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.

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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.

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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.

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New 2024 USPAP Q&As

By on January 26, 2024   /   appraisal, forecast, future, Mortgage applications, mortgage loan volume   /   Leave a comment
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New USPAP Q&As

January 16, 2024, the Appraisal Standards Board released new Questions and Answers covering important topics in the profession today including:

Demographics

Does demographic information relating to race (such as Census data) constitute “information relating to” a protected characteristic?

Artificial Intelligence

Question:

What is an appraiser’s USPAP obligations when using artificial intelligence (AI) in an appraisal assignment?

Personal Inspection

I recently completed an appraisal on a residential dwelling for Lender A that sells loans to Fannie Mae and Freddie Mac and the report was completed on a GSE form. Lender A decided not to grant the loan and the borrower then engaged Lender B to obtain financing. Lender B engaged me to perform a new appraisal assignment on the same property. Lender B indicated there wasno need for me to re-inspect the home, since my previous inspection date was only a few days earlier.

To read these new Q&As Click Here.

My comments: AI and demographics are “hot topics” now. I am glad the ASB is explaining them.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on forecasts for mortgage rates, a look back at the 80s a very similar mortgage market, appraising in a changing market, unusual homes, mortgage origination stats, etc.

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SFR with ADU or Two Units?

By on September 29, 2023   /   ADUs, climate change, future, non-lender appraisals, real estate market, retirement, va   /   Leave a comment
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How to Identify a Single-Family with ADU vs. Two-Family Property

By McKissock

Excerpts:

The presence of an additional living unit can complicate the appraisal process. It may make it difficult for you, the appraiser, to know how to classify the subject property. How do you know whether you’re dealing with an accessory dwelling unit (ADU) or a second unit?

Topics include:

  • ADU meaning and types
  • What is a two-family property?
  • How to tell if it’s a single-family with ADU vs. two-family property
  • It’s more likely to be a two-family property vs. single-family with ADU if:
  • It’s more likely to be a single-family with ADU vs. two-family property if:

To read more, click here

My comments: ADUs have been a controversial topic for a long time in California as state and local governments kept changing their ADU requirements. Finally, what they are and where they can be built became standardized. Today, they are becoming popular to get extra rentals in markets low on housing. Most recently, there is a possible regulation to sell them separately from the main house. Another tricky HBU issue in California!

Check the regulations in your state, county, or city.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on  non-lender appraisals, VA, flood and fires no insurance, retirement,  few lender appraisals, unusual homes, mortgage origination

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Data Collectors: Appraisers vs. Uber Drivers

By on May 12, 2023   /   appraisal business, Appraisal fees, data, Fannie, future, humor, non-lender appraisals   /   Leave a comment
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Certified Appraisers vs. Unlicensed Data Collectors

By Jonathan Miller

(13-minute video) Here’s a great take on the difference between Certified Appraisers vs. Unlicensed Data Collectors by Leigh Brown, President of the NC Association of REALTORS. Fannie Mae has been working hard to get rid of appraisers for years. Their latest twist is to re-categorize many appraisers as “Unlicensed Data Collectors.”

Fannie Mae will end up creating more instability for the trillions in the bond market – investors will have to process millions of valuations with the physical attributes of the home collected by unlicensed, uninsured, and unprepared individuals getting paid $10-$25 per inspection.

This is to follow up on a meeting Appraisal Institute representatives held in Washington, D.C. with members of the Federal Housing Finance Agency Divisions of Housing Mission and Goals and Fair Lending March 8 to discuss the new Value Acceptance program released by Fannie Mae…

Of particular concern is the encouraged development of an alternative workforce of property data collectors that may negatively impact aspiring appraisers’ ability to enter the appraisal profession…

To read more and watch the video, click here

To sign up for his weekly Housing Notes, click here I have been a subscriber for many years.

My comments: Miller tends to be negative about the AI, but this excerpt from his weekly email is worth reading especially the video!

This is the future of GSE using appraisers. Inspection or desktops are fine, but fees may be low and many don’t want to do them. Full appraisals only on the “though appraisals” where Fannie’s AI does not work.

Many appraisers are retiring or quitting. If you make it through this downturn there will be few appraiser competitors left for the next big upturn in business.

