9-11-20 Newz: Racial Bias and Appraisers? – Appraisal Process Challenges – House With 11 Domes

The Most Challenging Part of the Appraisal Process

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).

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11 connected Domes in Australian house!!

Just For Fun! What We All Need!!!

Excerpt: With 11 domes and twenty rooms across 1,050-square metres (10,925 sq.ft.) of floor space, this house, or spaceship, is a “world first”.

It’s situated on half a hectare (0.74 acres), with multiple balconies and a wine cellar.

To see lots of very interesting photos click here

My comment: I tried to count the domes myself but gave up! I have never seen, or heard of, a house with this many connected domes. I definitely would need to use a builder or architect drawing!! I would go crazee trying to measure this house…..

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8-7-20 Newz: What type of clients do you have? – Rotating Dome Home – Fannie Solar Panel Update

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?”

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

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5-22-20 Newz: Refis to Surge – Selling Over List – What’s Happening in Your Market?

Mortgage refinancings set to surge to a 17-year high

Lenders probably will originate $1.5 trillion in refis, a 51% jump from 2019, Fannie Mae says

Excerpt: Even as other parts of the economy tank, lenders will originate $1.5 trillion in refis in 2020, a 51% jump from 2019, according to the forecast. That would be the highest level since 2003 when $2.5 trillion of mortgages were refinanced, according to data from the Mortgage Bankers Association.

The lowest interest rates on record will bolster refis after the Federal Reserve began buying mortgage-backed securities to stimulate bond demand and grease the wheels of the credit markets. The average U.S. rate for a 30-year fixed mortgage fell to an all-time low of 3.23% at the end of April, according to Freddie Mac.

It’s probably heading even lower, according to the Fannie Mae forecast. The average rate probably will be 3.2% in the second quarter, down from 3.5% in the first quarter, and drop for the rest of the year.

To read more, click here

My Comment: And I thought my 3.5% rate loan was a low rate!! Everyone should refi!! Appraisers will be very busy!! Maybe more lenders will order external and desktop appraisals.

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Will Sex Sell? BDSM Dungeon in Arkansas Basement

Excerpts: A hidden door gives access to the dungeon, leading down a spiral staircase. At the bottom is a full nightclub, outfitted with an entertainer’s pole, along with custom-BDSM furniture Shayne made himself.

The couple says the neighborhood is quiet and an excellent place to raise a family.

Some of their neighbors know about the dungeon, and a few have been invited over. The space isn’t a dirty secret, and the couple is happy to talk about it with anyone who shows interest.

Despite the fact that the surrounding community is largely conservative, Shayne says the couple has had “zero negative feedback ”

For more info and lotsa fotos click here

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2-14-2020 Newz: FIRREA Under Attack – Spectacular Spirals – Lending Up to 2005 Levels

FIRREA Under Attack!

Excerpt: Congresswoman Maxine Waters and Congressman William Lacy Clay request a formal study/investigation into Title XI (FIRREA) and the recent dilution of its intent by the Federal Agencies. The letter to Gene Dodaro, Comptroller General, Government Accountability Office, addresses threshold increases, regulatory exemptions, appraisal waivers, the North Dakota appraiser certification waiver and evaluations in lieu of an appraisal. It is clear the Chairwoman of the House Financial Services Committee and Subcommittee Chairman on Housing, Community Development and Insurance see the issues surrounding the recent events.

To read the press release and appraiser comments, click here

My comment: finally someone in Congress is noticing what is happening and complaining to the GAO!!

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2-7-20 Newz: Obsolete Appraisers – Apartment AVMs – Outlier Sales

Not getting distracted by outlier sales

By Ryan Lundquist

It’s been a record-breaking couple of years. In New York we saw the highest residential sale ever in the United States at $238M. Then a couple months ago California got a new record with the Beverly Hillbillies mansion at $150M. And now there’s a listing in Bel-Air that just hit the market at $500M. The truth is it’s easy to get distracted by the bling of outlier sales because of how lofty the prices are, but here are a few things to keep in mind….

1) These sales don’t pull the market up: Outlier sales don’t pull the rest of the market up, and they have nothing to do with the entry-level market or affordability for the average person.

2) I just gotta have it: My observation with the highest sales is sometimes cash buyers offer prices that seem disconnected from what looks reasonable on paper. This doesn’t happen in all situations, but sometimes it does where the buyer simply says, “I just gotta have it.”…

For lots more tips, plus a few graphs, click here

My comment: When doing any type of statistical analysis, it is important to look at the outliers, high or low, so you can eliminate them in your data set. Very easy to do.

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1-30-20 Newz: Tax Records SqFt. – Weird SFR Zoning – 5 ft. Wide Home

13516718 – white wood texture with natural patterns

Tax Records is not the definitive source for square footage!

By Ryan Lundquist

Excerpt:

Why is the appraiser saying it’s only 1,400 sq ft? Tax Records shows the home is 600 sq ft larger. This issue comes up ALL the time, so let’s talk about it.

The truth: The Assessor’s records are generally reliable, but I’m just saying sometimes they’re not. Why is this? At times it’s as simple as the original builder not turning in accurate information when a house was built. Or maybe an owner took out permits but official records were never updated. Of course we’ve all seen instances where the tax roll shows two units on one lot, but there’s really just one house nowadays. Let’s not forget sometimes owners do an addition without permits, so the Assessor might actually be correct even though the house is technically larger or has even sold on MLS as a larger home. For reference, here are ten reasons why an appraiser’s sketch might be different.

For lots of comments and more info, click here

My comment: This one of the main reasons that AVMs will never be very successful for all homes. Over and over again, statistical analysis shows GLA is the most important physical feature overall.

