Posts Tagged adjustments

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Appraising Fixer Uppers

By Ann O'Rourke on April 14, 2023 / adjustments, appraisal how to, Fannie, liability, non-lender appraisals / Leave a comment

Tags: adjustments, appraisal how to, Fannie, liability, non-lender appraisals

Appraising Fixer Uppers

Excerpts: We’re all familiar with the term “fixer-upper.” For many different reasons, properties can come on the market in less-than-par condition. The degree and cost to cure becomes an issue to buyers and sellers, and a challenge for appraisers. At some point it’s no longer “normal market value minus cost to cure equals as-is value.”

The terms “entrepreneurial incentive” and “entrepreneurial profit” are typically discussed in terms of investment property, but the principles involved can also be applied to the many fixer-uppers—whether the buyer is a “purely investor type” or an “owner occupied investor type.” Maybe a couple new terms should be discussed: “sweat equity incentive” and “sweat equity profit.”

The rest of the post is a very good case study

To read more, click here

My comments: I have appraised many fixer-uppers. My overall ratings are: Unlivable with holes in wall or ceiling, kitchen, and bath not functional, not lendable, etc. ) In my MLS “contractor special” is often used. Liveable: needs work but functional kitchen and bath.

Most of my appraisals are for estates, and fixers are relatively common. There are few comps as almost all homes are fixed up for sale. There are some good ideas in this post. Even if you have comps, there is often a very wide range of conditions.

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Appraisers: How to Manage Your Emails

By Ann O'Rourke on April 7, 2023 / adjustments, appraisal business, lender appraisals, non-lender appraisals / Leave a comment

Tags: adjustments, appraisal business, Fannie, non-lender appraisals

The Mailbox is Full and Cannot Accept Any Messages at this Time. Goodbye. How to Manage Your Emails

By Paul Ryll

Excerpts: My mother told me today that she called last night and was greeted with, ‘The mailbox is full and cannot accept any messages at this time. Goodbye.’

I get a few telemarketers’ messages. Rarely is there a message from a friend or family member. I would say about 90% of the voicemails that I receive are from an irate homeowner worried about a rate lock or a stressed out realtor wondering if they are going to close on time.

AMCs

Assuring that the appraiser has the correct contact information for an inspection is very important. There have been numerous instances in which I have not been able to get ahold of a contact for an inspection only to find out weeks later that the AMC gave me the wrong contact information.

Communicating quickly with the lender is an issue with the appraisal process. I’ve requested guidance on assignments from the lender in which the answer came after the due date. Most recently, I had a detached condo that was ordered on a 1004 which needed to be switched to a 1073. The closing date came and went before I got the go-ahead from the lender.

Have one point of contact for an assignment. Nothing is more frustrating than 17 people calling me on one revision because the employees of the company don’t research to see if I have been contacted or read the notes in the assignment.

To read more, click here

My comments: Slow now? Work on organizing your emails. I have many email folders with automated inbox filtering, which helps a lot. Very good tips in the article. Written in 2-22 but is still very relevant today. I don’t see much written about appraisers and emails. I have always had a landline for business calls and a cell phone for personal calls. Having both on one cell phone is chaos, IMHO.

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What Do Appraisers Look For in a Sales Contract?

By Ann O'Rourke on April 2, 2023 / adjustments, appraisal, appraisal business, appraisal forms, appraisal how to, Fannie Forms, non-lender appraisals, UAD / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, Fannie forms, future, real estate market, UAD

What Do Appraisers Look For in a Sales Contract?

Why must an appraiser be given a copy of the sales contract? First and foremost, Standards Rule 1-5 in the Uniform Standards of Professional Appraisal Practice (USPAP) states that we are to: “analyze all agreements of sale.” That’s the real reason why—because USPAP says so.

Secondly, the appraiser is likely familiar with the local real estate contract forms, customary terms, and conditions of real estate transactions in the area, and might be able to identify irregularities and comment on them.

Thirdly, and more importantly, there may be provisions in the contract that identify concessions, non-real property items included in the sale, or other unusual conditions that would give the appraiser the opportunity to comment on or explain in the appraisal report as to why there is a difference between the indicated market value of the subject property and the contract price.

To read many practical tips, click here

My comments: Worth reading. Answers a lot of appraiser questions. Of course, I have always preferred not knowing the sales price as it seems like a conflict for an objective, unbiased appraisal.

