Complex Residential Properties for Appraisers

By on March 19, 2021   /   adjustments, AVMS, bias   /   Leave a comment
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How to Identify a Residential Complex Property

Excerpts: A complex one-to-four family residential property is defined as a property that meets at least one of the following criteria:

  • The property to be appraised is atypical
  • The form of ownership is atypical
  • The market conditions are atypical

“Below we dig a little deeper into each type of complex property outlined above, providing detailed descriptions and examples of properties that would fall under each of the three categories.”

To read more, click here

My comments: This is the best explanation I have read about this issue. All appraisers encounter complex properties. You may or may not decide to accept the assignment. Always check the info you have on the property before accepting the assignment. Or, you find out after starting on the appraisal that it is more complex than you thought. I regularly turn down assignments because it will require more time, or I don’t want to “reinvent the wheel,” as I may never do another like it, etc.

Mortgage lending appraisals are very, very cyclical. When you are very busy, I recommend turning down these assignments to make more money. You will have lots of time during the slow period to accept these assignments.

In ancient history, before AMCs, I often did the tough ones for loyal clients as a favor. AMCs will go down the list, sometimes for days, trying to find an appraiser. One called me yesterday about a mixed-use property that their lender client said was residential. From online information, it looked like commercial on first floor. The issue was highest and best use, of course. I told them I did not know any commercial appraisers who work for AMCs, plus the fee would be over $2,000. You have to know that city’s local zoning regulations, requiring local expertise to determine the highest and best use.

The Bottom Line: Don’t Risk Your Appraisal License if it is too complicated for you!! I get many calls from appraisers having problems. This is always my answer. I have returned fees up to $2,000 after spending lots of hours on the assignment.

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Coronavirus and Appraisals March 13 2020

By on March 13, 2020   /   AMCs, appraisal business, Appraisal fees, appraisal management company, AVMS, future, lender appraisals, Mortgage applications, mortgage loan volume, unusual homes, weird properties   /   1 Comment
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Appraiser’s (Changing) Role

Q&A with Mark Verrett, Chief Innovation Officer at Accurity Valuation

Excerpts: WRE: How can appraisers adapt to meet the profession demands?

Verrett: I think there are several ways to adapt to these challenges. The first is to work toward diversifying your practice away from 100 percent mortgage business niches. Our firm is a leader in green valuation, rural valuation, valuation consulting and litigation support and we help our offices diversify into those spaces. However, this solution isn’t for everyone….

To directly take on the challenges facing appraiser relevancy in the mortgage space, significant change is required. Appraisers need to unite to create a like-minded national voice that is not rejecting proposed changes for the profession, but rather working with stakeholders (regulators, lenders, clients, etc.) in conceptualizing, testing, tweaking, and ultimately modernizing the appraisal process on the mortgage side.

The appraisal community has a tough assignment in their role in this modernization. To be useful in the discussion, we need to challenge ourselves to be creative and open-minded, yet diligent in maintaining or, even better, improving the quality of the valuation being produced. I think it is extremely important for appraisers to listen and understand the needs of their clients and to creatively develop solutions that meet those needs.

Worth reading with some good ideas. To read more, click here

My comment: Accurity has franchisees and some very savvy appraiser officers and directors.

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Appraiser Covid Survey Results April 2020

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6 Reasons Appraisers Are NOT Needed

By on February 7, 2020   /   adjustments, appraisal, Appraisal Foundation, appraisal how to, AVMS, commercial appraisal, mortgage loan volume, Podcasts, unusual home, USPAP, weird properties   /   Leave a comment
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Appraisers Are NOT Needed???

Excerpt: You can buy a car in little to no time so why not a house? Over the years I have heard that the home buying process is too long. There are too many headaches for buyers and the process should be easier.

We are in a microwave society and everybody wants things instantly. This should, of course, carry over to the home buying process, right?

A house is probably the most expensive purchase people will ever make but that doesn’t mean that the process needs to consume your entire life, right? The appraiser just adds to the stumbling block that most home buyers face in getting into the house of their dreams. Today I am going to discuss 6 reasons that appraisers are not needed (wink, wink) in the home buying process.

Written for home buyers but good explanations for appraisers to use.

