Appraising Unique Homes

By on January 10, 2025   /   appraisal, appraisal business, Economic analysis, forecast, GSEs, retirement, ROVs   /   Leave a comment
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Newz: GSE Privatization, 2025 Forecasts, Unique Homes

January 10, 2025

What’s in This Newsletter (In Order, Scroll Down)

My comments on topics: This newsletter is long. Almost all the news items I have received are 2025 Forecasts, so I have included some of them in this newsletter.

    • LIA: Disclosing Identity of Complaining Party
    • Why Selling a Unique Home Is Challenging — and Can Leave Some Owners Feeling ‘Stiffed
    • 2025 Housing Market Predictions: Key Insights for Real Estate Appraisers The National View
    • Real estate trends to watch in 2025 – The Local View
    • Appraisal Industry Outlook Under Trump Administration
    • Will Homeowners Finally Sell in 2025? Here’s What the Experts Say, Amid a Glimmer of Hope
    • GSE Privatization A ‘Herculean Task’
    • Mortgage applications decreased 3.7 percent from one week earlier

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

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Why Selling a Unique Home Is Challenging — and Can Leave Some Owners Feeling ‘Stiffed’

Excerpts: When Ann Levengood decided to let go of her beloved double-dome home two hours outside of Seattle, she thought she did everything a seller needed to do to get a good price.

“We built a new garage and completely did the heavy work with a $50,000 new roof, new drainage, new retaining walls, landscaping (including removal of alder trees), interior was completely redone, new lighting, new skylights, you name it. We had zero tasks upon inspection,” she tells Realtor.com®

“The inspector had never seen such a clean house.” But when it came time to price the Poulsbo property, Levengood and her agent didn’t see eye to eye. While the proud owner wanted to price the house at $425,000, the cautious agent listed it at $339,000.

The problem? The house, with its double domes, was unusual.

Even so, the home took only two months to close a sale at full price, leaving Levengood with the lingering feeling that she had been stiffed. “I couldn’t even get agents to come out and see it,” she says.

Not only can it be more difficult to find the proper buyer for such a home, but it is also challenging to find comps.

To read more, Click Here

My comments: Worth reading the article. All appraisers appraise unique homes, which are often very challenging, especially for comps and market analysis. This article helps appraisers understand the difficulties in selling unique homes. I have never read about this important topic.

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2025 Housing Market Predictions: Key Insights for Real Estate Appraisers – The National View

By Kevin Hecht, Appraiser and Economist

Excerpts:

Summary of Key Trends – The National View

      • Mortgage Rates: Expected to stabilize between 6% and 7%, with modest declines towards the latter half of the year.
      • Home Prices: Predicted growth of 2.6% to 4% year-over-year, reflecting steady demand and incremental inventory improvements.
      • Home Sales: Anticipated increase of 7% to 9%, driven by improved inventory and easing mortgage rates.
      • Inventory Levels: Incremental improvement, with a forecasted 11.7% rise in available housing inventory.
      • Policy Influences: Potential shifts due to tariff policies and deregulation under the current administration.
      • Regional Trends: The Southwest is moving towards a buyer’s market, while multifamily developments in the South and Midwest enhance rental affordability.

As an economist, I have witnessed the housing market evolve through varying cycles, and 2025 promises to be no different — a year of incremental recovery and stabilizing trends. Understanding these nuanced changes is crucial for real estate appraisers to deliver accurate valuations and stay ahead in a dynamic field. Let’s dive into the key insights for the year ahead…

Opportunities for Appraisers in 2025

      • Rising Transactions: More home sales will provide appraisers with increased opportunities, particularly in regions experiencing economic growth.
      • Enhanced Expertise: With modest price growth and regional variations, clients will increasingly rely on appraisers to navigate market complexities.
      • Policy Implications: Staying informed about the effects of tariffs, tax reforms, and deregulation will position appraisers as knowledgeable advisors.
      • Adapting to Shifts: Expanding buyer’s markets and evolving rental trends will require appraisers to stay flexible and proactive in addressing client needs.

To read more, Click Here

My comments: Worth reading. Good overall info for appraisers.

Real estate trends to watch in 2025 – The Local View

January 7, 2025

By Ryan Lundquist, Appraiser

Excerpts: NOTE: The housing market isn’t the same in every part of the country. I hope you get some value here, whether you’re local or not.

Sellers will continue to thaw out: Last year we saw more listings come to the market. In fact, we had about 3,500 more new listings than 2023 in the region. But the wild part is we were still missing over 11,500 new listings from the pre-2020 normal level. Can you see why prices have remained higher? Anyway, right now it looks like 2023 was a bottom for seller inactivity, which is a good thing. This year I expect for new listings in 2025 to outpace 2024 levels as lifestyle moves come up for sellers. We still won’t be anywhere close to a normal number of listings though.

