FHA: Cosmetic vs. MPR Repairs

By on May 26, 2023   /   bad appraisers, bias, FHA, lender appraisals, USPAP   /   Leave a comment
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Cosmetic vs. MPR Repairs: Guidance for FHA Appraisers

By: McKissock

Excerpts: If you are appraising a property that needs some cosmetic repairs but meets FHA minimum property requirements (MPR) in its current condition, you should make the appraisal “as-is.” Here is some guidance on cosmetic repairs vs. MPR repairs.

Topics include:

  • When can an FHA appraisal be completed “as-is” vs. “subject to”?
  • Cosmetic repairs Examples
  • MPR repairs Examples
  • Conditions that require inspection Examples

To read more, click here

My comments: If you do FHA appraisals, read this blog post. Photos and lots of examples. I quit doing FHA appraisals in the mid-1980s because of the inspection requirements compared to conventional appraisals, that did not have the requirement.

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Appraisers: How to Manage Your Emails

By on April 7, 2023   /   adjustments, appraisal business, lender appraisals, non-lender appraisals   /   Leave a comment
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The Mailbox is Full and Cannot Accept Any Messages at this Time. Goodbye. How to Manage Your Emails

By Paul Ryll

Excerpts: My mother told me today that she called last night and was greeted with, ‘The mailbox is full and cannot accept any messages at this time. Goodbye.’

I get a few telemarketers’ messages. Rarely is there a message from a friend or family member. I would say about 90% of the voicemails that I receive are from an irate homeowner worried about a rate lock or a stressed out realtor wondering if they are going to close on time.

AMCs

Assuring that the appraiser has the correct contact information for an inspection is very important. There have been numerous instances in which I have not been able to get ahold of a contact for an inspection only to find out weeks later that the AMC gave me the wrong contact information.

Communicating quickly with the lender is an issue with the appraisal process. I’ve requested guidance on assignments from the lender in which the answer came after the due date. Most recently, I had a detached condo that was ordered on a 1004 which needed to be switched to a 1073. The closing date came and went before I got the go-ahead from the lender.

Have one point of contact for an assignment. Nothing is more frustrating than 17 people calling me on one revision because the employees of the company don’t research to see if I have been contacted or read the notes in the assignment.

To read more, click here

My comments: Slow now? Work on organizing your emails. I have many email folders with automated inbox filtering, which helps a lot. Very good tips in the article. Written in 2-22 but is still very relevant today. I don’t see much written about appraisers and emails. I have always had a landline for business calls and a cell phone for personal calls. Having both on one cell phone is chaos, IMHO.

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The Power of Praise for Appraisers and Clients 3-24-23

By on April 1, 2023   /   appraisal, appraisal how to, Fannie, lender appraisals, liability, non-lender appraisals   /   Leave a comment
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The Power of Praise

By Rachel Massey, SRA, AI-RRS, CDEI

Excerpts: …I received a really nice compliment from a reviewer with the Farm Credit Bureau. I had completed a complex appraisal assignment and was expecting multiple revision requests, but instead, got a note saying how thorough my appraisal report was and thanking me for the work. A couple days later, I got a call from a relocation company reviewer on another mind-boggling relocation assignment. Again, I was expecting multiple questions about the report since it was complex and atypical for the area. Instead this reviewer proceeded to tell me that it was one of the most detailed and well-developed reports he had seen in all his years reviewing relocation work. Boy I wish I had that one in writing!

Granted, I tend to be a bit verbose because I like to write, and I believe that it is important that my work be understandable, and not just now but in the future. I tend to put a similar amount of effort into the communication side for all clients, and like to think that my work product is solid. This begs the question of why two reviewers went out of their way to compliment my work, when it seems that almost every mortgage assignment that I complete for a production group, comes back with stipulations.

Stipulations that I forgot to add a listing which was a requirement of the engagement agreement (yes, I missed that) or that I didn’t put a sketch of an unfinished basement in the report (yes, I missed that as well). No words of thank you for an otherwise job well done. I missed something, fix it.

To read more, click here

My comments: Rachel is one of my favorite appraisal authors. She has seen all sides of the residential appraisal profession. Rachel has shifted between lender staff appraiser and reviewer and fee appraisals. Currently, she is a reviewer for a large lender. You could send a link to this article to a Very Picky or Very Supportive reviewer.>

Why Appraisers Love Appraising!