Appraisal vs Zillow vs AVM which is best

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on humor, non-lender appraisals, mortgage  forecast, staying positive when you’re slow, unusual homes, mortgage origination stats, etc.

To read more, click below

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Appraisal Profession Dying?

By on February 3, 2023   /   appraisal business, future, humor, non-lender appraisals, zillow   /   Leave a comment
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Bringing More People Into a Dying Profession?

By Dave Towne, Jan. 23, 2023

My comment: This only applies to residential lending appraisals, of course. My non-lender appraisals have changed very little with few, if any new “requirements”. I determine the Scope of Work.

Excerpts: Some people want to bring more people (primarily of color, which is great) into a dying profession. But the profession is being killed off by (mostly white!) people who think technology is the golden spoon to accurate valuations.

PAREA is being touted as the savior and the best appropriate way to get new people into this profession, especially people of color. Really? Let’s see. The education providers currently writing the PAREA courses have been indicating that the course cost will be up to 5 figures, roughly $10,000 or possibly more. That’s an outlay of significant cash BEFORE actually connecting with an appraiser who will put the PAREA-educated appraiser to work.

To read more, plus over 60 appraiser comments, click here

My comments: This only applies to residential lending appraisals, of course. My non-lender appraisals have changed very little with few, if any new “requirements”. I determine the Scope of Work.

I definitely prefer “profession” to “business”. I have always been a professional appraiser. I quit doing residential lender appraisals in 2005. I had good clients but did not like the dramatic volume changes. It has gotten very bad since AMCs took over.

Appraisal Business Tips 

Humor for Appraisers

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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 Costar and residential, non-lender appraisals., Humor, Zillow, unusual homes, mortgage origination stats, etc.

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Fannie Mae Takes A Closer Look at Appraisals

By on November 20, 2022   /   appraisal business, Fannie, future, real estate market, state appraiser regulators   /   Leave a comment
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Sins of the Past Are Back to Haunt Appraisers

Fannie Mae Takes A Closer Look at Appraisals

By Richard Hagar, SRA

 

 

Excerpts:

In the recent past, when appraisers were swamped

Even with the Collateral Underwriter program review, appraisers were overwhelmed. Every lender and AMC were seeking and hiring review appraisers in order to keep up with demand. Due to the shortage of review appraisers (exacerbated by low fees and time pressures), tens of thousands of poorly created appraisals were accepted without receiving adequate review.

Unfortunately, because many appraisals were rarely rejected or required corrections, appraisers developed the false notion that poorly crafted appraisals were okay to turn in. Many appraisers were bragging about their ability to fill out two or three appraisal forms a day and receive no call-backs from lenders.

However, time and time again we’d review appraisals, that were accepted by lenders, but had failures such as:

• No highest and best use analysis (as if vacant and improved).

• Failure to make appropriate time/market adjustments (positive or negative).

• Using only a single approach to value.

• Incorrect land values.

• Square footage costs and depreciation based more on opinion than reality.

• Unsupported adjustments (adjustments based on “my 30 years in the business” instead of facts).

• Failures to personally inspect and photograph comparables.

What’s happening now

FNMA indicates that their 2022 lending volume is down 47% from 2021 and is expected to drop by another 50% in 2023. So, it’s pretty safe to state that the “appraiser shortage” of yesteryear is over, and reviewers now have more time on their hands.

Which appraisers are going to survive when the loan volume is down 75-85% and the poor appraisals of the past are catching up with the appraiser today? Well, for the most part, it’s based on the quality of the appraisals delivered to lenders over the past five years.

Do you believe that the quality of your work ranks you as a tier 1 appraiser or do you have a little concern about your rating? Tier 1 appraisers have little to fear but tier 2 and 3 appraisers…

What you can do today

Today, you likely have more time on your hands, so slow down and take more time improving the quality of your work. Superior quality appraisals can set you free.

Learn how to accurately determine adjustments. Follow the ANSI standard when measuring the subject (even if you disagree with the method — it’s the requirement). Take more classes! Don’t stop taking classes just because you have enough CE credit to meet your next renewal; that mentality is for the bottom tier of appraisers.

