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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The Property Valuation Reckoning is ImminentHow 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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7 Women in the Building Business, Including an AppraiserExcerpt: 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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Obsessively Checking ZestimatesExcerpts: If you own a home, or want to own one, chances are you’ve spent some time with one of the many apps that estimate home values. As real estate prices have risen in recent years, watching one’s equity grow – at least on paper – has become something of a national pastime. Some would call it an obsession.
“I check my Zestimate way more than my 401(k),” said Bradley Reed, a homeowner in Cleveland, referring to Zillow’s proprietary tool.
“On a slow week, I might check it every other day,” said Krista Burns in Doylestown, Ohio.
Listen or read the story and twitter comments, see some fotos, etc. Add your comment at the bottom.
My comment: I listen to the marketplace podcast almost every day, listened to this one last week, and really liked it. Fortunately, with this link you can read the transcript or listen to it plus read some twitter comments. I know that real estate agents have lots of problems with it. I wonder how many appraisers look at Zestimates? You may be surprised!! Some even include it in their appraisal reports and explain why their value is different.
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AMCs and Respect for Appraisers??By Rachel Massey, SRA
Excerpt: …an example of an AMC that is not paying attention to the comments from the declination. If an appraiser declines due to coverage area, then it should not be reassigned. But also, if appraisers decline because the fee is inadequate, is upping it a paltry $25 going to cut it? In the time between the initial order and the subsequent, ten days passed. Had the AMC picked up the phone and started calling appraisers, they may have had much better success at finding someone who first of all covers the area, and second of all, would tell them how much it would take for them to take on the assignment.
My comments: Worth reading plus the appraiser comments, of course!!
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AVMs vs. appraisersExcerpt: 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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CHANGE YOUR TEMPLATES!!I am really going to try hard NOT to use 2018 on :
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What Was the Most Popular Home of 2018?Just For Fun!!Excerpts:
10. Cerro Gordo, Lone Pine, CA
Status: Sold for $1.4 million in July
Why it’s here: Seeking a little solitude? Look no further than Cerro Gordo, a bona fide ghost town perched 8,000 feet up in the Inyo Mountains in Southern California.
8. Beckham Creek Cave Rd, Parthenon, AR
Status: Currently off market
Why it’s here: This rustic estate carved into the side of the Ozark Mountains captured attention for its storied history of renovations. What started as a doomsday shelter was transformed into an A-list nightclub
Click here for fotos, more info, and 8 more popular homes!!
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Futuristic Houses With Some Weird Architectural DesignsJust 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 AppraisalDecember 2018Excerpt: 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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Proposed appraisal threshold increases keep coming – both residential and commercial !!——————————————— House Republicans Push to Ease Property Appraisal Rules Before Giving Democrats Control 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.
——————————————– 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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