Also, how bedrooms are determined varies a lot, depending on the local market and can vary over time. The assessor number of bedrooms may not match the appraiser’s. For example, tandem rooms. Finished basements can vary also.

I started appraising at a CA assessor’s office in 1976. In CA, State Board of Equalization regulated county assessors offices, so the procedures and terminology are very similar all over the state. However, GLA from the assessor may have different requirements than other sources, such as ANSI.

Proposition 13 passed in 1979, which only allowed an annual 2% increase in assessment per year, unless there was a sale or improvements (determined by permits). Over time, the information has become more and more out of date.

Data is not available for smaller counties if the assessor says it is confidential. Until the 90s, my county did not release any data, so I had to “guesstimate” on square footage for sales and listings. We finally got it when an MAI was elected assessor.

In the early 90s, I researched assessors records around the country. In some small rural counties the records were kept at the assessor’s home. They were not digitized and available for purchase by data companies.

Appraisers need to know which areas are not accurate. Someties GLA is “political”. Within a city, accuracy can vary. In my city the least accurate records are in the “Gold Coast” with many of the city’s larger, historic homes. In other nearby cities, some properties have low GLAs to keep the property taxes lower.

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12-6-19 Newz: Appraisal Shelf Life – AVMs – Neighborhood Analysis

What’s the Shelf Life of An Appraisal?

Except: All of this has let me to the question du jour. What is the shelf life of an appraisal? I am asked on a regular basis, “How long the appraisal is good for?”. The simple answer is, one day. Namely, the effective date of the report. Real estate appraisals reflect the appraiser’s opinion of value of the property being appraised, based upon a specific point in time. Why?

Real estate values are changing every day. Like food, there are external forces that affect the value of a home, and how rapidly it changes. Does that mean that the appraised value will be dramatically different the day after the effective date of the appraisal? Probably not. However, no appraiser can see into the future to know what tomorrow will bring.

To read more, see fotos and comments click here

My comment: I love these very creative articles. I have no idea how he does mashups of appraisals and all types of other topics! Plus I thought I understood food shelf life. Now I know a lot more ;> Creative videos and animated gifs, etc. Lotsa fun!!

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11-29-19 Newz: Choosing Comps – VA and Bifurcated – Most Expensive Homes

By George Dell

Excerpt: This question caused me to rethink the relationship of ‘spiritual’ or ‘mental health’ principles to profitable business practices. From last year’s blog, the research showed benefits with: relationships, physical and emotional health, reduced anger/isolation, sleep, self-esteem, and even improved brain power! Cool.

So, do these things cost me money? Or do they help make more money?

Let’s start with the obvious: what’s in an appraiser’s required belief system: Standards, ethics, and conduct. Recall that USPAP requires you to be worthy. Worthy of belief. Credible.

So, what in that list helps me make more money?

To read more, click here

My comment: Very good appraisal comments for Thanksgiving and the upcoming holidays! Worth reading.

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8-30-19 Newz; 99.99% Price Drop – Curious Bathrooms – Amazon’s $105K House

Once listed for $1 billion. Sold for $100,000. What just happened?

Excerpt: A heated court battle, a last-second offer and a sparsely attended auction behind a fountain in Pomona — this chapter of the famed Mountain of Beverly Hills ends not with a princely sum but a sale price more like that of a sports car.

Touted as the city’s finest undeveloped piece of land, the 157-acre property redefined the luxury market when it listed for a record $1 billion last year. On Tuesday, it sold for a mere $100,000 at a foreclosure auction, a fraction of the $200-million loan outstanding on the property.

A markdown of 99.99%, of course, comes with some fine print. Any other buyer would have been on the hook to repay that loan — and this buyer has to eat that loss

To read more, click here

My comment: Quite a story!! Only in LA, of course!! FYI, I am in Northern CA… very different here. We think we are superior to LA ;>

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8-23-19 Newz: Deminimus = $400,000 – Highest and Best Use – Fannie Cost Approach

Highest and Best Use – Residential Appraisers Need To Understand It!

Excerpt: There are many valuation products out there. CMA’s, BPO’s and AVM’s to name a few. What you will likely not see in those kinds of valuations, is the specific zoning class for the property being valued. Why?

With these types of valuations, a highest & best use (HBU) analysis is generally not made. However, if you hire an appraiser to value your home, we will perform this analysis. What is a highest & best use analysis? Why is it important in the development of an opinion of value? How is zoning involved?

To read more and see the fun animated gifs click here

My comments: My Most Frequent Residential Appraisal Rant!! I started at an assessor’s office in 1975. The First, and Most Important, Question was “What is the highest and best use?” In 1986 I started doing residential lender work. The form was just a check box for HBU. If you checked No, it was a big problem for the lender. Many residential appraisers don’t check the zoning, general plan, etc. One good way is to just drive around and see what is happening. For example, lots of small homes being torn down and McMansions being built. Or, lots of houses on a busy street converted to office uses. Or, a small house on a big lot with apartments all around it. A common residential issue is a possible lot split.

Don’t forget the General (Or Specific) Plan. It tells you what the city wants today and in the future for land use, which is not discussed in this article.

I have appraised a lot of older commercial properties for lenders, which often had a HBU different than the current use. I discussed it in my appraisals.

When there is a big difference in value between two appraisals, it is often due to a difference in opinion of HBU. Don’t get into trouble. Be sure to think about HBU!! If you’re not sure, contact an experienced appraiser, particularly one who does a lot of non-lender work and/or commercial appraisals.

In the Feb. 2017 issue there is an excellent article written for residential appraisers by Denis Desaix, “Residential Highest and Best Use Analysis: more than Just a “Check box” available to paid subscribers. See below.

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