bias

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Appraisers: Be Careful with Your Words

Freddie Advice: How to Avoid Using “Bad” Words

By Ann O'Rourke on November 10, 2023 / bias, FHA, liability, real estate market / Leave a comment

Tags: bias, FHA, forecast, Freddie, liability

More Objective Appraisals: A Practical Guide for Appraisers

By Scott Reuter Single-Family Chief Appraisal Officer, Freddie Mac

Excerpts: Changing the Mindset – Facts First

What’s the number one thing appraisers should be doing when they develop an appraisal? Stick to the facts. Here are a few more best practices that can help appraisers achieve more objective appraisals.

Don’t think like a salesperson – avoid words that may be common in Multiple Listing Service (MLS) and used to help sell a home.
Don’t use shorthand – both ‘123 Church Street’ and ‘123 Church’ could refer to an address but might come across differently in an appraisal.
Don’t copy and paste – avoid copying from Wikipedia or old appraisal reports or commonly used templates when providing neighborhood descriptions for similar communities.
Use pre-screening practices – while you can implement your own pre-screening process, some appraisal companies can implement them too.

To read more, click here

My comments: Read this article! Not just a list of words and phrases. Excellent examples and analysis. The author started as a second-generation practicing residential appraiser. He knows what you want.

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2024 USPAP Changes Clarify Nondiscrimination

By Ann O'Rourke on November 3, 2023 / bias, desktop appraisals, Economic analysis, hybrid appraisals / Leave a comment

Tags: bias, desktop appraisals, Economic analysis, Hybrid appraisals

Changes to the 2024 USPAP Improve Clarity Surrounding Nondiscrimination

Excerpts:

Revising the ETHICS RULE with a Nondiscrimination section

To provide clarity and eliminate concerns, the ASB removed the previous ETHICS RULE language regarding supported and unsupported conclusions, and crafted a new Nondiscrimination section which clearly indicates to appraisers and stakeholders that discrimination is prohibited.

Advisory Opinions

For 2024, the ASB has retired Advisory Opinion 16 (AO-16) and replaced it with two new Advisory Opinions, AO-39 and AO-40.

How do the USPAP revisions to the Nondiscrimination section affect appraisers?

Appraisers were also always prohibited from performing assignments with bias. These requirements are carried forward in the 2024 edition of USPAP. The primary difference is that the new USPAP contains clear and concise language regarding an appraiser’s ethical obligation not to engage in discrimination.

To read more, click here

My comments: Be sure to read this blog post. USPAP 2024 is effective January 1, 2024. You may, or may not, take the mandatory USPAP class prior to this date.

2024 USPAP for Appraisers

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Every unusual home has appraisal comps

Appraising Unusual Properties

By Ann O'Rourke on September 1, 2023 / adjustments, appraisal business, Bad lenders, bias / Leave a comment

Tags: adjustments, appraisal business

Appraising Odd Properties: What’s the Weirdest Property You’ve Appraised Recently?

McKissock Survey

Excerpts: As a professional appraiser, you’ll likely encounter some strange properties from time to time. Odd properties tend to be challenging yet rewarding in terms of the fee. To gain insight into these types of assignments, we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” Thank you to the many respondents who shared stories about the most unique and complex properties they’ve come across lately!

Most of them fall into these categories:

Challenging and complex properties
Unique property types
Properties with atypical characteristics
Historic properties
Rural properties
Non-compliant properties

“A yurt, a space dome, and a two-story single-wide mobile home. This was two single-wide mobile homes stacked on top of each other with a spiral staircase that was encased in semi tractor trailer chemlite panels. The stories behind them are lengthy.”

“It was a house on three lots. It has been added on to over the years. The GLA is 3200sf and there are two separate basements with a total 1100sf. There are funky angles, two kitchens next to each other divided by a wall. It was only 3 bedroom, but had 3.1 bathrooms. It had 3 family rooms on the GLA. Lots of weird spaces.”

“A custom-built art school built by artist named Solonevich that is used as a single-family dwelling. Every couple feet was a random angle. Nearly impossible to measure accurately.”

To see more examples, Click Here

My comments: I was inspired by this post and included two unusual homes in this newsletter. The one below with a jail is a good example! Down the page is a $1 listing.

