New sewer line increases value for appraisals?

My new sewer line adds huge value, right?

January 19, 2021, By Ryan Lundquist

Excerpt: A new sewer line. That’s what 2020 gave my family as a parting gift before the year closed. Yep, just before Christmas, we had to replace our entire line at a whopping $13,688. I know that sounds crazy expensive, but we had four separate bids and went with the most reasonable one. In part it was so pricey because we had one hundred feet of the line under eighty feet of concrete.

The good news is my house is worth $13,688 more now, right?

To read more plus lots of appraiser comments click here

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

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

For Covid Updates, go to my Covid Science blog at covidscienceblog.com

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 fees, house settling, unusual homes, mortgage origination stats, Covid tips for appraisers, etc.

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Be A Crack Detective

By Jamie Owen

Excerpt: Over the years, I have seen many cracks: big cracks, small cracks, long ones, and short ones. I’ve seen cracks of all different shapes and sizes. I should make it clear that I am not a crack expert. Before I go on, I should also make clear the type of cracks I am referring to. Settlement cracks!

Let’s first talk about the two fundamental types of settlement cracks. Structural and non-structural. It should be noted that sometimes a crack may appear to be structural, when it is not, and visa-versa. That’s one reason why a qualified professional is sometimes needed to make this determination.

To read lots more, see two good videos, and find out where the phrase “Crank Detective” came from click here:

My comments: One of the first house appraisals I did in the Bay Area was a large 2-story home on a steep hillside. I saw cracks radiating from the same corner of the drywall on both floors. Outside, on the same corner, I saw cracks on the outside stucco. A drain pipe ending at a depressed area, where water had been sitting for a long time, was the cause of the interior and interior damage. The home was settling on that corner. Under the house were cracks in the foundation.

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Anatomy of a Sales Comparable

By Tom Horn

Excerpt: 1) Verify the sale occurred – An appraiser can obtain information about a recent sale from the sources noted above or even from a homeowner who was aware that one occurred. However, this information must be confirmed and verified.

I have had multiple occasions where some of the information provided to me was not correct. This was not because anyone was lying or it was intentional but because there was a typo or some other error.

Ideally, it is best to first verify with a party to the transaction that the sale occurred and then to double-check this through public records. Verification sources include the buyer, seller, listing or selling agent, or closing documents. The information to be verified includes the sale price and date of sale.

To read more, click here

My comments: Written for real estate agents, but good reminders for appraisers.

Note: Tom recently recovered from Covid. He did not get it while appraising. A Case of COVID, 2020, and Birmingham Real Estate To read more, click here

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Martha’s Vineyard Estate From 1688 Tops This Week’s List of the 10 Oldest Homes for Sale

Excerpt: The list is topped by an estate on Martha’s Vineyard, MA, that was established in 1688. The James Allen House sits right next to Chilmark Pond and the Atlantic Ocean beyond.

There’s something soothing about looking at things that have withstood the test of time. Perhaps that’s why our regular peeks at the oldest homes on the market are so darn popular.

The 10 oldest homes available for sale this week date all the way to the establishment of the 13 ragtag Colonies. Each represents a long-standing commitment to the stories they have to tell and to all the people who took care of these homes through the years.

To check out all 10 of the oldest homes, click here.

My comment: Here in the Bay area, there were relatively few homes until the Gold Rush, which started in 1868. People from all over the world came to San Francisco. It was a wild time! There were few comparatively homes built prior to 1860. The oldest buildings in California are missions and churches built by the Spanish in the late 1700s.

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New in the January issue of Appraisal Today

Excerpt: Ten Top Appraiser Time Wasters by Doug Smith, SRA

1. Over emphasized work-life

Appraisers generally underestimate the fatigue factor in their lives.

Appraisers with travel time and heavy inspection schedules can become pressed for time to relax and re-energize.

Working when you are tired hinders thinking. The words “time off” and “vacation” should not be a foreign language in the appraiser’s vocabulary.

The most important software in the appraiser’s office is themselves. Why run on overload when there is a simple alternative to planning and inserting time to refresh and recharge? Sooner or later, health may suffer when the crisis point is reached. Your time off will be forced, and it will probably occur at the wrong time.

One casualty of an overly hectic schedule is sleep. Sleep is fundamental to health, and appraisers must be aware of the need for sufficient sleep and rest. Take a sleep inventory over a couple of weeks and abide by the results of this survey.

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

If this article gave you one good idea about getting more done, it is worth the subscription price!!

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Click here for more info!If you are a paid subscriber and did not get the January 2021 issue, emailed Jan. 4, 2021, please send an email to info@appraisaltoday.com and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it.

