Appraisal News and Business Tips

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3-21-19 Newz: Using Previous Sales – 12 Tech Tools – Floating Neighborhood

The problem of giving too much weight to previous sales (or not enough)

By Ryan Lundquist

Excerpts: It must be worth more than it sold for in the past, right? In many cases, YES. But sometimes NO. Let’s talk through some things to consider when pulling comps and noticing a previous sale. I find many of these points coming up lately in conversation, so I hope this is helpful.

8 issues are discussed.
Here are a few
2) Unique property:
3) Unicorn buyer overpaid
8) Not penalizing because it sold too low

Closing advice: I recommend paying close attention to previous sales to get clues to understand how a property fits into the market. But don’t get so stuck that you don’t see the most important thing – current comps.

Good topic I have not seen discussed in detail before. Worth reading. Lots of comments!!
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3-14-19 Newz: Terrible RE Agent Fotos – Appraiser Article in Rolling Stone – Appraisers and Ipads/Tablets

The Property Valuation Reckoning is Imminent

How Technology is Highlighting Underwriting’s Shortcoming

Excerpt: some high-level aspects that can be used to get conversations started.

1. Increasing the availability of detailed, property-specific information, including both operational (ongoing) activities and transactions (sale, refinance, etc.).
2. The collection and analysis of macroeconomic, microeconomic, and capital markets influences that affect the real estate industry.
3. Using concepts such as systems thinking, systems engineering, and advanced technology such as artificial intelligence, machine learning, and deep learning to design semi-automated models that capture and make sense of both property-specific and larger capital markets factors.

Very interesting ideas and analysis. Long, but worth reading. FYI PropTech is a newish acronym. See the next link.

What is PropTech?

My comment: The article gives commercial examples, but is relevant for residential. I have been watching commercial applications, such as AVMs, attempted since the 1990s. The biggest problem is the lack of data. Costar is the major source of data in many areas and has not allowed its data to be commercially used by AVM developers, as far as I know. For leased commercial properties you must have income and expenses, which is not always available. For some types of non-leased properties, such as owner occupied warehouses, AVMs could work well.

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3-7-19 Newz: Digitally-Doctored Listing Photos – Mermaids and Camels at Open Houses – Manufactured Home Webinar

7 Women in the Building Business, Including an Appraiser

Excerpt: In 1986, when Dina Miller, her brother, Jonathan, and other family members founded the real estate appraisal firm Miller Samuel, “there were very few female appraisers,” said Ms. Miller, 56, whose specialty is specialty work – determining the value of a common hallway that a co-op shareholder wants to buy, for example, and handling stratospherically expensive property, including the top-floor apartment at 432 Park Avenue.

Scroll down the page to Dina Miller

My Sister, My Business Partner Gets Her New York Times Due By Jonathan Miller
Excerpt: The New York Times weekend real estate section has a cover story The Boss? You’re Looking at Her: 7 Women in the Building Business and my sister Dina was one of them. I’m very proud of her. She, myself and my wife are the principals of our firm Miller Samuel we co-founded with our parents in 1986. Dina is not a public person like I seem to be but has often said her brother (me) “never met a microphone he didn’t like” which I wear as a badge of honor. Congrats to my sister for her well-deserved recognition.

My comment: Not often an appraiser is featured in an article in a major national publication!! Hardly ever is it a female appraiser.

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2-28-19 Newz: Strange listing fotos – $400k deminimus – FHA violations

Strange and tricky listing fotos

A real estate photographer tells you how to spot staging tricks in listing photos

Excerpt: “If a photo is overly bright, over contrasted, or almost too perfect or synthetic, that should be a red flag,” Cato says.

Another is if the photo has the same level of lighting everywhere. “It’s weird,” he says. “If the brightness is the same throughout, that is just not natural. You have to show where natural light falls.”

My comment: Written about New York apartments and condos but relates to all listing fotos. We all use comp listing fotos. Tips on how to evaluate them, including digital alterations, is always good!!
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The Most Hilarious Pictures Taken By Real Estate Agents
Just For Fun!!

Excerpt: From horror movie-esque semi abandoned flats for rent to excessively unique home decor cases and very impractical architecture decisions, the real estate agents behind these funny ads didn’t even care to fix the places up before snapping the hilarious pictures. The caring levels were so low that there’s also a photo with a live bat in it, a huge pig laying around in the living room and feral horses relaxing in front yards. The most baffling part is that these funny photos were really used to advertise and show the good side of housings to possible tenants.

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2-14-19 Newz: Coester Shuts Down; Beautiful Erosion; Facing Your State Board

17 of the World’s Most Beautifully Broken Places

Wind, rain, and retreating glaciers left this gorgeous destruction behind.

Here are two:
– Ah-Shi-Sle-Pah Wilderness Study Area New Mexico
The land is full of geologic eye candy like otherworldly spires, mushroom-shaped hoodoos, and prehistoric fossils.

Fjaðrárgljúfur Iceland
Strange rock formations tower above the river that snakes through this enchanting Icelandic canyon.

See the incredible locations and read about them at:

My comment: Click The Link And Take A Break from Your Appraisals!!
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2-7-19 Newz: Appraisal Dying?- Dangerous Roads- Wrong Algorithms

What If the Algorithms Are Wrong?

Excerpt: Algorithms are everywhere…
Mathematician and data scientist Cathy O’Neil coined a term for algorithms that are secret, important and harmful: “weapons of math destruction.” Learn more about the hidden agendas behind the formulas.”

