bias

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Dr. Seuss House aka The Goose Creek Tower

What is “retirement” for appraisers?(Opens in a new browser

Appraiser Retirement?

By Ann O'Rourke on November 5, 2021 / appraisal business, Appraisal Subcommittee, bias, real estate market / Leave a comment

Tags: appraisal business, Appraisal Subcommittee, bias, real estate market

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Appraiser Retirement?

By An Anonymous Appraiser

Excerpt: …retired 2 months ago, and I am SO GLAD I did. I’ve had enough. I decided on an appraisal career because I found real estate, and especially the valuation of homes to be extremely fascinating and challenging, and although I had heard that the appraisal profession was making changes back 30+ years ago, I “assumed” it was becoming a more upstanding, professional occupation, in the eyes of the lenders, politicians and general public, similar in stature to doctors, lawyers and accountants. In other words, they would would hold the appraiser’s opinion via “trust in the professionals opinion”.

What we got, was 30+ years of complaints from the lenders and politicians who blamed appraisers for all of the lenders and political wrong doings. And the public believed them! Why? Because appraisers NEVER got together as an organization to support other residential appraisers! Oh yes, there was the Appraisal Society and the Appraisal Institute, of which I became a candidate, but when I realized that they catered to commercial appraisers, and recently to their own needs, I decided there was no reason for me to join. Besides when licensing came along, the license was the main criteria for selecting the appraiser.

To read more plus many appraiser comments, click here

My comments: Many appraisers are getting older and retiring now for various reasons.

I am 78 years old and have been appraising for 45 years. I love appraising!! (I have not done any lender res appraisals since 2005.) I have friends near my age who are still appraising and like it. They work for direct lenders mostly and do little AMC work.

What is “retirement” for fee appraisers? One of the great reasons to be a fee appraiser is choosing when, where, what you appraise, and whom you work for. In the past, I worked long hours 7 days a week on properties in a wide geographic area. It has been many years since I worked that hard. Many of us just fade away gradually ;>

I recently spoke with two 55-year-old female appraisers. They had both invested in real estate and were retiring early. I have known appraisers over the years who did this. Why aren’t there more? Risk avoidance, I guess. I invested in a duplex in 1986 ($120,000 purchase price). I am living there now after selling my large home. My tenants pay mortgage, insurance, and taxes. I shoulda bought more when the prices were way down here!

I have written about appraiser retirement in my monthly newsletter many times over the years. Be sure you have “tail” insurance to cover any e&O claims after you retire. Mine is free from my E&O company. My most recent article is from May 2021, “Retirement: To Stay or Not to Stay. That is the question!!” Lots of issues to consider. Tip: don’t start taking Social Security until you are 70. I get $3,235 per month now, before the cost of living coming increases. The maximum is $3,985 per month.

Appraiser retirement plans?

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The UAD and Appraisers – Past, Present, and Future(Opens in a new browser tab

6 Appraiser Tips on Increasing Productivity

By Ann O'Rourke on September 24, 2021 / appraisal business, bias, Fannie, Fannie Forms / Leave a comment

Tags: appraisal business, bias, Fannie, Fannie forms

6 Ways to Streamline Your Appraisal Workflow

Excerpt:

#6. Reduce revision requests

A revision will waste 15 minutes minimum. To reduce revision requests, track your clients’ common questions, and include that information in all reports when applicable. If you work for a lot of different lenders or do a lot of appraisals for lending-related purposes, those clients and intended users are probably asking some of the same questions over and over.

For example, if your clients often ask about septic, go ahead and include a comment about the septic system in your initial report. In other words, answer the question before they ask it.

To read more plus get 5 more tips, click here

My comments: Short and well written, worth reading. I have been writing about time management in my Appraisal Today monthly newsletter since June 1992, the first issue. Saving time is a very hot topic now when everyone is very busy. All of my many articles are available free to paid subscribers. They are much longer than this blog post, of course.

How to increase appraisal productivity without spending any money

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NOTE: Please scroll down to read the other topics in this long blog post on Fannie News on Forms and UAD, September Fannie Update, Bias (again), unusual homes, mortgage origination stats, etc.

Location, Location, Location In Appraisals

By Ann O'Rourke on September 3, 2021 / adjustments, appraisal, appraisal how to, bias, real estate market, time adjustments / Leave a comment

Tags: adjustments, appraisal, appraisal how to, appraiser shortage, bias, real estate market, time adjustments

What’s Location Got to Do with It?

By Steven W. Vehmeier

Excerpts: We’ve all heard the old mantra that real estate is all about “location, location, location.” A perfect example of the importance of location in appraising can be found in The Villages in central Florida.

The development called “The Villages” has seventy-eight communities, each called a “village,” ranging in size from 100 to around 1,500 homes in each. In total, there are somewhere around 140,000 residents, and the home prices in these individual villages range from the low one-hundred thousand up to a couple million. In some cases, villages located near and/or adjacent to each other can vary significantly in price….

