Appraisal News and Business Tips

appraisal

7-12-18 Newz// 3 Story Homes, Auction Prices, Portable Architecture

The Most Popular Article From Last Week’s Newsletter: Former Appraiser’s Hot Dog Stand!! FYI, unusual and weird stuff is very popular with appraisers ;>

Three-story Single-family Homes and Townhomes

Excerpt: Of the 729,000 single-family detached homes started in 2017, a little over 18,000 (2.5 percent) had three or more stories, according to National Association of Home Builder tabulation of recently released Census data.

In contrast, the 23,000 3-plus story townhomes represent 22.0 percent of single-family townhome starts.

More info here:

My comment: 3 story detached homes are not popular in very many areas. It is a long walk up to the 3rd floor. I have appraised them (attic conversions of a classic older home to a master bedroom, for example). I always look to see if an elevator can be added – usually has to be on the exterior of the home. Definitely a functional problem. I rarely see them on existing homes, except for attic conversions. Some newer detached homes have a small room on the 3rd story – family room, extra bedroom, etc.

For townhomes, I have seen a significant increase in 3 story new construction townhomes in my city (within the past few years) and other Bay Area cities. The first floor is a garage plus entry, second floor living room and kitchen, bedrooms on 3rd floor. Very profitable for home builders, especially in areas with high land prices and infill tracts. I have appraised them and the owners did not object to the 3 floors. There are sometimes a few townhomes that are 2 story.

My first apartment when I moved to San Francisco in my 20s was a third floor walkup. I vowed Never Again ;>

Read more!!

11-30-17 Newz// My Client the FBI, 50 Lane Traffic Jam,Third Party Inspections

China’s 50-Lane Traffic Jam Is Every Commuter’s Worst Nightmare

What happens when a checkpoint merges 50 lanes down to 20.

Excerpts: Thousands of motorists found themselves stranded on Tuesday in what looks from above like a 50-lane parking lot on the G4 Beijing-Hong Kong-Macau Expressway, one of the country’s busiest roads. Some are dubbing the traffic jam a “carpocalypse,” while others are calling it “carmageddon.”:

China is no stranger to these ridiculous traffic jams, especially on national highways. In 2010, gridlock spanning more than 74 miles on the stretch between the Inner Mongolia Autonomous Region and Beijing left drivers with nowhere to go for a staggering 12 days. That time blame fell on everything from road construction to broken down cars and fender-benders.

My comment: Check out the photos. Wow! One of my nightmares is getting stuck in a big traffic jam, but I never thought about one as bad as this…

https://www.citylab.com/transportation/2015/10/chinas-50-lane-traffic-jam-is-every-commuters-worst-nightmare/409639

A Mysterious Device Revealed

Excerpt: On Monday, I distributed a photo (see below), which was taken by a western US appraiser at the subject property, and asked if anyone could accurately describe what this device is:

The property owner was not at the property when the appraiser was there, and the appraiser was frankly stumped as to what this ‘thing’ is.

By late afternoon Monday, the appraiser was able to talk with the property owner, and was told about this contraption. Meanwhile, dozens of appraisers wrote back with suggestions or positive “it’s a” statements.

My comment: There was a fun email thread on this topic. To sign up for Dave Towne’s emails, send an email to dtowne@fidalgo.net He has been writing a lot recently about hybrid appraisals (non-appraiser does the site inspection). Very controversial. I am working on an article for this topic in the paid Appraisal Today newsletter.

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9-14-17 Newz:// No Appraisal Waivers, How Many Comps Are Enough?, Ugliest House

Google Street Views – First Big Update with Lots More Big Data!!

Excerpt: The car-top rig includes two cameras that capture still HD images looking out to either side of the vehicle. They’re there to feed clearer, closer shots of buildings and street signs into Google’s image recognition algorithms.
Those algorithms can pore over millions of signs and storefronts without getting tired. By hoovering up vast amounts of information visible on the world’s streets-signs, business names, perhaps even opening hours posted in the window of your corner deli-Google hopes to improve its already formidable digital mapping database
My comment: Fascinating article. Check it out. I use Street Views a lot, but sometimes the images are fuzzy and are hard to figure out. Looking forward to improvements, but on the minus side, more data available that field appraisers provides now.

36 Appraisal Organizations Send Letter to Party Leaders of House Committee on Financial Services and Senate Committee on Banking, Housing and Urban Affairs on “No Appraisal” Waivers

Excerpt: 36 industry groups are attempting to prevent the Fannie Mae and Freddie Mac (GSE’s) from issuing appraisal waivers by sending a letter to the chairs and ranking members of the Senate Banking, Housing and Urban Affairs Committee, and the House Financial Services Committee addressing its concerns. AI recommends the halt of the waivers until the GSEs can demonstrate that the proposed program does not harm the consumer, is properly monitored, and integrates proper safeguards to prevent fraud.
We are writing this letter to raise concern over the new appraisal waiver programs recently implemented by Freddie Mac and Fannie Mae (the ” Government Sponsored Enterprises.”)  We believe these programs will create unnecessary and unacceptable risks for taxpayers and homeowners, and they come at a time when markets are at all-time highs – when risk mitigation should be tantamount. We ask you to call on the Federal Housing Finance Agency (FHFA) to prevent the Enterprises from implementing the appraisal waiver programs until they can demonstrate the appraisal waiver program:

My comment: Worth reading. Read the names of all the organizations that sent the letter. I can’t remember when so many appraisal organizations agreed on anything!!