New construction will do well again this year: Locally, I expect new construction to still do well. That may not be the vibe in some markets around the country, but 2024 was one of the strongest years we’ve seen over the past decade locally. Part of the success comes from buyers aching for quality inventory, so builders have a captive audience. But let’s be real that the huge x-factor is builders offering incentives.

Buyer demand will thaw out more: In 2024, we did better than 2023 and 2007. I know that’s not a huge flex, but having about 6% more closed sales in the region feels like a real win. What this means is we had over one thousand more buyers purchase homes last year. Look, the math still won’t work for many people, so don’t expect the floodgates of volume to open up in 2025, but we should get more buyers as long as rates hover around 7% instead of going higher.

To read the blog post, plus the appraiser comments, Click Here

My comments: Read Ryan’s other forecast topics and see his graphs for explaining what is happening in his market. How does this compare with your market?

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What are your best current and former AMC/lender clients? Now is the time to plan for the 2025 increase in appraisals.

In the January, 2025 issue of Appraisal Today

Excerpts: Business has been slow for lender appraisals, but is expected to go up in 2025. Mortgage rate drops are expected with stabilized interest rates. There is much pent up demand by owners for refis and buyers/sellers for sales

Your best clients for appraisal (and all) businesses are your previous

customers. Which are your best current and previous clients to focus on for getting business?

Don’t waste time randomly trying to get new lender clients. Instead, Use the

Rating Grid below to see which old clients you preferred or may be a good new client. You can research new clients and take one order to see if you like working for them.

Why previous clients?

A primary marketing advice I have always used, whether slow or busy: Your Best Prospects for Business Today Are Always Former Clients. This works for any business, but lender appraisals have significant increases and decreases in business. Why previous clients? They know you and you know them.

Of course any AMCs can change overnight from good to always taking the

lowest fee. Many see appraisers as all the same.

To read the full article with lots of tips on evaluating clients and a Client Rating Grid, plus 2+ years of previous issues, subscribe to the paid Appraisal Today at www.appraisaltoday.com/order .

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If you are a paid subscriber and did not receive the January 2025 issue emailed on Thursday, January 2, 2025 please email info@appraisaltoday.com, and we will send it to you. You can also hit the reply button. Be sure to include a comment requesting it.

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Appraisal Industry Outlook Under Trump Administration

January 6, 2025

by AppraisersBlogs

Excerpts: In a recent article, John D. Russell, JD explored the potential impact of the new Trump administration on the appraisal industry. With Republicans set to control the legislative process, Russell analyzed various documents and comments to distill expectations for how appraisal-related issues may be handled going forward.

He noted that the Trump administration’s efforts will likely reflect much of the Project 2025 platform, and that its approach to the GSEs and FHFA in the first term could mirror that of the previous administration. Late first-term efforts on housing finance reform may also provide insight into second term priorities.

Russell acknowledges the difficulty in predicting whether an administration’s policies and actions will ultimately benefit or hinder appraisers. However, he notes that the previous four years under the outgoing administration were characterized by an intense focus on appraisers and appraisals, particularly in relation to issues of bias and discrimination.

Russell reveals insights gleaned from numerous conversations with appraisers, many of whom express a profound sense of fatigue and a strong desire to simply carry out their professional duties to the best of their abilities – with objectivity, impartiality, and freedom from bias.

He suggests that the early phase of the Trump administration might offer a welcome respite for the appraisal profession, as the spotlight shifts to other priorities and allows appraisers some relief from the tumultuous scrutiny of recent years.

While the long-term effects remain to be seen, a change in focus could provide much-needed breathing room for appraisers to regroup and continue their important work without the added pressure of being under the political and social microscope.

To read the blog post, plus over 30 appraiser comments, Click Here

To read the original article, Click Here

My comments: Definitely worth reading this blog post and and/or the full article. I published a link to the original article in the November 25, 2024 issue and included a link to the original article listed above. The blog post above has excerpts from the article and appraiser comments.

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Will Homeowners Finally Sell in 2025? Here’s What the Experts Say, Amid a Glimmer of Hope

Jan 6, 2025

Excerpts: The ‘lock-in’ effect still grips homeowners

The projected above-6% mortgage rate for the duration of 2025 is bad news not only for prospective buyers, but also for would-be sellers, who have spent the past year in the grips of the “lock-in” effect, which has made them unwilling to list their properties and part with their current, significantly lower mortgage rates.

A report from the Consumer Financial Protection Bureau released back in September revealed that about 60% of the 50.8 million active mortgages had interest rates below 4%, way lower than the December rate of 6.91%.

Homeowners fortunate enough to be paying off their mortgage at the below-4% rate would think twice before moving to sell their home and then be forced to take out a new mortgage at a much higher rate.