An appraiser not familiar with The Villages could easily over-or under-value a property by mixing villages. For example, let’s say the subject is a 3-bedroom, 2-bath, 2,000 square foot home with a two-car garage on a typical sized lot. It would not be hard to find hundreds of homes with similar physical characteristics nearby; however, some might be located in the “wrong” village…

Can we apply this “village” concept to other areas? Are there typically many villages or neighborhoods in and around most major cities? Do the same principles apply in comparable selection and resultant values? Of course, they do!

To read more, click here

My comments: Very interesting “case study.” Tim Andersen soon will have two articles on neighborhoods and what USPAP says in Appraisal Today monthly newsletters.

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NOTE: Please scroll down to read the other topics in this long blog post on bedrooms, bias, time adjustments, unusual homes, mortgage origination stats, etc.

5-24-18 Newz//UAD and Fannie Form Changes. Floating Island. Refis dropping(Opens in a new browser tab)

2021 Appraiser Fee Survey

By Ann O'Rourke on August 13, 2021 / appraisal classes, Appraisal fees, bias, Fannie, UAD / Leave a comment

Tags: appraisal business, appraisal fees, bias, Fannie, Fannie forms

2021 Appraiser Fee Survey

By Isaac Peck

Excerpt: The 2021 Appraiser Fee Survey includes 365 Metropolitan Statistical Areas (MSA), as defined by the U. S. Census Bureau, with rural areas included by state. The survey includes eight different appraisal products, including reviews and FHA appraisals, and addresses turn times, to offer insight into that controversial topic by area.

To check out the very detailed report for your MSA, click here

My comments: Lots of info by MSA! I got this info Wednesday and did not have time to look at it in detail.

Raise Your Fees, especially if working for AMCs!! Before AMC broadcast bids looking for the lowest fee, appraisal fees did not change much when volume changed. Since 1986 direct lender fees went up gradually. In my area, fees were about $250 in 1986 for SFR. Now fees have gone up to about $450 – $550 for regular long-time lender clients (and local AMCs). National AMCs are not loyal. Direct lenders can be loyal.

Fascinating and very comprehensive results by state and MSAs. I hear a lot about lenders and borrowers complaining about high appraisal fees. But in my area fees are not that high per the survey. I hear regularly about desperate AMCs who will pay $1,000 or more for appraisals. Appraisers are deluged with AMC appraisal requests, which are often deleted unopened of course. I also hear that sometimes the fee to the appraiser is much lower than the AMC fee.

The UAD and Appraisers – Past, Present, and Future(Opens in a new browser tab)

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, bias, fees, non-lender appraisals, UAD, Fannie Update, mortgage origination stats, etc.

Why is the Appraisal Under Sales Price?

By Ann O'Rourke on July 30, 2021 / appraisal, bias, Freddie, real estate market / Leave a comment

Tags: appraisal, appraisal how to, Freddie, real estate market

Top Ways to Defend Your Work When the Appraised Value Comes in Under Sales Price

Excerpt: As a real estate appraiser, you’ve likely encountered assignments in which the purchase price is not supported by the available comps. So, what are the best ways to address complaints and requests in these situations? To find out, we (McKissock) asked appraisers, “What’s your top tip for defending your work when the appraised value comes in under sales price?” Here’s what they said…

How to prevent and prepare for complaints and requests

Many survey respondents emphasized the importance of making sure your work is as detailed and well-supported as possible—by means of careful comparable selection and analysis, thorough documentation, and clear explanation of why the available comps do not support the contract price…

To read more, click here

My comments: Lots of good ideas. Worth reading

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

What is an Appraisal “Inspection”?

By Ann O'Rourke on July 23, 2021 / adjustments, appraisal business, Appraisal fees, bias, FHA / 2 Comments

Tags: adjustments, bias, FHA

Appraisal Inspection Vs. Home Inspection

Excerpts: Why are these roles often confused? What is an Appraisal “Inspection”?

The root of many misconceptions about the appraisal inspection is the word “inspection” itself. It is true that as part of the appraisal process, the appraiser might perform some sort of onsite quality, condition, and functional utility survey of the property to determine its relevant characteristics and if it meets certain standards. For example, to the general public, the FHA requirements that an appraiser must operate certain systems in the home (plumbing, electrical, HVAC) seems similar to what a licensed home inspector does.

The Oxford Online Dictionary defines inspection as: “Careful examination or scrutiny”

Merriam-Webster’s Online Dictionary defines inspection as:

“The act of looking at something closely in order to learn more about it, to find problems, etc.; the act of inspecting something”

It’s somewhat of a benign definition, is it not? There’s nothing really scary there, yet many appraisers attempt to avoid confusion, and (potentially) limit their liability, by avoiding use of the word “inspection” entirely. Many appraisers use euphemisms for this term in their appraisal reports, such as “property visit” or “viewing.”

Even FHA got into the euphemism game with the publication of Handbook 4000.1, which went into effect in 2015. The words “inspect” or “inspection” generally do not appear in reference to an appraiser’s obligations. Instead, the words “observe” and “observation” are used.

To read more, click here

My comments: USPAP has never required an inspection. USPAP defines “Personal Inspection” as the following: a physical observation performed to assist in identifying relevant property characteristics in a valuation service.”

