real estate market

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Appraisal Neighborhood Analysis

Appraisers and Local Market Analysis

By Ann O'Rourke on October 21, 2022 / ADUs, appraisal business, E&O, humor, real estate market / Leave a comment

Tags: ADU, appraisal business, Fannie, liability, real estate market, RETIREMENT

Appraisers and Local Market Analysis

By Woody Fincham, SRA, AI-RRS, ASA

Excerpts: Social media and the mainstream media make a mess of these markets even in the best of times. They do not have the bandwidth to cover local markets. When you are in a metropolitan statistical area like Charlottesville and Waynesboro/Staunton you get some reporting from the local news. Still, if it is not driven to get online clicks from hyperbole it usually is not worth reporting. National data simply does not apply to the local real estate market and the closest large markets are Richmond and Washington DC. Neither are not great metrics for what our local markets are doing.

I think everyone has heard the old saying, “You can’t see the forest for the trees.” And that is true. We are in the middle of a market transition and exactly how it is transitioning is extremely hard to predict. The best market analysis is always retrospective, as they say, “Hindsight is 20/20.” Until we get past this period over the next few months it may be hard to say definitively what is exactly happening. As an appraiser, it is super important to understand how to gather and analyze relative data.

So, what metrics are worth watching?

Inventory levels
Absorption rates and marketing times
Actual days on market (DOM)…

To read more and see the graphs, click here

My comments: Read this article, including the case study. See if there are data types and graphs you can use in your appraisals. Your clients count on you to let them know the market today, not in the past. Of course, I agree with this. Appraisers have the most valuable data and analyses in a changing market: listings, pendings, price changes, etc.

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What Causes Appraisal Revisions?

Appraisal Risk, Reviews, and Revisions

By Ann O'Rourke on October 14, 2022 / adjustments, AMCs, appraisal business, lender appraisals, non-lender appraisals, real estate market, Reviews / Leave a comment

Appraisal Risk, Reviews, and Revisions

By Ken Dicks

Excerpts: This is part three of a three part series on appraisal review – Read parts one and two. I am often posed with the following question “How do you know when you are looking at a “good” appraisal?” The reality is there is no universal acceptance of a single method of measurement to differentiate “good” from “bad.” After many years of reading appraisal reports, my response is “One that leaves the reader with few unanswered questions, allows the data to tell the story, keeps appraiser interventions to a minimum and is able to present a case for what a property is worth, as well as what it is not worth.”

Today, while there still remains some stickiness to the QC revision process, a recent survey completed by The STRATMOR Group commissioned by appraisal management technology company Reggora, indicates 25% of appraisal reports require some form of revision. While that number may seem high to some, in the context of lending and property complexities, that is a 54% improvement in performance cited earlier in this article (from 35% 10 years ago). Is there room for more improvement? Of course, there is always room for process improvement, but on the face of it, some process improvements appear to be yielding results.

Consistent application of both quality control and quality assurance processes for appraisal review may also be in part a reason for improvement, as appraisers have a better understanding of what is needed by their client. Additionally, the tools available to both appraisers and appraisal reviewers have undergone iterative process changes and users have advanced further up the learning curve. Lastly, many lenders have progressed beyond the initial risk identification stage, or the “gotcha stage” to a holistic and strategic approach that accepts risk into their business objectives. Today lenders and stakeholders have the ability to gain risk insight beyond the initial transaction stage and utilize pattern and trend identification.

To read more, click here

My comments: Links to Part 1 and 2 are in the first line of the post. View from the AMC/Lender side. Good that reviews and reconsideration requests have gone down. Appraisers and AMCs spend less time and have fewer hassles.

Lender and AMC revision requests

What to Do When Your Appraisal Is Under Review

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What is the farthest you have traveled to complete an appraisal and still be considered geographically competent?

NAR Appraisal Survey 2022

By Ann O'Rourke on October 7, 2022 / appraisal business, Bad lenders, Fannie, real estate market / Leave a comment

Tags: appraisal business, Fannie, lenders, real estate market

NAR Appraisal Survey 2022

Excerpts from NAR Report (link below):

In May 2022, NAR Research conducted a survey of all 9,700 appraiser members and 50,000 randomly-selected non-appraiser members.

