ID badges for appraisers? A controversial topic

By Ann O'Rourke on December 2, 2015 / appraisal, appraisal business, appraisers, ID badges, lender appraisals / 12 Comments

Tags: appraisal, appraisers, ID badges, lenders

Excerpts:

Appraisers are not required to provide identification (in California), even a driver’s license, when they come to a house, do not always look the part and can cause alarm if not expected. One Orange County company says that is a problem.

Six months ago, Mission Viejo-based Comergence rolled out something the appraisal industry has never had – shiny ID badges.

Since the service started, just 22 of roughly 300 appraisers in San Diego County have signed up and the head of local industry group, the Appraisal Institute, says she thinks she knows why.

“A badge doesn’t identify you any differently than a business card does,” local Appraisal Institute president Susan Merrick said. “It’s pretty much typical operating procedure to give a business card when you go to the door… From a residential standpoint, it’s totally useless as far as I’m concerned.”

The state Bureau of Real Estate Appraisers says there is no law requiring appraisers to carry identification and has no opinion on Comergence.

Bureau head Jim Martin said he is not aware of any recent occurrences, at least in the last two years, of someone posing as an appraiser.

A San Diego commercial appraiser with 30 years experience, Gary Rasmuson, has pushed for a badge for the industry for years and even created his own.

My comments: This is controversial among appraisers. Many years ago, the chief appraiser for a lender told me that appraisers should not give a business card to the borrower. Of course, I didn’t agree. I have always give out business cards as that is a good source of referrals for me for non-lender work. I also want to be seen as a professional.

http://www.sandiegouniontribune.com/news/2015/nov/06/appraiser-id-system-california/

7 Things an appraiser has to be thankful for

By Ann O'Rourke on November 25, 2015 / appraisal, appraisal business, appraisers / 6 Comments

Tags: appraisal, appraisers

NO WORKING ON THANKSGIVING!! USPAP VIOLATION!!! THE APPRAISAL POLICE ARE WATCHING YOU!!!

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7 Things an appraiser has to be thankful for

Most Excellent comments By Tom Horne on his blog

I didn’t have time to contact Tom for permission to read his entire blog posting. It is worthwhile reading.

It’s easy to get caught up in the negative parts of our jobs, however I would guess that if we all thought about it we would find more positive Things an appraiser has to be thankful for things than negative. It’s always nice to have something like Thanksgiving to help us reassess our situation. Appraisers are no different than anyone else.

Relaxed work schedule- The majority of appraisers work for themselves and enjoy a relaxed work schedule.
You can pick and choose your clients.
You’re in total control of your success.
Good blend of working in and out of the office. I like my job because I don’t have to sit at my desk all day. I am able to work outside of the office during appraisal inspections which helps me to not get bored with what I am doing.
You have control over how much money you make. A good part of owning your own business is that you are in charge of everything you do.
Current trends in grassroots efforts. … some positive changes that have resulted from this is the trend in appraisers starting to take control of the situation and make themselves heard through the use of social media and state coalitions.
Better tools for doing our job.

Read the details at:

http://birminghamappraisalblog.com/appraisal/7-things-an-appraiser-has-to-be-thankful-for/

Appraiser income and expenses

By Ann O'Rourke on November 11, 2015 / appraisal, appraisal business, Appraisal fees, appraisers / 6 Comments

Tags: appraisal business, appraisal fees, AppraisalPort, appraisers

APPRAISER INCOME AND EXPENSE POLLS

Appraisalport poll, 11-15, www.appraisalport.com

Considering all aspects of completing an appraisal (research, driving, inspection, writeup, etc.) what response do you think best represents your hourly wage?

My comment: Of course, this is gross, before any expenses, auto, insurance, MLS, software, etc. etc. I wonder about those making less than $25 per hour.

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In the past year, have your operating expenses:

My comment: Expenses going up, nothing new. See above poll for hourly income. What is happening with your expenses?

Fannie is tracking photos from appraisals

By Ann O'Rourke on October 28, 2015 / adjustments, appraisal, Collateral Underwriter, lender appraisals / 2 Comments

Tags: adjustments, appraisal, collateral underwriter, lenders

“(Bob) Murphy (Fannie Mae) does acknowledge that Fannie Mae is able to track photos in each appraisal, a practice many appraisers have long suspected, which means that Fannie Mae is able to detect when appraisers reuse comparable photos in different appraisals and flag appraisals which contain outdated photos as deficient.”

http://www.workingre.com/fannie-mae-warning-letters-rise/

My comment: I have been hearing for awhile about appraisers who use the same smoke alarm photo in all their appraisals. Be careful out there. Fannie is watching!!

