Appraisal vs Zillow vs AVM which is best

By on July 26, 2019   /   adjustments, AVMS, deminimus, FHA, forecast, future, Mortgage applications, real estate market, weird properties, zillow   /   Leave a comment
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Appraiser vs. AVM vs. Zestimate… Ten Properties

Excerpt: On a regular basis, my opinion of value of a property I am appraising, is frighteningly similar to an AVM’s value. While that is the case, as you will see in this article, that is not always the case. You might be wondering what an AVM is? AVM stands for Automated Valuation Model. It is a computer program that uses mathematical modeling to derive a value based upon the data it is provided.
In this article I differentiate the typical AVM from Zillow’s Zestimate because Zillow claims to be more accurate than other AVM’s, due to the technology they use. Zillow’s Zestimate is an AVM.
To read more, click here
My comment: Try this on appraisals you have recently done and see the accuracy in your market. Read the article comments and leave your comment.

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Suburb not well defined for appraisals

By on June 14, 2019   /   appraisal regulations, Fannie, FHA, forecast, lender appraisals, mortgage loan volume, real estate market, weird properties   /   Leave a comment
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How Should We Define the Suburbs?

Excerpt: The problem (lack of a definition) stems from the fact that U.S. statistical agencies (the Census Bureau and Office of Management and Budget) do not provide a systematic definition for suburbs. They offer classifications for metropolitan areas and micropolitan areas, a classification of urban and rural areas, and a category of principal cities, but nothing of the sort for suburbs. But, suburb not well defined for appraisals.

Very interesting with a good table To read more, click here

My comment: Appraisers have to identify on forms if a property is urban/suburban/rural. Also percent built up. Rural can affect loans sometimes. I have never seen any clear definitions. Now I know why!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Every unusual home has appraisal comps

By on April 4, 2019   /   adjustments, AVMS, bpos, deminimus, FHA, marketing, Mortgage applications, Strange homes, unusual home, weird homes, weird properties   /   Leave a comment
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To keep up on what is happening in appraisal businesses, mortgage lending, USPAP, etc. , Plus humor and strange homes, sign up for my FREE weekly appraisal email newsletter, sent since June 1994. Go to Home on the left side of the menu at the top of this page or go to www.appraisaltoday.com
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Tips for choosing comps on a unique home (straw-bale house)

By Ryan Lundquist
Excerpt: It almost sounds like the big bad wolf story, but there really are homes built from straw. Literally. Today I want to mention a few things about this type of construction, share some photos of a local straw-bale house, and then talk briefly about how I approached appraising this one.
Worth reading to find out what Ryan did!!

My comment: Very good tips on appraising unique homes. No lender issues as the appraisal is pre-listing and not for a lender… Sacramento  is a Very Strange place for a straw-bale home!!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Traditionalist, advanced, vocational appraisers. What are you?

By on December 21, 2018   /   FHA, mortgage loan volume, Strange homes, unusual home, va, weird homes   /   Leave a comment
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What kind of appraiser are you?

By George Dell
Excerpt: Let’s put aside the ‘art’ versus ‘science’ discussion, where the artists say: “No computer will ever replace the appraiser”, or “No amount of education will ever replace experience”. The other side seems a bit confused.  There are traditionalists.  And there are the “advanced” appraisers.  And there are the “vocational” appraisers, who don’t seem to care much about all of this.  They just want to push through as many reports as possible.  The skeptics tend to doubt some of the old theory, as well as some of the “new theory”. Traditionalist, advanced, vocational appraisers. What are you?

My comment: Worth reading. I am a “traditionalist/skeptic”. What are you?

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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Bots replacing appraisers?

By on December 6, 2018   /   appraisal regulations, commercial appraisal, FHA, lender appraisals, Mortgage applications, mortgage loan volume, real estate market, threshold, unusual home, unusual homes, weird homes, weird properties   /   Leave a comment
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Sorry, home appraisers, bots are coming for your jobs

NOTE: This post was published in December 2018. This topic has been going on for a very long time since AVMs started in the 1970s. 

Federal regulators are looking to change appraisal rules to allow for more automated appraisals
Excerpt: Such a change could prove lucrative for upstart property valuation companies that use algorithms, artificial intelligence and drones to value homes. If these rule changes had been in effect last year, roughly 214,000 additional home sales, or some $68 billion worth, could have traded hands without an appraiser. Bots replacing appraisers?
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Plan to Reduce Human Appraisals May Lead to ‘Wildly Inaccurate’ Estimates 
From NAR: 
Excerpt: Automated home evaluations likely would take the place of in-person appraisals for qualifying properties-a move appraisers warn could lead to inaccurate estimates and more sellers who are unrealistic about home value.