“Algorithms are opinions embedded in code. It’s really different from what you think most people think of algorithms. They think algorithms are objective and true and scientific. That’s a marketing trick. It’s also a marketing trick to intimidate you with algorithms, to make you trust and fear algorithms because you trust and fear mathematics. A lot can go wrong when we put blind faith in big data…”

Check out the video of the Ted Talk: 15 minutes and well worth watching. “The Era of Blind Faith in Big Data Must End” I love Ted Talks and have subscribed to the Ted Radio Hour Podcast for a long time.

My comments: Remember the Recent Mortgage Crash The Data Did Not Predict? Why? They did not include data from the Great Depression, the last time real estate markets crashed all over the country.

Who was saying something was wrong? Whistleblower Appraisers. Appraiser Petitions fell on deaf ears. Some appraisers spoke the truth and lost their appraisal businesses and/or were blackballed by lenders.

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1-24-19 Newz: AVMs vs. Appraisers- New Fannie Formz?- Future of Res Appraising

AVMs vs. appraisers

Excerpt: Different AVMs are designed to deliver different types of valuations. And therein lies confusion.

Consumers don’t realize that there’s an AVM for nearly any purpose, which explains why different algorithms serve up different results, said Ann Regan, an executive product manager with real estate analytic firm CoreLogic. “The scores presented to consumers are not the same version that is being used by lenders to make decisions,” she said. “The consumer-facing AVMs are designed for consumer marketing purposes.”

Written for consumers, but very well written and worth reading.

My comment: How often does someone tell you what Zillow says their home is worth? What do you say? I say Zillow works well on tract homes built in the past 10 years. This article discusses AVMs, regulators, appraisers, etc.
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12-20-18 Newz//VA-No More 1004mc| Santa’s Home| What kind of appraiser are you?

The Most Astonishingly Unique Homes of 2018

Great Videos, Just for Fun!!

  • Frank Lloyd Wright Mayan inspired home
  • Dome Home, Hurricane Proof,  in South Carolina
  • Brady Bunch House in Southern California

My comment: Great to look at but don’t ask me to appraise them!!

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12-13-18 Newz:// Futuristic Homes / Declining Prices? / Coester?

Futuristic Houses With Some Weird Architectural Designs

Just For Fun!!

Excerpts: You may have watched Transformers, robots that transforms to a vehicle. Well, that’s exactly how these house designs are made. Futuristic? Sure it is. Considering that we need space to build our homes, now we can just take our homes to wherever it is we like. It transforms from a box to a home. How cool is that?

Some of these sleek, weird houses look like they’ve been ripped out of the twenty-second century and some look like they’re from the next millennium. Get ready to move into the freaky saucer homes of tomorrow.

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Fannie Appraiser Update: Special Edition for Rural Appraisal

December 2018

Excerpt: Get tips for appraising rural properties, learn more about our manufactured housing appraisal policy, read about recent appraisal policy updates, and more in the latest Fannie Mae Appraiser Update.

We love hearing from you! Please continue to use the Contact Us form for appraisers to share what’s on your mind and to submit feedback and questions on appraisal topics.

Topics include:
Adjustments, Comps, Cost Approach, etc. tips relevant for most appraisers.
Click here to download the Update PDF
My comment: Even if you don’t appraise rural homes, there are some good tips in this document for all of us! Who never gets a weird house to appraise?
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Education

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12-6-18 Newz// Threshold Proposed Increases, Ancient Cave Homes

Proposed appraisal threshold increases keep coming – both residential and commercial !!

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House Republicans Push to Ease Property Appraisal Rules Before Giving Democrats Control
Verification of Real Estate Values Would Drop by More Than Half Under Proposal
Source: Costar

Excerpts:

Republicans in Congress and U.S. financial regulators are proposing to ease appraisal rules for real estate sales financed by credit unions, prompting critics to warn the move could recreate some conditions that fueled the financial crisis more than a decade ago.

The proposals are part of a larger push by the Republican leadership in the House, which will hand over control to the Democrats next month, to roll back financial industry regulations while the GOP is still in charge in that chamber. The National Credit Union Administration is accepting comments until midnight on Monday on its plan to increase the threshold for nonresidential sales to $1 million, which it said would boost the portion of sales not requiring an appraisal to two-thirds of all transactions from 27 percent. About 210,000 commercial property transactions were valued at $1 million or less in 2017, according to CoStar data.

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18 Appraisal Groups send letter opposing credit union new commercial threshold

Excerpt: The letter noted that the federal banking regulatory agencies – the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve Board – earlier this year approved increasing the commercial appraisal threshold from $250,000 to $500,000

“We are deeply concerned the NCUA proposal, if finalized at $1 million for commercial real estate transactions, will result in a regulatory ‘arms race’ between the Agencies and the NCUA,” the letter said. “This would result in the NCUA – the agency with the least direct experience in overseeing business and commercial real estate lending – effectively driving the appraisal policies for the entire financial regulatory system.”

The letter also noted that legislation adopted this year by the U.S. House (and awaiting action by the Senate) would link commercial appraisal threshold levels for two of the U.S. Small Administration’s most popular loan programs to those established by the federal banking regulatory agencies. “This (NCUA) proposal will likely impact not just credit unions and banks, but SBA lenders and risks associated with SBA loans,” the letter said.
The NCUA did not propose changes to the appraisal threshold for residential loans. “We support the NCUA’s proposal to maintain the $250,000 threshold level for residential real estate transactions,” the letter said.
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Sign the Petition!! (residential)

Written by Ryan Lundquist and Jonathan Miller
Almost 3,000 have signed the petition as of yesterday!!

Excerpt:

While the current administration clearly believes in deregulation, this doesn’t sound like a move to protect the American consumer and the United States housing market. As recent experience tells us, it’s going to cost us.

Please sign the petition to send a message to federal regulators that exposing the consumer and taxpayer to unnecessary mortgage risk is not supposed to be their role.
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