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Appraising vs. the Public Good?(Opens in a new browser tab)

Appraiser Adjustment Tools

By Ann O'Rourke on March 3, 2023 / adjustments, appraisal business, bias / Leave a comment

Tags: adjustments, appraisal business, bias

What Tools Do You Use to Support Your Appraisal Adjustments?

McKissock Survey

Excerpts: Here’s a tally of the most popular answers—tools that were either selected or written in by multiple respondents. We’ve included “paired sales/matched pair analysis” in the list as well, even though it’s a method rather than a digital or software tool, because it was mentioned by so many appraisers.

In addition to the top answers listed above, we received many other write-in responses. Other methods and tools that our survey participants said they use to support appraisal adjustments include:

- Market knowledge/research
- Market extraction

Manual sales comparison
Regression analysis
Segmented market analysis

To read more, click here

My comments: First survey for this topic I have ever seen. Very interesting. Don’t miss the appraisers’ comments!

Using home’s previous sales in appraisals(Opens in a new browser tab)

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What Appraisers Wish Real Estate Agents Understood

By Ann O'Rourke on February 17, 2023 / adjustments, AMCs, appraisal business / Leave a comment

Tags: adjustments, AMC, appraisal business

What Appraisers Wish Real Estate Agents Understood

McKissock Survey

Question: “What’s one thing you wish real estate agents knew about the appraisal process?

What is a residential complex property?

By Ann O'Rourke on December 23, 2022 / adjustments, appraisal how to, george dell, humor / Leave a comment

Tags: adjustments, appraisal how to, George Dell, humor

How to Identify a Residential Complex Property

By: McKissock December 16, 2022

Excerpts: The property to be appraised is atypical

In this case, the property is an outlier, oddball, or not common for the particular area. Of all the characteristics that can make a property complex, physical features are the ones that are most obvious. Some of the key physical features that can make an appraisal assignment complex include:

The form of ownership is atypical

In this case, circumstances involving ownership are uncommon or make the appraisal more complex. For example: The owner doesn’t own property rights on a waterfront property.

The market conditions are atypical

In this case, unique market conditions increase the complexity of the appraisal. For example:

The property is located in an area where there are no other sales.

There is no market for the house; no sales are occurring for some reason (e.g., the property is near a nuclear site cleanup).

Note: the link to the complementary post, “How to Pull Comps on a Complex Property,” is included in this blog post.

To read more, click here

My comments: Worth reading with good tips. I published “Tips for dealing with complex residential appraisals” in the November issue, much longer with many more tips and examples.

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What Causes Appraisal Revisions?

How to Reduce Appraisal Revision Requests

By Ann O'Rourke on December 9, 2022 / adjustments, appraisal, appraisal classes, appraisal how to, real estate market, retirement / Leave a comment

Tags: adjustments, appraisal business, classes, real estate market, RETIREMENT

How to Reduce Appraisal Revision Requests

By Clear Capital November 14, 2022

Excerpts:

To cut down on appraisal revision requests, it is important to keep these best practices in mind:

Communicate in a timely manner

Address the request thoroughly and professionally. Add additional commentary where appropriate.

Ask questions. If you disagree with the request for appraisal submissions or have concerns or need clarification, please reach out for clarification.

1. Explain ‘How’, not ‘Why’ in the appraisal report

The most common frustrations arise when the appraiser focuses more on the type of adjustments made while the reader would look for the ‘how’ in the appraisal report. For example, if a positive or negative adjustment was applied in the report, the reader wants to know how the adjustment was determined.

“How did you determine that the subject comparable was inferior or superior in condition? Don’t leave the ‘how’ part out while applying adjustments. Be sure to address those questions; it will certainly help you in the long run.” says Ken Folven, Senior Director, Appraisal Quality Assurance at Clear Capital

2. Reduce lengthy commentary

In some cases, appraisers provide lengthy boilerplate commentary in an attempt to avoid a revision request. This strategy often backfires because parties involved in the lending process cannot find the specific information they are looking for in the report. Inconsistent commentary can result in common requests for revision.

Prior to submission, read the letter of engagement in detail, which highlights the customer-specific information, and make sure to include all required information in your report. Organize your commentary and explain your comparable selection process briefly.

“I always recommend organizing commentary by adjustment rather than by comparable and make it a habit to review the pre-delivery rules,” says Khan.

