Appraisal News and Business Tips

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8-16-18 Newz//Market starting to tank? ;Unusual Homes ;Public Trust Failed?

Bye-bye 1004MC, Hello Analysis

By Rachel Massey, SRA, AI-RRS
Excerpt: What does this mean to the residential practitioner operating in the mortgage space? It means that the requirement for analyzing the market remains, and it is now up to the practitioner to support their opinion, without the benefit of a flawed format. Appraisers can now choose how they present their analysis, which may include multiple sources to support an opinion. Fannie Mae is clear that the one-unit housing trends section should reflect properties that are directly competitive with the property being appraised. The following information relates to several different ways to support trends, but is not an exhaustive list.

Read the full article here:

My comment: FHA and VA still require 1004mc, plus some lenders and AMCs. Freddie is expected to drop the requirement.
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8-9-18 Newz//No more 1004MC?? ;Witch Windows ;North Dakota Waivers?

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Markets slowing down. Price declines??

Housing market is showing signs of cracking: ‘Anything-goes list-price strategy is no longer working
Excerpt: But the slowdown is also tied to overheated prices. Even in the hottest markets, there is a limit to affordability, and that limit is clearly now being hit.

In pricey Southern California, sales of both new and existing homes fell sharply in June compared with a year ago, according to CoreLogic. Demand is still quite strong, and while prices continue to gain, more listings are showing price reductions.

My comment: If I knew when the prices peak, I would be rich and get the Nobel Prize!! It is very tricky. Beware of price declines starting. Keep close watch on lots more listings than pendings. Few, or no, offers way over list. The bottom of the market is easy to see. Fast declines, then stabilizes for quite a while.
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The problem of overpricing in real estate

By Ryan Lundquist

 

Excerpts: Overpricing is a problem. You’d think in such a “hot” market that it wouldn’t be an issue, but it is. I’m not trying to dog sellers, but let’s talk about some of the most common pricing mistakes right now. I hope this helps.

5) Sales instead of comps: The most common pricing mistake I see is pricing according to a sale down the street that really isn’t comparable. So a seller says, “I know that house is totally remodeled with a pool, but someone’s going to pay the same amount for my house.” My advice? Price according to similar homes that are actually getting into contract rather than dissimilar properties. Be careful about hijacking price per sq ft figures too.

My comment: Written for real estate agents, but helpful for appraisers. I encountered this when doing a retrospective estate appraisal for a house that will be listed. The owner kept going on and on about a home nearby that sold for $1,100,00 that was “smaller” than hers. Fortunately, I was not doing current value ;>

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8-2-18 Newz .1004MC dropped, Treasury Proposes Appraisal Downsizing, Rural Appraisals

No more 1004MC for Fannie appraisals

Date: 7/30/18 1:46
My note: This was posted in an appraiser yahoo email discussion group I have subscribed to since it started awhile ago. The person who sent it is very reliable. I have known him personally for many years. Below is the email. When I used to travel a lot to appraisal conferences, sometimes Fannie would make comments on significant changes. This was one of those comments. When I speak I am a lot more candid than when I write for unknown reasons. Maybe Fannie speakers do the same sometimes.
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Posted discussion group message:
“I’m in Nashville at the National Appraisal Institute Conference. I just left a presentation given by the collateral policy managers at Fannie Mae and Freddie Mac.”

The Fannie spokesperson said that Fannie Mae has decided not to make the 1004MC a required from anymore; the change will be effective as of the new Selling Guide update, which is expected to come out next week.

I asked Freddie if they planned to drop the requirement as well? They said they had considered dropping it when the new reporting formats were finalized, but also said in light of Fannie’s announcement, they may not wait until the form-changes and adopt that decision sooner.

The Fannie spokesperson said that just because Fannie won’t requirement doesn’t mean a lender might not still want it. So, she warned not to expect all lenders to adopt the change instantly.

In my opinion, I think most lenders will opt out of the 1004mc form, but will require something else (data/analysis) in the report to support the market condition identification and adjustments (if warranted). So I don’t anticipate the need for market condition analyses to go away (and it shouldn’t, in my opinion) but I do anticipate more flexibility in the manner we (individual appraisers) want to present that data.”

What I think about 1004MC: The 1004MC forced appraisers to make market conditions adjustments, which lenders had to accept. When I started my appraisal business in 1986, I was told by local, well respected appraisers that lenders “did not want any time adjustments.” Apparently this had been going on for many years. During price declines in the 1990s, I personally knew appraisers who went out of business because they refused to not make time adjustments. All my lender clients allowed them or they were off my approved client list.

I started appraising in the 1970s at assessor’s offices. We were making 2% per month time adjustments. Guess I just got “bad training” for lender appraisals ;>

Appraiser comments: Of course, there were lots of appraiser comments. Dave Towne’s are below:
~1 Lenders and AMC’s (and the other gov’t agencies) won’t back down on requiring the 1004MC form in reports. So you will have to do it, regardless of what the GSE’s do.

