Drive-By Appraisals – Who, What, Why

Newz: Drivebys, Foreclosures, Hybrids?, ASB Q and As

April 18, 2025

What’s in This Newsletter (In Order, Scroll Down)

  • LIA ad: Appraisal Used in Divorce Case—Now What?
  • What is a Drive-By Appraisal?
  • Contemporary Architect’s Downtown Santa Barbara Home Could Set a Condo Price Record
  • Top 10 U.S. Housing Markets with the Most Foreclosure Starts in March 2025
  • Hybrid Appraisals – Flawed Data or Flawed Agenda?
  • New ASB Q&As
  • Mortgage applications decreased 8.5 percent from one week earlier

—————————————————————————————————–

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

 


———————————————————————

What is a Drive-By Appraisal?

Excerpts: This method bypasses traditional in-person appraisal methods and has grown in relevance for situations like refinancing or low-risk loans where a full interior inspection may not be necessary.

In addition to observing and evaluating the property’s exterior condition, appraisers will also assess the surrounding neighborhood, use MLS listings for home interior information, and evaluate comparable sales data to estimate property value.

Also known as “exterior-only appraisals” or “2055 appraisals,” this approach is often chosen when a full appraisal isn’t required, such as for low-risk lending scenarios or when lenders have sufficient market data to support a valuation without an interior inspection.

They are also used in situations like foreclosure when interior inspections are not possible.

Topics

  • How Does a Drive-By Appraisal Work?
  • Steps to Conducting Drive-By Appraisals
  • Situations When a Drive-By Appraisal is Used
  • Limitations of Drive-By Appraisals
  • Drive-By Appraisals and Industry Standards

To read more, Click Here

My comments: Definitely the most comprehensive and understandable article on drive-bys I have read. I did many drive-bys in the 80s and 90s for lenders. I finally quit doing them on 2-4 unit properties with little info available. Also, when appraising large Victorians I did not know what had changed since 1910. Permit histories in my city are very limited prior to 1950.

I did a lot of foreclosure drive-bys when prices were dropping. I did full appraisals with interior inspections after they were foreclosed.

My most difficult drive-by was a house that was completely “trashed” after the death of the owner by a young relative drug user. It had been sold after renovation and I had no access. I interviewed relatives, neighbors, etc. to try to find out what it was like on the date of death. I always ask the estate trustee to get me access to the house before any changes are made if possible.

BE CAREFUL. DO NOT UNDERBID ON DRIVEBYS.

TOO MUCH UNCERTAINTY ABOUT THE INTERIOR CONDITIONS.

Read more!!

Appraisal Sq. Ft. Appraisal vs. Assessor/Public Records

Newz: Sq. Ft. Appraisal vs. Assessor, The “R” Word, HUD Appraiser Complaints

March 14, 2025

What’s in This Newsletter (In Order, Scroll Down)

    1. LIA AD: Navigating value revisions in appraisals
    2. Why Is the Square Footage in Public Records Different from the Appraisal?
    3. 5 Properties With ADUs or In-Law Suites
    4. Open Letter to Government Efficiency Commission on HUD’s Appraiser Complaints
    5. The “R” word in real estate – Recession
    6. Going In-Depth on a Delicate Issue: The Invisible Fence of Racial Discrimination
    7. Mortgage applications increased 11.2 percent from one week earlier

——————————————————————————————-

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

——————————————————————————

————————————————————————————-

Why Is the Square Footage in Public Records Different from the Appraisal?

By Tom Horn

Excerpts:

Why Accuracy Matters

Square footage is one of the most critical factors in determining a home’s value, yet it is often misunderstood. Many homeowners and real estate agents assume that the square footage listed in public records is accurate, but that’s not always the case. When an appraiser measures a home, their calculation often differs from what’s in tax records. These discrepancies can lead to confusion, mispricing, and even appraisal challenges.