Read more!!

7-6-17 Newz: Tech Trends in 1776 .Arms-length transactions .Zillow vs. McMansions

8 Hottest Tech Trends in 1776

Just For Fun!! Take a break from writing up those darn reports. Is there any appraiser who likes writing reports. Not me ;>

Excerpt: At that time, the “best” technology available was the printing press and the “best” social network required the use of “word of mouth” in Public Houses… But while all this was going on, there were a bunch of entrepreneurs and a few startups that changed the world.
  1. Underwater warfare
  2. Telling accurate time
  3. Underwater exploration
  4. Indoor plumbing
  5. Kitchen stove
  6. Electricity
  7. Mechanical motion
  8. Multitasking
My comment: check out this great article!! It is only 2 days after July 4, so I decided to include this very interesting article by Shelly Palmer one of my favorite tech writers!

Arm’s-Length Transactions, Market Value and Related Parties, Part 2 By Richard Heyn, SRA

Excerpt: So while a non-arm’s length transaction may be a red flag that can point to an above or below market value transaction, the bottom line is that ALTs may or may not take place at market value.
Another area of misconception among appraisers regarding ALTs involves the application of the term “related parties.” Unfortunately, the term “related parties” is not defined in any authoritative appraisal-related literature that I am aware. The term is, however, defined in accounting standards and by the Internal Revenue Service, most notably in the IRS guidelines for exchanges of like-kind properties.

My comment: the excerpt above is from part 2, above is the link for part 1. I have read several long threads online about this topic. Lots of confusion. Rich’s articles are Most Excellent. Read These Articles!

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6-28-17 Newz// Octagon house craze, Reproducibility Crisis, AMC Technology Efficient?

Octagon House Craze in the 1800s

Excerpt: If you were a forward-thinking individualist in 1800s America, building an eight-sided abode was a great way to show it. The octagon house was a cutting-edge design at the time, believed to be a more efficient use of space, energy, and cost than the conventional square.

… Thousands of these geometric oddities were built by the time the trend hit its peak in the 1860s.

My comment: Wow!! I have never appraised an octagon house, but have seen a few from the outside. Have measured octagon turrets on Victorians.

Top cities where the number of million dollar homes is skyrocketing

Excerpt: In large swaths of the country, a cool million has mostly come to represent the new standard for good, upper-middle-class housing. “In more markets than ever before, the million-dollar mark is the new benchmark for that green lawn and white picket fence,” says Javier Vivas, manager of the realtor.com® economic research team.
  1. Denver CO
  2. Santa Rosa CA
  3. Boulder CO
  4. Truckee CA
Click here get the full list and read the comments on the cities – very interesting!!

My comment: In my small city in the San Francisco Bay Area, with a median price of around $850,000, many properties are listed just under $1,000,000 and sell over list. Starter homes are $750,000 to $800,000 (2 bedroom/1 bath, built before 1940, maybe updated kitchen and bath, 1000 sq.ft.) No, we did not get on the list. Already have too many over $1,000,000.. I am soo glad I bought my  house in 1985 for $135,000!!

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6-1-17 Newz .Our 25th Anniversary! .Zillow Class Action Lawsuit, FTC Says No to LA Setting AMC Fees

FTC Challenges Louisiana Real Estate Appraisers Board Regulations that Restrict Competition

Restrictions on fee setting violate federal antitrust rules, agency alleges

Excerpt from FTC: The Federal Trade Commission has filed a complaint against the Louisiana Real Estate Appraisers Board, alleging that the group is unreasonably restraining price competition for appraisal services in Louisiana, contrary to federal antitrust law. The complaint will be submitted to adjudication before an Administrative Law Judge, who will review it and render an initial decision.
In the administrative complaint, the FTC alleges that the Louisiana appraisers board limits the freedom of individual appraisers and their customers to engage in bona fide negotiations to set appraisal fees for real estate appraisals in Louisiana.
Excerpt from LA appraisal board comments:
In a statement, the Louisiana Real Estate Appraisers Board denies the FTC claims, adding that it is operating well within its rights and any accusations beyond that are “ludicrous” and without merit.
“Respectfully, the FTC is just plain wrong. By issuing this legally faulty and factually incorrect complaint, the FTC is seeking to punish a Louisiana state agency for following federal regulatory mandates,” Bruce Unangst, executive director of the Louisiana Real Estate Appraisers Board, said in a statement.
Read the details here from the FTC:
More info, including comments from LA appraisal board
My comment: Very interesting angle… I always wondered if it was ok for states to set AMC appraisal fees. I wondered who complained????
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When Stairs and Slides Are Hiding in Plain Sight

Play real-life Chutes and Ladders at these obscure thruways.

