Appraisal Risk, Reviews, and Revisions

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.

Appraisal Business Tips 

Humor for Appraisers

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

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

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

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

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

NOTE: Please scroll down to read the other topics in this long blog post on Reviews and Revisions, AMC layoffs, real estate market, unusual homes, mortgage origination stats, etc.

Read more!!

Fannie’s New ANSI FAQS July 2022

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

Appraisal Business Tips 

Humor for Appraisers

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

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

NOTE: Please scroll down to read the other topics in this long blog post on sex dungeon, appraisal violations, complaints, liability, unusual homes, mortgage origination stats, etc.

Read more!!

Green Home Appraisals – Ideas for Appraisers

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

Appraisal Business Tips 

Humor for Appraisers

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

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

NOTE: Please scroll down to read the other topics in this long blog post on desktops, nonbanks, alternative financing, unusual homes, mortgage origination stats, etc.

======================================================

Read more!!

Appraisal Completion Certifications – be careful!

Appraisal Business Tips 

Humor for Appraisers

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

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

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, Fannie ANSI requirements, mortgage rate forecast, mortgage origination stats, etc.

=================================================

ANSI Z765-2021 Information Resources – CLICK LINK BELOW FOR MORE

Read more!!

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

Appraisal Business Tips 

Humor for Appraisers

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

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

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, Fannie new desktop form, GSEs to use desktops for purchases loans, Time management, Freddie Secret, Liability, mortgage origination stats, etc.

Read more!!

What should appraisers look for in a sales contract?

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.

Appraisal Business Tips 

Humor for Appraisers

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

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

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, AMCs, appraiser survey on the future, real estate market, waivers, turn times,mortgage origination stats, etc.

Read more!!

Age adjustments in appraisals

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!!

Humor for Appraisers

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

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

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

NOTE: Please scroll down to read the other topics in this long blog post on srange homes, adjustments, market changes, client pressure, mortgage origination stats, Covid tips for appraisers, etc.

Read more!!

AMC Appraiser Dress Requirements?

AMC Appraiser Dress Codes? 

Excerpt: I recently saw a Facebook post where an appraiser was quite upset and offended that an AMC asked him to dress professionally for an appraisal walkthrough. Now, this

was a request that was made upfront as one of the conditions for accepting the order. Reading the post, it sounded like this appraiser was upset for two reasons. One, he was offended that the AMC was implying that he does not take his job seriously enough or dress professionally enough. Two, he felt like the AMC did not have a right to tell him how to do his job (i.e., how to dress).

First, let me say that I personally do not think it was the AMC’s intention to imply that this appraiser is not professional in any way. I simply think that they were taking extra precautions to make sure the borrower was extremely impressed by the service they, and the appraiser whom they hired, provided. Now, on to the real question. Can an AMC tell an appraiser how to dress? And the answer is yes.

To read more, plus appraiser comments, click here.

My comment: This has always been a controversial topic for fee appraisers. Dustin is correct. An appraiser client can have many requirements, such as requiring a newer car, no flip-flops, etc. It is your decision whether to work for them. Primary Rule: There is always another client!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

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

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

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

Read more!!

Common Appraiser Violations

Two of the common appraiser violations – Use of inappropriate sales and Use of unsupported site value

Excerpt: When it comes to common appraisal violations, certain minor violations are very common. In this article, I outline several examples of less serious breaches of development STANDARD 1 and reporting STANDARD 2—and a few other types of violations, too. I have compiled these based on many years of personal experience in appraisal regulation, as well as feedback I have received from other states’ enforcement agencies. Once you’re aware of these common mishaps, you should be able to avoid them more easily.

1. Use of inappropriate sales

One of the big problems is the use of inappropriate sales in a sales comparison approach….

2. Use of unsupported site value

Another common violation is the use of unsupported site value in the cost approach. That’s something that a lot of boards have cited as a prevalent deficiency or shortcoming in appraisal reports.

To read more click here

My comment: useful information. Nothing new, but good reminders. Don’t get the “violation letter” from your state board!!

Appraisal Process Challenges(Opens in a new browser tab)

Appraising Weird Stuff is Challenging!(Opens in a new browser tab)

What to Do When Your Appraisal Is Under Review(Opens in a new browser tab)

Read more!!

What is most often overlooked by appraisers?


 

 

 

 

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

Highest and Best Use (HBU)

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

Obsolescence

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

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

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

To read lots more, click here

Appraisal Humor

Appraisal business tips

For lots more appraisal topics, Click  Read More below!

Read more!!