Why Square Footage Discrepancies Occur

Public Records vs. Appraisal Measurements

The square footage listed in public records typically comes from the county tax assessor’s office. Assessors determine square footage based on:

Builder-reported figures:…

Estimates or outdated records:…

Conversions and Additions

Another common reason for discrepancies is home modifications. If a homeowner adds square footage without the proper permits, tax records may not reflect the change. Examples include:

Unpermitted additions:…

Incorrect classifications:…

To read more, Click Here

My comments: Worth reading. Written for non-appraisers but the best explanations I have ever read about this topic. I worked for an assessor’s office for my first 4 years of appraising, starting in 1975. I was given a geographic area and appraised every residential in it. Fantastic experience. I learned a lot. I was very lucky. Very different than lender appraising, where you only appraise properties that are suitable for mortgage loans.

The March 2025 issue of Appraisal Today has a very comprehensive article for appraisers: Can you use the assessor’s assessment values for site valuation, by Tim Andersen, MAI.

Read more!!

Highest and Best Use and Appraisals

Newz: HUD Layoffs – Including FHA, GSE Selling Guide Updates

February 21, 2025

What’s in This Newsletter (In Order, Scroll Down)

  • LIA Ad: Should I Complete this Assignment?

  • Highest and Best Use: A Superpower You Already Possess By Byron Miller, SRA

  • High Octane’ Desert Ranch That Boasts Airplane Hangars, Racetracks, and Custom Dune Buggies Hits the Market in California for $15 Million

  • Fannie Mae and Freddie Mac’s New Selling Guide Updates: What Appraisers Need to Know. What Data Sources Appraisers Are Using.

  • Massive FHA cuts would create dysfunction for mortgage industry, homeowners: ex-official

  • Builder Confidence Falls to the Lowest Levels Since May 2024

  • Mortgage applications decreased 6.6 percent from one week earlier

Zoning in the Appraisal Process

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

—————————————————————–

———————————————–

Highest and Best Use: A Superpower You Already Possess

By Byron Miller, SRA

Excerpts: Like the Incredible Hulk, my superpower didn’t show itself until stressed. That stress came in January 2020, when Minneapolis became the first major U.S. city to eliminate single-family residential (SFR) zoning, allowing one-to-three units to be built on what were previously (SFR) parcels. Suddenly, there was a lot of confusion in the appraisal community about when and how to perform the highest & best use (H&BU) analysis for the new zoning classification.

As chapter president of the North Star Chapter of the Appraisal Institute, I fielded a flood of questions from residential appraisers to state regulators. One thing I quickly realized was that many of the residential appraisers I spoke with didn’t know the four tests of H&BU analysis.

Let’s revisit the basics: In an H&BU analysis, real estate appraisers determine the most probable use of a property by applying four tests: whether the use is legally permissible, physically possible, financially feasible, and maximally productive. Order doesn’t matter for the first two tests, but it’s essential for the last two. Moreover, appraisers must conduct each of the four tests on the real property as if vacant, and as improved.

Applying each of these tests properly is essential to the valuation process. In many litigation situations where appraiser’s values are far apart, it’s due to H&BU analysis differences.

To read more, Click Here

My comments: Worth reading. The author is a residential appraiser. H&BU is one of my favorite topics! I have done many commercial properties for lenders and non-lenders where H&BU was not the current use. I appraised them at their H&BU.

If you only do residential properties H&BU issues is much less an issue, so you don’t do the H&BU analysis very often. Unfortunately, many of the res appraisers who call me did not think about the relevant H&BU. This article is an excellent reminder. You can get into Big Trouble with H&BU if you don’t know when it is important.

The article has a section titled: Practical H&BU Analysis of the 4 factors with an excellent case study. Interesting appraiser comment worth reading.

Read more!!