“We expect the willingness of homeowners to sell their existing home and buy a new one to wane,” says Realtor.com Chief Economist Danielle Hale. “Put simply, potential home sellers and the market in general will still feel the effects of mortgage rate lock-in, which is more acute when rates are higher.”

To read more, Click Here

My comments: At 81 years old I am a few years ahead of the official boomer age. Why am I not selling? Very low mortgage payment with a low interest rate. Original price in 1986 was $120,000. Capital gains of about $1,000,000. The cost of a replacement home in my area is over $1,000,000.

At my recent Christmas family get together, I found out my niece is pregnant. There are relatively few births where I live and in other locations.

My niece’s mother in law was at the event and was looking forward to seeing her first grandchild and babysitting. But, she lives in Southern California. Her 4,000 sq.ft. home is way too big for her and her husband and she wants to sell. But, if she sells it and moves closer to her daughter and grandchild, after capital gains taxes, she will not have enough money to buy here.

Another major factor is parents wanting move closer to their children, one of the primary reasons for selling their home. If they live in an area with much lower prices than where her children live, they don’t have enough money to buy a home there. Sometimes the children moved to an urban area to get a job where there are higher priced homes.

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GSE Privatization A ‘Herculean Task’

Jan 07, 2025

Excerpts: Researchers say it’s difficult to see how GSE privatization would lead to lower mortgage rates.

Anticipation, uncertainty, and speculation continue to build concerning the impact on the housing market of policy shifts expected to be implemented by

the incoming Trump administration.

Possibly the most impactful item on the agenda for mortgage professionals pertains to the re-privatization of Fannie Mae and Freddie Mac, an effort begun during Trump’s first administration.

Ultimately, Patel and Shvartser assess it’s hard to see how GSE privatization would lead to lower mortgage rates that benefit the consumer. Privatization would carry significant execution risks and could adversely affect the secondary mortgage market, driving primary mortgage rates even higher.

The authors acknowledge that the push for privatization is not surprising considering that conservatorship was never intended to be a permanent solution.

The big question emphasized in their paper asks: What happens to the implicit guarantee of the GSEs by the U.S. government in privatization? Uncertainty of GSE support may have an effect on primary mortgage rates, hurting consumers. Also any guarantee that goes beyond what is offered by the Treasury ($256 billion) would need Congressional approval.

To read more, Click Here

My comments: For appraisers, mortgage interest rates significantly affect lender appraisal volume.

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, Click Here.

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 go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. We are all waiting for rates to drop in 2025.

Mortgage applications decreased 3.7 percent from one week earlier

WASHINGTON, D.C. (January 8, 2025) — Mortgage applications decreased 3.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 3, 2025. This week’s results include an adjustment for the New Year’s holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 3.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 47 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 43 percent compared with the previous week and was 15 percent lower than the same week one year ago.

“Applications decreased last week as rising mortgage rates continued to discourage buyers from entering the market and put a damper on purchase activity. The 30-year fixed rate increased for the fourth consecutive week, reaching 6.99 percent – the highest rate since July 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Purchase applications declined for both conventional and government loans and dropped to the slowest weekly pace since February 2024. Refinance applications increased despite higher rates, but the increase was compared to recent low levels and was driven entirely by an increase in VA refinances, which continue to show weekly swings.”

The refinance share of mortgage activity increased to 40.8 percent of total applications from 39.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.7 percent of total applications.

The FHA share of total applications increased to 16.9 percent from 16.6 percent the week prior. The VA share of total applications increased to 16.2 percent from 15.7 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.99 percent from 6.97 percent, with points decreasing to 0.68 from 0.72 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) decreased to 6.99 percent from 7.13 percent, with points increasing to 0.74 from 0.64 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.65 percent from 6.69 percent, with points decreasing to 0.91 from 1.05 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 6.46 percent from 6.43 percent, with points decreasing to 0.62 from 0.75 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.98 percent from 5.97 percent, with points decreasing to 0.26 from 0.65 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone: 510-865-8041

Email:  ann@appraisaltoday.com

Online: www.appraisaltoday.com

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Appraising Unique Properties

By on December 13, 2024   /   adjustments, AI, appraisal, bias, Economic analysis, forecast, future, Highest and Best Use, retirement, ROVs   /   Leave a comment
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Unique Properties, Rocket Mortgage Sues HUD, Trump Shifts in Housing Market?

December 13, 2024

What’s in This Newsletter (In Order, Scroll Down)

    • LIA ad – Each appraisal is unique
    • The Ultimate Guide to Unique Property Appraisals
    • America’s Most Expensive Property Is Sitting in a Flood Zone—Will Anyone Buy the $295 Million Estate?
    • Rocket Mortgage Sues HUD Over Regulatory, Enforcement Discrepancies
    • Donald Trump’s Second Term Could Bring ‘Significant Shifts’ to the Housing Market
    • Report: What’s Driving the Recent Refi ‘Boom?’
    • Mortgage applications increased 5.4 percent from one week earlier
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The Ultimate Guide to Unique Property Appraisals

Excerpts: When faced with a truly unique property, the standard approach of pulling recent comparable sales from the neighborhood simply won’t cut it.