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4-6-17 Newz .VA Appraisers Congress Hearing .Appraiser and Timeshare Scam .Fourth Approach

Assessing VA Approved Appraisers and How to Improve the Program for the 21st Century – House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity April 4, 2017

Link to video of hearing: https://youtu.be/uoVmYOq4HQY  (scroll forward past the logo)
Witnesses included:
– NAR 2016 Real Property Valuation Committee Chair
– Vice President, Appraisal Institute
– Chief Revenue Officer, Clear Capital

My comment: I have always been surprised that so few appraisers are interested in doing VA appraisals. Guess they like working for AMCs with hassles and low fees. Every week, at the bottom of every free email newsletter, I include the MBA origination stats, including VA, which is similar in volume to FHA. This week FHA and VA are very similar – around 11% of originations.

I wrote an article about the plusses and minuses of VA appraising in my Paid Appraisal Today newsletter, available to paid subscribers (see below). What I really like about VA is that you are helping veterans, not a lender trying to make a deal however they can. I noticed that a Representative O’Rourke was one of the first speakers in the video ;>
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Federal Court Permanently Bars California Man From Preparing Property Appraisals

Appraiser prepared thousands of appraisals in conjunction with timeshare donation scheme

Read more!!

3-22-17 Newz: AQB Degree and Experience .Raise Deminimus? .AMC High Consumer Fees

Are you paying unseen add-on fees for your appraisal?By Ken Harney, nationally syndicated real estate writer

Excerpt: Are you getting fleeced on appraisal charges when you buy a house or refinance? Could you be paying as much as double what the appraiser is receiving for actually doing the work, with the excess going to an undisclosed third party?

Many appraisers say yes. And they’re eager to let consumers know that when the appraisal charge is $500 or $800 or $1,000, they’re frequently being paid just a fraction of that. The rest is going to an “appraisal management” company…
Read the full article here and add your comments:
My comment: Finally, someone is writing about the AMC Consumer Ripoff!! I have been saying since 2008 that the best way to “fight” AMCs is to let consumers know they are getting ripped off!! Appraisers complain about how AMCs treat appraisers and low fees, but don’t seem to focus on consumers, who are paying much more.
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3-2-17 Newz .Appraiser identity theft .Data shows no appraiser shortage

HUD Fraud Alert: Appraiser Identity Theft

 Excerpt: Most of the schemes happened when an FHA roster appraiser provided his or her personal identification number (PIN) for the desktop appraisal software to a colleague or supervisor. Providing the PIN was often rationalized because

* It was needed to keep the process timely,
* A fast turnaround was requested by the lender, or
* It was a contingency for when the roster appraiser was away or unavailable.
While these actions may seem innocent enough, they raise severe risks for misuse because the appraiser can never be sure the PIN will only be used with his or her knowledge and for legitimate purposes. Over the last couple of years, OIG has received more than a dozen reports of identity theft by colleagues or supervisors. Following are some case examples of the various schemes.
The identity theft examples were in IL, CA and WA
Click here to read the 2-page Fraud Bulletin:

My comment: Read the bulletin for more info. There was a lot of this reported when trainees were used in the last boom. All the appraisers were sentenced to 3-5 years in prison.

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How much value does a huge backyard shop add?
Another good post from Ryan Lundquist!!

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2-16-17 Newz .Land surveys in 1784 .Common appraisal errors

 Land Surveys in 1784 – Alexander Hamilton vs. Thomas Jefferson

Metes and bounds vs. Meridians

Excerpts:
In 1784, Thomas Jefferson and Alexander Hamilton squared off over the best way to divvy up newly American territory.
The two factions also had different ideas about how to divide the land. Jefferson and his allies wanted to use an innovative system of land division, which would use meridians and other abstract geographical reference points to measure out uniform parcels of land. Hamilton and his allies thought that would take too long. As long as settlers had been grabbing up land in America, they’d operated according to a principle of free settlement-essentially, first-come, first-serve. Hamilton wanted to divide up the land using the more traditional “metes and bounds” system, in which landmarks and other features of a piece of land are used to describe its borders.
The Public Land Survey System was created because, in the 1780s, the new United States of America needed money. The Revolutionary War had left the federal government with debts, and its leaders planned to raise funds by selling off land where American colonists had yet to settle.
My comment: Fascinating!! We all study how our country is divided geographically in our basic appraisal classes. George Washington was also a land surveyor. Surveyors were the predecessors to appraisers. RICS (Royal Institute of Chartered Surveyors), the largest international appraisal association was founded in London in 1868.
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Common Appraisal Errors – Part 1
by Joshua Walitt, SRA, MNAA
Excerpts on adjustments: You don’t need to write a book. In fact, most adjustments can be summarized relatively succinctly. Consider the following when summarizing your adjustments:
* What specifically is the difference between the subject and the comp? This is normally apparent for garages and GLA, but may not be as easily discerned for condition or quality. In other words, regarding quality-related components, what specific characteristics make the comp different from the subject?

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