The word “inspection” is used in various locations, such as Advisory opinion A02, including Minimal level of Inspection.

The fourth exposure draft for the 2023 version has Section 1: “Review of Requirements about Disclosing a Personal Inspection.” Final comments deadline is today, July 23, 2021.

What are Pass through Bedrooms for Appraisals

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Appraisal Business Tips including Marketing

Appraiser Client Relationships are Very Important

By Ann O'Rourke on July 16, 2021 / AMCs, appraisal business, bias, liability, real estate market / Leave a comment

Relationships… The Lost Art

Mark Skapinetz

Excerpts: Relationships. It’s a lost art of business when it comes to the appraiser profession…

From 2009 to about 2019, I was doing Lender appraisals, and deep down, something was missing. I would only be talking to customer service reps, people overseas that the AMCs subcontracted out to review work, and I had no one to go to with my issues and ideas. I know nothing about these people, and they don’t know anything about me.

Building this referral or relationship business wasn’t going to be easy, and it most certainly wouldn’t include any lenders that used AMCs for their ordering process. I needed to look elsewhere for this to happen. Where did I go? I went to the Realtor Facebook groups, Investor groups, and recently, I went to the new platform called clubhouse.

To read more, click here

My comments: I started my business in 1986 and mostly worked for lenders, but also worked for a wide variety of other clients: relocation companies, attorneys, private sales, estates, title companies, etc.

I quit doing residential lender appraising in 2005, before the crash. I had personal relationships with all my local and non-local, lender clients. Very few revision requests (wrong address, missing value, etc.) and no competitive bidding, etc.

Most of my referrals have been from local real estate agents or my website. I went on our weekly broker open house tours almost every week since 1990 and was active in the local association of Realtors.

I have been writing about non-lender appraisals since I started my paid newsletter in 1992 and have spoken to appraisers all over the U.S. and Canada about appraisal marketing.

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NOTE: Please scroll down to read the other topics in this long blog post on Crazy real estate market, bias, liability, unusual homes, mortgage origination stats, etc.

Interracial Etiquette for Appraisers

By Ann O'Rourke on July 14, 2021 / bias / 5 Comments

Tags: bias, racial bias

Interracial Etiquette for Appraisers

By David Braun, MAI, SRA

A spotlight has been shined on the appraisal profession’s propensity towards racial bias. There are at least two environments to contemplate. One is the legal aspect, and the second is more of a personal nature.

The practicing appraiser will need to understand the existing and proposed laws relating to racial bias, especially in the context of “Fair Housing” laws.

This short article presents five steps to achieve practical interracial etiquette on a more personal level. These steps apply to any combination of races. If an appraiser cannot follow these proposed steps, there may be no need to study the legal aspects as it is not acceptable to say, “I hate (whichever) people, but I always treat them fair and professionally in business. Sorry, you are in our prayers, but you cannot be in our profession.

Appraiser Capacity During the Pandemic

By Ann O'Rourke on June 18, 2021 / appraisal business, bias, liability / Leave a comment

Tags: appraisal business, bias, liabiity

Spotlight: Appraiser Capacity During the Pandemic

June 16, 2021

By Danny Wiley, Senior Director of valuation for Single-Family Credit Risk Management

Excerpt: 2020 – and the early part of 2021 – have shone a bright light on a topic that’s been a growing concern – appraiser capacity. While the scope of that concern has been different throughout the country in recent years, it’s now been brought to the forefront for every state. The pandemic fueled regulation which lowered already-low interest rates and, for a portion of homeowners, home-improvement-related refinances combined with additional factors to create a perfect storm for record appraisal volume – without a corresponding increase in the number of licensed appraisers.

The majority of the states comprising the list of the top 10 highest average GSE appraisals per appraiser were often situated in the western part of the country – and also, not surprisingly, included some of the more populated states, including California, Texas, Michigan, Arizona and Colorado. This group ranged from Ohio (165 average appraisals per appraiser), Illinois (171) and New Jersey (174) at the low end to Utah (233) and Texas (207) at the top end. Overall, the appraisers on this list were averaging about 14-19 appraisal per month from 2012-2019.

As you can see, the workload quickly escalates at this end of the spectrum – and, as you’ll find out below, 2020 showed us that a perfect storm of factors can make the situation much worse.

To see more graphs and read more, click here

My comments: Maybe someday lenders will allow trainees to sign. The Very Best Way to solve the appraiser shortage. The significant AMC hassles mean appraisals take more time.

A subscriber called me recently. She got a request for an appraisal of a home with a subsidized purchase price (Low-moderate income). The AMC appraisal request did not disclose this. She left messages to 5 of the AMC reviewers and did not get a callback. I suggested telling the AMC to get another appraiser. The easiest reason is usually to say she is not competent as the reason.

I have appraised them before. They are complicated. Typical restrictions on price if sold, etc. I was working for a local lender and contacted the very experienced chief appraiser to see what they needed and if they want to lend on these types of properties. Many appraisers are giving up on working for AMCs and quitting or retiring.

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, marketing, appraisal bias,mortgage origination stats, etc.