What are the most frequent adjustments that appraisers make?

By Ann O'Rourke on October 21, 2015 / adjustments, appraisal, Collateral Underwriter, lender appraisals / 2 Comments

Tags: adjustments, appraisal, collateral underwriter, lenders

Source: Corelogic

Excerpts:

Using a national sample of approximately 1.3 million appraisal reports between 2012 and 2015, new analysis from CoreLogic shows which home features are being adjusted the most frequently, as well as which are being adjusted for the most money, thereby having the greatest impact on appraisal values.

So what is being adjusted and how often? CoreLogic analysis reveals that some type of adjustment was made on 99.8 percent of appraisal reports reviewed. Figure 1 shows the various features adjusted on appraisal reports in relation to how often that adjustment was made, as well as the financial impact, or value influence, it had on the appraisal report.

Differences in Living Area was the most adjusted feature at 96.4 percent. Other features that were adjusted on 50 percent or more of appraisal reports were Room, Car Storage, Porch and Deck, Overall Condition and Site Area. It is significant to point out that the frequency of an adjustment is indirectly correlated to the financial impact, as four of the top five most adjusted features resulted in relatively low average dollar adjustments. For example, Room adjustments were very common at 70.4 percent but had minimal value influence, recording an appraisal adjustment of only $2,246 on average. Conversely, a Quality Rating adjustment had the highest value influence, with an average adjustment of $14,748, but accounted for only 18.7 percent of all adjustments.

Although the adjustment features that result in the highest value adjustment levels (Condition, Quality and Location) are harder to quantify, appraisers are professionals who can do this and adjust their reports appropriately to reflect the most precise appraisal for the home.

My comment: Interesting results. The actual dollar amounts don’t mean much as they are aggregated from all over the country. But, the frequency of adjustments and their relative amounts are worth checking out. What I see is that too many adjustments are being made for items that don’t affect value much and are hard to support. Savvy appraisers are not making adjustments for items such as porches and deck. Many are putting 0 in the grid to indicate that no adjustment is needed. Some appraisers only make adjustments for market conditions and GLA. Other differences, such as condition and location, are considered in the reconciliation. For example, if the subject has superior condition as compared to the comps, a value on the higher end of the range of adjusted comps is selected.

Fannie is focusing on adjustments in the new CU 3.0. They have been focusing on Q and C ratings. I will be writing about what all this means in the November, 2015 issue of the paid Appraisal Today.

Click here to see the adjustments graph and full article. Very interesting and worth checking out.

http://www.mortgagenewsdaily.com/10192015_appraisals.asp

FHA new manual 9/15/15 – no changes or USPAP problems?

By Ann O'Rourke on August 12, 2015 / appraisal, FHA / 4 Comments

Tags: appraisal, FHA

FHA says no significant changes from previous requirements

My comment: I have heard from knowledgeable appraisers and instructors that there are few changes from the old handbook.

Recent posting by Coleen Morrison on a Facebook group

I heard back from my contact at HUD, and here is what she said: “Ms. Conde [the author of the article] (Ed note: see below) and I have had multiple conversations. FHA has not changed any of its requirements regarding the items that she discusses. If an FHA appraiser was compliant prior to September 14, the appraiser is going to be compliant after. The language has changed a bit, mostly for clarity and format, but the requirements are the same.”

I have written back and asked specifically about their thoughts regarding the Competency Rule. I have been saying the same thing … that nothing has really changed… but I never thought about the Competency Rule. It seems very contradictory when the HUD manual states the appraisal is not to be considered a home inspection;

…

The handbook states: “FHA appraisals are not a guarantee that the property is free from defects. The appraisal establishes the value of the property for mortgage insurance purposes only. Buyers need to secure their own home inspections through the services of a qualified inspector and satisfy themselves about the condition of the property.”

Adding the statement from the manual into your appraisals, and referencing Assumption and Limiting Condition #5 are 2 steps you can take to help protect yourself. I don’t know how much of a fight we can have against HUD, so if you choose to do FHA appraisals, and you were not doing the extent of inspection which is very clear in the 4001 now, you will need to step it up; add what the HUD manual states above in big bold letters to your report; or choose not to do FHA appraisals. The ultimate choice is yours.