If the appraisal is for lending purposes, be sure to find out if it is “lendable” before spending much time on it. Lenders and CU/AVMs, like nice newer tract homes.

Whenever two appraisers meet, there is never a lack of conversational topics! This one is very popular! Be sure to get a higher fee, of course. These properties are an excellent learning experience. If your business is slow, now is a good time to do the “tough ones.”

Highest and best use are often the issues that are the most tricky for me, especially if you have to consider non 1-4 unit uses. HBU is a regular issue for the older commercial and mixed-use properties I appraise.

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ChatGPT for Appraisers

By Ann O'Rourke on August 13, 2023 / appraisal business, appraisal how to, bias, liability / Leave a comment

Tags: appraisal, appraisal business, appraisal how to, bias, liability

ChatGPT: Valuable Tool or a Replacement for Real Estate Appraisers?

by Dustin Harris, The Appraiser Coach

Excerpts: ChatGPT: A Game-Changer for Appraisal Work

For those who have embraced it, ChatGPT has been transforming multiple aspects of appraisal work, such as:

Appraisal Work:

Writing narrative
Market analysis
Market-specific information
Descriptions of adjustments
Terminology
ResearchMarketing:
Creating lists
Writing emails and messages to current and potential clients
Crafting blogs
Strategizing networking and relationship development
Writing presentations for ‘lunch and learn’ events with real estate agents
Crafting the perfect apology letter when you upset a key loan officer in your small town
To read lots more, click here
My comments: Many thanks to Dustin for writing this article! I have not had time to use it, but have been reading and watching demos about how it can be used for appraisers for awhile. It definitely can be very useful, as Dustin explains. It can be tricky at first to use, but Dustin explains it.

I recently had to renew my California Driver’s license, as I am over 70 and had to do a written exam and eye test. I had difficulty setting up an appointment and clicked on “Chatbot”. It was much friendlier than any other Chat support I have used. I recognized the use of software similar to ChatGPT.

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The Future of Residential Lender Appraisers

The End of Lender Appraisals?

By Ann O'Rourke on August 4, 2023 / appraisal business, bias, real estate market, USPAP / Leave a comment

Tags: appraisal business, Fannie, real estate market, USPAP

The End of Home Appraisals?

By Jeremy Bagott, MAI

Excerpts: In his 1946 essay “Politics and the English Language,” the late British novelist, essayist and critic George Orwell examined the connection between political orthodoxies and the debasement of the English language. In a truly Orwellian move, mortgage giant Freddie Mac recently announced its intent to censor an arbitrary collection of words such as “desirable,” “safe,” “well-kept,” “student” and “crime” when they appear, in any context, in the hundreds of thousands of appraisal reports it relies on in mortgage underwriting. It would be hard to make this up.

As with all banned words, Freddie’s list will lead to the need to ban additional words over time as appraisers, expunging the word “desirable,” will find synonyms when analyzing market reaction to the views of two homes or to the cul-de-sac location of a home versus the midblock location of a comparable. When discussing how market participants view side-by-side school districts, appraisers will figure out they can use synonyms like “advantageous,” “preferable,” or “beneficial” instead. Soon, these words, too, will need to be banned. In a college town, the banned word “students” will become “matriculants,” a word that will likewise need to be banned.

The attack on the protected speech of independent appraisers erodes their ability to describe how the properties they appraise relate to the preferences of market participants. The censorship is part of a march toward what appraiser and podcaster Phil Crawford has coined “universal basic home value” – a utopian vision among idealogues in which government technocrats dictate the supposed value of a property using algorithms and machine learning. The censorship began with Fannie Mae, and has now predictably spread to Freddie Mac.

To read more plus appraiser comments, click here

My comment: Worth reading. Lots more AMC/lender appraisal correction requests. Last week’s email had a discussion of the “words” which got a lot of clicks by appraisers wanting more information.

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Appraisers: Be Careful with Your Words

By Ann O'Rourke on July 28, 2023 / bias, Fannie, Fannie Forms, george dell, non-lender appraisals / Leave a comment

Tags: bias, Fannie, mortgage lending

Pesky Words. Keeping Appraisers out of Language Purgatory

Appraisers: Be Careful with Your Words!

by Dave Towne

Excerpts: Appraisers, on July 17, 2023, a document from Freddie Mac was circulated to numerous appraisers around the US which identified certain words and other info that can be considered to be ‘BIASED’ in appraisal reports. Here is the Link to the Bulletin.

