waivers

Market Trends and Market Conditions Adjustments Appraisals

By Ann O'Rourke on December 6, 2024 / adjustments, AMCs, appraisal how to, state appraiser regulators, waivers / Leave a comment

Tags: adjustments, AMC, Fannie, waivers

Newz: GSE New Market Conditions Policy, State Board Complaints, Waivers

December 6, 2024

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

LIA ad – Navigating Value Revisions in Appraisals
Market Trends and Market Conditions Adjustments.
A Ferrari Inspired Masterpiece With 20K square Feet of Luxury Resort Amenities Listed at 55 Million in Delray Beach FL
November 2024 Real Estate Market Update By Kevin Hecht
5 Tips to Handle Appraisal Board Complaints
Correcting the Record: Accurate Group’s Commitment to Compliance and Industry Excellence
FHFA’s Massive Expansion of Appraisal Waivers: What It Really Means
Mortgage applications increased 2.8 percent from one week earlier

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Appraisal Business Tips
Humor for Appraisers
USPAP Myths for Appraisers

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Market Trends and Market Conditions Adjustments

Working through the new Market Conditions policy and advisory from Fannie Mae

By Ken Dicks

Excerpts: Did Fannie Mae just throw a wrench into how residential appraisal reports for mortgage transactions are completed with their recent announcement on Market Conditions?

As an appraiser, it is highly likely at some point you will see the following or a similar request soon after your appraisal is submitted to your client, or even months after your appraisal is accepted by your client: Please provide support for your market conditions adjustment conclusions.

Appraisal Quality Control and Appraisal Quality Assurance create a revision request minefield filled with Lender and Investor tailored appraisal reporting requirements and preferences. Review of the appraisal reports is required by the lender or whoever the lender chooses to delegate this requirement to (i.e. Appraisal Desk, AMC, etc.).

As a practicing appraiser, the announcement and accompanying exhibit prompted a series of questions in my mind.

Does Fannie Mae want to see this specific graph in all appraisals?
What does USPAP say?
What level of data and analysis does an appraiser need to present when providing support for market conditions adjustments?

The following is where I have arrived at developing answers:…

To read more, Click Here

My comments: Worth reading the full article, plus the appraiser comments.

I am so glad I have not done any GSE appraisals since 2008! I don’t care what the GSEs say. I comply with USPAP. Of course, I always make market adjustments on my residential appraisals or explain why no adjustments was needed. It is the only dollar adjustment I make on non-lender forms unless the subject has an unusual feature requiring research and analysis.

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Appraising Kitchens

By Ann O'Rourke on November 1, 2024 / AMCs, appraisal, appraisal modernization, liability, UAD, waivers / Leave a comment

Tags: appraisal, appraisal how to, appraisal waivers, liability, UAD

Newz: FHFA Waiver Expansion, AMC Appraisal Fees, Appraising Kitchens

November 1, 2024

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

Construction Progress Inspection Reports: Claims Involving ADUs and Remodels
Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations
Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.
FHFA’s Appraisal Waivers Expansion
The Great Debate on Appraisal Fees
Updated UAD redesign timeline with specific implementation dates
Mortgage applications decreased 0.1 percent from one week earlier

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Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations

Excerpts: When it comes to real estate appraising, kitchens often play a pivotal role in determining a home’s value. A well-appointed kitchen can significantly enhance a property’s appeal and marketability. As an appraiser, understanding the nuances of kitchens is essential to providing credible and insightful valuations. Let’s dive into appraising kitchens and how the room impacts market value.

Functional Obsolescence and Price Point

If a back corner kitchen or a galley kitchen does not align with current market preferences for homes of a similar age, it might be considered outdated and impact marketability. However, this does not necessarily rise to the level of functional obsolescence that must be remedied. An outdated but functional kitchen might not be a major concern in lower price ranges.

Conversely, in high-end homes, buyers expect the latest designs, features and finishes; and therefore, an outdated kitchen may be considered as functional obsolescence.

Appeal & Functionality Count when Appraising Kitchens

In conclusion, appraising kitchens requires a thoughtful, balanced analysis of market trends, quality, and functionality. While it’s important to understand current design preferences, the value of a kitchen is ultimately determined by how well it meets the expectations of buyers in a particular market.

A homeowner may have invested heavily in a kitchen renovation, but it is the appraiser’s responsibility to carefully consider factors such as conformity, local market preferences, and house style and price range when valuing the subject property. Remember, ultimately a kitchen’s value lies in its ability to enhance the overall appeal and functionality of the home, not its initial cost or the cost of renovation.