AI and Appraisers

Newz: AI Limits, VA News, New UAD,
Hurricane Risks

October, 11 2024

What’s in This Newsletter (In Order, Scroll Down)

  • Intended Use and User (LIA Ad)
  • The Limits of AI: When the intelligence is artificial, common sense is a superpower
  • Vila Siena In Bel-Air CA Is The Most Insane Mega-Mansion EVER at $177,000,000
  • The New UAD: Opportunity, Confusion or Threat?
  • What’s New at the VA? A Q&A With Its Chief Appraiser
  • Effects of Hurricane Helene
  • Is Anywhere Safe From Hurricanes? The 10 States With the Lowest Risk of Damage
  • ————————————————————————————–
  • Appraisal Business Tips 

 


The Limits of AI: When the intelligence is artificial, common sense is a superpower

By John Russell

Excerpts: At some point, all of us will integrate AI tools into our business practices. Whether it automates mundane and repetitive tasks, generates narrative text, or assists with analyses, the power of AI to save time is real.

The good news for valuation professionals is they have lots of experience spotting data points that don’t jibe with what they know. Another way to say this is that they have common sense. It’s a basic requirement for doing the work. Of course this 3-story overbuilt McMansion is probably not a comparable for a Cape Cod two miles away. That sale was under atypical conditions and, at minimum, needs adjustments to even be considered. You get the idea.

Do I trust what the AI is telling me?

Accepting AI outputs without any skepticism is a recipe for disaster. Approach AI like a detective interviewing witnesses: trust, but verify. Basic internet searches can quickly fact-check results — or raise enough red flags that you reject what is being offered. No state board will accept the argument, “But ChatGPT said,” and neither should you….

Should I be using AI for this task?

Just because you can doesn’t mean you should — commit this phrase to memory. You will have to own everything in your report, and if too much of the product is driven by AI tools, you may be asked: “Well, what exactly did you do here?”…

Common sense is a superpower that can protect you from dire consequences as you experiment with AI. It’s tempting to be spellbound by new AI tools that seem miraculous — and to let down your guard of common sense. Instead, I recommend a heightened sense of caution: The tools are only as good as the people who craft them and the inputs provided by the users. AI hallucinations are still unpredictable, inevitable failure points, which means any “facts” and analyses it supplies should always be verified — it’s just common sense

To read more, Click Here

My comments: Good, practical analysis of AI for appraisers.


—————————————————————————————-

Read more!!

Q3 Fannie Update – Concessions, Rural, Environmental Hazards

Newz: Fannie Update, Concessions Are a Mess, State Board Complaints

October 4, 2024

What’s in This Newsletter (In Order, Scroll Down)

  • State Board Complaints and Renewal

  • Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards

  • $47 Million Ski Chalet With Private Tesla-Style Gondola, Bowling Alley, and Basketball Court

  • September 2024 Real Estate Market Update: What Appraisers Need to Know By Kevin Hecht

  • The hot mess of concessions in real estate By Ryan Lundquist

  • That A-Frame Life: What It’s Really Like To Live in These Triangular Houses

    —————————————————————–

    Appraisal Business Tips 

    Humor for Appraisers

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

————————————————————————————

Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards

Excerpts:

Rural

Worth reading with links to Fannie info, including a link to: Free Fannie online Rural Appraisal Challenges eLearning course. Plus other tips.

Environmental Hazards

While Fannie Mae does not expect the appraiser to be an expert in the field of environmental hazards, we do expect appraisers to analyze and report any information about environmental hazards that is available in the normal course of business…

If an appraiser has knowledge of or identifies an environmental hazard in or on the subject property or on any site within the vicinity of the property, we require the appraiser to…

Seller Concessions

The article about seller concessions in our December 2023 Appraiser Update generated a lot of questions and buzz.

First, we heard that some appraisers, in reaction to our article, adopted a practice of always adjusting dollar for dollar for seller concessions. While this may seem sensible from a theoretical perspective, it could have adverse unintended consequences (such as undervaluation) if the concession did not actually have a dollar-for-dollar impact on the price. Making either assumption (that there is no impact or that the impact is dollar-for-dollar) is not the correct approach…

PSAs – UAD, Bias with useful links to Fannie info

To read more, Click Here

My Comments: Read the concessions section to see what Fannie Mae says on this hot topic! Plus the useful info and links on other topics above.