My comment: I quit doing FHA appraisals in 1988, after 2 years on the roster. Too many requirements as compared with conventional. Plus… our local property values had skyrocketed way above the FHA limits… not much work.

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FHA vs USPAP – Appraisers Caught in Catch 22

By Joanne Conde

Excerpts:

The new FHA Handbook will become effective on September 14, 2015. There has been much discussion of the implications of changing “should” to “must” in thousands of examples in the Handbook. As a Board member of the Arizona Association of Real Estate Appraisers as well as being on the FHA Roster, I have taken a good hard look at these requirements and then, it hit me as I was teaching the Uniform Standards of Professional Appraisal Practice (USPAP) which is the basis of appraisal standards for every appraiser in the United States. The FHA assignment conditions, whether under “should” to “must” force appraisers into a Catch 22 or turn down the FHA appraisal assignments. FHA is essentially making it a condition of employment that appraisers violate the Competency Rule. Why did I not see this before? I guess because the two never converged in my mind at the same time and I expect that is what has also happened to other appraisers.

It is an FHA assignment condition that appraisers make the following statement within the report: “The utilities were on and functioning at the time of inspection and the home meets 4150.2 & 4905.1 HUD Requirements,” and “Other intended users[of the report] are HUD/FHA.”

Click here to read more and read appraisers’ comments

http://appraisersblogs.com/appraisal/fha-vs-uspap-appraisers-caught-in-catch-22/

21 Reasons Why Corner Lots Are For Suckers

By Ann O'Rourke on August 5, 2015 / appraisal / 7 Comments

Tags: appraisal

To keep up on what is happening in appraisal businesses, mortgage lending, USPAP, etc. , Plus humor and strange homes, sign up for my FREE weekly appraisal email newsletter, sent since June 1994. Go to Home on the left side of the menu at the top of this page or go to www.appraisaltoday.com
Sign up in the Big Yellow Boxes

Excerpt:

1. Noise, noise, noise. Double street and sidewalk frontage means double the noise from pedestrian and car traffic. Pull up a chair and crack open a cold one; I’m just gettin’ started.

2. Unconventional configurations. For example, the front yard of a home on a corner lot is usually bigger than the back, and the garage may be located around the corner.

My comment: I have always wondered why there was a checkbox on the 1004 for corner lot… a mystery to me;> Maybe it was a factor in the 1960s/1970s, when the first forms were developed and used. Maybe it has been taken off some of the forms…

Click here to see the other 19 reasons!!

http://time.com/money/3980951/corner-lots-are-for-suckers

Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

By Ann O'Rourke on July 29, 2015 / appraisal, Appraisal fees, FHA, lender appraisals / Leave a comment

Tags: appraisal fees, FHA

What you need to know and which FHA documents you need to read!!
Available in my paid August Appraisal Today August newsletter!!

Many appraisers say they will quit doing FHA appraisals.
This means less competition for you!!

There is lots of confusion and mis-information about the changes. Some say there is too much required and others say there have not been many changes. What about attic, crawl space, and appliance inspections?

The author, Doug Smith, SRA, interviewed an FHA executive to find out what is really happening.

There are different FHA documents you need to read, not just Handbook 4000.1. It is very confusing, but Doug tells you what information you need and where to get it. He includes:

Which guide to use for what, and links to the reference material, including FAQs, Webinars, and SF Housing Appraisal Report and Data Delivery Guide
How to keep updated on changes
Attic, crawl space, and appliance inspections
Energy efficient items contributory value
Highest and best use – when all 4 criteria are required
FHA – UAD and Fannie guidelines

And lots more information.

Comp Photos and MLS, Fannie, USPAP, etc.

By Ann O'Rourke on June 2, 2015 / appraisal, comp photos, Fannie, lender appraisals / 45 Comments

Tags: appraisal, Fannie, lenders

I regularly write about hot topics in appraising and appraisal business management issues
in my paid Appraisal Today monthly newsletter.
$99 per year or (credit card only) $8.25 per month, $24.75 per quarter, or $89 per year.
For more info, go to https://www.appraisaltoday.com/products

Appraisalport polls on comp photos from June 2015

By Steve Costello,

This month I want to discuss three recent polls dealing with comp photos. In the first poll, we asked “With the availability of MLS photos, do you still feel it is necessary to drive by and photograph every comp?” We had a total of 3819 responses and the top two answers were very close. The winner, with 40 percent of the vote, was “Sometimes, it depends on the complexity of the specific assignment.” Coming in a close second was “Yes, I always want to see any property I use in a report” with 38 percent of the vote. The final answer of “No, I would rather just use MLS photos” only scored about half the votes as the first two answers, finishing with 22 percent. This makes sense because I think most appraisers want to look at a comp before they include it in a report, especially if they aren’t already familiar with the property. I can also see where some appraisers are very familiar with the properties in their area, use many of the same comps over and over again, and don’t feel a need to drive by and photograph them every time they use them.