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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11-29-18 Newz// Proposed $400k threshold for appraisals -The American Garage – a very strange room

By on November 29, 2018   /   AMCs, evaluations, FHA, marketing, mortgage loan volume, real estate market, Strange homes, unusual home, weird homes   /   2 Comments
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$400,000 Proposed bank threshold for appraisals to be replaced by evaluations

Below are links to the proposed rule, what others are saying, and where to send your comments on the proposed rule.
OCC Issues Notice of Proposed Rulemaking to Exempt Residential Real Estate Transactions of $400,000 or Less from Appraisal Requirements
Excerpts: Rather than requiring an appraisal, the proposal would require that residential real estate transactions exempted by the threshold obtain an evaluation consistent with safe and sound banking practices.

Read what the OCC says in their announcement – one page www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-123.html

Comments will be accepted for 60 days from publication in the Federal Register.

Instructions in the full Full 69-page proposed rulemaking. Download the above link and search for comments

The word “evaluation” is included many times in the document. Google evaluation to see what it says.

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FDIC, OCC, Fed propose raising appraisal threshold for first time since 1994. Good analysis of how many loans would be affected:

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Push to cut back on home appraisals sparks controversy
By Ken Harney, long time nationally syndicated real estate writer who regularly writes about appraisal issues

Excerpt: The Trump administration wants to eliminate professional appraisals on a large number of home-sale transactions – a move that critics say could push the country back toward the see-no-evil days of mortgage lending that preceded the housing crash.

Includes comments from appraisers Ryan Lundquist and Pat Turner plus Appraisal Institute.
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Link to Appraisal Institute letter
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Get rid of appraisers while nobody’s looking
By Ryan Lundquist

 

Excerpt: I’m guessing these “evaluators” will be real estate agents who do BPOs, employees at banks and data firms, and probably some appraisers who need the work at $75-$100 a pop.

Read it here, plus the appraiser comments, of course.
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My comments:
– FIRREA increased the deminimus from $200,000 (1989) to $250,000 in 1994, but appraisals were still done. Why? Fannie and Freddie’s investors wanted them. FHA, VA, etc did not adopt the deminimus.
– What is an ‘evaluation’ and who does them? Hopefully, someone will tell me what is an evaluation?
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Valuation by Comparison – Very good residential book

By on October 20, 2018   /   adjustments, FHA, forecast, mortgage loan volume, real estate market, unusual home   /   Leave a comment
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Buy This Book!! Valuation by Comparison, Second Edition by Mark Ratterman, MAI, SRA

I reviewed it in the July, 2018 issue of the paid Appraisal Today.

One of the best books I have ever read for residential appraisers. (There are only a few that I recommend.)

More info and how to purchase at:

Appraisal Adjustments Yes, No, Maybe(Opens in a new browser tab)

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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6-7-18 Newz//Square footage. Novelty Architecture. Appraisal Fraud

By on June 7, 2018   /   adjustments, appraisal how to, appraisal waivers, evaluations, Fannie, FHA, Fraud, hybrid appraisals, mortgage loan volume, square footage, weird properties   /   Leave a comment
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It’s not all about square footage in real estate

By Ryan Lundquist

Excerpt:
Myth: Extra square footage is always worth more.
Factors:
1) Single story vs two story
2) 55+ Community
3) Layout
4) Dangerous to always adjust

Worth reading, plus appraiser comments at:

Goofy Buildings: Revisiting the Heyday of California’s ‘Crazy’ Novelty Architecture – Giant hats, portly pigs, and drive-thru donuts.

Just For Fun!!

Excerpts: In the 1930s, a British traveler in Southern California wondered if the local architects had gone a little nuts. It was either that or he had stumbled into a fantasy universe. There was something trippy about the roadside shops he saw along the way…

The unusual businesses he saw weren’t on some Hollywood backlot, but were California’s classic coterie of mimetic architecture-that is, buildings shaped like, well, anything but buildings. According to Cristina Carbone, a professor of art and architectural history at Bellarmine University in Louisville, Kentucky, the practice dates back to at least the Renaissance.