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Appraisal Risk, Reviews, and Revisions

By on October 14, 2022   /   adjustments, AMCs, appraisal business, lender appraisals, non-lender appraisals, real estate market, Reviews   /   Leave a comment

Appraisal Risk, Reviews, and Revisions

By Ken Dicks

Excerpts: This is part three of a three part series on appraisal review – Read parts one and two. I am often posed with the following question “How do you know when you are looking at a “good” appraisal?” The reality is there is no universal acceptance of a single method of measurement to differentiate “good” from “bad.” After many years of reading appraisal reports, my response is “One that leaves the reader with few unanswered questions, allows the data to tell the story, keeps appraiser interventions to a minimum and is able to present a case for what a property is worth, as well as what it is not worth.”

Today, while there still remains some stickiness to the QC revision process, a recent survey completed by The STRATMOR Group commissioned by appraisal management technology company Reggora, indicates 25% of appraisal reports require some form of revision. While that number may seem high to some, in the context of lending and property complexities, that is a 54% improvement in performance cited earlier in this article (from 35% 10 years ago). Is there room for more improvement? Of course, there is always room for process improvement, but on the face of it, some process improvements appear to be yielding results.

Consistent application of both quality control and quality assurance processes for appraisal review may also be in part a reason for improvement, as appraisers have a better understanding of what is needed by their client. Additionally, the tools available to both appraisers and appraisal reviewers have undergone iterative process changes and users have advanced further up the learning curve. Lastly, many lenders have progressed beyond the initial risk identification stage, or the “gotcha stage” to a holistic and strategic approach that accepts risk into their business objectives. Today lenders and stakeholders have the ability to gain risk insight beyond the initial transaction stage and utilize pattern and trend identification.

To read more, click here

My comments: Links to Part 1 and 2 are in the first line of the post. View from the AMC/Lender side. Good that reviews and reconsideration requests have gone down. Appraisers and AMCs spend less time and have fewer hassles.

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Fannie’s New ANSI FAQS July 2022

By on July 22, 2022   /   ANSI, appraisal business, Fannie Forms, lender appraisals, liability   /   Leave a comment
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Fannie’s New ANSI FAQS July 2022

Standardized Property Measuring Guidelines

Excerpts: Updated guidance, including some new and substantively revised FAQs

In response to your feedback, we’ve updated the Standardized Property Measuring Guidelines with some new and substantively revised FAQs, including clarifications on the terms “declaration” and “statement of finished sq ft.”

A few of the Q&As

Q5. When common practice in the local market differs from the ANSI standard, can the appraiser modify the subject’s GLA to conform to local custom?

Q6. The standard mentions a “statement of finished sq ft”; does Fannie Mae require appraisal reports to make an affirmative statement that the standard was followed?

Q7. The standard describes three scenarios in which a “declaration” is required. What is the difference between the statement of finished sq ft and the declarations?

Q19. Will appraiser adherence to the ANSI standard cause confusion when the subject GLA differs from other sources such as MLS or public record?

Q20. The GLA of comparables available to appraisers may not be based on the ANSI standard. How should appraisers manage this issue?

To Read this 5-page Update click here

—————————————

Bryan Reynolds speaks with Fannie Mae representative about the new ANSI FAQ. 37-minute podcast. Listen to this podcast!!

The Appraisal Update – Episode 109 | Fannie Mae’s New ANSI FAQ

Speaker: Bryan Swartwood III, Fannie Mae Credit Risk Senior Manager – Single Family Collateral Policy

Topics: The two Bryans discuss below grade, subject GLA different from MLS, comps not measured using ANSI, what happens to appraisers not following ANSI, ceiling height below 7 ft., manufactured homes, using exception code, and many more from the FAQs.

To listen to the podcast, click here

It is on the top of the web page now. scroll down the page looking for Episode 109. If possible, a copy of the ANSI Standards and the new FAQs makes it easier to follow the speakers. I subscribe to The Appraisal Update Podcast from Appraisal eLearning.

My comments: I listened to the podcast. The speaker was very good with practical advice. Reading the 5-page FAQs was okay, but the speaker helped me remember and understand what was written.

