to get an answer … might it be important to know exactly how to describe a comp?

So what’s the issue? Why should we care? I am a highly trained expert. I have a license. “Trust me. I know a good comp when I see one.”

My comments: George is writing a longer article than his blog posts for the May issue of the paid Appraisal Today. I often wish his blog posts were longer, but they are designed to be short ;>

Read more!!

4-5-18 Newz//Weird home interiors, Reduced AQB requirements and state regulators, Data analytical tools

The rage of Airbnb rentals (and stuff to keep in mind about value)

By Ryan Lundquist

Excerpts: The owner has a cash cow. Her second unit is bringing in $3,300 per month as an Airbnb rental, and it’s paying her mortgage. Since these types of rentals are all the rage right now, let’s talk about some important details to keep in mind from a value perspective. This isn’t meant to be exhaustive, but I wanted to share some things on my mind. I’d love to hear your take in the comments.

Topics:
1) Airbnb rent vs. market rent
2) Lenders and market rent
3) Investors & seller expectations
4) The fine print and a 12% tax

Click here to read the details, plus the appraiser comments:

My comment: This stuff gives me a headache ;> These seem to be everywhere now, especially room rentals. The Local Politics can be a mess. I look at the income as a business. Very different than renting by the month or year (at much lower daily rates), unless it is in a popular vacation rental market.

Read more!!

2-2-17 Newz .Appraiser email scam .New Fannie updates .White House value

What is the White House Worth? Nearly $400 Million, Says Zillow

Excerpt: Want to buy the White House? Well, you can’t. But if you could, it would go for just under $400 million, says new hypothetical Zillow data.
According to the data, the White House has appreciated 15 percent since Barack Obama’s inauguration in 2009, and is currently valued at $397.9 million. Were it to actually be listed on Zillow, it would be the most valuable home on the site-and rightfully so.
My comment: Of course, we all know how accurate Zillow is ;>
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New Netflix Lemony Snicket series and Realtors – humor (Just for fun!!)
Excerpt:
Netflix release of “A Series of Unfortunate Events.”
The children fall in the care of Count Olaf (Neil Patrick Harris), their geographically “nearest living relative,” who is plotting to steal their fortune.  From here on out, the orphans initiate a process of guardian hopping following every next guardian’s death at the hands of Count Olaf.

Read more!!

12-15-16 Newz// Unique Airports, Deregulation and Appraisers, Victorians Under $200k

Beautiful airports and Victorians under $200,000

Unique and Beautiful Airports Around the World

Architecture that redefines what it means to travel in style.

All I can say is WoW!! Take a break for a few minutes and look at these photos…

http://www.atlasobscura.com/articles/photos-of-the-worlds-most-unique-and-beautiful-airports

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Affordable homes from all over the country (Hint: No fixers)

Just scroll down the pages.

7 Victorians under $200,000 (No tiny homes)

http://www.realtor.com/news/trends/victorian-homes-under-200k/

8 homes under $100,000 (Hint: no fixers)

http://www.realtor.com/news/trends/black-friday-bargain-homes-under-100k/

My comment: Wow!! Those Victorians in my city would be way over $1,000,000 on lots under 5,000 sq.ft. !!!


Sadly, The Appraisal Institute is now working against its local chapters by Jonathan Miller, posted 12/9/16
Read more!!

9-1-16 Newz:: Statistics humor, Abandoned islands, USPAP 2nd draft

Why Not to Trust Statistics – Humor

Statistics cartoons. Just for Fun!!

Mean, median, range, correlation, variance, correlation coefficient. Amazing what you can do with stats!!

Can’t describe it. Just click here for the cartoons.

https://mathwithbaddrawings.com/2016/07/13/why-not-to-trust-statistics/ Thanks to Joe Lynch for this great link!!

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The Incredible Ruins of 12 Abandoned Islands

Excerpt:

Of all the many places around the world that have been abandoned by their inhabitants and left to slump into obscurity and ruin, islands seem among the most unlikely. What’s not to love about an island? Yet there are dozens of isles scattered throughout the world’s oceans that have been deserted by their residents and left all but forgotten.

Frozen in time with nothing but a story to tell, many of these ghost islands have taken on an eerie and enticing second life in their desertion and disrepair. Here are 12 abandoned islands in the Atlas, each of which has a intriguing story behind its decline.

Good photos and comments. Just scroll down the page.

http://www.atlasobscura.com/articles/the-incredible-ruins-of-12-abandoned-islands

My comment: I live on an island in San Francisco Bay. Definitely very different mentality than non-islanders. I hate leaving the island. For the past two years, almost all my appraisals have been here. When I travel, I always go to any nearby accessible islands..