Fascinating!! Lots of photos and interesting comments at:

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4-26-18 Newz//Tristar Waivers Denied. Fannie Update. FHFA Paper on Value of AMCs Questioned

By on April 26, 2018   /   AMCs, appraisal business, Fannie, FHA, forecast, lender appraisals, Mortgage applications, mortgage loan volume, real estate market, weird properties   /   Leave a comment
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Technology or Human Logical Analysis? Who Wins?

By George Dell, MAI, SRA, ASA, CDEI
Excerpt: There is evidence that human judgment WINS – the appraiser opinion beats the AVM and other valuations based on technology. In fact, I have often heard that the qualified appraisal, based on the human logical analysis – is the “gold standard” for the industry. This appears to be true of client groups, and appears to be recognized in administrative law, our federal and state and “quasi-governmental” bodies such as Fannie Mae, Freddie Mac, and the Appraisal Foundation.

Even as we say this, the human model, the appraiser, continues to lose market share to other technologies and other “non-appraiser” value providers.

Worth reading at:

My comment: George Dell’s weekly blog posts are great, but short, as is appropriate for blogs. The May issue of the paid Appraisal Today newsletter will have a much longer article by George, “Will another profession replace appraisers?”

Uredd Rest Area (Ureddplassen)

Norway has built what may be the world’s most beautiful public toilet.

Just For Fun!!

Excerpt: Norway’s newest landmark is a place of absurd beauty. The redesigned rest area, situated along a section of the Norwegian Scenic Route, overlooks stunning views of the fjords and the open sea, and is a popular spot for visitors and locals to watch the northern lights in winter and the midnight sun in summer.

Now this picturesque place is quickly gaining a stranger kind of fame, for being home to what may be the most beautiful public toilet the world over.

Check out the Fantastic Photos and short description at:

My comment: Wow!! What do I use in the field? Fast food, bushes, etc. ;> Sometimes a crummy restroom or smelly portable toilet in a public park… Please hit reply of you know any other great public restrooms…

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12-14-17 Newz, Underground Digs, AirBnB values, FHA loan limits and PACE

By on December 14, 2017   /   adjustments, appraisal how to, FHA, real estate market, weird properties   /   Leave a comment
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Digging into our drive to tunnel, bore, and head underground.
Just For Fun!!
Excerpt: The deepest tunnelers among animals, crocodiles that can burrow 39 feet down, cannot compete with us at all. Humans have traveled, in the deepest mine in the world, almost 2.5 miles underground (to say nothing of our boreholes, which go nearly three times deeper). The longest and deepest traffic tunnel in the world, the Gotthard Base Tunnel, makes it possible to cross the Alps in 40 minutes or less. The world’s major cities are criss-crossed by tunnels carrying water, sewage, wires, and people. Montreal has an entire subterranean city for its residents to navigate in the cold winter.

My comment: Fascinating!! I have not appraised any properties with tunnels, but I have seen many (and traveled through some) over the years. Railroad and mass transit trains, abandoned tunnels to nowhere, underground parts of cities (mostly abandoned), old mining tunnels, etc. I have seen (and appraised) lots of basements though, some way below ground ;>

How much is Airbnb driving up home prices and rents

Excerpt: The researchers looked at rents and home prices in the 100 largest metro areas in the U.S. between 2012 and 2016. They found that a 10% increase in Airbnb listings leads to a 0.39% increase in rents and a 0.64% increase in house prices.

“That may sound minuscule, but between 2012 and 2016, rents rose by about 2.2% annually [on average in the 100 areas], so a 0.39% increase in that context isn’t very small at all,” says Dr. Edward Kung, an assistant professor of economics at the University of California Los Angeles and one of the study’s authors. The same is true for home prices, which rose by an average of about 4.8% annually in the 100 areas, he adds.

My comment:

Seems like Airbnb rentals are all over, such as my small city, not just in popular vacation spots. From an appraisal point of view, Airbnb rentals are tricky. More cities are regulating them. A lot more hassle than renting out an ADU for a year, for example. Tax issues for owners. To me, seems like it is business value rather than real estate value. Very confusing!!

Appraiserville from Jonathan Miller’s Housing Notes

Check out the topics below
– The Appraisal Industry Needs Better PR
No one knows what we do.
No one appreciates what we do.
– More on Tristar Bank in TN (you know, the one that shouldn’t be in the mortgage business)
– Loan origination graph 2006 to 2017
– The Next Appraisal Bombshell: Economic Growth Regulatory Reduction and Consumer Protection Act

Scroll down the page to Appraiserville, and maybe make a few stops along the way ;>

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