Desktop appraisals okay for some Fannie Loans March 2022

Desktop appraisals okay for some Fannie Loans March 2022

Fannie announcement – About Desktop Appraisals

Beginning in March 2022, desktop appraisals will be an option for some loan transactions. This fact sheet provides high-level information on Fannie Mae’s requirements for desktop appraisals and answers some frequently asked questions. We’ll be adding information to the fact sheet, such as additional FAQs as needed.

Excerpts:

  • Use Form 1004 Desktop
  • Must include floor plan with interior walls.
  • The appraiser must have sufficient information to develop a credible report.

To read the fact sheet, click here

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Desktop Appraisal to Become the New Norm

by Isaac Peck, Editor, WorkingRe

Note: This article was written before the Fannie announcement above. 

Excerpts: A number of questions remain regarding how the GSEs will establish the eligibility criteria for what types of loans, transactions, and loan-to-value (LTV) ratios will qualify for these desktop valuations. For example, Thompson’s comments that such a move will provide relief on rural appraisals runs contrary to most conventional appraisal experience in the industry where appraisal waivers, hybrid appraisals, and other “alternative” valuation products have primarily been used in cookie-cutter, tract home neighborhoods where model-match comps are more readily available.

In fact, over the years many senior executives at the GSEs and at major lending institutions have acknowledged the need for traditional appraisals on rural properties—which are much more likely to have unique features and require more complex analysis.

There is also the question of whether the introduction of desktop appraisals will potentially lead to a broader range of alternative appraisal products into the mix. Given that some senior executives at Fannie Mae were predicting that hybrid appraisals would become mainstream by 2022, it is actually a little surprising that desktop appraisal assignments are the first alternative product to get a permanent place on the GSE’s valuation roster. Appraisers will just have to wait to see what the future holds!

To read more, click here

My comment: Interesting and worth reading about the background of Fannie’s change

Appraisal Completion Certifications – be careful

Appraisal Business Tips 

Humor for Appraisers

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To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, ANSI, Liability, appraisal business, Fannie, How to, mortgage origination stats, etc.

 

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Appraising New Construction: Guidance for Follow-Up Inspections

By: McKissock

Excerpts: Be completely honest.

Appraisers who mean well may classify a project as complete, even when work is still required. Don’t be lenient. If work is in progress or tasks are left undone, state that in your inspection documents. If you say work is complete and the lender releases funds, but the work is not done, you are liable if the builder doesn’t finish the project—and could face a law suit. Always report exactly what you see.

Remember that it’s not your job to tell the lender when to close a loan. It’s your job to report to the lender the progress on the home so that the lender can make an informed decision. Be very detailed in your reporting, include many pictures, describe the incomplete items and assign your estimated cost to complete them. Then let the lender decide what to do next.

The lender relies on you to confirm that the collateral is secure and that construction is complete. Don’t drop the ball when it comes to assessing both the level of completion and the quality of the construction. It’s your job to project the lender and borrower.

If you do new construction appraisals, read this.

To read more, click here

My comments: I quit doing new construction appraisals many years ago because of hassles over inspections and re-inspections and pressure to say it was completed. Also, getting correct sales price information from the subdivision office was sometimes difficult. Of course, the only new construction here is stacked condos or 3-4 story skinny townhomes!! Very little vacant land is available, and the land prices are high.

The January 2022 issue of the monthly Appraisal Today had an article: Construction Progress Reports by Claudia Gaglione, Esq. Liability advice and good examples of appraisers that got into trouble. See the ad below.

====================================================Email from Dave Towne, received at 11:24 PM (PST) last night

Subject: You’d better read this report from the ASC

My comments after the end.

Report title: Identifying Bias and Barriers, Promoting Equity: An Analysis of USPAP Standards and Appraiser Qualification Criteria

Because they were directed to do so, the Appraisal Subcommittee has produced an 80+ page report, which frankly and explicitly lays the blame for low market values of homes in ‘communities of color’ directly at the feet of independent appraisers involved with mortgage lending.