In the next poll, we asked “In your opinion, with MLS, Google, and other photo sources available to clients, the main reason original comp photos are required from the appraiser is:” This poll had 3986 responses and had a pretty clear winner. A full 63 percent of the appraisers chose the answer “To make sure the appraiser actually drives by the comps.” So it looks like most appraisers don’t think their clients care as much about the actual photo compared to just making sure the appraiser actually visited the comp. The answer we expected to be very popular, “To provide the client with up-to-date photos of the comps – ensuring they exist in the stated condition,” only received 22 percent of the vote. A third response of “So the clients won’t have to take the time to look up the photos from one of the sources noted above” didn’t do well, only pulling in 3 percent of the vote. Not a surprise — we didn’t really expect many appraisers to choose that answer. Finally, 13 percent of appraisers went with “Other reason” as the best choice for this question. We really don’t know if there were one or many “other reasons” or what they are.

Finally, we asked “Would you be in favor of eliminating the requirement to include an original photo of every comp as long as a recent MLS photo of the property could be included with your report?” This question was very popular with 4770 total votes. It also produced a landslide vote with 79 percent of the appraisers selecting the answer “Yes.” Only 15 percent answered “No” and would not want to use an MLS photo instead of an original if it were available. A final 6 percent were “Not sure” how they felt about this issue. So, from this poll it is clear that appraisers feel that an original photo is not a necessity to produce a quality appraisal as long as a good representative photo is available from another source like an MLS.

My comment: As we all know, a photo taken at the time of listing from the MLS is often better than one taken later and USPAP does not require comp photos. Fannie Mae certifications require that the appraiser inspect the exterior of the comp, not take a photo. What about re-using a comp photo? Why the requirement of an “original” photo? To be sure appraisers drive by the comps.

Appraisal Humor

Appraisal business tips

A very, very funny appraiser video!

What does it cost to take appraisal comp photos?(Opens in a new browser tab)

Poll – Taking comp photos?(Opens in a new browser tab)

Statistics and Appraisal Data

By Ann O'Rourke on March 31, 2015 / adjustments, appraisal, Collateral Underwriter, zillow / 2 Comments

Tags: adjustments, appraisal, collateral underwriter, Fannie, lenders, mortgage lending

Statistics and Appraisal Data

The key to any statistical analysis is DATA, DATA, DATA!! Single family real estate data is not very reliable or consistent, and not enough is available in many areas, as we all know.

CU is the most significant attempt to get more useful data by requiring appraisers do use specific coding and criteria. However, real estate is local, local, local. Even the number of bedrooms varies a lot as there are different criteria for determining what is a bedroom, even in the same city. Three appraisers measuring the same house will probably not have the same square footage, as I learned doing relocation appraisals.

9/20 Update. CU (Collateral Underwriter) has let Fannie obtain lots of data from appraisals. Unfortunately, the data is not available to appraisers. Fannie uses the data to analyze report reliability.

With CU, this is becoming more obvious as there are sometimes wide variations in how appraisers code factors. For example, why do condition ratings vary? How accurate is MLS? Is public records accurate? What is the best source?

Now that regression software is popular with appraisers for getting adjustments, I have been thinking about why it is often not very reliable. To understand even simple regression requires knowledge.

My first statistics class was in 1963. The first time I used multiple regression was in graduate business school in 1979, when I did a mini-thesis on factors in REIT stock volatility using SPSS.I used a remote university mainframe that kept blowing up and erasing my data. There were no data issues. Doing multiple regression analysis on real estate housing data was not possible. Way too much lack of usable data.

Since I started my Appraisal Today newsletter in 1992, I have been writing about AVMs. The less data that is available, the less reliable the value.

As we all know, AVMs work well in a conforming home in a large tract of similar homes, built in the past 10 years. After that, the accuracy and reliability goes down fast. Just check what Zillow’s Zestimate against your appraised value.

Fannie warning letters – GLA adjustments and lots more coming(Opens in a new browser tab)