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Appraisal Fees on the Move: New Survey Asks How Much

by Isaac Peck, Editor, WorkingRE

Excerpt: The latest data from Freddie Mac indicates that appraisers have unquestionably participated in this boom. Danny Wiley, Senior Director of Valuation for Single-Family Credit Risk Management at Freddie Mac, reports that the seven months since the COVID-19 pandemic began (March-September 2020) represent the seven highest volume months in terms of appraisals received to the Uniform Collateral Data Portal® (UCDP®) ever on record. Compared to 2019, appraisal volume was up 40% from January–September 2020 based on UCDP numbers.

… only about 15% of appraisal assignments ordered utilize the new appraisal flexibilities permitting exterior only, or desktop assignments, according to Fannie Mae’s latest data.

To read more and take the survey click here

My comments: AMCs are desperate! I had a call from PCV Murcor AMC this week. The first AMC call I have had for a very long time. Maybe they were going to the state regulator and calling every appraiser in my small town. There very few active fee appraisers here.

I will have info on the volume of Covid alternative appraisals in each state in Appraisal Today’s February issue

Raise Your Fees Now!!! They will go down again when rates go up. 

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Michael Jackson’s Neverland Ranch Sells for $22 Million

Excerpt: Initially listed in 2015 for $100 million, the home sat on the market for more than five years and multiple drops in the asking price until it finally sold last month for $22 million.

Before being listed in 2015, the property was extensively renovated, and most traces of Jackson had been removed, including the amusement park rides and zoo. Billionaire and former family friend of Jackson, Ron Burkle, purchased the property for what he has described as a “land banking opportunity.”

To read more, click here

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COVID-19 Recent posts covidscienceblog.com

I got my first vaccine shot yesterday – Moderna. Plus my Covid-19 Vaccination Record Card. No side effects, No lines and very fast, except for waiting for 15 minutes to see if I had a bad reaction. A friend called last Thursday morning and said to call Kaiser Permanente, the largest provider in the Bay Area, and gave me the phone number. After an hour on hold, I got an appointment. I was very lucky. By Friday, the phones were overwhelmed. By Saturday or Sunday, Kaiser was scheduling the appointments (no call-ins) for 75+, not 65+ . Six million people in CA over 60 including 3 million over 70. The total population is 37 million.

A great weight has been lifted from me. No more worries about getting very sick and maybe dying. I will be doing appraisals and getting my house cleaned for the first time since February. Hopefully, someday we will find out that vaccinated persons cannot transmit Covid. Then, no more masks, distancing, etc., and worrying about getting someone else infected, my greatest fear.

Note: I am doing new blog posts 2-3 times a week. Subscribe to the blog to get notified – upper right of each page.

Mayo Clinic What is happening now – Vaccine Rollout, Variants, and much more. January 20, 2021, Excellent, understandable, weekly update with the latest news topics. Video 32 minutes To watch the video and read more, click here

Anyone of any age can become a Long Hauler with Covid symptoms that last for months January 19, 2021 Video 13 minutes To watch the video and read more, click here

How To Judge 6 ft. Physical Distance – What We All Need!! January 18, 2021, Fun Video 4 minutes To watch the video and read more, click here

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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 decreased 1.9 percent from one week earlier

WASHINGTON, D.C. (January 20, 2021) – Mortgage applications decreased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 15, 2021.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 87 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 9 percent compared with the previous week and was 15 percent higher than the same week one year ago.

“Mortgage rates increased across the board last week, with the 30-year fixed rate rising to 2.92 percent – its highest level since November 2020 – and the 15-year fixed rate increasing for the first time in seven weeks to 2.48 percent. Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “After a post-holiday surge of refinances, higher rates chipped away at demand. There was a 5 percent drop in refinance activity, driven by a 13.5 percent pullback in government refinances.”

Added Kan, “Purchase applications remained strong based on current housing demand, rising over the week and up a noteworthy 15 percent from last year. Homebuyers in early 2021 continue to seek newer, larger homes. The average loan size for purchase loans jumped to $384,000, the second highest level in the survey.”

The refinance share of mortgage activity decreased to 72.3 percent of total applications from 74.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.1 percent of total applications.

The FHA share of total applications decreased to 9.3 percent from 9.6 percent the week prior. The VA share of total applications decreased to 13.8 percent from 15.8 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 ($510,400 or less) increased to 2.92 percent from 2.88 percent, with points increasing to 0.37 from 0.33 (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 $510,400) increased to 3.19 percent from 3.17 percent, with points remaining unchanged at 0.28 (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 3.01 percent from 2.93 percent, with points decreasing to 0.29 from 0.32 (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 2.48 percent from 2.39 percent, with points increasing to 0.33 from 0.31 (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 2.76 percent from 2.66 percent, with points decreasing to 0.31 from 0.38 (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

Appraisal Cost To Cure

Cost to Cure 

(Plus very funny handyman video)

Excerpt: On a regular basis, I appraise homes that need some type of repair. It may be as simple as replacing an outlet or as complicated as renovating a home. In the appraisal process, the appraiser has to estimate a cost to cure many types of repairs.