We need to step back for a moment and carefully analyze and consider why that was done, and what it means to appraisers.

In many ways, appraisers forget the purpose of the appraisal assignment – which is to value real estate. In other words, the physical structures tied to the land.

But too often, elements of personal or neighborhood demographics or other comments seep into the reports. Maybe not consciously or on purpose, but because appraisers are not critically reading what they write and may not realize the implications of how what they write can be interpreted.

To read more, click here

To read the Freddie document, click here

My comments: Well written and worth reading. Thanks to Dave Towne! I have subscribed to his emails for a long time. To join his list, send an email to dtowne@fidalgo.net requesting to join. I wrote about the July 17 Freddie announcement in this newsletter’s June 16, 2023 issue. Guess it finally got out into the appraiser internet world.

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FHA: Cosmetic vs. MPR Repairs

By Ann O'Rourke on May 26, 2023 / bad appraisers, bias, FHA, lender appraisals, USPAP / Leave a comment

Tags: bias, FHA, mortgage lending, USPAP

Cosmetic vs. MPR Repairs: Guidance for FHA Appraisers

By: McKissock

Excerpts: If you are appraising a property that needs some cosmetic repairs but meets FHA minimum property requirements (MPR) in its current condition, you should make the appraisal “as-is.” Here is some guidance on cosmetic repairs vs. MPR repairs.

Topics include:

When can an FHA appraisal be completed “as-is” vs. “subject to”?
Cosmetic repairs Examples
MPR repairs Examples
Conditions that require inspection Examples

To read more, click here

My comments: If you do FHA appraisals, read this blog post. Photos and lots of examples. I quit doing FHA appraisals in the mid-1980s because of the inspection requirements compared to conventional appraisals, that did not have the requirement.

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To read more of this long blog post with many topics, click Read More Below!!

State Appraisal Boards – What Do They Look For?

By Ann O'Rourke on April 21, 2023 / bias, Fannie, liability, non-lender appraisals, state appraiser regulators / Leave a comment

Tags: bias, Fannie, liability, non-lender appraisals, state appraiser regulators

The State Appraisal Board Wants to Throw Me Under the Bus, Right?

by Barry Phillips and Tim Andersen

Excerpts: So, what do the investigator and the state board look for as part of their investigation? Again, simply put, the investigator and board look to see if the appraisal meets the requirements of USPAP’s Standard 1, and if the report meets the requirements of USPAP’s Standard 2. Everything else in such an investigation is merely an elaboration of the answers to these two questions.

Nevertheless, there is a warning due here. Increased numbers of state appraisal boards are looking at complaints against appraisers from the standpoint of the consumer, rather than that of the client and/or the intended user(s).

This, to a great extent, is a function of the current political climate. As all appraisers are aware, the consumer has no standing with the appraiser (assuming the consumer is not the named client or intended user). Nevertheless, state boards tend to favor the consumer (the complainant) over the appraiser (the respondent).

To read more, click here

My comments: Good analysis of how state boards work and what they look for. Tim Andersen, MAI, is definitely “The” USPAP Expert.

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Appraising vs. the Public Good?(Opens in a new browser tab)

Appraiser Adjustment Tools

By Ann O'Rourke on March 3, 2023 / adjustments, appraisal business, bias / Leave a comment

Tags: adjustments, appraisal business, bias

What Tools Do You Use to Support Your Appraisal Adjustments?

McKissock Survey

Excerpts: Here’s a tally of the most popular answers—tools that were either selected or written in by multiple respondents. We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or software tool, because it was mentioned by so many appraisers.

In addition to the top answers listed above, we received many other write-in responses. Other methods and tools that our survey participants said they use to support appraisal adjustments include:

- Market knowledge/research
- Market extraction

Manual sales comparison
Regression analysis
Segmented market analysis

To read more, click here

My comments: First survey for this topic I have ever seen. Very interesting. Don’t miss the appraisers’ comments!

Using home’s previous sales in appraisals(Opens in a new browser tab)

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