Construction Code Violations and Expertise Appraisals

By on January 3, 2025   /   appraisal business, appraisal how to, climate risk, humor, Mortgage interest rates, time adjustments   /   Leave a comment
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Newz: Appraiser Humor, Mortgage Rate Changes, New GSE Time Analysis

January 3, 2025

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

  • LIA – Code Violations and Expertise
  • Mortgage Rate History Since 1971 What about 2025?
  • Hurricane-Proof $600K Dome Home on Florida’s Space Coast
  • Lyle Radke of Fannie Mae with George Dell, SRA, MAI, ASA, CRE to discuss upcoming changes by the GSEs on Time Analysis
  • Backers of most U.S. mortgages (GSEs) have done little about climate risks
  • Top Ten Reasons Why It Is Great to be an Appraiser – Humor
  • Mortgage applications decreased 21.9 percent from two weeks earlier

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Mortgage Rate History Since 1971 What about 2025?

Excerpts: For many homebuyers, the last few years have felt like a perfect storm of challenges—soaring home prices and climbing mortgage rates colliding to limit affordability. It’s left many wondering if 2025 will finally calm the waters. Will rates dip low enough to bring some relief, or is another wave of increases on the horizon? While there’s no magic compass to navigate these market shifts, a look back at mortgage rate history can offer clues—and maybe even some hope for those waiting to make their move.

Despite the Federal Reserve’s 25-basis-point rate cut in November, mortgage rates have remained in the high 6% range, offering limited relief to borrowers. However, optimism persists in the market as many believe rates could continue to ease in the months ahead, potentially sparking renewed interest among buyers and homeowners.

While the history of mortgage rates provides valuable context, it’s important to recognize that average mortgage rates are just a benchmark. Borrowers with healthy credit profiles and strong finances often get mortgage rates well below the industry norm.

Current rates are more than double their all-time low of 2.65% (reached in January 2021). But if we take a step back and look at the history of mortgage rates, they’re still close to the historic average since 1971 of 7.73%

To read more and see the graphs and many links to more info, Click Here

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Appraising Unique Properties

By on December 13, 2024   /   adjustments, AI, appraisal, bias, Economic analysis, forecast, future, Highest and Best Use, retirement, ROVs   /   Leave a comment
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Unique Properties, Rocket Mortgage Sues HUD, Trump Shifts in Housing Market?

December 13, 2024

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

    • LIA ad – Each appraisal is unique
    • The Ultimate Guide to Unique Property Appraisals
    • America’s Most Expensive Property Is Sitting in a Flood Zone—Will Anyone Buy the $295 Million Estate?
    • Rocket Mortgage Sues HUD Over Regulatory, Enforcement Discrepancies
    • Donald Trump’s Second Term Could Bring ‘Significant Shifts’ to the Housing Market
    • Report: What’s Driving the Recent Refi ‘Boom?’
    • Mortgage applications increased 5.4 percent from one week earlier
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The Ultimate Guide to Unique Property Appraisals

Excerpts: When faced with a truly unique property, the standard approach of pulling recent comparable sales from the neighborhood simply won’t cut it.

These properties require a real estate appraiser with a different mindset and a more creative approach to valuation.

Here’s a quick break down of exactly how unique property appraisals differ from traditional approaches:

Breaking Down the Time Barrier

One of the most common misconceptions is that we can only use recent sales. For unique properties, this simply isn’t true. Here’s why:

Expanding Geographic Boundaries

Location matters, but for unique properties, finding truly comparable homes often requires the appraiser to look beyond the immediate neighborhood:

The Bottom Line

Appraising unique properties requires breaking free from traditional constraints while maintaining professional standards.

To read more, Click Here

My comments: Good summary of the issues. Read the details plus a table comparing traditional and unique properties. Almost all appraisers appraise unique properties, if only occasionally. This is written for real estate agents, but very useful for appraisers.

I regularly hear about AMCs trying to find an appraiser to do one of these properties. They keep shopping for low fees and fast turn times. After a while they finally go with the appraiser who can do them at a good fee and reasonable turn times.

If you can appraise unique properties you have a substantial advantage over less experienced appraisers. Now is an excellent time to try doing one, especially if your business is slow now.