These properties require a real estate appraiser with a different mindset and a more creative approach to valuation.

Here’s a quick break down of exactly how unique property appraisals differ from traditional approaches:

Breaking Down the Time Barrier

One of the most common misconceptions is that we can only use recent sales. For unique properties, this simply isn’t true. Here’s why:

Expanding Geographic Boundaries

Location matters, but for unique properties, finding truly comparable homes often requires the appraiser to look beyond the immediate neighborhood:

The Bottom Line

Appraising unique properties requires breaking free from traditional constraints while maintaining professional standards.

To read more, Click Here

My comments: Good summary of the issues. Read the details plus a table comparing traditional and unique properties. Almost all appraisers appraise unique properties, if only occasionally. This is written for real estate agents, but very useful for appraisers.

I regularly hear about AMCs trying to find an appraiser to do one of these properties. They keep shopping for low fees and fast turn times. After a while they finally go with the appraiser who can do them at a good fee and reasonable turn times.

If you can appraise unique properties you have a substantial advantage over less experienced appraisers. Now is an excellent time to try doing one, especially if your business is slow now.

Read more!! →

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10 Appraisal Myths

By on November 29, 2024   /   AI, appraisal, appraisal business, Appraisal fees, appraisal management company, Economic analysis, future, Highest and Best Use, liability, retirement, ROVs   /   Leave a comment
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Newz: 10 Appraisal Myths, AMCs – Appraiser Ripoffs –  AMC Junk Fees

November 29, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • LIA – Intended Use and User
  • Don’t Fall for These 10 Real Estate Appraisal Myths
  • Extraordinary 4-Story Megamansion With Rooftop Putting Green and 2 Pools Lists for $78 Million
  • Now What? On a New Trump Administration
  • Outrage Over Connect by ValueLink’s New Monthly “Junk Fee”
  • Mortgage applications increased 6.3 percent from one week earlier

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10 Real Estate Appraisal Myths

By Tom Horne

Excerpts: In this week’s post, I dispel some common appraisal myths that have been around for years.

10 Appraisal Myths

Myth #1: All real estate appraisers are the same

Myth #2: Appraisals are the same as the Zillow Zestimate

Myth #3: The appraisal always comes in at the contract price

Myth #4: The appraiser is working for the buyer

Myth #5: Cost always equals value

Myth #6: Comps must be within one mile of the subject property

Myth #7: Agents and appraisers cannot talk

Myth #8: Appraisals and home inspections are the same

Myth #9: Assessed value will equal market value

Myth #10: The “new” appraisal methods are better than the old

To read more, Click Here

My comments: I’m sure you have heard some, or all, of these questions. I have heard them. Read the full post to see the answers you can use.

This blog post is written for newer real estate agents, but a good reminder of what many other people think. For example, when I say I am a real estate appraiser, many people ask if I have any listings. They think I am an agent and don’t know what appraisers do. Unfortunately, that is the main reason appraisers have difficulty when trying to communicate appraisal issues. Few listened to appraisers speaking out about fraud before the 2008 crash. What did we residential lender appraisers get to “fix” the problem? AMCs.

I don’t know why the appraisal associations have never done much to let people know about what appraisers do.

Read more!! →

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Appraisal Cost Approach and Highest and Best Use

By on November 16, 2024   /   AI, appraisal, appraisal how to, cost approach, Economic analysis, forecast, future, Highest and Best Use, liability, USPAP, zillow   /   Leave a comment
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Newz: Now What For Appraisers After Election? Generative AI and adjustments?

November 15, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • (LIA ad) Intended Use and User
  • 10 Questions on the Cost Approach and Highest and Best Use
  • A Real-Life ‘Yellowstone’: Historic 52,000-AcreArizona Ranch Hits the Market for $42 Million—Complete With a Private Airstrip and Off-Grid Cabin
  • Now What? On a New Trump Administration
  • Can Generative AI solve the adjustment support paradigm
  • How Deep Fakes Have Burrowed Into Home Finance
  • Murder in the flying saucer: inside The Chemosphere in Los Angeles, CA
  • Mortgage applications increased 0.5 percent from one week earlier
  • So Many Appraisal Cost Approach Questions
  • Appraisal Business Tips 
    Humor for Appraisers


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

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10 Questions on the Cost Approach and Highest and Best Use

By Timothy Andersen

Excerpts: It is clear most appraisers do not like to perform the analytics inherent in the Cost Approach. This may be because most appraisers simply do not appreciate its power. Consider these 10 Cost Approach questions.

