How much is a neighborhood name worth?
Excerpt: Despite some anecdotal examples, there’s little statistical evidence supporting the notion that a neighborhood’s brand or name contributes to a higher sales volume or a premium on price, according to Jonathan Miller, chief executive of the appraisal firm Miller Samuel.
“You’ll see buildings trying to hook into adjacent, better-known neighborhoods as a marketing ploy, but we don’t see that translate into a premium or more sales for doing that,” Mr. Miller said.
To read more, click here
My comment: Some interesting stories. I’m not sure if “renaming” works, but I do know that in some older established neighborhoods in the Bay Area, including my city, the name does make a difference in value.
Zillow – the past and the future
Zillow’s new photo algorithm
Zillow’s New algorithm uses photos of your home to check quality and curb appeal plus a look back at when Zillow started, and info on their ibuyer service
Excerpt: “We’ve taught the Zestimate to discern quality by training convolutional neural networks with millions of photos of homes on Zillow, and asking them to learn the visual cues that signal a home feature’s quality,” Stan Humphries, Zillow’s chief analytics officer & chief economist, said in a Medium post announcing the new algorithm. “For instance, if a kitchen has granite countertops, the Zestimate now knows — based on the granite countertop’s pixels in the home photo — that the home is likely going to sell for a little more.”
To read more, click here
My comment: I am trying not to think about this…… Maybe North Dakota can try using Zillow on their rural properties….
Zillow – tales from when it started plus ibuyer
Excerpt: Every night for five months before the launch of Zillow’s website in February 2006, employees gathered their Dell desktops on Ping-Pong tables, connected them to harness their combined processing power, and strung together extension cords to get them all running. To avoid overloading the circuits, they unplugged the office refrigerator and banned Christmas lights. Then, while most of them slept, this jury-rigged supercomputer analyzed a decade of property records and American housing market data in order to spit out price estimates for 43 million homes.
To read more, click here
My comment: Published in Forbes. Well written and researched. I liked Zillow’s history plus a good analysis of their ibuyer service – the new wave of purchasing homes and selling them later.
What I think about bifurcated appraisals
Have you ever done a comp check for a mortgage broker or lender in the past? They are appraisals. You only have public records and maybe MLS. You may have driven by the property, but probably not.
What about drivebys? You drove by the outside, but never saw the rear or interior.
With bifurcated appraisals, at least you have photos, measurements of the exterior, descriptions of what the exterior and interior rooms look like, etc.
What about having trainees do them, under your supervision? A great way to get new appraisers started. I spoke with one appraiser who is doing this.
All appraisers rely on public records, MLS photos and descriptions, etc. We don’t know how accurate this data is.
Check out the company doing bifurcated appraisals and their forms software data handling. Do not work for one that requires that you manually fill in a 1004P, for example. How long have they been in business? Are there appraisers in management?
Whether or not you do them is a business decision. They are less risky than comp checks and drivebys. You have more information, assuming they do not make up the photos, sketch, etc.
The Bottom Line: appraisers don’t like change, just like most people. Some adapt, some decide not to change.
Lender Overlays and FHA Appraisal Requirements
Excerpt: FHA requirements re: approaches to value
Regarding the approaches to value, the HUD Handbook states, “The Appraiser must consider and attempt all approaches to value and must develop and reconcile each approach that is relevant.”
Translation: If the appraiser determines an approach is necessary for credible assignment results, the appraiser must develop that approach. When appraising new construction or a dwelling that is one year old or less, it is likely that the appraiser will need to develop the cost approach. As in any appraisal, if the appraiser decides not to develop one or more of the approaches, he or she will need to support that decision.
For info on site requirements, etc click here
My comment: AMCs and lenders can have some strange requirements. It’s always good to know what FHA says.
How Should We Define the Suburbs?
Excerpt: The problem (lack of a definition) stems from the fact that U.S. statistical agencies (the Census Bureau and Office of Management and Budget) do not provide a systematic definition for suburbs. They offer classifications for metropolitan areas and micropolitan areas, a classification of urban and rural areas, and a category of principal cities, but nothing of the sort for suburbs.
Very interesting with a good table To read more, click here
My comment: Appraisers have to identify on forms if a property is urban/suburban/rural. Also percent built up. Rural can affect loans sometimes. I have never seen any clear definitions. Now I know why!
Why do appraisers hit the sales price?
By George Dell
Excerpt: A recent study includes a graph which shows that some 90% of appraisals hit the sale price exactly, or were higher, while only some 10% were below the sale price (when the sale price is known).