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Market Trends and Market Conditions Adjustments Appraisals

By on December 6, 2024   /   adjustments, AMCs, appraisal how to, state appraiser regulators, waivers   /   Leave a comment
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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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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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Q3 Fannie Update – Concessions, Rural, Environmental Hazards

By on October 4, 2024   /   adjustments, Fannie, real estate market, state appraiser regulators   /   Leave a comment
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Newz: Fannie Update, Concessions Are a Mess, State Board Complaints

October 4, 2024

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

  • State Board Complaints and Renewal

  • Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards

  • $47 Million Ski Chalet With Private Tesla-Style Gondola, Bowling Alley, and Basketball Court

  • September 2024 Real Estate Market Update: What Appraisers Need to Know By Kevin Hecht

  • The hot mess of concessions in real estate By Ryan Lundquist

  • That A-Frame Life: What It’s Really Like To Live in These Triangular Houses

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    Appraisal Business Tips 

    Humor for Appraisers

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Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards

Excerpts:

Rural

Worth reading with links to Fannie info, including a link to: Free Fannie online Rural Appraisal Challenges eLearning course. Plus other tips.

Environmental Hazards

While Fannie Mae does not expect the appraiser to be an expert in the field of environmental hazards, we do expect appraisers to analyze and report any information about environmental hazards that is available in the normal course of business…

If an appraiser has knowledge of or identifies an environmental hazard in or on the subject property or on any site within the vicinity of the property, we require the appraiser to…

Seller Concessions

The article about seller concessions in our December 2023 Appraiser Update generated a lot of questions and buzz.

First, we heard that some appraisers, in reaction to our article, adopted a practice of always adjusting dollar for dollar for seller concessions. While this may seem sensible from a theoretical perspective, it could have adverse unintended consequences (such as undervaluation) if the concession did not actually have a dollar-for-dollar impact on the price. Making either assumption (that there is no impact or that the impact is dollar-for-dollar) is not the correct approach…

PSAs – UAD, Bias with useful links to Fannie info

To read more, Click Here

My Comments: Read the concessions section to see what Fannie Mae says on this hot topic! Plus the useful info and links on other topics above.

See Ryan Lundquist’s post below on Concessions – A Mess

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Value of a Pool

By on July 5, 2024   /   adjustments, appraisal, appraisal business, appraisal how to, forecast, real estate market, zillow   /   Leave a comment
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What is a pool worth? It depends.

By Ryan Lundquist June 26, 2024

Excerpts: With and Without Pools (Big Difference)

There’s a huge difference in the stats when we compare homes with and without pools. The properties with pools are larger in square footage and lot size, higher in price, and they’ve taken slightly less time to sell too.

In short, the higher the price, the greater chance there is a pool. This likely has to do with the cost of building a pool, cost of maintaining a pool, and even larger parcels at higher ranges – not to mention buyers at higher price points expecting a pool more often.

The rhythm of pool sales basically follows the pattern we see in the entire market. More sales as the year unfolds, and they typically peak around June. Some smaller areas could be slightly different.

Seriously though, What is a pool worth?

It depends. Different price points and locations come with different expectations. There isn’t a one-size-fits-all answer for the value of a pool. In other words, we can’t just apply one figure to a property because that number isn’t going to make sense everywhere. This is where we have to study the comps. With that said, my observation is pool adjustments have generally gone up since the pandemic as buyers are more in tune with the importance of a backyard. Have you seen that also?

To read more, Click Here

My comments: Check out Ryan’s tables to see his data analysis, which is not difficult to set up.

When I first started appraising in suburban Bay Area cities in the mid-1980s, homes with pools sold for more in some neighborhoods with higher-priced homes. MLS always said a pool was there, which is a good way to check it out. At that time, MLS data analysis was much more limited than it is today. I saw this in a particular neighborhood with very hot summers. This is still the same now.

In contrast, where I live, about 15 miles west, on an island on San Francisco Bay, pools have never been a plus or a minus. Weather is “Mediterranean” weather without hot summers. Often sellers said they would remove the pool, but the buyers never requested it.

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Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on HOA Horror Stories, Zillow and Redfin lawsuits Videos and Privacy, Residential to commercial transition, real estate market, unusual homes, mortgage origination stats, etc

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Appraising Factory-Built Houses

By on June 14, 2024   /   adjustments, Appraisal fees   /   Leave a comment
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Factory-Built Houses: Types, Benefits, and Tips for Appraisers

By Dan Bradley

Excerpts: Factory-built houses are an important, yet often overlooked, part of the American housing market. Approximately 10% to 12% of new housing starts in the United States are factory-built. There are several advantages to building a house in a factory. For example, certain houses can be constructed for 50% less than a similar-sized site-built home, making quality housing more affordable for thousands of Americans. As an appraiser, your knowledge of factory-built housing is key to a credible appraisal.

This article examines several different types of factory-built houses, their five main advantages, and tips for appraising them.