Why do appraisers use the term, cost to “cure” instead of a cost to “fix” a repair? Are appraisers just trying to use fancy vernacular to try and impress the reader of the report?

Appraisers think in terms of value. The term “cure” may make you think of someone who suffers from an illness for which a cure is desired. Appraisal Cost to Cure is very different.

To read more and watch the very funny 3-minute video near the end, click here.

My comments: Written for homeowners. This very good for appraiser marketing. But, there are lots of reminders and maybe some new ideas for appraisers.

The best part: The “Weird Al Yankovic” Handy 3 minute video at the end. Very, very funny. Total Escape!! Just what I needed for the election ;> I have been following Weird Al for decades.

Once Again, Jamie Owen finds the best photos, animated gifs, and videos. Extremely Creative!! 

Unfortunately, I cannot insert a video into these emails.

If you don’t have time to read the blog post, to watch the 3-minute video, click here

Appraisal Humor

Appraisal business tips

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

 

Read more!!

Common Appraiser Violations

Two of the common appraiser violations – Use of inappropriate sales and Use of unsupported site value

Excerpt: When it comes to common appraisal violations, certain minor violations are very common. In this article, I outline several examples of less serious breaches of development STANDARD 1 and reporting STANDARD 2—and a few other types of violations, too. I have compiled these based on many years of personal experience in appraisal regulation, as well as feedback I have received from other states’ enforcement agencies. Once you’re aware of these common mishaps, you should be able to avoid them more easily.

1. Use of inappropriate sales

One of the big problems is the use of inappropriate sales in a sales comparison approach….

2. Use of unsupported site value

Another common violation is the use of unsupported site value in the cost approach. That’s something that a lot of boards have cited as a prevalent deficiency or shortcoming in appraisal reports.

To read more click here

My comment: useful information. Nothing new, but good reminders. Don’t get the “violation letter” from your state board!!

Appraisal Process Challenges(Opens in a new browser tab)

Appraising Weird Stuff is Challenging!(Opens in a new browser tab)

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

Read more!!

Appraising Weird Stuff is Challenging!

How to Handle the Weird Stuff: Appraisal Methods from an Experienced Florida Appraiser

Excerpt: Going further away or back in time

One method is to go further back in time for comparable sales.. Another method is to use sales that are more distant to find data to utilize. Both of these techniques have long been available to appraisers. When using these appraisal methods, most often a comparison is made between properties with similar characteristics to the question at hand to extract a ratio/percentage which is then brought current or to the locale and applied. This could work for the above illustration with only four houses on leased land and no similar nearby sales. Most appraisers are familiar with and have utilized these techniques… Appraising Weird Stuff is Challenging!

Well written and worth reading. To read more, click here

My comments: Lots of good tips. All of us are asked to appraise the “weird ones”. Of course, sometimes we don’t know a house is weird until we drive up and see it!! A very good discussion of methods. I have used all of them except the depreciated cost, which is a good method. Plus, lots of tips on doing them for lenders. Of course, sometimes I just say “no” as it will take too long.

I have learned that they often are money losers due to the increased time. This is what can happen with lender UAD appraisals for AMCs due to the excessive amount of questions and trying to fit the appraisal on the form. I sometimes accept the weird ones for non-lender work with no time pressures. They can be very interesting and challenging.

Appraisal Process Challenges(Opens in a new browser tab)

Common Appraiser Violations(Opens in a new browser tab)

Read more!!

Should Appraisers Pay to Be on AMC List

By Dustin Harris

Excerpt: Should appraisers pay to be on an AMC’s approved appraiser list? Is this one way to get new clients? If an AMC solicited you, would you check it out?

Now, I work for some AMCs that, frankly, you might not choose to work for. That’s fine. It’s a choice we all make. Understand that most of the areas I work are rural, so AMCs are generally willing to pay more because of this. Some AMC are very demanding. Yet, when I meet those demands, I get a lot of well-paying jobs from them.

To read more, plus lots of appraiser comments, and listen to the podcast, click here

My comment: A never-ending very controversial topic ever since AMCs took over residential lender appraisals after the mortgage crash around 2008!

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

Read more!!

Which Appraisal Clients are used the most?

Survey: Which Appraisal Clients Make Up the Majority of Your Client Base?

Excerpt: What types of clients do property appraisers serve? Do most of their assignments come from lenders vs. non-lenders? To help answer these questions, we recently asked our real estate appraisal community, “What type of appraisal client makes up the majority of your client base?” Or, which Appraisal Clients are used the most?