~2 Some report users may design their own market conditions reporting form, and demand its inclusion in reports per their own assignment conditions.(One no-longer-in business-by that-name AMC did this in 2008, and demanded their form be included even after the MC form became mandated – until appraisers loudly complained.) These may not be acceptable to other lenders/users. So we could have a situation where multiple users have different forms required, which will greatly complicate completion of reports in a timely manner.

~3 The several report software providers may design something to replace the MC form, which you could then be used in reports. But if 4 (or more) different ones exist, the same situation as in #3 will occur.

~4 The GSE’s may have another form already prepared to replace the MC Form and will demand it be used instead. (By the way….”new appraisal report forms” to replace the current ones are nowhere ready to be released, at least from what the GSE’s have said in the past couple of months.)

~5 Smart, and well versed, appraisers will continue to provide supportable documents and analysis to show market trend activity – which they’ve already been including in reports as a substitute to the MC form. Appraisers who have not been doing this should take steps to learn how to document subject/comparable market trends that are specific to each assignment, and not just a regurgitation of ‘regional’ or ‘national’ trends data reported by others that may not directly apply to the appraisal assignment.

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6-28-18// Newz .Appraiser Impostor Video, Unusual Motels/Hotels, Switch Off USPAP

Appraiser Imposter Captured on Video!!!

Click here to see the video of the imposter and the owner’s comments. Note: You may have to wait for the ad to finish. Worth the wait!!

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Imposter posing as appraiser, utility workers target Phoenix neighborhood
Excerpt: Last Wednesday, as construction workers bustled inside Huddleston’s home near 22nd Street and Glendale Avenue, a woman came to her door claiming to be an appraiser for the bank.

Huddleston said the woman told her she was there to take pictures, and had arranged the time with Kacia’s husband, Bryan.
“She knew my husband’s name, and as I was in the midst of texting my husband to see if she was supposed to be here, she walked right in,” said Huddleston.

My comment: Have you inspected the wrong house? I have definitely knocked on the wrong door, but never went inside… so far ;>

Stories of Surprising Roadside Hotels

It’s check-in time for your memories of unforgettable travel lodgings.

Just For Fun!!

Excerpt: Lots of interesting places!! Here are a few:
Red Caboose Motel Ronks, Pennsylvania
The guest rooms are actual train cabooses. Think tiny houses on rails.

The Atomic Inn Beatty, Nevada
“It was alien and bunker-themed, and was decorated with atomic bomb art.”

Wigwam Village #2 Cave City, Kentucky
Stay in a teepee.

Movie Manor
Monte Vista, Colorado
“It’s in a drive-in theater and you can watch movies from your bed.”

Click on the Motel/Hotel name for photo and more info

My comment: Back in the 60s I traveled between California and Oklahoma regularly, using Route 66, before the Interstate was completed. Lotsa strange motels!! Before motels morphed into chains that looked the same. There are still a few of these “old timers” left.

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6-21-18 Newz// $760,000 Parking Space, Peak Prices?, Hypervacancy

A $760,000 Parking Space ($5,000 per sq.ft.)

By Jonathan Miller
Excerpt: In 2007, I analyzed Manhattan parking spaces that made page one of the NY Times (oh, and my wife broke her leg that day). The takeaway was that parking spaces sold for about the same price per square foot as a typical apartment in the same building. Typical parking spaces run about 150 square feet in size.

This US $760,000 Hong Kong parking space sale (a flip) was a little more than $5,000 per square foot in a luxury project. The average residential sale is US$3,182 per square foot. Based on what we see for Hong Kong housing prices, that price really doesn’t sound so crazy.

In the greater reality, it sounds absolutely nuts. Without the context of an HK$100M condo nearby…

Scroll down to Appraiserville for a long story about a VA appraisal “gone bad” plus lots more good stuff at:

http://www.millersamuel.com/note/june-15-2018

Surf’s Up! America’s Most Affordable Beach Towns, 2018 Edition

Excerpts: These aren’t the country’s best known and rarified ocean towns (sorry, Hamptons and Malibu!), but each one has a great beach and a cool and distinct vibe, from ruminative to rowdy, serene to (sorta) swanky.

Here are a few:
1. Gulfport, MS
Median home list price: $184,100
2. Jacksonville, NC
Median home list price: $184,600
9. Coos Bay, OR
Median home list price: $274,200
Lots more detail at:

https://www.realtor.com/news/trends/americas-most-affordable-beach-towns-2018-edition

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6-14-18 Newz//New Fannie Selling Guide, AMC Changes, Crazy Restrooms

Dodd-Frank rollback weakens appraisal standards

Excerpts: Under the new law… smaller banks and credit unions will now be free to waive an appraisal for rural properties valued under $400,000, when they can’t find an appraiser in a timely manner.

Most loans are sold into the secondary market. It is a fairly narrow provision. They are basically looking at rural areas where banks are holding the loans in their portfolio.

…continuing concerns with what has been a pendulum swinging back to regulatory relief and loosening risk-management requirements. This is part of that wave.