See Ryan Lundquist’s post below on Concessions – A Mess

Read more!!

Appraisal Reviews – Who and What

August 23, 2024

What’s in This Newsletter (in Order, Scroll Down)

  • Construction Progress Reports: ADUs & Remodels
  • What Is an Appraisal Review and Who Can Be a Reviewer?
  • Billionaire Getty Heir Puts Extraordinary Greek Temple (Temple of Wings) on the Market for $5 Million
  • Redfin Reports Investor Home Purchases Post Biggest Increase in Two Years
  • The Biggest Home in Each State
  • Objectionable Valuations Become Hate Speech, Inflating Home Prices
  • Mortgage applications decreased 10.1 percent from one week earlier

Appraisal Business Tips 

Humor for Appraisers

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

——————————————————————————————-


What Is an Appraisal Review and Who Can Be a Reviewer?

Excerpts:

Topics:

  • What is an appraisal review?
  • Fact-checking vs appraisal review
  • Types of appraisal review reports
  • Why are appraisal reviews needed?
  • Who requests a property appraisal review?
  • Who can review a property appraisal?

The client base for appraisal reviews is vast and diverse, encompassing a wide range of sectors and needs.

  • Lenders rely on reviews to ensure the accuracy and reliability of appraisals before making lending decisions.
  • Investors use them to evaluate the value and risk of potential investments.
  • Attorneys order reviews to support legal matters involving property valuation, including disputes and condemnation cases.
  • Insurance companies use them for verifying property values in underwriting and claims.
  • Government agencies may request reviews for regulatory purposes, tax purposes, or right-of-way acquisitions.

To read more, Click Here

My comments: Comprehensive info on reviews. Short and well written. The best I have read, whether you are a reviewer or an appraiser being reviewed. Reviewing is an excellent option for fee appraisers and staff appraisers.

Personally, I quit doing lender reviews many years ago. I preferred to do the appraisal rather than reviewing an appraisal where I have to also appraise the property. Back in the “old days” I reviewed competent local appraisers I knew.

The final blow later for me was a 4 unit property where the appraiser appraised it as a home. There were 4 electrical meters and lots of cars. When I called my client, they just wanted to know if the value was the same as a house or 4 units. I did not reply. It was my last review for lending purposes. I verified with the city that it was a 4 unit property. There was no information that it had been converted to a single family home. Mortgage rates and requirements are lower for SFRs.

On the other side, many appraisers who do lender reviews say they learned a lot about how appraisers appraise.

Read more!!

Value of a Pool

What is a pool worth? It depends.

By Ryan Lundquist June 26, 2024

Excerpts: With and Without Pools (Big Difference)

There’s a huge difference in the stats when we compare homes with and without pools. The properties with pools are larger in square footage and lot size, higher in price, and they’ve taken slightly less time to sell too.

In short, the higher the price, the greater chance there is a pool. This likely has to do with the cost of building a pool, cost of maintaining a pool, and even larger parcels at higher ranges – not to mention buyers at higher price points expecting a pool more often.

The rhythm of pool sales basically follows the pattern we see in the entire market. More sales as the year unfolds, and they typically peak around June. Some smaller areas could be slightly different.

Seriously though, What is a pool worth?

It depends. Different price points and locations come with different expectations. There isn’t a one-size-fits-all answer for the value of a pool. In other words, we can’t just apply one figure to a property because that number isn’t going to make sense everywhere. This is where we have to study the comps. With that said, my observation is pool adjustments have generally gone up since the pandemic as buyers are more in tune with the importance of a backyard. Have you seen that also?

To read more, Click Here

My comments: Check out Ryan’s tables to see his data analysis, which is not difficult to set up.

When I first started appraising in suburban Bay Area cities in the mid-1980s, homes with pools sold for more in some neighborhoods with higher-priced homes. MLS always said a pool was there, which is a good way to check it out. At that time, MLS data analysis was much more limited than it is today. I saw this in a particular neighborhood with very hot summers. This is still the same now.