I typically obtain double the CE credit hours necessary to renew my certificate…double! Why? Because I want to do things better, obtain higher fees, and survive the purge that is coming. Lenders have more choices, and you need a way to stand out from the bottom tier and low fee appraisers.

To read more, click here

My comments: Worth reading. Hagar is one of the best residential appraisal instructors. I have known him for over 30 years and have taken many of his classes. Richard can be a bit negative but states what is really happening and what you need to do. Many thanks to Ryan Lundquist’s 2020 blog post for the very appropriate image above!

I also think that now is the time to increase your appraisal skills by taking classes and seminars. I also have always had more CE hours than I need.

I am an appraiser because it is challenging and never boring. I quit working in labs because it was boring after 7 years but have never been bored appraising. I want to be the best appraiser I can be. (I have always been an over-achiever).

Consider doing non-lender appraisals. I have been doing them since 1986 and writing about them in my monthly newsletter since 1992. No CU, UAD, reviews, many pages of differing AMC requirements etc. Your requirements are in USPAP.

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Reliable MLS Data important for appraisals

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on State board complaints, non-lender appraisals, mortgage forecast, real estate market changes,  unusual homes, mortgage origination stats, etc

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VA Update for Appraisers

By on October 28, 2022   /   adjustments, future, real estate market, va   /   1 Comment
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VA Update for Appraisers

Interview with VA’s Chief Appraiser

By Isaac Peck

Excerpts: …the United States Department of Veteran Affairs (VA), is known throughout the valuation community for respecting the work of appraisers and maintaining reasonable fee schedules.

The questions:

  • Fannie Mae and Freddie Mac are making desktop appraisals a permanent fixture in their valuation offerings. Is the VA looking at these types of valuations and what are some of the considerations?
  • There’s been a lot of buzz about measuring homes to ANSI standards in the appraisal industry–what can you tell us about the VA’s stance on ANSI? Do you anticipate requiring ANSI on VA appraisals in the future?
  • There is a lot of concern about discriminatory appraisals—what is the VA doing to protect Veterans from discrimination and what are your thoughts on the topic?
  • What’s new at the VA? Any final thoughts?

To read the answers and more, click here

My comments: I have always strongly recommended doing VA appraisals, especially since AMCs took over other lenders’ appraisal management. VA wants you to help veterans. Lenders want to make more money. I wrote a long article about VA in the past, available to paid subscribers. I interviewed VA appraisal employees, fee appraisers who liked VA, and other appraisers who did not want to work for VA.

Appraisers and local market analysis

Appraisal Business Tips 

Humor for Appraisers

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

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Crazy Appraisal Stories! We all have them!!

By on April 22, 2022   /   ANSI, desktop appraisals, forecast, future, humor   /   Leave a comment
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Crazy Appraisal Stories!

Excerpts: Not Just Measuring Homes and Taking Pictures
I went to appraise a home for a movie producer in Brentwood, California. I knocked on the door, and one of the producer’s boyfriends opened the door and invited me in. He was completely naked. He told me that whatever I do, don’t let the cat out. As I went room to room taking photos, I met another naked boyfriend. He also told me not to let the cat out. As I went to the second floor of the house, I met the producer who was also naked. He told me again, “don’t let the cat out.”
I’m approaching the rear patio door to take pics of the rear of the house. Outside I see a beautiful pure-bred Persian cat. I know I didn’t let the cat out but I sure as hell better get it back in the house. I started chasing the cat in the rear yard. Finally, I grabbed it, but not before it ripped my blouse and caused my hands to bleed. Huffing and puffing from the chase, I tossed the cat back into the house and closed the door. A few moments later one of the naked boyfriends came over and said “that’s the neighbor’s cat. Get him out of the house.” I then had to chase the cat again. Finally, I caught the cat and put him out of the house. I was left there panting with a torn blouse and bleeding hands, thinking appraising homes is definitely not just measuring homes, taking pics, and typing up forms.
-Mary Cummins
To read more, click here
My comments: Just For Fun! We’ve all got these stories!

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on Desktops, Future of appraising, Cubicasa, ANSI, unusual homes, mortgage origination stats, etc.

 

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