To read more, Click Here

My comments: This is the best analysis I have read on kitchens. Worth reading. Kitchens are a very important factor when buying a home. What is popular changes over time. Of course, appraisers see all types of kitchens.

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Appraisal Business Tips
Humor for Appraisers
The UAD and Appraisers – Past, Present, and Future

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Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.

Excerpts: sprawling Lake Tahoe estate known as Shakespeare Ranch hit the market on Monday for $188 million.

Not only is that a price tag that makes it the most expensive property on the market in Nevada, it’s also one of the priciest in the entire U.S., bested only by a small handful of homes in Los Angeles and South Florida.

Named after the nearby Shakespeare Rock, a nearby outcropping that is said to resemble the playwright, the property spans 130 acres on the eastern shores of Lake Tahoe and includes a colossal selection of amenities, from multiple properties and a historic barn to its own rodeo ground and private pier.

The ranch dates to the late 1800s, and its multiple properties include a 4,980-square-foot lakefront home with a waterside cabana, an under-construction 7,713-square-foot architect-designed residence and a number of cabins.

he historic barn on the property was built in 1873 and is currently outfitted with a commercial kitchen, a game center and a wine room.

The property also has a pool house with an indoor pool and spa, a gym, lawns, gardens, an office suite, a staging kitchen for catering, two boat lifts, 14 buoys and a boat house.

To read more, Click Here

For video, photos, and more information and to see the listing, Click Here

My comments: I live within driving distance to Lake Tahoe and have been there many times. A beach with a dock and a boat house is a premium feature.

Why Appraisal Workfiles Are Important

By Ann O'Rourke on April 5, 2024 / appraisal business, bias, Economic analysis, USPAP, waivers / Leave a comment

Tags: appraisal business, bias, Economic analysis

Why an Organized Workfile is Your Best Defense

By Craig Capilla

Excerpts: We all know that the Uniform Standards of Professional Appraisal Practice (USPAP) set the baseline for what must be included in a workfile. We’ve all also heard ad nauseum that USPAP is a minimum standard. Still, all too many appraisers seek only to meet that minimum standard and little more. That’s where the trouble begins. Particularly when speaking about the workfile, for my money, the most dangerous words in USPAP are “or references to the location(s) of such other data, information, and documentation.” There it is, right there in plain English: USPAP permits appraisers to maintain a reference to the data, information, and documentation considered as a part of the assignment, and the appraiser is NOT obligated to keep a contemporaneous copy of those items.

That minimum standard is all well and fine until one day many months later, when an enforcement agency demands that the appraiser produce that information, usually on a tight timeline, and the information is no longer available or the source now shows different information than what was available at the time of the assignment.

Believe me when I tell you that it is not a good feeling when a regulator asks you to explain why you didn’t consider a particular piece of information, and you cannot summon an answer. Similarly, there are few things more liberating than producing a document that shows the information you are being asked about was not available to you at the time you performed the assignment. I’ve seen this happen. Systems fail. MLS aggregators have software glitches. Public record updates at its own pace. And sometimes, that one crucial piece of information isn’t there anymore when you need it.

To read more, Click Here

My comments: The article also discusses bias. Capilla is an attorney who defends appraisers. Newer appraisers are lucky. Scanning work files is easy. I started appraising before the Internet and easy scanning and filing. My office and home garage are filled up with paper files! I have PDF copies of all the appraisals I have done as a fee appraiser on my main computer, except those done before PDFs were available.

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Why Comp Photos in Appraisals?

Appraisals: Using Comps Across a Freeway?

By Ann O'Rourke on December 1, 2023 / adjustments, appraisal business, non-lender appraisals, waivers / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, non-lender appraisals, waivers

Pulling comps from the other side of the freeway

By Ryan Lundquist

Excerpts: It can be a REALLY bad idea to pull comps from the other side of the freeway, but not always. Today I have some thoughts about location, comp selection, and lenders freaking out when schools are mentioned in appraisal reports.

I don’t normally pull comps across a highway

In so many cases it’s an awful idea to cross a major road or highway to pull comps because a highway sometimes separates markets that are far different in age, square footage, lot size, architecture, price point, school district, etc….