In contrast, where I live, about 15 miles west, on an island on San Francisco Bay, pools have never been a plus or a minus. Weather is “Mediterranean” weather without hot summers. Often sellers said they would remove the pool, but the buyers never requested it.

———————————————————————————-

Appraisal Business Tips 

Humor for Appraisers

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

NOTE: Please scroll down to read the other topics in this long blog post on HOA Horror Stories, Zillow and Redfin lawsuits Videos and Privacy, Residential to commercial transition, real estate market, unusual homes, mortgage origination stats, etc

Read more!!

Low Appraisal Fees in 2024

CFPB Crackdown: Unfair Practices Hurting Consumers

This includes Appraisal payments to appraisers by AMCs

by Josh Tucker, June 5, 2024

Comments must be received on or before August 2, 2024

Excerpts: As we all know many AMCs are not paying Customary & Reasonable fee as required by TILA. They have consistently pushed down the pay of Appraisers while making undisclosed profit off consumers and prioritizing cheapest and fastest over quality and competency. The CFPB has been in communication with individuals behind the scenes and are concerned with what has been shown enough to include AMCs in their data collection process.

Now is the time to send them everything we have. To drive legitimate change, we must encourage as many appraisers as possible to submit all relevant information to the contact details provided below.

CONSUMER FINANCIAL PROTECTION BUREAU

[Docket No. CFPB-2024-0021] NOTE: USE THIS LINK TO READ THE DOCUMENT AND THIS NAME TO USE THE COMMENTS PORTAL BELOW.

Request for Information Regarding Fees Imposed in Residential Mortgage Transactions AGENCY: Consumer Financial Protection Bureau.

ADDRESSES: You may submit comments identified by Docket No. CFPB-2024-0021, by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments. NOTE: THE SEARCH WAS NOT WORKING ON JUNE 6. MAY WORK LATER. CAN USE EMAIL.

Email: 2024-RFI-ResidentialMortgageFees@CFPB.gov. Include Docket No. CFPB-2024-0021 in the subject line of the message.

Mail / Hand Delivery / Courier: Comment Intake —Residential Mortgage Fees Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.

To read more, Click Here

My comments: DO SOMETHING. YOUR VOICE MATTERS. Let CFPB know about the amount of AMC fees for appraisers, plus other problems. In my opinion, AMCs are ruining residential lender appraising. I have never worked for an AMC, but I’ve been appraising for almost 50 years and understand the problems.

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

Appraisal Fees & Value: Lessons from Picasso & Steinmetz

By “Apex Appraiser” June 3, 2024

The Appraisal Institute has been a source of frustration and criticism within the appraisal profession for quite some time. I must admit that I have also expressed my dissatisfaction with them. Nevertheless, I must acknowledge that the new CEO, Cindy Chance, appears to be a positive change and is making some valuable points about our profession from her new position. In particular, she recently discussed appraisal fees in a piece she wrote.

In this excerpt, she shares two stories that provide valuable insights. These stories, one involving art and the other science, highlight the fact that appraising is a combination of both.

First is the story about a young woman who encountered Pablo Picasso one spring day, in a park, sketching. She begged him to sketch her. He graciously agreed, and following a few moments of study and drawing, handed her a sketch of herself. When she asked what she owed him, Picasso answered “$5,000 madam.” “But it only took you five minutes.” “No, madam, it took me my whole life.”

To read more, plus many appraiser comments, Click Here

My comments: Worth reading, plus the appraisers comments. I have been following CEO Cyndi Chance since she started working for AI. It’s definitely a “breath of fresh air” for the AI!

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

 

Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

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

NOTE: Please scroll down to read the other topics in this long blog post on state appraisal boards, liability, appraiser insurance, price per sq.ft. up 50%, sea level rise, unusual homes, mortgage origination stats, etc

Read more!!

Tools To Support Appraisal Adjustments

What Tools Do You Use to Support Your Appraisal Adjustments?