You will start seeing accusatory slanted media reports about this report. ABC news already has distributed it. A TV station in San Francisco has aired a story already.

Yes, the report casually mentions actual facts that GOVERNMENT policies and procedures promulgated segregated and extraordinarily unfair housing issues in the US ….. from the 1930’s into the early 1960’s. The GSE’s, FHA, VA wrote the documents appraisers followed. Banks and other lenders went along with those policies. It was part of the culture at the time. Was it wrong? Yes. Just like the slave trade many COUNTRIES encouraged, which ended, thankfully.

Unfortunately, appraisal associations had to be sued in the early 1970’s to finally eradicate discriminatory advice they continued to promote until then. That appears to be one justification for the piling on this report does.

The report basically says, “you appraisers shouldn’t have done what you were told to do,” “you caused the low values,” and now we’re coming after you …. independent appraisers and the agencies who write policies …. to fix what ‘the GOVERNMENT’ originally caused.

The report also implies that ‘you’ are responsible because so few ‘people of color’ are appraisers. (If parity to equalize racial composition is such a huge concern, why no outcry about National Football League teams which are dominated by ‘people of color’?)

Appraisers need to take a few minutes and peruse this delightful document. If you read nothing else, read pages 1-12 and the Conclusion below.

There are some other interesting passages buried in the bowels. One that caught my eye is a suggestion that using the ‘Sales Comparison Approach’ is “not fair” to ‘communities of color’…. unless the appraiser leaves the immediate neighborhood to seek out higher priced homes elsewhere to artificially increase the appraised value of the subject.

Normally I’d attach the document as a PDF. But this sucker is 40 MEGABYTES in size. So you will have to click this link to see it, and print it:

To read the Report Click Here

This is the conclusion in the report:

G. Conclusion

An appraiser has the unique power to determine the value of a home, which for most Americans, is their single most important financial asset and holds the key to wealth, stability, and opportunity for their family and generations to come.

In addition, home values affect the tax base, school funding, and community investments. Moreover, time and again, our nation’s economy and financial markets have been significantly impacted by home valuations, with communities of color often bearing the brunt of failings in the mortgage market and the home appraisal process.

Given the importance of homeownership to American families, particularly families of color, governmental and private organizations have called for reforms and a comprehensive examination of the structure and governance of the appraisal industry.

In response to these calls for reform, we have assembled the research and recommendations in this report. We urge federal and state governmental entities, The Appraisal Foundation, the GSEs, lenders, appraisers, researchers, and civil rights and consumer advocates to work together to address the concerns raised in the report, including:

• Questions About the Governance of the Appraisal Industry

• Gaps in Fair Housing Requirements and Training

• Barriers to Entry to the Appraisal Profession

• Compliance and Enforcement

We hope that this report will encourage conversations among key stakeholders in the appraisal and housing industries to seek workable, sustainable solutions that benefit the whole of the housing market, including borrowers of color.

This ‘train’ of accusations started down the track about four years ago …. because appraisers are easy targets. It’s been building steam ever since. The ride toward ‘reforms’ is not going to be very scenic or pleasant for appraisers for at least three more years. Appraisers will need to keep very close tabs on the waybill of items being hauled your way.

Even though this report is extraordinarily discouraging, I will say again. If you are a biased appraiser in any way, in how you conduct yourself or in how you analyze data and report values, then you need to excise yourself from appraisal work. On the other hand, if you are doing your work appropriately and professionally according to current policies and procedures, continue being careful and diligent. And hold your head high.

Dave Towne, MNAA, AVAA, AGA, dtowne@fidalgo.net

To be added to Dave’s list, send him an email.

My comments: I have been reading Dave’s emails for a long time. He somehow keeps track of the latest appraisals news and is often the first appraiser to write about them!