Read more!!

4-21-16 Newz .Levitating houses .Murders in house .Unhappy appraisers

Levitating houses?

Excerpts:

… One architect’s proposed solution for low-lying cities that have trouble with flooding. Inspired by amphibious houses, Lira Luis’ concept asks: what if buildings could avoid flooding simply by not touching the ground at all?

As sea levels rise, some low-lying cities have started experimenting with floating buildings and amphibious houses. But one architect has another unlikely sounding suggestion: What if buildings could avoid flooding simply by not touching the ground at all?

Architect Lira Luis thought of the concept as she was working on another installation that happened to be on water and required invisible, easily removable attachments. She started using magnets for the attachments, and when she accidentally held the magnets the wrong way, she noticed that they repelled each other even through a layer of water.

Click here to read. A bit “techie” but fascinating.

http://www.fastcoexist.com/3058400/this-architect-is-trying-to-build-houses-that-can-levitate

Thanks to Matt Cook for posting this Most Interesting Link!!

My comment: This is very relevant for predicted increases in sea levels. I live in a low-lying coastal city in San Francisco Bay. Recently, part of the city’s flood maps were revised to 100 year flood levels, requiring flood insurance if you have a federally insured loan. As usual, all the complaints from owners were about having to buy flood insurance. My house is about 5-6 feet above typical high tide now. When there are very high “King” tides (high tide plus heavy rains), it is closer to high tides. Flood maps for all coastal areas in the country are being revised.


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Voluntary Appraiser Disciplinary Action Matrix Based on 2014-15 edition of USPAP

A very interesting document provided by the Appraisal Foundation to state boards. Not mandatory, just information for them. State boards vary dramatically in how they handle discipline. Fortunately, I am in California, which has never had a state board (Governor of CA at that time did not want to increase any expenses, including advisory boards). Investigators are all state employees.

3 examples:

An appraiser states in his certification on an appraisal that he inspected the interior and exterior of the subject property, when in fact he only drove by the property.
As a result, he stated that the subject property was in average condition when it was actually in poor condition and essentially uninhabitable. He did not use any extraordinary assumptions or hypothetical conditions in the assignment. He knew that the lender required an interior inspection.

An appraiser accepted an appraisal assignment in an area where he is not geographically competent, failed to notify the client that he was not geographically competent and failed to take the necessary steps to become competent. As a result, he produced an appraisal that was not supported by market data.

In the sales comparison approach, an appraiser simply adds the adjusted value of the three comparable sales used and divides by three for an indicated value, even though some sales were far better indicators of value than others.

Note: These are the simple examples. There are more commercial appraisal examples and more complicated residential examples.

Click here to download from the Oklahoma state regulator web site.

My comment: Well worth reading. What does your state board do?

Thanks to Long Time Reader and author Doug Smith in Montana for this great link!!

Appraisal Today newsletter

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Alternative Valuation Products and USPAP

Appraisal Foundation issues Draft White Paper – Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice

Excerpts:
“At the request of its Industry Advisory Council, The Appraisal Foundation has drafted the attached white paper on Alternative Valuation Products and the Uniform Standards of Professional Appraisal Practice (USPAP).“

“The white paper is intended to provide information to assist appraisers, users of appraisal services, and others, with a greater understanding of Alternative Valuation Products and their use in the marketplace. The paper also attempts to view these products in light of an appraiser’s USPAP obligations.“

“All interested parties are encouraged to comment in writing before the deadline of December 31, 2013. Respondents should be assured that each comment will be thoroughly read and considered.“

Included are BPOs, AVMs, CMAs,
– Appraiser Price Opinions (APOs)
– Reconciliation Review Non-Standard Desktop Valuations/Field – – Reviews Full inspection proprietary appraisal form (non-GSE form)

My comment: lenders have been looking for an alternative to an appraisal report for a long, long time. For many fee appraisers, the issue is a low fee, even if it is uspap compliant. FYI, the Industry Advisory Council is composed of representatives from lenders, AMCs, etc. Of course, it is not the total fee, but the per hour billing, that is most important. If you get $400 for a report and spend 8 hours (including travel time, stips, etc.) you make $50 per hour. If you spend 4 hours for a $250 appraisal fee, you also make $62.50 per hour. Don’t make the mistake of focusing on the total fee.