By McKissock

As part of our monthly survey series, we asked our community of real estate appraisers, “What tool(s) do you use to support your appraisal adjustments?” Respondents were allowed to make multiple selections and write in their own answers as well.

Popular tools include Synapse by Spark, Solomon Adjustment Calculator, and Redstone by Bradford Technologies. The majority of respondents said they use a combination of various tools and methods, such as paired sales analysis.

We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or appraisal software tool, because it was mentioned by so many appraisers.

A few sample appraiser comments:

“I am capable of determining the adjustments without any software. I look at the MLS data and am able to determine appropriate adjustments. I would need to know all of the assumptions the software takes into consideration before I would trust the adjustment with my signature.”

“I use Synapse by Spark for typical property adjustments and Solomon for more complex properties.”

In addition to the top answers, we received many other write-in responses. Sample responses:

Allocation method

Depreciation

Cost to build

Sample appraiser comments

“Due to rural location, there are no algorithmic tools to be utilized for adjustment data. I utilize paired and grouped data analysis and experience and knowledge.”

To read more, Click Here

My comments: Short, well written, and Very Interesting, especially the appraiser’s comments! I quit doing adjustments a while ago. I always do market conditions adjustments (or explain why not) and for views and other factors that significantly add to value.

I have never used any of the appraisal software listed above. I use Excel and MLS data. I often go back in time for comps with views, etc. I also interview agents to see what they say. Not for a number, but about marketability.

Appraisal Business Tips 

Humor for Appraisers

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

NOTE: Please scroll down to read the other topics in this long blog post on Geographic Data and Comps, effect of renovation on value, very low foreclosures now, current real estate market, unusual homes, mortgage origination stats, etc.

Read more!!

ROV (Reconsideration of Value) Changes – FHA and GSEs

ROV (Reconsideration of Value) Changes – FHA and GSEs

GSE Effective date is August 29, 2024
HUD Effective date is September 2, 2024

Editor’s note: This long section includes, In order:

  • McKissock/Dave Bradley post with a good summary including links to HUD and GSE documents.
  • Appraisersblogs with Dave Towne’s opinions plus many appraiser comments.
  • George Dell – his usual very interesting comments.
  • VA’s Tidewater Initiative written in 2021 by McKissock (Similar idea as current ROV changes), effective in 2003.

———————————————-

Changes to ROVs: GSEs and HUD Announce New Reconsideration of Value Policies

By Dave Bradley, McKissock May 2, 2024

Excerpts: On May 1, 2024, Fannie Mae, Freddie Mac, and HUD announced new policies for appraisal reconsiderations of value (ROV). These policies were the result of a collaborative effort between the GSEs, the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA).

These policies are intended to create a consistent framework for lenders to respond to a borrower-initiated reconsideration of value. Within this framework, the lender must include steps for the borrower to appeal an appraisal when they believe the value opinion:

  • is unsupported;
  • is deficient due to unacceptable appraisal practices; or
  • reflects discriminatory practices.

Freddie Mac’s Bulletin, announcing the new policy, states:

“Freddie Mac, in collaboration with Fannie Mae and HUD, is implementing requirements related to reconsideration of value (ROV) that promote consistency when a perceived appraisal issue and/or appraisal deficiency exists. These requirements also recognize the importance of the Borrower having the knowledge and opportunity to request an ROV.”

Several sections of HUD Handbook 4000.1 have been amended to reflect HUD’s new ROV policy.

For appraisers, Section II.D.2. of the Handbook creates new general requirements for appraisers. This section states, in part:

“In the event that the underwriter requests a Reconsideration of Value (ROV) and provides additional information material to the value of the Property, the Appraiser must: review all information and market data received from the underwriter;

and summarize the analysis of all information provided by the underwriter within a revised version of the appraisal report regardless of whether the Appraiser determines that changes are not needed to address the issues identified in the ROV.”

To read more plus get links to FHA/GSE documents, Click Here

My comments: If you do GSE or FHA appraisals, read this post, plus the links to the documents. Many appraisers will probably not like it, but will like to have a standardized ROV method. I have never done an “official” ROV for a lender, but I did not like any lender clients objecting to my values.