I received the Fannie email notice on July 19, 2022, at 10:30 Pacific time. The Appraiser eLearning podcast was available on July 19 at 2 PM. Whether or not FAQs were original, revised, or new is not indicated in the document. I did not compare it to the original Fannie FAQs.

When Fannie first announced in December 2021 that ANSI would be required on April 1, 2022, there was lots of confusion among appraisers who had never used ANSI or were not using it properly. ANSI was designed by home builders, not appraisers or lenders. Also, what Fannie wanted was not clear.

ANSI standards and Fannie requirements sometimes appeared to conflict. The forms were not designed to accommodate ANSI, such as where to put the different square footages on the form. Owners, reviewers, underwriters, real estate agents, and many others who read the appraisals are sometimes confused. These FAQs help to answer some of the questions.

ANSI Z765-2021 Resources for Appraisers

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Green Home Appraisals – Ideas for Appraisers

By on May 6, 2022   /   adjustments, ANSI, desktop appraisals, lender appraisals   /   Leave a comment
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5 Tips for Appraising Green Homes

By McKissock

Excerpts:

1. Consider each home on a case-by-case basis

You must independently determine whether there is sufficient information available to develop a reliable opinion of market value for each individual property. That will depend on the extent of the differences between the green home and other types of houses in the neighborhood. It will also depend on the number of such properties that have already been sold in the neighborhood.

5. Compare improvements to those in the neighborhood

Any improvements should conform to the neighborhood in terms of age, type, design, and materials used for their construction. If there is market resistance to a green home property because its improvements are not compatible with the neighborhood or with the requirements of the competitive market because of adequacy of plumbing, heating, or electrical services; design; quality; size; condition; or any other reason directly related to market demand, address the impact to the value and marketability of the subject property.

To read more, click here

My comments: I have “Mediterranean” (mild) weather, without much solar. If you live in an area with high summer and/or low winter temperatures, there are probably more solar installations. Many classes are offered by various appraisal CE providers. Check with education providers, such as McKissock, the Appraisal Institute, and local offerings.

What are Pass through Bedrooms for Appraisals

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Appraisal Completion Certifications – be careful!

By on December 31, 2021   /   Fannie, future, lender appraisals, liability   /   Leave a comment
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ANSI Z765-2021 Information Resources – CLICK LINK BELOW FOR MORE

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Sewer vs. Septic for Appraisers – Don’t get into trouble!

By on October 22, 2021   /   appraisal business, Fannie, Fannie Forms, Freddie, lender appraisals   /   Leave a comment
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What should appraisers look for in a sales contract?

By on August 20, 2021   /   AMCs, appraisal business, appraisal how to, lender appraisals, real estate market, waivers   /   Leave a comment
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What should appraisers look for in a sales contract?

By Steven W. Vehmeier

Excerpt: When should we analyze the contract?

Looking at the sales contract early on allows the appraiser to identify any “subject to” items or other conditions that could influence the value conclusion.

However, reviewing the contract early might also put the sales price in the back of the appraiser’s mind. And although it shouldn’t, it may unintentionally influence the appraiser’s comparable selection and eventually impact a direction in value.

Maybe looking at the sales contract only after developing the appraiser’s opinion of value would help avoid the above concern?

To read more, click here

My comment: Some interesting, and maybe controversial, ideas. Short and worth reading.

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Age adjustments in appraisals

By on March 12, 2021   /   adjustments, bias, lender appraisals, mortgage loan volume   /   Leave a comment
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Age adjustments in appraisals

By Jamie Owen

Excerpts: Sometimes, two homes with wide age differences can have the same effective age. For instance, a thirty-year old home may have an effective age that is the same as a fifty-year old home, if the fifty-year old home has been renovated to a degree that is comparable to the younger home. If this is the case, while there is a relatively wide age gap, no age or condition adjustment may be supportable.

Once the home is lived in, it can never be considered “new” again. Subsequently, a new home typically has a higher market value than one that has already been lived in. The joyful homeowner makes these choices, the home is built, and they move in. Now starts the wear and tear. The degree of wear and tear depends much on the homeowner and how well they maintain their home. With new homes, typically homeowners go for a number of years without needing to do anything major to the property. However, at some point, they will need to.

To read more and see some fun animated gifs and a video, click here

My comment: Written for homeowners (an excellent marketing tool) but interesting comments for appraisers. I love Jamie’s blog posts!!

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