But, crossing the highway does work here

With that said, I want to show you an example of a local neighborhood where I have zero hesitation about pulling comps from both sides of the highway. The areas north and south of Highway 50 below represent the College-Glen area…

Why it’s no biggie to pull comps like this

A) Prices are similar: Prices are similar on each side of the highway. I’ve found this when pulling comps through the years, and I’ve also shown this when making graphs. I will say the north side tends to have a slightly larger square footage than the south side (same with west vs east), which is something to consider when we compare stats. But it’s still not a major difference.

B) Buyer Behavior …

C) School System …

To read lots more, plus maps and many appraiser comments, Click Here

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Fannie Wants Desktop Appraisals

Fannie Mae: No Appraisals Required? 3-10-23

By Ann O'Rourke on March 31, 2023 / AMCs, Fannie, non-lender appraisals, waivers / Leave a comment

Tags: AMC, appraisal waivers, Fannie, non-lender appraisals

Fannie Mae: Appraisals are no longer the default option: Value Acceptance replaces Appraisal Waiver

Fannie Mae updated its Selling Guide on March 1 to include more options for property valuations, saying that they are “moving away from implying that an appraisal is a default requirement.” Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals.

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Fannie Mae – No Appraisals Required – The End of Appraisers?

Hamp Thomas 12 minute video – my favorite commentary on this issue!

Fannie Mae took a direct shot at appraisers today with the announcement of changes in their Selling Guide. Two options for the future, both of which do great harm to the appraisal industry.

First, “third party” inspections. Appraisal trainees aren’t good enough, so now we will have unlicensed inspectors going through the homes of unsuspecting homeowners. And, with this inspection a traditional appraisal is no longer a requirement for the mortgage loan.

Secondly, the 3rd party inspection is sent to a licensed appraiser. FNMA wants an appraiser’s signature so the appraiser can be held responsible if there’s any problem in the future. Both options say they are good for consumers and both options are filled with fabrications and misinformation. At the end of it all, it’s about control and profits. Why trainees can’t provide the data is simply because big banking and AMC’s don’t make profit from the inspection part of the process.

If appraisers don’t stand up and say no, right now, the running joke of the appraisal industry could be gone in five years; well, it just very well may come true. Ok appraisers, it’s time to speak out and stand together.

The only reason for these changes are about a piece of the 11 TRILLION dollar mortgage market. And that’s the way it is – March 1, 2023.

To watch the video, click here

My comments: Worth watching the video. Call to Action. Hamp is an excellent speaker and teacher.

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Fannie Statement: “Value acceptance + property data has arrived”

“This new option reduces cycle times and may reduce borrower costs, promotes safety and soundness by obtaining a current observation of the subject property, and provides operational simplicity and certainty at time of loan application.“

To read what Fannie says, click here

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Link to Fannie SEL-2023-02: Selling Guide Updates PDF

To read more, click here

My comments: Lenders Are Happeeee! Those darn appraisers and appraisals have always taken too much time. Fannie sells their loans to investors. The more loans, the more money Fannie makes. I did not include links to what the happy lenders say. You already know.Clear the Tracks!

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Crazy Appraiser Stories!!

Does A “Crazy” Neighbor Lower Value?

By Ann O'Rourke on April 29, 2022 / adjustments, ANSI, Clubhouse, desktop appraisals, liability, real estate market, waivers / Leave a comment

Tags: adjustments, CLUBHOUSE, desktop appraisals, real estate market, waivers

Does A “Crazy” Neighbor Lower Value?

By Jamie Owen

Excerpts: It’s tax appeal season, and I’ve had several homeowners say that they feel their neighbors are negatively impacting the value of their homes for different reasons. Is that the case? Can that be the case?

The homeowners of one property stated that their neighbors are a nuisance. My clients said that one of their neighbors has people coming and going until late in the evening, most evenings. They also complained about there being noisy. Additionally, they claimed that the neighbor directly behind them is not a very nice person and is always causing neighborhood trouble.

Meanwhile, in a different neighborhood, a different homeowner claimed that their home was suffering a loss of value due to their neighbor’s home not being kept up and needing repairs and updates on the exterior. The neighbor’s property is an eye-sore.

The long-winded point I am trying to make is that the appraiser will need to find some evidence to support the claims that a neighboring property is really creating a loss in market value to its neighboring properties.

To read more, and see some fun animated gifs and videos, click here

My comments: As always, Jamie often writes about appraisal topics from a different “angle”! I have a crazy next-door neighbor also, who waits for me to come home to “attack” me with some perceived problem… since 1986 when I purchased the property.