10 QUESTIONS TO CONSIDER

Take a look at these 10 questions on the Cost approach (and various items related to it). After you are finished, you will still not like to do it. But you may appreciate its analytical and interpretative powers even more.

1. On the 1004 form is the indication that Fannie Mae does not require the Cost Approach to Value. However, where does the form instruct the appraiser not to complete the analytics of the Cost approach? (Spoiler Alert: It does not.)

2.   Instructions on the form state the appraiser is to “…[p]rovide adequate information to the lender/client to replicate the [herein] cost figures and calculations.” However, where does the typical appraiser provide such replicable information?

3. In addition, the reporting form requires the appraiser to “…[s]upport the opinion of site value [with a] summary of comparable land sales or other methods for estimating site value.” Nevertheless, where does the typical appraiser provide such summary information?…

So, it is clear from these Fannie Mae instructions that the appraisal of a SFR includes an analysis and valuation of the subject site separate from the valuation of the site as improved. Does this mean to conclude a site value as if the subject site were vacant and available to be put to its highest and best use? (Spoiler Alert: Yes, it does.)

To read all 10 Q&As, Click Here

My comments: Of course, for custom home construction the Cost Approach is required to determine the feasibility of construction before building the home. I got some good ideas on using the Cost Approach from this article.

Read more!! →

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New URAR For Appraisals

By on November 8, 2024   /   appraisal, appraisal modernization, Economic analysis, GSEs, lender appraisals, liability, New URAR, time adjustments   /   Leave a comment
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Newz: New URAR, GSEs Update Appraisal Market Areas Requirements, Lender Redlining

November 8, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • Claudia Says: Navigating Value Revisions in Appraisals

  • The New URAR: Embracing New Beginnings

  • $19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market

  • CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

  • October 2024 Real Estate Market Update: A Balancing Act of Hope and Hurdles

  • What can we expect for the future of the appraisal and the country?

  • GSEs Update Appraisal Market Area Requirements

  • Mortgage applications decreased 10.8 percent from one week earlier

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The New URAR: Embracing New Beginnings

By Jo Traut

Excerpts:

What’s New with the New URAR?

Think of the new URAR like upgrading from a basic flip phone to a modern smartphone. The old flip phone did its job—making calls and sending texts—but the new smartphone offers so much more. It’s customizable, adaptable to various apps and functions, and streamlines your daily tasks.

Similarly, the new URAR goes beyond a static, one-size-fits-all approach. It’s dynamic and data-driven, tailored to different property types and appraisal assignments, ultimately allowing us as appraisers to provide clearer and more comprehensive reports .

Why the Change?

The existing URAR has been dependable, much like an old-school flip phone. But as technology advances and standards evolve, the mortgage industry requires a more versatile tool. This redesign addresses current inefficiencies, meeting the rising demand for improved reports, as well as enhancing the experience for both appraisers and report readers.

To read more, Click Here

My comments: Read this blog post! Definitely the best practical appraisal advice I have read on new URAR. Includes links to relevant technical details.

No more 30-40 page appraisal SFR reports that is not what GSEs (and most appraisers) wanted. No more outdate “forms” reports that do not change fast enough to accommodate GSE (and USPAP) changes.

Both URAR and UAD acronyms are used in articles and references I have read. I like that the GSEs kept the same name for the reports (formerly “forms”)

URAR – Uniform Residential Appraisal Report

UAD – Uniform Appraisal Dataset

I will be writing more about the new URAR upcoming changes in future issues of this weekly newsletter and my monthly newsletter.

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$19.8 Million Cape Cod Estate Next to Kennedy Family’s Famed Hyannis Port Compound Hits the Market

Excerpts: 7 bedrooms, 7.5 baths, 9,629 sq.ft. 3 Acre lot, Built in 1914

Adjacent to the famed Kennedy Compound in the exclusive Hyannis Port enclave, the eight-bedroom mansion, known as Port View, has just become available “for the first time in a quarter century,” according to the listing.

The seaside, 9,629-square-foot residence sits right next to the home where President John F. Kennedy and wife Jacqueline Kennedy Onassis famously spent their summers sailing the waters of Nantucket Sound.

Some of the most impressive features found throughout the 26-room estate’s open floor plan include high ceilings, ornate architectural details, an imperial staircase, and six fireplaces.

“The whole interior views to the water,” she said. “It’s like being on a ship with front row ocean views. You are just drawn to it.”

Built in 1914, the Cape Cod mansion has been thoughtfully modernized over the years to retain its historic integrity.

Period details include exposed-beam ceilings and preserved mahogany inlay floors. French doors from the main living and dining areas give way to an enormous patio with waterfront views.

To read more, Click Here

To see the listing, with 28 photos, Click Here

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CFPB and Justice Department Take Action Against Fairway for Redlining Black Neighborhoods in Birmingham, Alabama

Top mortgage lender to pay a $1.9 million penalty and provide $7 million in loan subsidies

Oct. 15, 2024

Excerpts: Today, the Consumer Financial Protection Bureau (CFPB) and the Justice Department (DOJ) took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions.

Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement announced today would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods.

To read more, Click Here

My comments: How much money did Fairway make vs. what an appraiser makes for an appraisal. More lenders in the news vs. “biased” appraisers!

Read more!! →

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Waterfront Property Appraisals

By on September 27, 2024   /   appraisal how to, appraisal modernization, Economic analysis, liability, Mortgage interest rates   /   Leave a comment
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Newz: Rate Drops and Appraisers, UAD Overhaul, Avoiding Court

September, 30 2024

What’s in This Newsletter (In Order, Scroll Down)

  • Avoiding Court: A Common Sentiment Among Appraisers (LIA ad below)

  • Making Waves: Appraising Waterfront Property

  • $850K Nantucket ‘Shack’ That Looks Set To Plunge Into the Sea

  • New UAD Overhaul: What Appraisers Can Expect in 2025 & Beyond

  • Sticky Prices

  • The Fed is finally lowering interest rates. What does it mean for appraisers?

  • Experts Predict Where Mortgage Rates Are Headed in 2025 as the Fed Cuts Rates

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Making Waves: Appraising Waterfront Property

Excerpts: Appraising waterfront properties involves a comprehensive evaluation of various factors that go beyond typical residential appraisals. By considering the unique aspects of water frontage, local regulations, environmental factors, and property-specific amenities, you can provide credible and comprehensive valuations that reflect the worth of these highly sought-after properties.

Understanding the depth, quality of the water, and type of shoreline is crucial, as these elements directly influence the property’s usability, aesthetics, and long-term stability. The importance of these factors cannot be overstated, and they deserve careful consideration in every waterfront property appraisal.

1. Water Frontage and Access

One of the most critical elements in appraising waterfront properties is the type and extent of water frontage. The value can vary significantly depending on whether the property is adjacent to a lake, river, ocean, or pond.

5. Depth of the Water

The depth of a water body significantly affects its usability, particularly for recreational activities like boating, fishing, and swimming. Shallow water might limit boating and can lead to stagnant water, which may contribute to unpleasant odors and an increase in insects like mosquitoes.

Conversely, deeper water is often clearer, supports a healthier ecosystem, and is more desirable for recreational use, thereby enhancing property value.

To read the details on all 8 factors, Click Here

My comments: Excellent article. Worth reading. The best I have read on this topic. Even if you never appraise a waterfront home, most people have been to a lake or other type of waterfront property on vacation. I live on an island in San Francisco Bay with water on all sides plus a small area on a nearby peninsula with 3 sides waterfront. I moved here in 1980 and appraised hundreds of waterfront properties including condos plus semi-detached and detached homes.

I lived for 25 years in three waterfront homes with boat docks in my city and am very familiar with with the issues above. I have appraised waterfront homes with 7 of the 8 factors in the blog post, except utilities as all were public utilities with no problems).

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Appraiser and Real Estate Agent Communication

By on September 6, 2024   /   AMCs, appraisal, Appraisal fees, Economic analysis, non-lender appraisals   /   Leave a comment
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Newz: Disturbing AMC Violations, Appraiser and Real Estate Agent Communication

September 6, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • Top 10 Things Appraisers Wish Real Estate Agents Understood
  • Divorce Appraisal Red Flags
  • Carmel’s Iconic and Artistic ‘Owl House’ $3,750,000
  • Housing Market Update: August 2024
  • Please! Not Another Highest and Best Use Question?!
  • Appraisal Regulation Compliance Council Exposes Disturbing AMC Violations
  • Mortgage applications increased 1.6 percent from one week earlier

Real Estate Agents and Comparable Sales – Tips for Appraisers

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Top 10 Things Appraisers Wish Real Estate Agents Understood

McKissock Survey

Excerpts: Survey question: “What’s one thing you wish real estate agents knew about the appraisal process?”

Based on the answers we received, appraisers wish that agents knew the following:

  • The appraisal process is complex and takes time
  • Appraisers do not assign value
  • Appraisers are unbiased and must follow guidelines
  • Appraisers need their input and cooperation
  • How to select appropriate sales comps
  • The importance of providing accurate and detailed info in their listings
  • How to determine correct GLA (gross living area)
  • How renovations and upgrades affect value
  • How to prepare for the appraisal appointment
  • FHA/VA/USDA guidelines

Sample appraiser answers:

“How complex it really is. We don’t just pull numbers out of the air—they are market supported adjustments backed by ‘many angles“

Some brokers regard the appraiser as an adversary, who potentially can ruin their deal and end up without commission. They should learn that the appraiser is neutral and cooperating can be a benefit.”’ of research.”

“Entering an occupied home without agent or home owner present is a liability issue for appraisers—[we] need someone present to observe what we do.”

