Appraisal News and Business Tips

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12-6-19 Newz: Appraisal Shelf Life – AVMs – Neighborhood Analysis

What’s the Shelf Life of An Appraisal?

Except: All of this has let me to the question du jour. What is the shelf life of an appraisal? I am asked on a regular basis, “How long the appraisal is good for?”. The simple answer is, one day. Namely, the effective date of the report. Real estate appraisals reflect the appraiser’s opinion of value of the property being appraised, based upon a specific point in time. Why?

Real estate values are changing every day. Like food, there are external forces that affect the value of a home, and how rapidly it changes. Does that mean that the appraised value will be dramatically different the day after the effective date of the appraisal? Probably not. However, no appraiser can see into the future to know what tomorrow will bring.

To read more, see fotos and comments click here

My comment: I love these very creative articles. I have no idea how he does mashups of appraisals and all types of other topics! Plus I thought I understood food shelf life. Now I know a lot more ;> Creative videos and animated gifs, etc. Lotsa fun!!

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10-11-19 Newz: Appraisal Waiver Train – Multiple Offers – Secret Doors

Banks Are Driving the Appraisal Waiver Train

By Jonathan Miller

Excerpt: Look at the ASC members and their North Dakota waiver vote on July 9, 2019

Only FHFA and HUD voted against the North Dakota Waiver. Those specific agencies deal with appraisers first-hand and understand their role in the risk management process. The remainder are bank regulators or in the case of CFPD, represent consumer interests (and the agency has been gutted over the past several years to reduce its pro-consumer efforts).

In other words, banks are driving the waiver train. They want to remove a pain point from the mortgage process to grow more origination volume. The Federal government has already proved it will be willing to back up the banks if the economy collapses so why not keep pushing for removing of all pain points?

To read more, click here

My comment: Nothing new. Lenders have wanted to get rid of appraisals for decades. Impediments to The Deal.

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9-6-19 Newz: Bidding Wars – Dumb Mistakes – U.S. Abandoned Places

Can Smart Appraisers Make Dumb Mistakes?

By George Dell, ASA, MAI, SRA

Excerpt: I am a smart and educated, award-winning appraiser. It is not possible for me to be irrational. Of course not. You can see that. I can see that.

A high IQ and education won’t necessarily protect you from highly irrational behavior—and it may sometimes amplify your errors. David Robson, in an Excerpt from The Intelligence Trap

Oh No! Who is this guy!? Doesn’t he know how smart I am? Why, even my peers have said I am smart. I pride myself on my critical thinking. Even my kids say that! What more proof do you need? Let’s get this straight: I am rational, smart, of high IQ and extremely educated, especially in my chosen field!

Recently, scientists have started to measure what things go with irrationality. There is even a name for this field of study, this measure: dysrationalia. The studies roughly parallel the studies of dyslexia and dyscalculia (difficulty in dealing with number things).

Understandable, Well Written and Interesting!! To read more, click here

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6-21-19 Newz: MLS Cyber Attack – McMansions – FHA and Risky Loans

Valuation Is Not A Guessing Game, It’s a Development Process

Excerpts: If you’ve ever had an appraisal of your home completed, perhaps you can relate to the following scenario: insert image

The appraiser arrives at your home. You know that they have probably done a little research on what potentially comparable sales in the neighborhood are selling for.

The appraiser views each room in your home, taking photos and notes as they go. The appraiser asks you about any improvements you have made to your home in recent years.

At the end of the inspection, you assume that the appraiser has to have some idea about what the value is likely to be. You ask the appraiser, “Well…What do ya think?” What you’re probably really wanting to know is what the appraiser thinks your home is worth. At this point the appraiser is likely to give an evasive reply that doesn’t answer your question. Why?

To read more and see the funny animated fotos and gifs click here

My comment: written for homeowners, but some good ideas for appraisers. You can use for ideas for speaking to real estate agents, for example. Or, can give (or send) the owner a link to this article.

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6-14-19 Newz: Refis up 47% – Appraisal Hearing – Suburb Definition

Lender Overlays and FHA Appraisal Requirements

Excerpt: FHA requirements re: approaches to value

Regarding the approaches to value, the HUD Handbook states, “The Appraiser must consider and attempt all approaches to value and must develop and reconcile each approach that is relevant.”