Crazy Appraiser Stories

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Appraisal Obsolete? Now or in the Future?

AMC Mergers and Acquisition for Appraisers

By Ann O'Rourke on February 4, 2022 / AMCs, ANSI, appraisal business, appraisal management company, waivers / Leave a comment

Tags: AMC, ANSI, appraisal business, waivers

AMC Mergers and Acquisition – Someone has a positive view of residential lender appraising!

Nationwide Property & Appraisal Services purchased by investment firm Arcapita Group Holdings

Excerpts: The deal gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.

“We were attracted by Nationwide’s highly cash generative business, experienced management team, and strong base of clients across the country,” Arcapita CEO Atif Abdulmalik said in a statement. “Close to 50% of Nationwide’s customers have maintained their relationship with the company for over six years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%.”

The AMC has acquired five other companies since Corridor bought a stake in Nationwide in 2016. In June, Nationwide acquired Portland, Oregon-based First Choice Appraisal Management, expanding its reach into the Pacific Northwest.

Other large financial firms are also putting money into the appraisal management space, which is highly fractured.

In October, private holding group StoicLane acquired control of the appraisal management company Lender’s Valuation Services (LVS).

To read more, click here

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Class Valuation purchases Metro-West

Excerpt: In a press statement, Class Valuation said Metro-West, founded in 1987, is the largest independent residential appraisal firm in the country, with staff appraisers in over 80 U.S. metros.

Class Valuation, which itself is owned by private equity firm Gridiron Capital, said the acquisition of Metro-West would fit into its larger strategy of fusing tech tools such as automation and 3D measurements to help clear the well-documented capacity issues in appraisal.

“One area of focus for us has been the growth of a staff appraiser network and building out a nation-wide trainee program,” John Fraas, CEO of Class Valuation, said in a statement.

This is the fifth acquisition Class Valuation has made in the last 12 months, and the seventh in recent years. In September, Class Valuation acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum.

There’s been a surge in private equity investment in the U.S. appraisal space over the last two years.

To read more, click here

My comments: The investors see money to be made in appraisals. What will they think when it inevitably crashes again, like it always does. I wish I had an AMC I could sell to investors ;>

If you work for any of these AMCs, keep close track of your billings, so they don’t get lost in any accounting mergers. No one knows, of course, if their appraisal management will change.

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What should appraisers look for in a sales contract?

By Ann O'Rourke on August 20, 2021 / AMCs, appraisal business, appraisal how to, lender appraisals, real estate market, waivers / Leave a comment

Tags: AMC, appraisal business, appraisal waivers, real estate market

What should appraisers look for in a sales contract?

By Steven W. Vehmeier

Excerpt: When should we analyze the contract?

Looking at the sales contract early on allows the appraiser to identify any “subject to” items or other conditions that could influence the value conclusion.

However, reviewing the contract early might also put the sales price in the back of the appraiser’s mind. And although it shouldn’t, it may unintentionally influence the appraiser’s comparable selection and eventually impact a direction in value.

Maybe looking at the sales contract only after developing the appraiser’s opinion of value would help avoid the above concern?

To read more, click here

My comment: Some interesting, and maybe controversial, ideas. Short and worth reading.

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Appraisers and The Psycho Kitty

By Ann O'Rourke on May 7, 2021 / appraisal how to, appraisal waivers, humor, real estate market, state appraiser regulators, statistics, unusual home, waivers / Leave a comment

Tags: appraisal how to, appraisal waivers, Fannie, humor, real estate market, state appraiser regulators, unusal homes

Favorite Crazy Appraisal Stories – The Psycho Kitty

Excerpt: Psycho Kitty

I had an appointment at a home in the country out in the woods. The access instructions said the cat MIGHT be caged. Got to the home and the cat was at the front door and hissed at me as I went in. I tried to make friends with the cat, but it didn’t work, so I ignored the cat and started my inspection.

As I came out of the first-floor master, he was waiting. He stood on his hind legs, teeth showing, hissing, and came at me. Once again, I used my clipboard and ran to the laundry room where I was able to shut the door. I was safe…

To read more strange and/or funny appraisal stories, click here

My comment: We all have appraisal stories, of course!! In my 45 years of appraising I have never been attacked by a cat. My creepiest cat encounter was appraising the home of a cat foster parent for a local animal shelter. Large outside cat enclosure full of cats, multiple cats on top of dressers and other places, looking at me (looked like they were hungry). I wish I could forget about all the cat eyes looking at me :<

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