Factory-built house is a term that refers generally to a number of house types that are constructed or fabricated, at least in part, off site. The prefabricated components are transported to the site and finished or reassembled there. By contrast, site-built, or “stick-built,” homes are put together at the building site from thousands of individual pieces (e.g., studs, nails, sheets of drywall, shingles, wires, pipes, electrical outlet boxes).

For appraisers, understanding the specific type of factory-built house you’re dealing with is key. It tells you which building codes apply, gives you clues about the construction process, and impacts how you approach the valuation.

Factory-built homes include:

  •   Mobile homes
  •   Manufactured homes
  •   Modular homes
  •   Panelized homes
  •   Pre-cut or kit homes

To read more, Click Here

My comments: This is worth reading, especially if you appraise these types of homes. It provides very good, understandable explanations, including identifying the types. For example, GSEs will not purchase or securitize a mortgage on a mobile home manufactured before June 15, 1976. Likewise, HUD will not issue FHA mortgage insurance on a pre-1976 mobile home.

I work in an urban/suburban area, mostly built up, and have appraised very few of these homes. However, they are definitely more affordable housing, which is a very hot topic now.

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I Can’t Believe I Just Bought a $5M Mobile Home’: A Look Inside 5 of America’s Most Lavish Trailer Parks

Just for Fun!

Excerpts: Multimillion-dollar price tags usually come attached to massive mansions or luxury condos—but now, it’s becoming more common to find them in mobile home parks in enviable locations.

But these aren’t just any trailer parks, as they’re more commonly known. For one, they usually sit on prime real estate. And the neighbors? They’re traditionally billionaires or A-list celebrities.

Prices in some of these parks can generally range from $1.5 million to more than $6 million, but that hasn’t put off buyers with that type of cash to spare.

Arguably, the most famous trailer park in America is Paradise Cove in Malibu. Here, celebrities “slum it” in mobile homes to be close to some of the most expensive real estate in the world.

In 2019, fashion maven Betsey Johnson sold her small pink house here for $1.9 million; in 2018, former “Baywatch” babe Pamela Anderson unloaded her trailer for $1.75 million; and in 2016, songbird Stevie Nicks sold hers for $5.3 million.

To read more and see the photos, Click Here

My comment: I had to include this fun article related to the article above

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Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post seller concessions, all cash sales, liability, new fee survey, unusual homes, mortgage origination stats, etc

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Tools To Support Appraisal Adjustments

By on May 17, 2024   /   data, liability, real estate market, state appraiser regulators   /   Leave a comment
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What Tools Do You Use to Support Your Appraisal Adjustments?

By McKissock

As part of our monthly survey series, we asked our community of real estate appraisers, “What tool(s) do you use to support your appraisal adjustments?” Respondents were allowed to make multiple selections and write in their own answers as well.

Popular tools include Synapse by Spark, Solomon Adjustment Calculator, and Redstone by Bradford Technologies. The majority of respondents said they use a combination of various tools and methods, such as paired sales analysis.

We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or appraisal software tool, because it was mentioned by so many appraisers.

A few sample appraiser comments:

“I am capable of determining the adjustments without any software. I look at the MLS data and am able to determine appropriate adjustments. I would need to know all of the assumptions the software takes into consideration before I would trust the adjustment with my signature.”

“I use Synapse by Spark for typical property adjustments and Solomon for more complex properties.”

In addition to the top answers, we received many other write-in responses. Sample responses:

Allocation method

Depreciation

Cost to build

Sample appraiser comments

“Due to rural location, there are no algorithmic tools to be utilized for adjustment data. I utilize paired and grouped data analysis and experience and knowledge.”

To read more, Click Here

My comments: Short, well written, and Very Interesting, especially the appraiser’s comments! I quit doing adjustments a while ago. I always do market conditions adjustments (or explain why not) and for views and other factors that significantly add to value.

I have never used any of the appraisal software listed above. I use Excel and MLS data. I often go back in time for comps with views, etc. I also interview agents to see what they say. Not for a number, but about marketability.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on Geographic Data and Comps, effect of renovation on value, very low foreclosures now, current real estate market, unusual homes, mortgage origination stats, etc.

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Basement Issues and Values

By on May 3, 2024   /   adjustments, appraisal how to, non-lender appraisals, real estate market   /   Leave a comment
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Understanding Basement Contributory Value

By Jo Traut

Excerpts: Determining how a basement contributes to a residential property’s value requires an appraiser to determine what type of basement the home has, its level of finishing, and take into account common concerns, like evidence of mold or signs of structural concern.

By following best practices, including separating the basement from the above-grade finished area, understanding the intended use of the space, and completing comprehensive research, you can evaluate the basement’s contributory value more accurately.