Click here to read the 36-page document. The first 13 pages is the main section. The remainder is mostly excerpts from state laws.
https://appraisalfoundation.sharefile.com/download.aspx?id=sf61dc8e04054957a#

Appraisal Today newsletter

National Appraisal Compliant Hot Line to start by 3/29/13 Appraisal organizations ask for delay

ASC notice to state regulators:
Excerpt: The Hotline will begin operation no later than March 29,2013. The Hotline will refer complainants to appropriate State and/or Federal agencies to handlecomplaints of alleged violations of the Uniform Standards of Professional Appraisal Practice(USPAP) and/or appraisal independence requirements. The Hotline will direct complainants tocontact you to formally file their complaint using the existing protocols established by your State.The Hotline does not initiate complaints, act on behalf of complainants, arbitrate complaints, assistin appealing the outcome of complaints, or follow up on complaint referrals previously provided

Link to full notice:
http://www.scribd.com/doc/126820613/ASC-Appraisal-Complaint-National-Hotline-Notice-to-States
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Feb 4, ASA/NAIFA sends letter to ASC asking for delay

Excerpts of a few bullet points:
– The ASC designed the appraisal complaint hotline system behind closed doors, and has failed to allow stakeholders to comment on it prior to final implementation:
– The ASC’s hotline system, as proposed, violates congressional intent and the clear language of the dodd-frank provision authorizing it:
– Congress intended the hotline to provide appraisers with an ability to report efforts to undermine their independence, not as a catch-all mechanism to be used against appraisers by persons disgruntled because the appraised value did not meet their needs or for other non-specific or Non-serious reasons:

Link to letter http://c.ymcdn.com/sites/www.naifa.com/resource/resmgr/legislation/02.07.2013_letter_from_asa_a.pdf

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Feb 12, AI/ASFMRA sends letter to ASC asking for delay

Excerpt:

However, in speaking with state appraiser regulatory officials, practicing appraisers and others involved with real estate and mortgage finance, virtually no understanding of the hotline and its intended purpose, as well as the proposed protocol, exists. As such, we believe that the protocol could be met with unnecessary trepidation simply because to date the ASC did not seek stakeholder input. As such, we respectfully request that the ASC refrain from approving the protocol, and instead release the protocol for public comment, similar to the process used by the ASC in drafting Policy Statements. Since the hotline likely will impact other mortgage and real estate professionals and regulatory agencies, we believe that all stakeholders deserve to have an opportunity to review comment on the hotline before it is operational. This is the foundation of good government and, in this case, we believe that such a measure actually will engender support for the proposed protocol.

Link to AI/ASFMRA letter
http://www.appraisalinstitute.org/newsadvocacy/downloads/ltrs_tstmny/2013/AI-ASFMRA-to-ASC-on-Hotline.pdf

My comments: The ASC was mandated by law to set this up. I have not read all these links, so I have no opinion. It is all up to you!!

ASB issues 3rd USPAP Exposure Draft

The Appraisal Standards Board (ASB) has issued the following document:

Issued on November 30, 2012


Written comments requested by January 25, 2013

Third Exposure Draft of Proposed Changes for the 2014-15 edition of the Uniform Standards of Professional Appraisal Practice (USPAP)

 

 

This exposure draft includes:
Revisions to Reporting and Communication Requirements
Reporting Options
Retirement of STANDARDS 4 and 5
Other revisions and additions as needed to ensure clarity and relevance

Summary of proposed changes:
– Proposed Retirement of STANDARDS 4 and 5 (including revisions and additional Illustrations proposed for Advisory Opinion 21)
– Proposed Revisions to the DEFINITIONS of “Assignment Results,” “Report,” and “Scope of Work”
– Proposed Revisions to the RECORD KEEPING RULE- Report Options (includes proposal for options in STANDARDS 2, 8, and 10)
– Proposed Revisions to Advisory Opinion 11, Content of the  Appraisal Report Options of Standards Rules 2-2 and 8-2 and Advisory Opinion 12, Use of the Appraisal Report Options of Standards Rules 2-2 and 8-2
– Proposed Revisions to the COMPETENCY RULE
– Proposed Revisions to the PREAMBLE – When Do USPAP Rules and Standards Apply?
– Proposed Revisions to Standards Rule 3-5
– Certification Requirement Related to Current or Prospective Interest and Prior Services

The Board currently intends to adopt any revisions for the 2014-15 edition of USPAP at its public meeting in San Francisco on February 1, 2013.

Any such revisions would become effective on January 1, 2014, and any updates related to USPAP course material should be available by late summer 2013.

Link:  https://appraisalfoundation.sharefile.com/d/sbe05929a13844d89
Send Comments to ASBComments@appraisalfoundation.org

If there are any issues in this USPAP draft, be sure to speak out by 1/25/13!! This may be your Last Chance!! Members of the ASB read all comments.