I have not had time to read the report, but it includes excerpts from appraisal textbooks as recently as 1973. Of course, few fee appraisers did lender appraisals before licensing. Almost all were staff appraisers at lenders.

Appraisers’ Dirty Little Secret” (my phrase).

There was never any mention of this in any appraisal classes I have taken.

I have been worried about appraisers and redlining for a while but did not have documentation. If I did residential lender appraisals back then I would have switched to commercial appraisals.

When I started appraising in the late 70s, I think it had mostly disappeared from official documents. I know a local female appraiser who started with FHA in the mid-70s, when they increased appraiser diversity: women, blacks, etc. I started at the same time at an assessor’s office as the first female appraiser. Of course, assessors would not want to have lower values. Affirmative action was big back then. Before that time, there were few female appraisers.

I had planned to write about this topic in my March newsletter. This new report has lots of information and links I can use.

The answer: Change how we do appraisals for lenders? Change how appraisals comps are selected? What happens when prices fall?

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Construction Progress Reports

By Claudia Gaglione, Esq.

Excerpts:

Use disclaimers (Note: more disclaimers in the full article)

Many lenders have pre-printed forms that they ask the appraisers to

complete. The forms have a list of specific items and the appraiser must

estimate a percentage of completion for each item. If at all possible,

consider adding some disclaimer language to the prepared form such as:

“This report is prepared for the benefit of the lender to assist in making

loan proceed disbursements. It is not prepared for the benefit of the

borrower.”

NEVER CERTIFY THAT WORK HAS BEEN COMPLETED IF THAT IS NOT THE CASE

It doesn’t matter whether the building materials are on-site and the

work is in progress or not. Promises that the work will be completed must be ignored. You might not want to travel back to the site to perform a second inspection, but it has to be done. Appraisers have been duped too many times only to later find out that promised work was not performed.

Suits against appraisers involving the performance of construction

progress inspections are a troublesome area of appraiser litigation. It may not always be possible to avoid this exposure since assignments are often accepted to please a client or to preserve an existing business relationship. However, by following some simple loss prevention suggestions, you may be able to avoid being cast as the “villain” when the buyer’s dream home becomes a “nightmare”.

To read the full article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article gave you one good tip about handling these issues and staying out of trouble, it is worth the subscription price!!

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Skepticism Can Lead to Poor Appraiser Decisions

By Jamie Owen

Excerpt: We must be careful to not let skepticism negatively affect our work. Have you ever heard an appraiser make a statement that is similar to one of the following?

“I don’t see what the big deal is with supporting my adjustments. No one can really prove that their adjustment is exactly correct, so what does it matter?”

“Show me any report, and I will find mistakes in it, so I’m not going to put that much time into my appraisals. They can’t be perfect anyway.”

“What’s the big deal about measuring the home we are appraising? After all, the public records and MLS are probably not accurately reporting the size of the homes I am using as comparable properties, so what does it matter?”

Would you agree that these thoughts might be fueled by skepticism? What is skepticism anyway? Skepticism is having an attitude of doubt…

Some have argued that ANSI measurements don’t always reflect the market. That is true! We may measure to ANSI Standards, but we appraise based upon the market.

If there is a conflict between the two, we must still find a way to credibly appraise a home, accurately reflect the market, even when ANSI Standards may conflict with the view of buyers. And it can be done! It does require more commentary to explain what we did and why we did it. However, as long as we properly explain the situation and what we did, we will not be misleading the intended user of the report. At least in my opinion.

To read more, click here

My comments: Jamie Owen has a unique, very interesting, interpretation of how appraisers think! Plus a fun video and lots of animated gifs! I will write about the ANSI issues above, plus many other issues, in the March issue of the monthly Appraisal Today.