54% of appraisers report that appraisal management companies (AMCs) have been among the greatest challenges in their businesses in the past year; 30% cite expanding regulations.

The typical appraiser reports a 40-mile radius in which they conduct appraisals. 68% report practicing within a radius of 20–59 miles.

Virtually all appraiser respondents (97 percent) have conducted an in-person appraisal, and 79 percent have done so by desktop/drive-by appraisal. Eleven percent cite evaluations (non-appraisal opinions of value). The eight percent who cite other valuation methods most often explained that they use a hybrid approach or mostly an exterior appraisal.

Two-thirds of appraisers (66 percent) are asked monthly or more often to conduct appraisals outside of the geographic area or the property type in which they feel their expertise is. Close to one-third conduct an appraisal outside their area of expertise on a weekly basis. Twenty-three percent of appraisers report never having to conduct an appraisal outside of their geographic area or area of expertise.

Appraisers are significantly more likely than other members to say that the most competent are not being selected most of the time (22 percent vs. nine percent) or at all (16 percent vs. six percent) and much less likely to say they are being selected most of the time (12 percent vs. 23 percent).

A few comments:

“Appraisal Management Companies are destroying our profession.”
“Appraisers are the “truth tellers” in this process. While agents can “puff” we cannot! If a property is listed at $315k, with an offer of $345k, do not harass the appraiser when the appraisal comes in at list!! If it had a market value of $345k, it would have listed at $345k!”
“AMCs are a significant issue for not only appraisers but for the consumer. They bid out each appraisal to maximize their profit, usually harming turn times and passing on costs to the appraiser and to the borrower.”

To read the report, click here

My comments: Read the PDF report. Easy to read with good graphics, similar to the graphic above. Since it was done in May, it focuses on appraiser shortages and delays, mostly from the non-appraiser respondents.

It has both appraiser and non-appraiser survey questions, which is a bit tricky to read. Some of the questions are relevant today, such as AMCs. Other questions are not as relevant, such as fees, as the appraisal market in many areas is not as strong as in May when the survey was done.

How much appraisers travel was interesting. I only work in my island city, 1 mile by 3.5 miles. I hate leaving the Island! Island mentality, I guess ;> I used to work in a much larger area, of course.

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Appraisers: How and Why To Check Carbon Monoxide Detectors

By Ann O'Rourke on September 29, 2022 / appraisal how to, Fannie, real estate market / 3 Comments

Tags: appraisal how to, Fannie, real estate market

Killed by Carbon Monoxide: Appraiser Blamed

Read this article on how to check CO detectors. You may save someone’s life!!

by Kendra Budd, Associate Editor, WorkingRE

Excerpts: For decades, appraisers have been gently reminded to pay careful attention to smoke alarms and carbon monoxide (CO) detectors—especially noting when they are absent altogether. Many experts advise that the state and federal standards requiring these important systems exist for a reason.

A recent case in which a young couple died from carbon monoxide poisoning while they slept highlights the life and death importance of these simple alarms—and brings this issue front and center for the real estate appraiser community as a whole.

Lawsuit

As you might expect, it didn’t take long for both John and Suzy’s parents to hire a law firm and start going after all the real estate professionals involved.

As it turns out, both the appraiser and the home inspector had each independently inspected the home 18 months prior and both mistakenly reported a few of the smoke alarms present at the home, as CO detectors.

Consequently, both the appraiser and home inspector ended up on the receiving end of a “wrongful death” legal claim.

The legal team for the parents of the deceased young adults (plaintiffs) alleged that the appraiser, Darcy Doe (name changed for privacy), had negligently appraised the Smiths’ home and had reported the presence of a CO detector when in fact, none were present. Unfortunately for Doe, she labeled her photograph inaccurately in her own appraisal report to the lender.

CO Detector vs Smoke Alarm

One important lesson in these cases is that it can be extremely difficult to tell the difference between CO detectors and smoke alarms. This is a reminder to appraisers to take a second look at all CO detectors and smoke alarms—and to test them as well.

Rick Bunzel, home inspector and Washington firefighter was able to give us some tips on how to not only tell the difference between the two detectors, but offers additional safety tips on smoke alarms and carbon monoxide detectors as well.