While most appraisers said that the majority of their work comes from lenders (most often through AMCs), some said the bulk of their client base is made up of other types of appraisal clients, such as attorneys or private individuals.

To read the results and appraiser comments click here

Marketing and Management Tips for Appraisers

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!!

What’s the appraisal definition for suburban?

Excerpts: The U.S. hasn’t had a formal definition for what constitutes a suburb. A new data analysis comes closer to defining America’s most popular neighborhood type. (Suburban appraisal definition is tricky.) What’s the appraisal definition for suburban?

The United States is a land of suburbs, with just one problem: No one’s quite clear what a “suburb” is.

It’s a question of semantics with real-world implications, as government programs, political campaigns and developers try to spend money in the “suburbs,” where a majority of Americans say they live despite the category having no formal definition.

For some people, it’s obvious: A suburb is a smaller city on the periphery of a larger city. Or it’s a sprawling neighborhood filled with vast swathes of single-family homes. Still other more dated conceptions of suburbia in the popular mind involve the people who live there: allegedly white, middle class and socially homogenous.

Now a new team of researchers believe they’ve cracked the code…

To read more, click here

My comments: Of course, if you do residential lender appraisals this is a Very Big Issue due to lender “requirements” such as no rural properties. Lots and lots of online discussion about this for a long time. Post this topic on your favorite Internet chat site or email list… and wait for the wide variety of opinions!!

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My Favorite Definitions

(This has been floating around for many years…)

Rural  Suburban  Urban

  • If you stand naked on the front porch and the neighbors can’t see you… it’s rural.
  • If you stand naked on the front porch and the neighbors call the cops on you… it’s suburban.
  • If you stand naked on the front porch and the neighbors ignore you… it’s urban.

There are other variations, of course, that are not suitable for this newsletter ;>

Crazy Appraiser Stories!!(Opens in a new browser tab)

Read more!!

Fannie Update on Covid alternative appraisals

Fannie Update on Covid alternative appraisals. Excerpt: Through mid-May, about 15% of Uniform Collateral Data Portal® (UCDP®) appraisals completed after our announcement used the flexibilities, either desktop or exterior-only. As you know, circumstances vary widely across the country, and the uptake of the flexibilities reflects this. The highest percentages of appraisals using the flexibilities are around 40% in some northeastern states, while the lowest percentages are around 10% in some of the less impacted states…

We found that appraisers have used the flexibilities correctly about 90% of the time. Appraisers have done a great job identifying external obsolescence for desktops and exterior-only appraisals, as well as leveraging their local knowledge, maps, aerial photos, and other data sources. We’ve been pleasantly surprised to find that, although not required, about 35% of nontraditional reports include a sketch pulled from prior reports, assessors records, or other sources. Also, the supporting comments in the nontraditional reports have been even better on average than those in traditional reports.

Worth reading. 5 pages and well written. Also includes comments on “one mile rule” and flood zones. To read more, click here

My comments: There are very few of these done in the Bay Area. 10% sounds about right. However, now we are now in a major virus surge in some states – opened too soon and people in some areas did not do social distancing, hand washing and wear face coverings. Use of the alternative reports may increase in some states, and decrease in the northeast.

These appraisals are not easy to learn how to do, and are very different than doing full 1004 with interior inspections. In the June issue of the paid Appraisal Today I have lots of information on them, including useful references. See the ad below.

Covid-19 and Appraisers FREE Newsletter(Opens in a new browser tab)

Click the link below for a church converted to a home, Value Difference Between Streets, Avenues & Boulevards…?, Millions of American Homes at Greater Flood Risk Than Government Estimates, New Study Says, random thoughts of an appraiser, mortgage origination stats. 

Read more!!

Reconsideration of Appraised Value

Reconsiderations of Value and What to Do About Them

By Danielle Lopez

Excerpt: It is Tuesday morning and I have my day planned and timed between reports that are due and morning inspections. I’m just about out the door when I receive an email notification for an appraisal I submitted last week. The notes indicate “Reconsideration of Value.” You know the drill, I’m sure.

Since I just completed this appraisal it was fresh in my mind. I recall the steps, time and attention to detail to locate the appropriate sales. I review my appraisal, and the unadjusted range of sales is $740,000 to $761,000, with adjusted prices of $740,000 to $756,000. I utilized three closed sales and two active listings/pending sales to support my opinion of value. The sales comparison approach is tight, bracketed and the report has an additional forty-eight pages of supporting documentation and explanation for the reader.

I open the notes from the AMC that say: “Please review the attached sales and indicate why they were not utilized in the appraisal.”…

To read more about this, click here

What Is An Appraiser?(Opens in a new browser tab) Humor

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

51 Ways to Cut Appraisal Costs and Increase Cash Flow(Opens in a new browser tab)

To read about lots more appraisal topics, click read more below!

Read more!!