What is most often overlooked by appraisers?


 

 

 

 

Excerpt: We recently asked our appraisal community, “What’s the ONE thing that is most often overlooked by appraisers?” We received a wide variety of answers ranging from big-picture oversights to specific details. The most common answer we received was “Highest and Best Use.”…

Highest and Best Use (HBU)

This was the top answer, which was written in by about 8% of survey respondents “First question when doing an appraisal is the highest and best use. If there are two very different opinions of value on a property, different HBU is often the reason.”…

Obsolescence

Obsolescence is another item mentioned by multiple survey respondents. Appraisers cited both external obsolescence and functional obsolescence as being frequently overlooked.

External obsolescence for the subject property – When I’m reviewing appraisals, I see this more often than other oversights. When I was performing retrospective reviews for FNMA, their biggest complaint was that appraisers did not point out external obsolescence for the subject and/or its impact on marketability (if there was an impact).”

Functional obsolescence – Appraiser focus has changed over the years as subject functionality has changed.”

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Value, Accuracy, and Misleading for Appraisers

On Value, Accuracy, and Misleading…and How They are Different From What You Might Think!

By Tim Andersen, MAI

Excerpt: Let’s start this musing by addressing the issues of value, accuracy, and misleading. You might have looked at them differently in the past. Then we’ll tie these in the idea of the value conclusion in an appraisal being right or correct.

State appraisal boards level charges against appraisers. It is very common for appraisers to defend themselves against these charges by insisting their value is “right”. Or, they assert they have properly supported their value conclusion, or something similar. In reality, this argument is utterly irrelevant and carries no weight with the appraisal board.

IRRELEVANT!?

When it comes to value, accuracy, and misleading, the appraiser’s value opinion alone is irrelevant and weightless. This is because TAF has given state appraisal boards specific instructions. Those instructions are that the appraiser’s value conclusion is not to be a part of the board’s investigation. Nor is it to be a part of its deliberations. Therefore, it is not to be part of the appraiser’s defense since it is not part of the charges against the appraiser.

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My comment: Tim is a regular contributor to the paid Appraisal Today. He is The USPAP Expert and helps appraisers stay out of trouble with their state boards!! Tim also has an interesting podcast – link is on the top of the page.

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7 Things to Watch in your Appraisal Market

Seven things to watch in real estate during a pandemic

April 14, 2020 By Ryan Lundquist

Excerpts:

1) Listings: We often think about listings increasing as a way to see the market changing, but right now many markets across the country are seeing fewer new listings. So at times change is best seen with less of something rather than more. It’s not a surprise to see fewer new properties during a pandemic, right?…

7) Prices: In real estate we are so obsessed with prices, but that’s really the last place to look to see the market. What I mean is change happens first in the areas above before showing up in sales stats a couple months down the road. In short, for now the slower pandemic trend hasn’t infiltrated sales price figures as of yet in Sacramento. This doesn’t mean the market is stable in every price range and location. All I’m saying is regional and county stats don’t show price declines right now. Normally I pull monthly price data, but I’ve switched to weekly in order to see the trend sooner rather than later.

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Pandemic and market for buyers and sellers: Appraisals(Opens in a new browser tab)

Very, very funny appraisal video!!(Opens in a new browser tab)

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Raise appraisal deminimus to $2 million or $5 million?

 

Should we raise the deminimus to $2 million? Or $5 million?

By George Dell
Excerpt: To simplify this discussion, let’s note two facts:  Appraisers can perform ‘evaluations’, normally using the same scope of work as an unlicensed “evaluator”.  What’s the difference?  It appears to me that there is one key difference.  The question is then:  Which part of the service is not required?  Is it the integrity/ethics, or the performance (such as using the right data and analysis)?

It appears to me that since unlicensed persons can charge less, have less tax/fee burden (for licensing, education, and errors/omissions insurance- the less ethical, less responsible ‘evaluator’ can always outbid the licensed appraiser every time.

Read the full blog post and appraiser comments. What do you think? Add your comments.

My comments: Interesting analysis by George, of course!! Credit unions are proposing to raise the commercial deminimus to $1,000,000. I didn’t know they made commercial loans. Guess they forgot about the commercial crash in the late 1980s.
As long as Fannie and Freddie (and their investors) require res appraisals, it won’t have a big effect on residential. The FIRREA deminimus in 1989 was $200,000. No effect on much of anything, even though we thought the Sky Was Falling.

The usual Mortgage Cycle: Good Business = lower requirements. Bad Business = higher requirements.

 

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Where Are the Most Mcmansions for Higher Appraisal Fees

Who Ordered All the McMansions? 10 Cities Where They’re Piled Highest

Excerpt: You know them when you see them.

The imposing, ostentatious structures looming over surprisingly wee plots of land. The crazily mismatched architectural styles. The hipped roofs, gabled roofs, and pyramidal roofs-all on the same house! The bank columns. The front yard Romanesque fountains. The puzzling profusion of window sizes and types. The gigantic, two-story front doors.

Click here for more info and where there are lots of them:

https://www.realtor.com/news/trends/metros-with-most-mcmansions

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Covid-19 Residential Appraisers Tips on Staying Safe

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NOTE: Please scroll down to read the other topics in this long blog post on fraudulent appraisals, horror story house, mortgage origination stats, Covid tips for appraisers, etc.

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Is Appraising Dying? Appraisals Replaced by Computers?

Is the Appraisal Profession Dying?

By George Dell
Excerpts: Yes. Appraisal as we know it is dying.
Can it be saved?  No.
So what should I do?  What should “we” do?

To answer these questions, we need to look at causes and conditions. Some of these are obvious.
– Judgment is good; Analysis is better.
– Human generalization is excellent; Computation is fast…

So what can we do? If we cannot be saved. If computers are faster. If we have complete data. If we too have software.  If we too can provide results instead of opinions…  Leads to an obvious question: Can an experienced appraiser do these things as well as, or better than those others?

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Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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

NOTE: Please scroll down to read the other topics in this long blog post on hybrid appraisals, bpos, waivers, mortgage origination stats, Covid tips for appraisers, etc.

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