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Triple-Dome Design in North Carolina

Excerpts: Located on a private, 13.1-acre wooded lot, the multilevel, three-bedroom home features a number of modern amenities. Plenty of features are packed into the home’s unique design. A spiral staircase leads up to a loft from the main bedroom, and skylights let in an abundance of natural light. Then there are Bluetooth-paired lights and slate stone flooring.

All three domes are connected, and one serves as a two-car garage.

Lawrence (the agent) explains that the main dome serves as living space, with a sunken section and stairs that go up to a loft. Behind the loft is the kitchen, which lines the back of the second dome. “You go down another hallway that is lined with bookcases, and there is a third dome,” she says.

It has three bedrooms, the primary bedroom and two others.

To read more and see lots of photos, click here

My comment: Conforms to ANSI. One story at grade level! Don’t ask me to measure it!!

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New ANSI Z765-2021 Resources Web Page at www.appraisaltoday.com/ANSI

Every week I have been writing about new classes, Webinars, and videos. I am putting them on this web page now. Plus, removing old information, such as a class that has changed the dates it is offered.

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Fannie Mae Answers your Questions About ANSI

Lyle Radke Senior Director of Collateral Policy at Fannie Mae at FREE youtube webinar. Feb. 28 at 10 am CT It will be recorded so you can watch it later. 

To watch, go to www.youtube.com and search for appraiser elearning. Scroll down the page.

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Do Not Take a Class, Using the 2013 Version of ANSI !! Look for ANSI Z765-2021

Education providers who have been offering the 2013 version are updating their classes to the 2021 version. When I was looking for classes, it was confusing. I kept getting info on the 2013 version of ANSI. The title of one class was not clear, but the class summary said it was about the 2021 version.

Also be careful with written material, Youtube videos, recorded webinars, etc.

The February 1 issue of the monthly Appraisal Today will have lots of info on ANSI Z765-2021

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HOW TO USE THE NUMBERS BELOW. Appraisals are ordered after the loan application. These numbers tell you the future for the next few weeks. For more information on how they are compiled, go to www.mbaa.org Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 7AM to noon, Pacific time.

Mortgage applications increased 2.3 percent from one week earlier

WASHINGTON, D.C. (January 19, 2022) – Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 14, 2022.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 49 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 8 percent from one week earlier. The unadjusted Purchase Index increased 14 percent compared with the previous week and was 13 percent lower than the same week one year ago.

“Mortgage rates hit their highest levels since March 2020, leading to the slowest pace of refinance activity in over two years. The 30-year fixed rate reached 3.64 percent and has increased more than 30 basis points over the past two weeks. FHA and VA refinance declines drove most of the refinance slowdown,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Despite the increase in rates, purchase applications jumped almost 8 percent, with conventional purchase applications accounting for much of the stronger activity. The average loan size for a purchase application set a record at $418,500. The continued rise in purchase loan application sizes is driven by high home-price appreciation and the lack of housing inventory on the market – especially for entry-level homes. The slower growth in government purchase activity is also contributing to the larger loan balances and suggests that prospective first-time buyers are struggling to find homes to buy in their price range.” 

The refinance share of mortgage activity decreased to 60.3 percent of total applications from 64.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.8 percent of total applications.

The FHA share of total applications decreased to 9.3 percent from 9.9 percent the week prior. The VA share of total applications decreased to 10.0 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.64 percent from 3.52 percent, with points remaining unchanged at 0.45 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 3.54 percent from 3.42 percent, with points increasing to 0.47 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.64 percent from 3.50 percent, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.95 percent from 2.73 percent, with points increasing to 0.43 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 3.04 percent from 3.03 percent, with points increasing to 0.24 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. Base period and value for all indexes is March 16, 1990=100.