To read more, Click Here

My comments: Read the blog post and maybe get some good ideas for answering agent questions!

Many years ago a top local agent asked me why I was driving around taking photos. I explained they were similar homes (comps) I may be using in an appraisal. I realized she did not know much about what appraisers do.

When I started my appraisal business in 1986 I did presentations at all the local real estate offices, usually during their marketing meetings. I explained what appraisers do and how agents and appraisers can work together. They liked the information.

Read more!! →

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ROV (Reconsideration of Value) Changes – FHA and GSEs

By on May 10, 2024   /   appraisal business, Economic analysis, real estate market   /   Leave a comment
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ROV (Reconsideration of Value) Changes – FHA and GSEs

GSE Effective date is August 29, 2024
HUD Effective date is September 2, 2024

Editor’s note: This long section includes, In order:

  • McKissock/Dave Bradley post with a good summary including links to HUD and GSE documents.
  • Appraisersblogs with Dave Towne’s opinions plus many appraiser comments.
  • George Dell – his usual very interesting comments.
  • VA’s Tidewater Initiative written in 2021 by McKissock (Similar idea as current ROV changes), effective in 2003.

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Changes to ROVs: GSEs and HUD Announce New Reconsideration of Value Policies

By Dave Bradley, McKissock May 2, 2024

Excerpts: On May 1, 2024, Fannie Mae, Freddie Mac, and HUD announced new policies for appraisal reconsiderations of value (ROV). These policies were the result of a collaborative effort between the GSEs, the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA).

These policies are intended to create a consistent framework for lenders to respond to a borrower-initiated reconsideration of value. Within this framework, the lender must include steps for the borrower to appeal an appraisal when they believe the value opinion:

  • is unsupported;
  • is deficient due to unacceptable appraisal practices; or
  • reflects discriminatory practices.

Freddie Mac’s Bulletin, announcing the new policy, states:

“Freddie Mac, in collaboration with Fannie Mae and HUD, is implementing requirements related to reconsideration of value (ROV) that promote consistency when a perceived appraisal issue and/or appraisal deficiency exists. These requirements also recognize the importance of the Borrower having the knowledge and opportunity to request an ROV.”

Several sections of HUD Handbook 4000.1 have been amended to reflect HUD’s new ROV policy.

For appraisers, Section II.D.2. of the Handbook creates new general requirements for appraisers. This section states, in part:

“In the event that the underwriter requests a Reconsideration of Value (ROV) and provides additional information material to the value of the Property, the Appraiser must: review all information and market data received from the underwriter;

and summarize the analysis of all information provided by the underwriter within a revised version of the appraisal report regardless of whether the Appraiser determines that changes are not needed to address the issues identified in the ROV.”

To read more plus get links to FHA/GSE documents, Click Here

My comments: If you do GSE or FHA appraisals, read this post, plus the links to the documents. Many appraisers will probably not like it, but will like to have a standardized ROV method. I have never done an “official” ROV for a lender, but I did not like any lender clients objecting to my values.

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Low Value = Material Deficiencies? New FHA ROV Policy

By Dave Towne, May 3, 2024

Excerpts: Up until recently, there has never been a standardized policy for mortgage loan related Reconsideration of Value (ROV) requests after an appraisal has been submitted. Now there is, per the attached PDF HUD/FHA mortgage letter. The GSE’s have similar policies.

I’m not opposed to having a standardized ROV policy. However, these policies are in keeping with the new initiatives surrounding alleged and often unproved appraisal bias and discrimination claims.

But when one reads deeper into the reason for implementing these procedures, it is quickly evident that actually it’s focused on the perception that the appraised VALUE is wrong.

This is the statement in the HUD/FHA ML-2024-07: “This included guidance to improve the established process by which FHA program participants may request an ROV if the initial valuation is lower than expected.”

OK, so who exactly decided the value should be HIGHER than what the appraiser reported, before an appraisal was ordered? Was it the borrower? The mortgage loan officer handling the loan? A Zillow Zestimate? Maybe the underwriter at the lender?

The document also mentions many times the words “material deficiencies” in the appraisal report, which can trigger an ROV request.

My comments: I find this post’s appraiser comments most interesting, especially those from VA appraisers who have been required to use the VA’s Tidewater Initiative, which started in 2003. It was and is controversial. See the last article in this list for more info on Tidewater.

To read more, Click Here

Row, Row, Row, Part 1

By George Dell May 8, 2024

Excerpts: A better ROV! Please reconsider the direction of your boat. Try this this bigger oar. And use it only on the right side of the boat.

Appraisers have long been asked to “reconsider” their opinion. Now we have a more official “standardized process” which affects appraisers, lenders, AMCs, GSEs, and of course, the borrower.