To read more click here

My comment: I have appraised many apartment properties. 2-4 unit properties are more difficult to appraise than a 60 unit apartment building, which I appraised recently! Owner occupants, motivations, etc. are big issues. 4 units are the most difficult.

My city has had rent control, which keeps getting stricter, for 4 years. CA recently passed rent control for the state. Must use actual, not market, rents in appraisals. Very, very difficult to appraise. 3 weeks ago I decided not to do them any more.

But, last week a family was thinking about selling their 4 unit property. I pre-screened them. If it had low rents, I don’t know who would buy it. Fortunately the rents were around 80% of market. They wanted to know if it was good time to sell. I told them I would let them know, then do the appraisal. Not a good market now.

I met one of the owners this week at the inspection. He brought a copy of the 2005 date of death appraisal and asked for an “update” or an “evaluation”, for a lower fee, which his sisters requested. I told him I could not do it and did not know any licensed appraiser who would do it. And told him to use a local real estate agent for free. I doubt if they would recommend not listing now as I speak with them regularly at open houses.

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Appraisal Neighborhood Analysis

By on December 7, 2019   /   AMCs, appraisal business, appraisal how to, AVMS, computers, marketing, Mortgage applications, mortgage loan volume, real estate market, Strange homes   /   Leave a comment
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What is so Important About the Damn Neighborhood Analysis that the Reviewer Nicked me for it?

By Tim Andersen, MAI

Excerpt: Question: in a recent review of one of my appraisal reports, the reviewer said my neighborhood analysis was poor. I asked what that meant and she indicated I should familiarize myself with Fannie Mae’s requirements for a NEIGHBORHOOD ANALYSIS. She also indicated what I had in my report was just a recitation of facts, but (a) lacked any analysis of neighborhood trends and (b) therefore I did not analyze the neighborhood sufficiently to reconcile my conclusions of the neighborhood trends and its effect on both my highest and best use conclusion and my final value opinion. I came in just over the contract price. What does the reviewer want from me? I did what I always do in an appraisal! Help me!

For the answer, click here

My comment: Tim always has great answers for appraiser questions! He is a regular contributor to the paid Appraisal Today, with articles on USPAP 2020-2021, state board problems, etc.

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What to Do When Your Appraisal Is Under Review(Opens in a new browser tab)

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Bifurcated Appraisals and Inspections Yes or No

By on September 28, 2019   /   AMCs, appraisal business, AVMS, bifurcated appraisals, CU, Fannie, lender appraisals, Mortgage applications, USPAP, weird properties   /   Leave a comment
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Bifurcated appraisals – Yes or No??

What Fannie Says: Yes, of course

Interview with Lyle Radke Lyle Radke, Director of Collateral Policy at Fannie Mae

Excerpt: Fannie has spent the first half of 2019 detailing its plans to roll out the 1004P, a new desktop appraisal that will be based on a Property Data Collection report that is prepared by a third party inspector; this is part one. Fannie has indicated that it is currently testing appraisers, appraiser trainees, insurance inspectors, real estate agents, property preservation service professionals, and smart home service professionals as potential Property Data Collectors to determine “which labor force can best collect data,” including a “robust and accurate set of data elements, photos, and floor plan.” Bifurcated Appraisals and Inspections Yes or No is a controversial topic.

The more impactful revelation is that Fannie aims to replace the appraisal requirement completely where it can. In these scenarios, a property data collector, not necessarily a licensed appraiser, will inspect a home and report back on the condition of the property. Then, based on that property inspection report, a desktop appraisal may be ordered or the appraisal requirement might be waived altogether.

Many issues are discussed: Value Verify, appraiser aging, who will do inspections, etc.

For more info, click here

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What Richard Hagar Says on Bifurcated:

No – A Train Wreck

Excerpt: We are hearing about the latest trend called bifurcated appraisals. Within the past year I’ve seen this term used more often in more diverse places than in the prior 20 years combined; it’s almost like some media company has decided that “bifurcated” is the “it” term for 2019. All sorts of people, AMCs, lenders, technology companies, and Fannie Mae are promoting this “spiffy” new process. They are hoping that the rest of us will “get on board” with their new “better” process.