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com 

www.appraisaltoday.com

Fannie requiring ANSI for appraisals starting 4/1/22

ANSI Update

I have been getting questions from appraisers but did not have time to research this Very Hot Topic. Below is a link to purchase the new 2021 Standards.
There are lots of comments online. The first link below by Appraisersblogs allows comments which you can read and make your own comments. The second link is a short blog post by McKissock.
Purchasing the Standards document for $25 is a good idea—link at the end of this section. I purchased a copy, so I knew what it said. Hopefully, most appraisers who do GSE appraisals will get a copy. Disclaimers coming soon regarding ANSI, assessor’s offices, etc. Disclosure of what you use is an excellent idea.
For many years, I did relocation appraisals, where 2-3 appraisers appraised the same house before the sale. Sq.ft. by the appraisers was very seldom the same. We did future values, typically 90-120 days in the future. My most favorite appraisals. Every appraisal was a test of how close I came to the sales price.
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ANSI Measuring Standard Required on April 1, 2022 – Comments allowed
By Appraisersblogs
Excerpts: includes Fannie’s 1-page “Standardized Property Measuring Guidelines” with good information.
Does following ANSI even reflect the market? Perhaps, adopting the ANSI standard will make the description of the subject property more precise. However, how is this going to help if Realtors, assessors, builders, and architects are not measuring by the same standard? Will this create a false sense of accuracy? Will there be a lot more discrepancies once the ANSI measuring standard is used by appraisers for the subject property while different measuring standards measure the comparable sales. And how do we apply the ANSI measuring standard on exterior-only appraisals, desktops, hybrids, and 2055s?
This blog post is a good place to read comments and leave your own. Over 35 comments. Click here to read.
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Fannie Mae to Adopt ANSI Measurement Standard in 2022
Short blog post with good info
By: Dan Bradley (McKissock)
Excerpt: ANSI Z765 is a copyrighted document. A downloadable PDF is available for purchase from Home Innovation Research Labs for $25.00. The website can be accessed here: https://www.homeinnovation.com/z765.
To read more, click here

Read more!!

What is Included in Appraisal GLA (sq.ft.)?

Stairway to Confusion – What is Included in GLA?

by C. Brett Bowen
Excerpt: There has been considerable discussion over the years about gross living area (GLA) measurement standards. The ANSI Z765 standard gets the lion’s share of the attention, and is the most widely referenced standard in the industry by far. It can also be the most difficult to interpret, particularly when it comes to stairs. Here’s why.
It is primarily important to recognize two very important facts:
 1) a standard is nothing more than the definition of a unit of comparison
 2) it is the appraiser’s responsibility to be consistent with that definition.
First, what do I mean when I say that a standard is nothing more than the definition of the unit of comparison? The unit of comparison for something is critical to the understanding of that thing.
Second, as an appraiser, consistency with the definition is actually more important than which definition is chosen.
To read more, click here
My comment: Worth reading. I have seldom used ANSI. The standards were developed for new home construction. I have appraised many homes on hillsides, with often only the garage at street level (or just a driveway). Many historic homes, on level streets, have different types of “basements” converted to living area: above grade, partly below grade, etc. If I worked in suburbia, ANSI would work better. I use what the local market tells me.

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, mortgage origination stats, sfr zoning, german appraisers, GLA, etc.

 

Read more!!

What AMCs Say to Appraisers and How to Respond

What AMCs say to appraisers and How to Respond

By Steven W. Vehmeier

Excerpts: A student contacted me with the following dilemma concerning an Appraisal Management Company (AMC) request: “I told the Management Company that I cannot mark the Zoning Compliance as ‘Legal’ if the report is marked “as-is,” because this would not be true for the current “as-is” condition of the subject on the effective date of the appraisal. The AMC insists that as long as I disclose in the addendum that the zoning is currently ‘illegal,’ then I can mark on the first page as ‘Legal.’”

Taking the matter to the source can be accomplished by: 1) personal research of the appropriate documents, which is sometimes faster, or 2) emailing the controlling entity for their official answer. Notice I didn’t say to phone them. I want the answer in writing to pass on to the client/AMC.