Topics

  • Know your basic basement types
  • How is the basement finished? Determining levels
  • Best practices when appraising a basement
  • Know the intended use and client requirements
  • Common problems in basements
  • Environmental hazards: One of the most significant issues appraisers run into is mold.

To read more, Click Here

My comments: This is one of the best discussions of basements I have read. It is worth reading. In my area, there are few fully underground basements, as we have a mild climate. Most homes were built prior to 1930, and there are many types of “basements.” They are not easy to determine added value, if any. I research, check with agents, check permit histories, try to get comps with the same type of basement, etc. The type and level of finish are critical.

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals and diversification of your appraisal business, home insurance problems affecting values, unusual homes, mortgage origination stats, etc.

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Desktop Appraisals: Who, When, and Why

By on April 12, 2024   /   adjustments, non-lender appraisals, real estate market   /   Leave a comment
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Desktop Appraisals: Who, When, and Why

Excerpts: The ability to identify property characteristics without a personal inspection is not a new concept. Retrospective appraisals, drive-by (exterior inspection) appraisals, and valuations from plans and specifications, are all valuation assignments where an appraiser develops an appraisal opinion without personally inspecting the property.

Similarly, while not identical, appraisers generally use the cited sources above to identify the physical characteristics of comparable sales in their appraisals. Thus, it’s fair to say that identifying the physical characteristics of the subject property in a desktop appraisal is a similar process to verifying comparable sales.

While they won’t replace a full appraisal for a majority of property transactions, desktop appraisals can offer a more efficient and cost-saving alternative for all involved parties and are often used in low-risk scenarios and non-GSE appraisal assignments, such as:

  • Helping sellers determine a price: A desktop appraisal provides sellers with valuable insights into their property’s market value, helping them make informed decisions when determining an appropriate listing price.
  • Home equity lines of credit (HELOCs): When homeowners apply for HELOCs, lenders may request desktop appraisals to ascertain the property’s value and determine the credit limit without requiring a full appraisal.
  • Tax Appeal Support: When there is a challenge to a tax assessment, a desktop appraisal may be used to provide a current market value.
  • Insurance purposes: Lenders or other clients may order desktop appraisals for insurance purposes to determine the property’s replacement cost or insurable value.
  • Managing Investments: For investors who own multiple properties, desktop appraisals provide rapid updates on property values.

To read more, Click Here

My comments: Although the web page title includes “for new appraisers,” this post has ideas for all appraisers. The list of non-lender uses is very good. I have done drivebys for estate appraisals when the home had been sold and I had no access.

Desktop appraisals okay for some Fannie Loans March 2022

Fannie Wants Desktop Appraisals

Appraisal Business Tips 

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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals, using new construction comps for existing homes, master planned communities, unusual homes, mortgage origination stats, etc.

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Functional Obsolescence in Appraisals

By on March 29, 2024   /   adjustments, appraisal business, FHA, real estate market   /   Leave a comment
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Functional Obsolescence Can Be Challenging

By McKissock

Excerpts: For appraisers, functional obsolescence can be a challenging concept because the elements that influence property values may not be obvious or immediately apparent. To help you better understand what it means and how to pinpoint it, we’re exploring some examples, the different types of functional obsolescence, and how it can influence property values.

Additionally, we’re sharing insights from appraisers who answered our survey question, “When dealing with functional obsolescence in real property appraisal, what aspect do you find most challenging?”

Topics include:

  • Types of functional obsolescence
  • Curable obsolescence
  • Incurable obsolescence
  • Superadequacy

What aspects of functional obsolescence do appraisers find most challenging? We asked our appraisal community, “When dealing with functional obsolescence in real property appraisal, what aspect do you find most challenging?”

The top two answers were “supporting adjustments for it” and “finding comparable properties with similar obsolescence.” Here are the full survey results, followed by comments from appraisers who shared further insights into these two common challenges related to functional obsolescence:

Supporting adjustments: 46%

Finding comps: 33%

Sample appraiser comments:

“Functional obsolescence is not a searchable criterion in any MLS database I’ve found. The ability to find a credible impact on other homes repeatedly is an anomaly. So, I may be able to generate a factor or dollar difference but having only one comp to determine with leaves you deciding on credibility or making no deduction if you don’t feel it’s a credible adjustment.”

To read more, Click Here

My comments: We all encounter Functional Obsolescence when appraising. The blog post is well-written and understandable. It is worth reading the full blog post and the appraisers’ comments. Plus, the explanations about functional obsolescence are good reminders.

Functional Obsolescence for Appraisers

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post on home gets 147 offers, cutting costs, manufactured homes, appraisal analysis, unusual homes, mortgage origination stats, etc.

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