For starters, the difference between a smoke alarm and a CO detector is quite simple. “The item will be clearly labeled, written on the exterior shell of the device, so you’ll be able to see it easily,” advises Bunzel. However, this can be hard to read because the signage could be the same color as the shell, so it’s incredibly important for you to get close enough to the alarm or CO detector to read it clearly (and test it!).

Bunzel was also able to provide some helpful tips for appraisers as far as how to communicate with their clients about CO detectors. For example, Bunzel says that appraisers and home inspectors should make it clear to their clients that they do not warranty if the device is working, just that it is there. “The test button doesn’t test the workability of a device—only the alarm. Just because it squeaks doesn’t mean it works,” reports Bunzel. This disclaimer language should be included in the appraiser’s report.

Another tip is to check the date of a CO alarm and smoke detector

To read more, click here

My comments: Read this article, especially how to identify and check CO detectors. The disclaimers are useful. I have CO and smoke detectors in several locations in my house. CO is much riskier than smoke as you can’t smell it.

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Appraisers – The Past and The Future

Appraisers: What should you have in your car?

By Ann O'Rourke on September 16, 2022 / appraisal business, appraisal management company, non-lender appraisals, real estate market / Leave a comment

Tags: AMC, appraisal business, non-lender appraisals, real estate market

Appraisers: What should you have in your car?

Excerpt: Here are a few items:

Screwdriver: A screwdriver has many uses. You can use it to take the cover off a crawl space entry panel, check wooden structural members for rot or insect damage, remove an electrical outlet cover to check for insulation in the walls, etc.
Voltage detector: To determine whether wires are live.
Ice pick: To check for termites or wood rot.
Magnet: To determine whether old pipes are made of iron or lead.
Mace or pepper spray: To defend yourself, especially if you’re appraising REO and foreclosure properties.
Bug spray: To protect yourself from mosquito bites, ticks, etc.
Spare clothes and footwear: Including an extra coat or jacket, hat, and boots—especially if you work in rural areas.

To read more, click here

My comments: Good tips! I definitely need to add some of the items to my car, especially dog repellent, which is not on the list. I have been bitten by dogs. I left the homes and contacted the lender. Don’t know if they got their loan and did not care. Once two large Dobermann dogs broke down a trailer door. I barely got into my car in time.

This was originally posted on McKissock’s Appraisal Blog, but that link was not working.

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Working with difficult appraisal clients

Appraiser Pressure – What To Do?

By Ann O'Rourke on September 2, 2022 / ADUs, AMCs, real estate market / Leave a comment

Tags: ADUs, AMC, real estate market

How to Handle Appraisal Pressure and Stay Ethical?

Excerpts: There’s no simple and easy way to deal with appraisal pressure. A major source of frustration for appraisers is the realization that clients do not have to follow USPAP. The ethical and performance requirements of USPAP apply only to appraisers, not to clients. In other words, USPAP doesn’t prohibit a mortgage broker from calling and asking you to develop an appraisal based on a predetermined value, but USPAP does prohibit you from accepting that assignment.

When you are faced with appraisal pressure, here are some strategies to manage the situation and still maintain your reputation as an ethical, unbiased appraiser.

1. Educate your appraisal clients

A lot of what appraisers consider pressure from clients is merely a result of the client’s lack of knowledge about appraisal standards and ethics. A lender might ask an appraiser to guarantee values beforehand simply because he or she is unaware that it is unethical for an appraiser to do so.

Avoid this by explaining why you cannot guarantee a value or remove that deferred maintenance photo from your report. You might be surprised at your client’s response if you take the time to educate him or her.

For 8 more reasons, click here

My comments: Appraiser Pressure – What To Do? Can you learn to be an ethical appraiser (or person)? Do you try to be ethical in whatever you are doing? Does it depend on who trained you? Or, do you learn from your parents when growing up? A Very controversial topic!

The Good Appraiser (for anyone who wants their number) Always gives us what we need: – Unethical Appraiser. The Bad Appraiser: A deal killer – Ethical Appraiser.

I was trained at an assessor’s office with no pressure to appraise high or low, fail to disclose defects, etc. I was very lucky. Fee appraisers are under lots of pressure. You learn that people are always looking for a value. for example, when doing an appraisal for a divorce, I always say, “If neither spouse likes my value, it must be okay.” For new clients, I make it very clear that I will not be unethical by giving them what they want upfront. I have lost many clients over the years because I was ethical.

