Why is the Appraisal Under Sales Price?

By on July 30, 2021   /   appraisal, bias, Freddie, real estate market   /   Leave a comment
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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…
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My comments: Lots of good ideas. Worth reading

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What is an Appraisal “Inspection”?

By on July 23, 2021   /   adjustments, appraisal business, Appraisal fees, bias, FHA   /   2 Comments
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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.

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

What are Pass through Bedrooms for Appraisals

Appraisal Business Tips 

Humor for Appraisers

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Appraiser Client Relationships are Very Important

By 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.

Appraisal Business Tips including Marketing 

Humor for Appraisers

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Interracial Etiquette for Appraisers

By on July 14, 2021   /   bias   /   5 Comments
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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.

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Appraiser Capacity During the Pandemic

By on June 18, 2021   /   appraisal business, bias, liability   /   Leave a comment
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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.

 

Appraisal Business Tips 

Humor for Appraisers

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Zoning and Appraisals

By on June 11, 2021   /   appraisal, appraisal business, bias, george dell, real estate market   /   Leave a comment
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The Infamous History of Zoning in the Housing Industry (Video)

Excerpts: History of zoning in the housing industry and how past practices shape the problems we are currently experienced today.

What was the purpose of zoning in the very beginning? How exactly were these practices harmful to people of color? What are some of the problems we see today because of this? These questions and much more will be answered.

To watch the video, click here

My comment: A controversial topic. Today this often involves “downzoning,” allowing for properties to have more than one unit or more density – apartments, condos and townhomes.

Experts Say Zoning Changes Are Most Effective Path to Boost Housing Supply for a More-Balanced Market

Excerpt: A Zillow survey of economists and other real estate experts finds high costs are expected to slow construction and may lower homeownership among today’s 30-somethings. Relaxing zoning rules is what the panel says would be most productive to increase new housing supply.

Other ways include:

  • Ease the land subdivision process for landowners
  • Relax local review regulations for projects of a certain size
  • Accelerate adoption of new construction technologies (e.g., modular building, 3D printing of certain components)

To read more, including details and the full list of survey suggestions, click here

Zoning in the Appraisal Process

Appraisal Business Tips 

Humor for Appraisers

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Appraising vs. the Public Good?

By on June 4, 2021   /   appraisal, appraisal business, bias, cost approach, liability, trainees, USPAP   /   Leave a comment
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Has Appraising Failed the Public Good?

by Steven R. Smith, MSREA, MAI, SRA

Excerpts: The term Public Good is in the opening paragraph of the Uniform Standards of Professional Appraisal Practice (USPAP). An appraiser friend once wrote that our regulations and guidelines are intentionally ambiguous—and that may be. But what is crystal clear to me is that the industry has put the interests of its clients before the public good.

The Public Trust statement and the Ethics Rule have been largely ignored over the years with loan production put first…

What can an individual appraiser do to support the public good, even before they start an assignment? For me, the answer always has been to appraise the client and the appraisal assignment. There are some clients and assignments that simply should be avoided because of the wants, needs and desires of the client, with respect to the assignment results.

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My comments: I have known Steve Smith for a long time. To read more comments from Steve and other savvy appraisers, join the National Appraisers Forum, an email discussion group. I have been a member since it started. It is my “go-to” resource for appraisal topics. Moderated. Very different from Facebook and other appraiser online discussion groups where filling out forms and dealing with AMCs are discussed.

The future of residential appraising

Appraisal Business Tips 

Humor for Appraisers

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What Should Appraisers Wear?

By on May 21, 2021   /   adjustments, appraisal business, bias, Fannie, real estate market   /   Leave a comment

What Should Appraisers Wear?

Excerpt:

Professional Dress

When we are observing properties, it is important that we dress professionally. If we are doing an appraisal for lending, we are a representative of our client. Although we are not an employee of the client, we do represent them. Often, we are the only person actually seen by participants in the transaction.

Photo above by BBH Singapore on Unsplash

Also, we represent ourselves, our business, so we want to dress professionally. We are professional licensed appraisers performing our work and should look as such. That said, what works for walking around properties, in between bushes, in the mud, etc.?

To read more and add your comments click here

My comments: Very interesting. From a female appraiser perspective, but applies to guys also.

Over my 45 years of appraising, I had differences in what I wear, from very professional (commercial) to casual for protection from bushes, dogs, etc. For residential appraisals, I prefer to keep my clothes from being damaged (heavy pants, strong jacket, collared polo shirts, and very sturdy shoes) from gravel, unknown stuff under weeds in the back yard, etc.). I live in a mild Mediterranean climate, so I don’t do much else except raincoats and a heavier jacket.  I don’t even want to think about snow, slush, and mud!!

Appraisal Business Tips 

Humor for Appraisers

Wearing shoes in a house for appraisal(Opens in a new browser tab)

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The UAD and Appraisers – Past, Present, and Future

By on April 23, 2021   /   appraisal business, bias, UAD, unusual homes   /   Leave a comment

The UAD and Appraisers – Past, Present, and Future

30 minute video

Speakers: Sean Murphy and Danny Wiley of Freddie Mac

Excerpt: They offer some insightful looks into the process and delve into the specifics that appraisers need to know.

What are some of the key updates for 2021? What can appraisers expect with these changes in the UAD? How will these changes impact the appraisal industry? These questions and much more will be answered between Sean, Danny, and Joan (moderator) as they dive into more about the UAD and Freddie Mac.

 

If it does not display, to watch the video, click here

My comments: Danny Wiley is an excellent speaker (starts after the first speaker). Worth listening to. Wiley is Freddie Mac’s Senior Director of valuation for Single-Family Credit Risk Management. Sean Murphy is the Credit Policy Risk Analytics Manager. Danny has been around for a long time, starting as a fee appraiser. He knows what is happening and what it means for you.>

Appraisal Business Tips 

Humor for Appraisers

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How to Fight Real Estate Agents’ Appraiser Blacklisting

By on March 26, 2021   /   AMCs, appraisal business, bias, Fannie, humor   /   Leave a comment
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How to Fight Real Estate Agents’ Appraiser Blacklisting

Excerpts: When a real estate agent “blacklists” an appraiser, the result is often that the agent’s lender/AMC contacts will stop using the appraiser completely (at the agent’s request), or occasionally, the lender will continue to use the appraiser but not assign the appraiser any of the transactions that that particular agent works on. In the case of the latter, sometimes the appraiser will be assigned an order only to have it canceled later that day once the real estate agent sees the appraiser on the order and calls the lender or mortgage broker to complain. I’ve talked to appraisers who have this happen several times a year with the same agent…

Having an order canceled and reassigned is sometimes the first and only indication to the appraiser that something fishy is going on, but some appraisers who abruptly stop receiving work from a client often don’t have to look far to figure out why. While “blacklisting” is sometimes more discreet, some appraisers actually have the real estate agent call them and tell them explicitly that they are going to actively prevent the appraiser from ever working on one of their transactions.

To read more, click here

My comments: Lender blacklisting has been around for decades. I remember when the blacklists were shared among lenders. Some appraisers said it was good to be on the blacklist of the not-so-ethical lenders.

Savvy AMCs (and lenders) often just don’t give the appraiser any more work. Putting an appraiser on a blacklist can be a big issue.

Good article with practical tips from Richard Hagar and the author.

Appraisal Business Tips 

Humor for Appraisers

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