I do not want to “get on board” because it’s headed for a train wreck.

Editor’s Note: Hagar’s bifurcated test in his office did not go well.

For more info, click here

My opinion: It is a business decision whether or not to do bifurcated appraisals. This month’s issue of Appraisal Today has an article on the topic, written by Julie Friess, SRA

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99.99% price drop from $1 billion. Appraisal Challenge

By on August 30, 2019   /   appraisal how to, AVMS, Mortgage applications, real estate market   /   Leave a comment
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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. 99.99% price drop from $1 billion. Appraisal Challenge.

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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Appraisal Process Challenges

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Measuring Bi-level homes square footage

By on August 16, 2019   /   adjustments, appraisal business, AVMS, evaluations, square footage, zillow   /   Leave a comment
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GLA Issues When Appraising Split & Bi-Levels… Where The Ground Meets the Wall

Excerpt: When it comes to appraising split-level and bi-level dwellings, trying to calculate the gross living area (GLA) can be tricky. If you’re trying to figure out what the gross living area of one of these types of homes is, there are some important things to consider. For example, where the ground meets the exterior wall of a particular level. Measuring Bi-level homes square footage is tricky.

In real estate, the line at which the ground intersects with the foundation of a home, is called a grade or grade line. Did you know that where the ground meets the exterior wall of a level, can have a direct impact on value? How so? Let’s get down to the nitty gritty of it, shall we?…

To read more, click here

My comment: Very comprehensive, well written, article. Don’t miss the fun “split” video at the end. Hint: be sure to watch until 1 minute mark.Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

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What is Included in Appraisal Square Footage?

Tax records and Square Footage in Appraisals

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Appraisal vs Zillow vs AVM which is best

By on July 26, 2019   /   adjustments, AVMS, deminimus, FHA, forecast, future, Mortgage applications, real estate market, weird properties, zillow   /   Leave a comment
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Appraiser vs. AVM vs. Zestimate… Ten Properties

Excerpt: On a regular basis, my opinion of value of a property I am appraising, is frighteningly similar to an AVM’s value. While that is the case, as you will see in this article, that is not always the case. You might be wondering what an AVM is? AVM stands for Automated Valuation Model. It is a computer program that uses mathematical modeling to derive a value based upon the data it is provided.
In this article I differentiate the typical AVM from Zillow’s Zestimate because Zillow claims to be more accurate than other AVM’s, due to the technology they use. Zillow’s Zestimate is an AVM.
To read more, click here
My comment: Try this on appraisals you have recently done and see the accuracy in your market. Read the article comments and leave your comment.

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Appraising the White House

By on July 20, 2019   /   AMCs, appraisal classes, AVMS, bifurcated appraisals, Mortgage applications, state appraiser regulators, statistics, weird homes   /   1 Comment
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18 Historic Homes that Would Be Fascinating to Appraise

Excerpt: Historic homes make for complex and interesting appraisal subjects. As one appraiser said, “I love unusual properties, and the challenge they present to appraise. I have always loved appraising large, older properties. They take us back to another world back in time.” We recently asked our appraisal community, “What famous historic home would you want to appraise?” Here’s what they said.
A few of the homes:
Frank Lloyd Wright’s Fallingwater
The White House
Norman Bates “Psycho” House
Graceland
To read the full list plus many comments click here
My comment: For me, none of the above ;> Too difficult!

Appraising Weird Stuff is Challenging!

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Every unusual home has appraisal comps

By on April 4, 2019   /   adjustments, AVMS, bpos, deminimus, FHA, marketing, Mortgage applications, Strange homes, unusual home, weird homes, weird properties   /   Leave a comment
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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
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Tips for choosing comps on a unique home (straw-bale house)

By Ryan Lundquist
Excerpt: It almost sounds like the big bad wolf story, but there really are homes built from straw. Literally. Today I want to mention a few things about this type of construction, share some photos of a local straw-bale house, and then talk briefly about how I approached appraising this one.
Worth reading to find out what Ryan did!!

My comment: Very good tips on appraising unique homes. No lender issues as the appraisal is pre-listing and not for a lender… Sacramento  is a Very Strange place for a straw-bale home!!

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