—————————————

Low Value = Material Deficiencies? New FHA ROV Policy

By Dave Towne, May 3, 2024

Excerpts: Up until recently, there has never been a standardized policy for mortgage loan related Reconsideration of Value (ROV) requests after an appraisal has been submitted. Now there is, per the attached PDF HUD/FHA mortgage letter. The GSE’s have similar policies.

I’m not opposed to having a standardized ROV policy. However, these policies are in keeping with the new initiatives surrounding alleged and often unproved appraisal bias and discrimination claims.

But when one reads deeper into the reason for implementing these procedures, it is quickly evident that actually it’s focused on the perception that the appraised VALUE is wrong.

This is the statement in the HUD/FHA ML-2024-07: “This included guidance to improve the established process by which FHA program participants may request an ROV if the initial valuation is lower than expected.”

OK, so who exactly decided the value should be HIGHER than what the appraiser reported, before an appraisal was ordered? Was it the borrower? The mortgage loan officer handling the loan? A Zillow Zestimate? Maybe the underwriter at the lender?

The document also mentions many times the words “material deficiencies” in the appraisal report, which can trigger an ROV request.

My comments: I find this post’s appraiser comments most interesting, especially those from VA appraisers who have been required to use the VA’s Tidewater Initiative, which started in 2003. It was and is controversial. See the last article in this list for more info on Tidewater.

To read more, Click Here


Row, Row, Row, Part 1

By George Dell May 8, 2024

Excerpts: A better ROV! Please reconsider the direction of your boat. Try this this bigger oar. And use it only on the right side of the boat.

Appraisers have long been asked to “reconsider” their opinion. Now we have a more official “standardized process” which affects appraisers, lenders, AMCs, GSEs, and of course, the borrower.

On quick review, I see some unintended consequences, as well as some which have been anticipated. The anticipation includes the additional burden on lenders as well as appraisers. There is administrative time involved, as well as legal factors. Also, the burden on borrowers appears greater than before, including detail and reason.

First, the burden on borrowers. They start the row. Borrowers must believe the opinion of value is:

And regardless of the impact on borrowers and appraisers, the Fannie Mae Selling Guide is almost entirely focused on the responsibilities of the lender.

To read more, Click Here

My comments: Short and worth reading.

———————————————————————-

The first “official” ROVs – VA’s Tidewater Initiative in 2003: What VA Appraisers Need to Know

By McKissock, January 8, 2021

Excerpts: The VA has a unique set of protocols, known as the Tidewater Initiative, that a VA appraiser must follow when he or she expects the appraised value of a property is going to be lower than its contract price.

This program, often known simply as “Tidewater,” initiated in—you guessed it—the Tidewater area of Virginia (i.e., the Norfolk, Chesapeake, Portsmouth, and Virginia Beach areas). It initially began as a test program in the early 2000s and was expanded to all areas of the country in 2003, as a result of VA Circular 26-03-11. This initiative was subsequently reaffirmed in the issuance of VA Circular 26-17-18 in July 2017.

If it appears to a VA appraiser that the appraised value of a property is going to come in below the pending sales price, the appraiser must contact the designated point of contact (POC) party that is specified in the appraisal order.

The appraiser is not supposed to discuss the contents of the appraisal with the POC at this point, except to explain they are asking for whatever additional information the POC may be able to provide…

To read more, Click Here

My comments: Read this Tidewater post to see why the current changes are not new. There was a precedent. I never did VA appraisals, so can’t speak from Tidewater experience. But, I remember it was very controversial when it started. Many appraisers complained about it. I was contacted many years ago by the VA to get on their panel, but I declined as the property values were way above VA limits where I lived.

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

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

Appraisal Business Tips 

Humor for Appraisers

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

NOTE: Please scroll down to read the other topics in this long blog post on staying positive with slow business,  economic analysis for appraisers, current real estate market, unusual homes, mortgage origination stats, etc.

 

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

Read more!!