Waterfront Property Appraisals

By on September 27, 2024   /   appraisal how to, appraisal modernization, Economic analysis, liability, Mortgage interest rates   /   Leave a comment
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Newz: Rate Drops and Appraisers, UAD Overhaul, Avoiding Court

September, 30 2024

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

  • Avoiding Court: A Common Sentiment Among Appraisers (LIA ad below)

  • Making Waves: Appraising Waterfront Property

  • $850K Nantucket ‘Shack’ That Looks Set To Plunge Into the Sea

  • New UAD Overhaul: What Appraisers Can Expect in 2025 & Beyond

  • Sticky Prices

  • The Fed is finally lowering interest rates. What does it mean for appraisers?

  • Experts Predict Where Mortgage Rates Are Headed in 2025 as the Fed Cuts Rates

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Making Waves: Appraising Waterfront Property

Excerpts: Appraising waterfront properties involves a comprehensive evaluation of various factors that go beyond typical residential appraisals. By considering the unique aspects of water frontage, local regulations, environmental factors, and property-specific amenities, you can provide credible and comprehensive valuations that reflect the worth of these highly sought-after properties.

Understanding the depth, quality of the water, and type of shoreline is crucial, as these elements directly influence the property’s usability, aesthetics, and long-term stability. The importance of these factors cannot be overstated, and they deserve careful consideration in every waterfront property appraisal.

1. Water Frontage and Access

One of the most critical elements in appraising waterfront properties is the type and extent of water frontage. The value can vary significantly depending on whether the property is adjacent to a lake, river, ocean, or pond.

5. Depth of the Water

The depth of a water body significantly affects its usability, particularly for recreational activities like boating, fishing, and swimming. Shallow water might limit boating and can lead to stagnant water, which may contribute to unpleasant odors and an increase in insects like mosquitoes.

Conversely, deeper water is often clearer, supports a healthier ecosystem, and is more desirable for recreational use, thereby enhancing property value.

To read the details on all 8 factors, Click Here

My comments: Excellent article. Worth reading. The best I have read on this topic. Even if you never appraise a waterfront home, most people have been to a lake or other type of waterfront property on vacation. I live on an island in San Francisco Bay with water on all sides plus a small area on a nearby peninsula with 3 sides waterfront. I moved here in 1980 and appraised hundreds of waterfront properties including condos plus semi-detached and detached homes.

I lived for 25 years in three waterfront homes with boat docks in my city and am very familiar with with the issues above. I have appraised waterfront homes with 7 of the 8 factors in the blog post, except utilities as all were public utilities with no problems).

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Appraising New Construction

By on September 13, 2024   /   appraisal modernization, GSEs, liability   /   Leave a comment
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September 13, 2024

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

  • Family Feud and Intended Use
  • 6 Tips for Appraising New Construction Homes
  • Vast $100 Million Equestrian Estate With a Bowling Alley in Rancho Santa Fe, CA
  • Mortgage Volume Forecasts
  • New UAD GSE online appraisal report samples
  • Inside the Tiny Arkansas Town Where Homes Sell for $400—With a Huge Catch
  • Mortgage applications increased 1.4 percent from one week earlier

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2024 Updated UAD and URAR – What does It Mean for You?

Real Estate Agents and Comparable Sales – Tips for Appraisers

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6 Tips for Appraising New Construction Homes

Excerpts: Lenders, FHA, and the GSEs (Fannie Mae and Freddie Mac) treat new construction a little differently. When appraising new construction homes, certain factors that don’t always apply to existing dwellings must be considered.

New construction appraisals require more work, so you want to charge a fee that is commensurate with the work involved. Perhaps more than that, you need to follow the proper protocols. Stick to these best practices to ensure you cover all your bases when performing a new construction appraisal.

1. Don’t rely totally on blueprints during a new construction appraisal

2. Gather as much detail about plans and specs as you can

3. Keep a file of local building costs

4. Be careful when choosing comparables for a new construction appraisal

5. Use the sales comparison method for site value (if possible)

6. Know the applicable requirements for an appraisal on new construction.

To read more, Click Here

My comments: Read this if you do new construction. I have done many new home appraisals from one-off custom homes to all sizes of projects. My advice: Always check what plan and updates were actually built when doing final inspection. Getting the actual costs and upgrades can be difficult to obtain on the subject and the comps from the project sales office. I always asked to see the final sales document data. Sometimes I got them.

I finally quit doing them – too much hassle. There is little new construction where I work, except for infill projects – townhomes and and condos. My area is almost fully developed, so I did not lose much work. On the plus side, I learned a lot about construction!

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Appraisal Institute Counters Flawed Appraiser Bias Narrative

By on April 19, 2024   /   AMCs, appraisal modernization, modernization, non-lender appraisals   /   Leave a comment
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Appraisal Institute Counters Flawed Appraiser Bias Narrative

Excerpts: In reality, appraisers have a great story to tell, but we have a long way to go to refocus the terribly flawed “appraiser bias” narrative onto facts and science.

Last week’s email from Cindy Chance, the CEO of the Appraisal Institute, marks an important and long overdue shift in the organization’s approach to addressing accusations of bias in the appraisal profession. For too long, appraisers have faced sweeping claims that their valuations are biased against certain groups, despite appraisers’ ethical standards, rigorous training, and lack of financial stake in transactions.

As Chance acknowledges, the Institute should have done more to advocate for appraisers and make the public aware of their professionalism. This public acknowledgement of an obligation to counter the flawed “appraiser bias” narrative is an encouraging first step. Appraisal organizations like the Appraisal Institute should advocate for appraisers, as advocacy is a key membership benefit. Industry groups should also step up to support appraisers.

Importantly, Chance points out that claims of appraiser bias contradict what appraisers actually do. Their role is to provide impartial, data-driven opinions of value. She explains how pioneering research in psychology revealed that all humans have cognitive biases, but professionals like appraisers are trained to minimize bias through rigorous methodology. In fact, appraisers’ discipline protects homebuyers and the industry from irrational biases.

Chance suggests the Institute will undertake communications grounded in facts and science to reframe the false narrative around appraiser bias. With their scientific expertise and ethical standards, appraisers have a strong basis to counter the accusations. Chance’s leadership in publicly addressing the issue and committing to advocate for appraisers represents an encouraging change of direction for the Institute.

To read more, including the full document, Click Here

My comments: Read it. Note: it can be “dense” with very long paragraphs. This is, by far, the best writing I have seen on bias related to appraisals. I have been saying for a while that all humans are biased in some way. It is human nature.

When I read it last week, I was going to put a link to it in this newsletter. Now that appraisersblogs has published the full document, you can read and make comments.

For a long time, since AI dropped out of the Appraisal Foundation, I have said, “I am a 35-year member of AI. I stay because my MAI is very, very valuable (similar to CPA).” Plus, I have an excellent local chapter.

I have been reading Cyndi Chance’s emails to members and following her activities to reach out to local chapters since she started last fall.

I am so glad that AI is now taking on the bias issue. I recently took USPAP plus two California bias classes in a two week period. After I finished them, I thought of giving up my license (CA is not a mandatory state) and maybe quitting appraisal. After a rough weekend, I decided not to leave. Finally, I now see there is hope!

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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals, forms to reports modernization, AMCs, earthquake risk, unusual homes, mortgage origination stats, etc.

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