New URAR For Appraisals

Newz: New URAR, GSEs Update Appraisal Market Areas Requirements, Lender Redlining

November 8, 2024

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

  • Claudia Says: Navigating Value Revisions in Appraisals

  • The New URAR: Embracing New Beginnings

  • $19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market

  • CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

  • October 2024 Real Estate Market Update: A Balancing Act of Hope and Hurdles

  • What can we expect for the future of the appraisal and the country?

  • GSEs Update Appraisal Market Area Requirements

  • Mortgage applications decreased 10.8 percent from one week earlier

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The New URAR: Embracing New Beginnings

By Jo Traut

Excerpts:

What’s New with the New URAR?

Think of the new URAR like upgrading from a basic flip phone to a modern smartphone. The old flip phone did its job—making calls and sending texts—but the new smartphone offers so much more. It’s customizable, adaptable to various apps and functions, and streamlines your daily tasks.

Similarly, the new URAR goes beyond a static, one-size-fits-all approach. It’s dynamic and data-driven, tailored to different property types and appraisal assignments, ultimately allowing us as appraisers to provide clearer and more comprehensive reports .

Why the Change?

The existing URAR has been dependable, much like an old-school flip phone. But as technology advances and standards evolve, the mortgage industry requires a more versatile tool. This redesign addresses current inefficiencies, meeting the rising demand for improved reports, as well as enhancing the experience for both appraisers and report readers.

To read more, Click Here

My comments: Read this blog post! Definitely the best practical appraisal advice I have read on new URAR. Includes links to relevant technical details.

No more 30-40 page appraisal SFR reports that is not what GSEs (and most appraisers) wanted. No more outdate “forms” reports that do not change fast enough to accommodate GSE (and USPAP) changes.

Both URAR and UAD acronyms are used in articles and references I have read. I like that the GSEs kept the same name for the reports (formerly “forms”)

URAR – Uniform Residential Appraisal Report

UAD – Uniform Appraisal Dataset

I will be writing more about the new URAR upcoming changes in future issues of this weekly newsletter and my monthly newsletter.

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$19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market

Excerpts: 7 bedrooms, 7.5 baths, 9,629 sq.ft. 3 Acre lot, Built in 1914

Adjacent to the famed Kennedy Compound in the exclusive Hyannis Port enclave, the eight-bedroom mansion, known as Port View, has just become available “for the first time in a quarter century,” according to the listing.

The seaside, 9,629-square-foot residence sits right next to the home where President John F. Kennedy and wife Jacqueline Kennedy Onassis famously spent their summers sailing the waters of Nantucket Sound.

Some of the most impressive features found throughout the 26-room estate’s open floor plan include high ceilings, ornate architectural details, an imperial staircase, and six fireplaces.

“The whole interior views to the water,” she said. “It’s like being on a ship with front row ocean views. You are just drawn to it.”

Built in 1914, the Cape Cod mansion has been thoughtfully modernized over the years to retain its historic integrity.

Period details include exposed-beam ceilings and preserved mahogany inlay floors. French doors from the main living and dining areas give way to an enormous patio with waterfront views.

To read more, Click Here

To see the listing, with 28 photos, Click Here

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CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

Top mortgage lender to pay a $1.9 million penalty and provide $7 million in loan subsidies

Oct. 15, 2024

Excerpts: Today, the Consumer Financial Protection Bureau (CFPB) and the Justice Department (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions.

Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement announced today would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods.

To read more, Click Here

My comments: How much money did Fairway make vs. what an appraiser makes for an appraisal. More lenders in the news vs. “biased” appraisers!

Read more!!

Appraising Kitchens

Newz: FHFA Waiver Expansion, AMC Appraisal Fees, Appraising Kitchens

November 1, 2024

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

  • Construction Progress Inspection Reports: Claims Involving ADUs and Remodels
  • Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations
  • Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.
  • FHFA’s Appraisal Waivers Expansion
  • The Great Debate on Appraisal Fees
  • Updated UAD redesign timeline with specific implementation dates
  • Mortgage applications decreased 0.1 percent from one week earlier

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Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations

Excerpts: When it comes to real estate appraising, kitchens often play a pivotal role in determining a home’s value. A well-appointed kitchen can significantly enhance a property’s appeal and marketability. As an appraiser, understanding the nuances of kitchens is essential to providing credible and insightful valuations. Let’s dive into appraising kitchens and how the room impacts market value.

Functional Obsolescence and Price Point

If a back corner kitchen or a galley kitchen does not align with current market preferences for homes of a similar age, it might be considered outdated and impact marketability. However, this does not necessarily rise to the level of functional obsolescence that must be remedied. An outdated but functional kitchen might not be a major concern in lower price ranges.

Conversely, in high-end homes, buyers expect the latest designs, features and finishes; and therefore, an outdated kitchen may be considered as functional obsolescence.

Appeal & Functionality Count when Appraising Kitchens

In conclusion, appraising kitchens requires a thoughtful, balanced analysis of market trends, quality, and functionality. While it’s important to understand current design preferences, the value of a kitchen is ultimately determined by how well it meets the expectations of buyers in a particular market.

A homeowner may have invested heavily in a kitchen renovation, but it is the appraiser’s responsibility to carefully consider factors such as conformity, local market preferences, and house style and price range when valuing the subject property. Remember, ultimately a kitchen’s value lies in its ability to enhance the overall appeal and functionality of the home, not its initial cost or the cost of renovation.

To read more, Click Here

My comments: This is the best analysis I have read on kitchens. Worth reading. Kitchens are a very important factor when buying a home. What is popular changes over time. Of course, appraisers see all types of kitchens.

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Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.

Excerpts: sprawling Lake Tahoe estate known as Shakespeare Ranch hit the market on Monday for $188 million.

Not only is that a price tag that makes it the most expensive property on the market in Nevada, it’s also one of the priciest in the entire U.S., bested only by a small handful of homes in Los Angeles and South Florida.

Named after the nearby Shakespeare Rock, a nearby outcropping that is said to resemble the playwright, the property spans 130 acres on the eastern shores of Lake Tahoe and includes a colossal selection of amenities, from multiple properties and a historic barn to its own rodeo ground and private pier.

The ranch dates to the late 1800s, and its multiple properties include a 4,980-square-foot lakefront home with a waterside cabana, an under-construction 7,713-square-foot architect-designed residence and a number of cabins.

he historic barn on the property was built in 1873 and is currently outfitted with a commercial kitchen, a game center and a wine room.

The property also has a pool house with an indoor pool and spa, a gym, lawns, gardens, an office suite, a staging kitchen for catering, two boat lifts, 14 buoys and a boat house.

To read more, Click Here

For video, photos, and more information and to see the listing, Click Here

My comments: I live within driving distance to Lake Tahoe and have been there many times. A beach with a dock and a boat house is a premium feature.

Read more!!

Waterfront Property Appraisals

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

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

Appraisal Business Tips 

Humor 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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Read more!!

Appraisal Institute Counters Flawed Appraiser Bias Narrative

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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