Derek Mitchell, a California-based Senior Appraiser at Clear Capital, has a different approach: “I use a lot of characteristic-based comments as opposed to comparable-based comments because it cuts down on the amount of writing that I have to do and the amount of reading the reviewer has to do,” Mitchell says. “It tends to get redundant when you’re just talking about different comparables but the same characteristics.”

In addition, staying up-to-date with Uniform Standards of Professional Appraisal Practice (USPAP), Federal Housing Administration (FHA), and GSE guidelines and industry requirements also goes a long way in drafting error-free reports that would otherwise create unnecessary revision requests.

To read more, click here

My comments: Good practical tips. We all hate revisions unless maybe it was because we forgot to put the value in. I did this sometimes in appraisals for a local bank ;> Your clients hate them also. They take appraisers too much time and can sometimes make you very upset, which interrupts your workflow.

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Practical real estate appraisal writing tips for AMC questions

Practical Tips for Working With AMCs

By Ann O'Rourke on November 4, 2022 / adjustments, AMCs, liability, non-lender appraisals, ROVs / Leave a comment

Tags: adjustments, AMC, liability, non-lender, ROVs

Appraisers Share Their Best Tips for Working with AMCs

By McKissock

Excerpts: In a nutshell, our survey respondents recommended that you should:

1) do your research and get to know the AMCs,

2) build a relationship with them,

3) treat the relationship as a partnership, and

4) prioritize communication.

Build a relationship

“Be personable so they remember you.”

“Make yourself known by being efficient as well as timely with your reports. Be friendly—even when you feel like the UW’s question may be redundant or was already answered in the report. I promise you that this will make you known in your area.”

“Have a very responsive credo. Keep them up to date in every step of the report so that they can keep the Lender (and the Buyer/Seller/Realtor/Closing Attorneys when applicable) all in the loop on the progress of the report. Remember when they look good and trust you—you look good

Communicate, communicate, communicate!

“Update the orders quickly.”

“Keep them informed.”

“Over communicate!”

“Always communicate—even if it feels like too much. Our office updates AMCs on every scheduling attempt with details, every inspection appointment set and completion, and any materials needed ASAP in the assignment. They really appreciate it, and it ensures you can complete assignments on time as you had planned (no one likes waiting for a legal description only to have it show up on your day of 4 inspections!). It’s truly a win-win.”

“Stay in communication. Appraisers tend to get annoyed with constant emails from the AMC about inspection date, completion, report submission, etc. I make it a point to update them and answer their emails ASAP. In my opinion, that’s good business. And if you do need more time, more info, they are more willing to oblige.”

To read more, click here

My comments: Read this blog post with practical tips from practicing appraisers. It can help you get more business from AMCs (and other lender clients). Savvy appraisers I know who mostly do non-lender work also have a limited number of carefully vetted AMCs they work for, plus a few local lenders and “private” lenders.

Advertising Disclaimer: McKissock is one of my regular email advertisers. I keep my advertising clients and this newsletter’s content separate. But, McKissock’s blog posts are short, well written, and popular with readers, so I include them regularly.

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Reconsideration of value and Appraisers

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Appraisers and local market analysis

VA Update for Appraisers

By Ann O'Rourke on October 28, 2022 / adjustments, future, real estate market, va / 1 Comment

Tags: adjustments, forecast, real estate market, va

VA Update for Appraisers

Interview with VA’s Chief Appraiser

By Isaac Peck

Excerpts: …the United States Department of Veteran Affairs (VA), is known throughout the valuation community for respecting the work of appraisers and maintaining reasonable fee schedules.

The questions:

Fannie Mae and Freddie Mac are making desktop appraisals a permanent fixture in their valuation offerings. Is the VA looking at these types of valuations and what are some of the considerations?
There’s been a lot of buzz about measuring homes to ANSI standards in the appraisal industry–what can you tell us about the VA’s stance on ANSI? Do you anticipate requiring ANSI on VA appraisals in the future?
There is a lot of concern about discriminatory appraisals—what is the VA doing to protect Veterans from discrimination and what are your thoughts on the topic?
What’s new at the VA? Any final thoughts?

To read the answers and more, click here

My comments: I have always strongly recommended doing VA appraisals, especially since AMCs took over other lenders’ appraisal management. VA wants you to help veterans. Lenders want to make more money. I wrote a long article about VA in the past, available to paid subscribers. I interviewed VA appraisal employees, fee appraisers who liked VA, and other appraisers who did not want to work for VA.

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