To read more, click here

My comment: Some Most Excellent and practical tips!! My bottom-line advice: Fire the AMC! We all know there is always another AMC that is desperate for appraisers today. Now is a good time to shop for one that is easy to work for. You could check in appraisal online groups to see what they say. If they are not competitors, hopefully, you can get some good ideas. Be sure to post your location.

What to Do When Your Appraisal Is Under Review

Appraisal Business Tips 

Humor for Appraisers

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

To read more of this long blog post with many topics, click Read More Below!!

NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, FHA, Fannie, E&O, liability, time adjustments, price per sq.ft. mortgage origination stats, etc.

Read more!!

What is Included in Appraisal Square Footage?

Question: Can it count in the square footage?

Roof detail house

By Ryan Lundquist

Excerpts: Can you include it in the square footage? I get questions like this almost every week. Is it okay to count an accessory dwelling in the living area? What about a pool house? How about a man cave or she shed? Let’s talk about this.

The straight dope: It’s tempting to lump something else in the backyard into the square footage, but that’s not appropriate per ANSI measuring standards. Suppose you have to walk outside of the house into something else that is not directly accessible to the house. In that case, we’re really dealing with something that isn’t considered to be a part of the main house…

To read more, click here

My comments: Written for homeowners, but has some good remarks on square footage, such as “lumped square footage” in MLS. What is Included in Appraisal Square Footage can be tricky and controversial. It can also vary by geographic area.

How accurate is the reported square footage from the tax records in your primary service area?(Opens in a new browser tab)

Marketing and Management Tips for Appraisers

Click Read More below for the rest of this long blog post!!

Read more!!

Working with difficult appraisal clients

Advice for Working with Difficult Appraisal Clients

Excerpt: Even if the bulk of your appraisals are fairly cut and dried, and require minimal interaction with a human client, any appraiser will occasionally have to work with a difficult client. The assignment might require you to work with a specialty property that is hard to appraise, or with a client who is personally disagreeable, or exceptionally exacting, or who has an agenda that you don’t understand or can’t go along with. Here are some tips for working with difficult clients. Three of the topics:

– Working with AMCs and banks: Time management

– Working with non-lenders: Expectations management

– Deal with complaints immediately

To read the tips, click here

My comment: Some great, practical tips!! Maybe I will try some of them instead of Firing clients, my most popular option ;>

My motto: Appraising would be great except for the darn clients!!

Which Appraisal Clients are used the most?(Opens in a new browser tab)

What to Do When Your Appraisal Is Under Review(Opens in a new browser tab)

Read more!!

Favorite parts of the appraisal process

What’s your favorite part of the appraisal process?

Excerpt:

Number 1. Data collection and property description (38%)

“The best part is the property review. I enjoy seeing what people have done to their properties and talking to them about their homes.”

“I enjoy viewing/observing the subject home.”

“Detective work”

“Each dwelling is different, and not every appraiser takes the time to clarify the differences in the dwellings. The quality, the construction, the egresses, and especially the correct way to calculate GLA or measure a dwelling.”

Number 2. Data analysis (27%)…

To read more about favorites, click here

My comment: I love working in the field, so my choice is Number 1. But, my very best choice is getting paid ;>

Which Appraisal Clients are used the most?(Opens in a new browser tab)

What is the farthest you have traveled to complete an appraisal and still be considered geographically competent?(Opens in a new browser tab)

Appraisal Process Challenges(Opens in a new browser tab)

Read more!!

Tax records and Square Footage in Appraisals

13516718 – white wood texture with natural patterns

Tax Records is not the definitive source for square footage!

By Ryan Lundquist

Excerpt:

Why is the appraiser saying it’s only 1,400 sq ft? Tax Records shows the home is 600 sq ft larger. This issue comes up ALL the time, so let’s talk about it. Tax records and Square Footage in Appraisals is a hot topic.