Read more here:
My comment: good analysis by Bill Garber of the Appraisal Institute. Worth reading.

13 of the Craziest/Coolest Public Bathrooms

Just For Fun!!

Excerpt: We know, there is a lot to hate about public restrooms, but we’ve found they can actually be a very unexpected but very potent source of inspiration. We’ve never seen tile layouts like the ones in public facilities-and that’s why we like them. Overlapping squares with zigzag edges? A woven look with a whopping five different colors and two different tile sizes?

My comment: Wow! Vibrant colors and tiles….

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

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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5/31/18 Newz//Crash in 2020?, Floating Homes, Rate changes since 1900s

Floating Homes the Ultimate Water View

Excerpts: For many, floating is something new and adventurous,” said Max Funk, co-editor of “Rock the Boat: Boats, Cabins and Homes on the Water” (Gestalten, 2017). The book reveals an explosion of creativity in buoyant architecture, including an egg-shaped floating cabin in England, floating spas (with working saunas) in Finland and the United States, and floating geodesic domes in Slovenia.

Outside of Seattle, where houseboat construction is being curtailed because of the potential impact on local salmon populations, Ms. Bethell said, the most prominent areas in North America for floating homes are the San Francisco Bay Area; Vancouver, British Columbia; Key West, Fla.; and Portland, Ore.; where the number of floating homes has doubled since 2012.

My comment: In the San Francisco Bay Area they are in several marinas, including in my city, Alameda. In the past, they were anchored around the bay, but were moved to marinas due to pollution concerns. When I moved here in 1968, I visited one anchored off Sausalito in a protected bay with no sewage storage.

2018’s Hottest Backyard Amenity: Detached Living Spaces

Excerpt: The reason for their rise in popularity? Privacy, for one. There’s no one-and no surrounding noises from your disruptive family or neighbors-to make you lose your focus. It’s all you, the shed and whatever your No. 1 priority is for the day. Not to mention, if you have a lush and peaceful backyard, the view is a plus.

So, what do these look like? Anything you can imagine. From hobbit hole-style sheds to more contemporary glass structures, these can take the form that best suits your needs. And what are they used for? That depends on you…

http://blog.rismedia.com/2018/detached-living-spaces

My comment: a great way to get some peace and quiet plus privacy ;>

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5-10-18 Newz//Market Value Fallacies, Broken Mortgage Market, Crazy Appraiser Stories

Is it all a big lie? Are there really 6 fallacies of market value?

By George Dell, MAI, SRA, ASA

Excerpts: Some ten years ago, we saw the start of the economic meltdown. Were appraisers to blame?  Some tried to pin the blame that way. But was there a big lie underneath? The required (federally insured) definition of value has seven distinct elements. Were appraisers doing what they were told?
Seeking entertainment for my Stats, Graphs, and Data Science¹ classes, it seemed fun to see if these assumptions had not been religiously followed.  This led to a PowerPoint slide entitled:
 “Dell Operative definition of market value”
Check it out at:

My comment: Interesting comments plus some humor ;>

In the Trenches, Crazy Appraiser Stories

Just For Fun!!

Excerpt: You’ve all got them… The crazy car chases, the surprising living conditions, the exotic assignments and the unique collectors. Here are a few of our stories we found buzz worthy.
This was a beautiful 3,200 sq ft home with all the extras. After measuring…
The Stories plus 10 comments with more stories.
My comment: I love the foto of the crazy appraiser!!

Which of us does not have a weird experience… or lots of them ;>

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5-3-18 Newz//Federal Enforcement of USPAP?, Public Restroom App, Unusual Houses & Buildings

How Lenders and Appraisers Can Work Better Together Through Increased Transparency

By Wes Costello
Excerpts: The relationship between lenders and appraisers has never been quite right. The association was scared by improprieties of the few that led to a fallout of the many, with each party retreating behind walls of mistrust and perceived regulatory requirement. Recently, communication is civil but has been described as resembling two parties of a legal arrangement who speak to each other on an as-needed basis….

Anyone who has directed appraisal management knows that they are only as good as the appraisers they partner with. This makes it vital to value each member of your appraisal panel as an integral partner in your company’s business.

My comment: Well written and worth reading, plus the comments, of course. The author is a Senior Vice President of Quality Management & Collateral Risk at AnnieMac Home Mortgage… He is a Pennsylvania Certified Real Estate Appraiser.

Public Restroom App by Charmin: Find Clean Bathrooms!

Excerpt: A clean nearby public bathroom can be hard to find. But not all restrooms are created equal.

With SitOrSquat we put clean public toilets on the map. Literally. Clean locations have a green “Sit” rating. Less desirable ones have a red “Squat.”

So, the next time nature calls and you need to find a nearby restroom, SitORSquat will help you know where to go.

My comment: Thanks to appraiser Jerry Walsh for this great tip. He has used it for years. I am downloading it today!! I coulda used this 40 years ago when I started appraising in rural areas….. Better than The Bushes or Behind A Tree ;>

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