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Review appraiser liability

Appraisal Reviews – The Good and The Bad

By Ann O'Rourke on August 19, 2022 / appraisal business, Mortgage applications, real estate market / Leave a comment

Tags: appraisal business, mortgage loan volume, real estate market

What to Do When Your Appraisal Is Under Review

Excerpt: Topics:

Remember that reviewers are on your side
Look out for these common points of contention
“The number one mistake is that the appraiser did not include the lender’s specific report requirements,” Nakashima confirms. “Often, the appraiser will not read the lender’s requirements—and if those requirements are not in the report, it cannot be delivered, or the lender will send it back.
Avoid future revision requests

“You can’t avoid the report being reviewed, but you can avoid revision requests,” he says. “Check your report for common mistakes. Review the specific lender requirements and make sure you covered all the bases. When you can’t meet a requirement, include a comment that explains why not.”

To read more, click here

My comments: Worth reading if you do lender appraisals. Some good tips for reviewing your non-lender appraisals. I have never had any reviews for my non-lender appraisals similar to the reviews above. When I did lender res appraisals for direct lenders before 2005, I was usually only contacted if I had a typo: address, no value, etc.

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Appraisers: How to Spend Less Time on Email

By Ann O'Rourke on August 12, 2022 / appraisal business, bias, new appraisers, non-lender appraisals, real estate market / Leave a comment

Tags: appraisal business, bias, mortgage loan volume, real estate market

Appraisers: How to spend less time on Email

Excerpts: Many appraisers report that they’d like to spend less time on email. The task of providing status emails eats up time in the workday and tends to be more complex and time-consuming than typing a quick email reply. Status requests from AMCs typically require you to log in to their system and go through the process of updating the order status on their website. Simple enough, but if you are doing this several times a day for multiple orders, it interrupts your workflow and decreases your productivity.

2. Only check email twice a day, at designated times

Set aside two short time windows for email (15 or 30 minutes each). Do not read or reply to emails outside of those time windows. For the rest of the day, turn off email notifications on your phone, etc., so that incoming emails won’t interrupt your work. You can add a note to your email signature letting people know that they can reach you by phone if they need to get in touch on an urgent matter.

To read all 7 ways, click here

My comments: I regularly write about managing your emails in my monthly newsletter, including getting to Inbox Zero. This blog post is the best I have ever read, as it is specifically for practicing appraisers.

How to Manage Your Email

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Where VA loans are soaring. Are you doing VA appraisals?

VA Approves Desktops and Exterior-Only Appraisals

By Ann O'Rourke on August 5, 2022 / desktop appraisals, Fannie, hybrid appraisals, non-lender appraisals, real estate market, va / Leave a comment

Tags: appraisal business, Fannie, non-lender appraisals, real estate market, va

VA Approves Desktops and Exterior-Only Appraisals

Excerpts from the Summary: On August 1, 2022, the Veterans Affairs released Circular 26-22-13 announcing new procedures for alternative valuation methods, effective immediately.

“The use of a Desktop Appraisal may allow an appraiser from outside the market area, but with appropriate credentials for the jurisdiction of the property, to complete the assignment when no local VA fee panel appraiser is available.”

“Appraisal Assignment Waterfall. With consideration for the high demand for appraisal services and limited availability of appraisers in certain local market areas, VA is providing lenders, servicers, and appraisers with a procedural waterfall that clarifies acceptable valuation methods when certain conditions exist. Lenders and appraisers can also refer to Exhibit A for more information. VA continues to explore opportunities for expanding the use of Exterior-only Appraisals and Desktop Appraisals and will update this procedural waterfall, as appropriate.”

To read the full blog post, click here

The summary and Circular are in the blog post.

To read more about the May 2022 proposal to eliminate the fee panel, click here

I wrote about the VA in my July 8 email newsletter. To read it, click here

My comments: The big push to cut down on appraisal turn times because of the appraisal shortage is Very Old News since mortgage volume has plummeted. I always recommend VA as the best lender client for appraisers. I wrote about it in the past and interviewed VA employees, appraisers on the VA panel, and appraisers who did not want to do VA appraisals in my paid monthly newsletter.

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