The truth: The Assessor’s records are generally reliable, but I’m just saying sometimes they’re not. Why is this? At times it’s as simple as the original builder not turning in accurate information when a house was built. Or maybe an owner took out permits but official records were never updated. Of course we’ve all seen instances where the tax roll shows two units on one lot, but there’s really just one house nowadays. Let’s not forget sometimes owners do an addition without permits, so the Assessor might actually be correct even though the house is technically larger or has even sold on MLS as a larger home. For reference, here are ten reasons why an appraiser’s sketch might be different.

For lots of comments and more info, click here

My comment: This one of the main reasons that AVMs will never be very successful for all homes. Over and over again, statistical analysis shows GLA is the most important physical feature overall.

Also, how bedrooms are determined varies a lot, depending on the local market and can vary over time. The assessor number of bedrooms may not match the appraiser’s. For example, tandem rooms. Finished basements can vary also.

I started appraising at a CA assessor’s office in 1976. In CA, State Board of Equalization regulated county assessors offices, so the procedures and terminology are very similar all over the state. However, GLA from the assessor may have different requirements than other sources, such as ANSI.

Proposition 13 passed in 1979, which only allowed an annual 2% increase in assessment per year, unless there was a sale or improvements (determined by permits). Over time, the information has become more and more out of date.

Data is not available for smaller counties if the assessor says it is confidential. Until the 90s, my county did not release any data, so I had to “guesstimate” on square footage for sales and listings. We finally got it when an MAI was elected assessor.

In the early 90s, I researched assessors records around the country. In some small rural counties the records were kept at the assessor’s home. They were not digitized and available for purchase by data companies.

Appraisers need to know which areas are not accurate. Sometimes GLA is “political”. Within a city, accuracy can vary. In my city the least accurate records are in the “Gold Coast” with many of the city’s larger, historic homes. In other nearby cities, some properties have low GLAs to keep the property taxes lower.

Appraisal Humor

Appraisal business tips

What is Included in Appraisal Square Footage?(Opens in a new browser tab)

How accurate is the reported square footage from the tax records in your primary service area?(Opens in a new browser tab)

10 reasons why public records and the appraiser’s square footage can differ(Opens in a new browser tab)

To read about lots more appraisal topics, continue reading below!

 

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Angle Measurements for Appraisers

Accurate Measurements with Odd Angles

Excerpt: Imagine a 2,100 square foot, one and a half story house with an attached garage, porch, and deck. You probably imagined the typical bungalow. Now, imagine that house having 48 corners and only 4 of them are 90 degrees. I recently had an experience with just that house. Some architect, thinking they were Frank Lloyd Wright reincarnated, decided to build this house on a high bank cliff overlooking the Puget Sound. Don’t get me wrong, it was a pretty cool design, but I knew right away when I received the order for that appraisal that I was going to need some help.

To read more, click here Lots of reviews of the product, plus other similar products.

My comment: $19.95. An inexpensive product we all need!! They have been around for awhile, but most appraisers did not know about them. I appraise a lot of Victorians. Very useful!!

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

To read more of this long blog post, click Read More Below!!

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What’s included in appraisal GLA?

Should The Agent Include These Areas In Square Footage?

Excerpt: The most thrown around metric in real estate has to do with square footage and price per square foot. People ask me all of the time what homes in this or that neighborhood are selling for per square foot.

Why do they do this? Because they want to take the price per square foot and then multiply it by the square footage of their home to find out what it is worth. Sounds reasonable right? Wrong….

(An example I see a lot): A heated and cooled finished room that is attached to the main house but you get to by going outside of the main house should not be included in the main GLA.

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My comment: written for real estate agents, but many appraisers, including myself, regularly get asked: “what is in the living area” by agents. I do. This article focuses on ANSI and may help you explain it to them. There are links to his other blog posts on this, and related, topics.

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

What is Included in Appraisal Square Footage?

To read more of this long blog post, click Read More Below!!

Read more!!