Is this a bias on the part of appraisers, or is the bias the cause of the system? What could possibly cause this strong upside skew?
First, ignore the ongoing pressures from the entire ‘loan industry’ to make the loan, make the commission, make the quota, make the bonus, and look successful. Ignore the claimed purpose of the public trust (of our quasi-governmental standards and licensing quagmire).
The goal of protecting the public trust failed, and will fail again— this time with different excuses and blaming— but it will fail again.
Let’s look at some underlying economic truths and social/governmental policy. What economics and public policies come into play here? Three come to mind immediately:
To read the full, very interesting post click here
My comment: When I started my appraisal business in 1986, I was told by local very experienced appraisers to appraise at the sales price or I may be kicked off a lender’s approved list. Of course, since I was trained at an assessor’s office, I was shocked and refused to do this… There was always another lender client I could get.
Dell’s blog has very short posts. My June paid newsletter will have a much longer article written by him: “Old Versus New: Conflict or Opportunity?” It has a brief look into the past, including a photo of an acoustic coupler for connecting to remote sites. Plus, of course, comments on the future! I remember 30 baud transmission rates in the early 1980s connecting from my home PC to my company’s servers;>
25 Common Errors in Appraisal Reports
A compilation of the most common errors and deficiencies found in appraisal reports by reviewers, regulators, and appraisal boards.
Here are a few:
– Not providing enough analysis for the intended user or reader to understand the report properly.
– Inconsistencies between the description of the subject property in the improvements section and the photographs, sketch, sales comparison grid, and other areas in the report.
– Inappropriate use of boilerplate commentary in the appraisal report to describe the neighborhood or to explain the reconciliation of the sales comparison approach.
– Failure to summarize the analysis and rational that supports the Highest and Best Use opinion.
– Not complying with the most current USPAP.
Read the full list here:
My comments: Reminders are always good. For unknown reasons, I don’t see much CE or writing on these problems. These apply to all appraisals because we are licensed, not just lender appraisals.
It was soooo nice in the “old days” before licensing ;> Two Rules: Tell the truth and disclose what is bad. No USPAP changing every two years, overzealous appraisal boards, renewal fees, etc.. Of course, the reason we have licensing is the lender mess in 1989, resulting in FIRREA, regarding bad commercial property development loans by S&Ls
Tips for choosing comps on a unique home (straw-bale house)
By Ryan Lundquist
Excerpt: It almost sounds like the big bad wolf story, but there really are homes built from straw. Literally. Today I want to mention a few things about this type of construction, share some photos of a local straw-bale house, and then talk briefly about how I approached appraising this one.
Worth reading to find out what Ryan did!!
My comment: Very good tips on appraising unique homes. No lender issues as the appraisal is pre-listing and not for a lender… Sacramento is a Very Strange place for a straw-bale home!!
These Locations Were Abandoned Years Ago. Look At Them Today
Excerpt: We’re used to seeing places maintained and kept to a high standard. Usually, we travel to places that are made to look as nice as possible through consistent cleaning and maintenance. But what about the places that are left behind?
Fascinating!! Take a break from appraising and check these out!!
Obsessively Checking Zestimates
Excerpts: If you own a home, or want to own one, chances are you’ve spent some time with one of the many apps that estimate home values. As real estate prices have risen in recent years, watching one’s equity grow – at least on paper – has become something of a national pastime. Some would call it an obsession.
“I check my Zestimate way more than my 401(k),” said Bradley Reed, a homeowner in Cleveland, referring to Zillow’s proprietary tool.
“On a slow week, I might check it every other day,” said Krista Burns in Doylestown, Ohio.
Listen or read the story and twitter comments, see some fotos, etc. Add your comment at the bottom.
My comment: I listen to the marketplace podcast almost every day, listened to this one last week, and really liked it. Fortunately, with this link you can read the transcript or listen to it plus read some twitter comments. I know that real estate agents have lots of problems with it. I wonder how many appraisers look at Zestimates? You may be surprised!! Some even include it in their appraisal reports and explain why their value is different.
17 of the World’s Most Beautifully Broken Places
Wind, rain, and retreating glaciers left this gorgeous destruction behind.
Here are two:
– Ah-Shi-Sle-Pah Wilderness Study Area New Mexico
The land is full of geologic eye candy like otherworldly spires, mushroom-shaped hoodoos, and prehistoric fossils.
Strange rock formations tower above the river that snakes through this enchanting Icelandic canyon.
See the incredible locations and read about them at:
My comment: Click The Link And Take A Break from Your Appraisals!!