Translation: If the appraiser determines an approach is necessary for credible assignment results, the appraiser must develop that approach. When appraising new construction or a dwelling that is one year old or less, it is likely that the appraiser will need to develop the cost approach. As in any appraisal, if the appraiser decides not to develop one or more of the approaches, he or she will need to support that decision.

For info on site requirements, etc click here

My comment: AMCs and lenders can have some strange requirements. It’s always good to know what FHA says.

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How Should We Define the Suburbs?

Excerpt: The problem (lack of a definition) stems from the fact that U.S. statistical agencies (the Census Bureau and Office of Management and Budget) do not provide a systematic definition for suburbs. They offer classifications for metropolitan areas and micropolitan areas, a classification of urban and rural areas, and a category of principal cities, but nothing of the sort for suburbs.

Very interesting with a good table To read more, click here

My comment: Appraisers have to identify on forms if a property is urban/suburban/rural. Also percent built up. Rural can affect loans sometimes. I have never seen any clear definitions. Now I know why!

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6-6-19 Newz: What’s Fannie Doing and Why – Shadow Banks – Photoshopping

Tracking the Economy Through New-Home Square Footage

Excerpt: The U.S. housing market may not be synonymous with the business cycle, as a famous 2007 paper proclaimed, but the ups and downs in housing, which represents a big part of the economy, usually do offer hints about what’s going on more broadly.

That’s why economists closely watch housing market indicators like sales volumes and home prices — as well as how Americans are accessing the market and managing their obligations to mortgages, rental costs, taxes, and so on.

To read more, click here

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5-17-19 Newz: Dancing and Crooked Houses – Will Appraisals Be Transformed??

Will Fintech Transform/Disrupt Appraisals?

Bifurcated appraisals is the “tip of the iceberg” in changes coming to lender appraisals

I recently attended Jeff Bradford’s excellent presentation on coming changes in the type of valuation used in the residential mortgage industry. I also attended a webinar “New Valuation Trends Disrupting the Industry” that focused on the lender side, especially loan originations. Both saw significant changes coming in the next 5-10 years, going from legacy to digital lending that will transformational.

Both used the term “Fintech” regularly.
Here are two definitions “computer programs and other technology used to support or enable banking and financial services” and “fintech is one of the fastest-growing areas for venture capitalists”. I have written about several VC funded appraisal companies in this newsletter, both residential and commercial, working on new ways to make appraisals more efficient.

Both presentations talked about many ways, such as using AI, photos and data to evaluate interior condition, estimating square footage without measuring, “real time” google earth, etc.

I will be writing about both presentations in the next month’s issue of the paid Appraisal Today.

For more info, google Fintech and mortgage lending and/or Fintech and mortgage lending appraisals. FYI, I did not know what fintech referred to and had to google it after the presentations;>
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5-10-19 Newz: Fannie Changes – Appraisal Changes – Very Crooked House

How is Appraisal Gonna Change?

By George Dell

Excerpt: What new “appraisal methods and techniques” have we seen? As I speak to reviewers who see valuations from around the country, there seems to be a degradation of quality. Less analysis rather than more. Less explanation rather than clearer logic. More “trust me” and less “see my reasoning.”

What does the world really need? Trust my opinion-or see the result? Trust my comps-or see market parameters.

Competitors for valuation, risk, and investment needs want “better, faster, cheaper.” For now, lets just look at “better.” What is “better?”

“Better” is actually fairly simple. There are only three parts: 1) is the right question being asked; 2) is the result true (accurate); and 3) how sure (precise) is the result? So, let’s look briefly at each of these needs, and how each can be helped with today’s technology.

https://georgedell.com/how-is-appraisal-gonna-change/

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4-26-19 Newz: Praising Appraisers – Hobbit Houses – New York AMC law

Hobbit Houses in Charlevoix, Michigan

Just For Fun!!

Excerpts: Growing up in northern Michigan in the early 1900s, Earl Young was obsessed with boulders. Glacial boulders, to be exact-ones moored in fields, forests, and on lake coastlines across the state thanks to the slow march and retreat of glacial ice during the Precambrian age.
The homes he designed will stop you in your tracks, as one did the last time I was there, passing by on a bike. Call them “mushroom houses,” “hobbit houses,” “boulder houses”; everyone has a different name for them. They’re often described concisely, if vaguely, as “organic.” Though some see Frank Lloyd Wright’s influence, they’re distinctly Young.

Fascinating! Lots of fotos and info at:
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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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