On quick review, I see some unintended consequences, as well as some which have been anticipated. The anticipation includes the additional burden on lenders as well as appraisers. There is administrative time involved, as well as legal factors. Also, the burden on borrowers appears greater than before, including detail and reason.

First, the burden on borrowers. They start the row. Borrowers must believe the opinion of value is:

And regardless of the impact on borrowers and appraisers, the Fannie Mae Selling Guide is almost entirely focused on the responsibilities of the lender.

To read more, Click Here

My comments: Short and worth reading.

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The first “official” ROVs – VA’s Tidewater Initiative in 2003: What VA Appraisers Need to Know

By McKissock, January 8, 2021

Excerpts: The VA has a unique set of protocols, known as the Tidewater Initiative, that a VA appraiser must follow when he or she expects the appraised value of a property is going to be lower than its contract price.

This program, often known simply as “Tidewater,” initiated in—you guessed it—the Tidewater area of Virginia (i.e., the Norfolk, Chesapeake, Portsmouth, and Virginia Beach areas). It initially began as a test program in the early 2000s and was expanded to all areas of the country in 2003, as a result of VA Circular 26-03-11. This initiative was subsequently reaffirmed in the issuance of VA Circular 26-17-18 in July 2017.

If it appears to a VA appraiser that the appraised value of a property is going to come in below the pending sales price, the appraiser must contact the designated point of contact (POC) party that is specified in the appraisal order.

The appraiser is not supposed to discuss the contents of the appraisal with the POC at this point, except to explain they are asking for whatever additional information the POC may be able to provide…

To read more, Click Here

My comments: Read this Tidewater post to see why the current changes are not new. There was a precedent. I never did VA appraisals, so can’t speak from Tidewater experience. But, I remember it was very controversial when it started. Many appraisers complained about it. I was contacted many years ago by the VA to get on their panel, but I declined as the property values were way above VA limits where I lived.

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Why Appraisal Workfiles Are Important

By on April 5, 2024   /   appraisal business, bias, Economic analysis, USPAP, waivers   /   Leave a comment
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Why an Organized Workfile is Your Best Defense

By Craig Capilla

Excerpts: We all know that the Uniform Standards of Professional Appraisal Practice (USPAP) set the baseline for what must be included in a workfile. We’ve all also heard ad nauseum that USPAP is a minimum standard. Still, all too many appraisers seek only to meet that minimum standard and little more. That’s where the trouble begins. Particularly when speaking about the workfile, for my money, the most dangerous words in USPAP are “or references to the location(s) of such other data, information, and documentation.” There it is, right there in plain English: USPAP permits appraisers to maintain a reference to the data, information, and documentation considered as a part of the assignment, and the appraiser is NOT obligated to keep a contemporaneous copy of those items.

That minimum standard is all well and fine until one day many months later, when an enforcement agency demands that the appraiser produce that information, usually on a tight timeline, and the information is no longer available or the source now shows different information than what was available at the time of the assignment.

Believe me when I tell you that it is not a good feeling when a regulator asks you to explain why you didn’t consider a particular piece of information, and you cannot summon an answer. Similarly, there are few things more liberating than producing a document that shows the information you are being asked about was not available to you at the time you performed the assignment. I’ve seen this happen. Systems fail. MLS aggregators have software glitches. Public record updates at its own pace. And sometimes, that one crucial piece of information isn’t there anymore when you need it.

To read more, Click Here

My comments: The article also discusses bias. Capilla is an attorney who defends appraisers. Newer appraisers are lucky. Scanning work files is easy. I started appraising before the Internet and easy scanning and filing. My office and home garage are filled up with paper files! I have PDF copies of all the appraisals I have done as a fee appraiser on my main computer, except those done before PDFs were available.

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Remove all bathtubs from home?

By on March 8, 2024   /   adjustments, appraisal business, BATHROOMS, Economic analysis, forecast, modernization, real estate market   /   Leave a comment
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Is it a problem to remove all bathtubs in a house?

By Ryan Lundquist

Excerpts: I’ve been asked this question twice this week. Is it a problem to remove the tubs from each bathroom? People planning a remodel asked if it was a big deal or not to only have a walk-in shower in each bathroom. Here are my thoughts, and I really want to hear from you too. Anything to add?

It’s not a black and white answer: There’s not one black-and-white answer that applies to every house, price range, location, or market. Bottom line. But backing up, part of the fun of working in real estate is figuring out how to answer questions like this in a way that is balanced and hopefully reflective of the sentiment in the marketplace.

Other topics include:

  • It’s never just about resale value
  • 55+ communities
  • Splitting hairs to prove an adjustment

To read more, including Ryan’s many comments, fun images and graphics, his Twitter X and Instagram surveys, plus 50+ comments, Click Here

My comments: This is the only analysis I have ever seen about this appraisal topic and it is great! I started appraising in 1975 and this was an issue then, continuing today.

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