Appraisal ADU Price Per Sq.Ft.?

By on February 14, 2025   /   ADUs, climate change, liability, Mortgage interest rates, time adjustments   /   Leave a comment
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Newz: ADU Price per Sq.ft.? Time Adjustments Insanity

February 14, 2025

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

  • LIA AD: Divorce – no interior access allowed
  • Should accessory dwellings be valued at the same price per square foot? By Ryan Lundquist
  • $4 Million Midcentury Modern ‘Casita’ Complete With a Wacky Circular Kitchen in Rancho Mirage, CA
  • Time Insanity, Part 7 of a 12 part series: GSE Guidelines Time Adjustments
  • The irony of replacing appraisers with technology By Tony Pistilli
  • Home Values To Plunge in ‘Climate Abandonment’ Zones Total loss of property value projected to reach $1.47 trillion
  • Mortgage applications increased 2.3 percent from one week earlier

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Should accessory dwellings be valued at the same price per square foot?

By Ryan Lundquist, February 4, 2025

Excerpts: Should accessory dwelling units be valued at the same price per square foot as the main house? This question came up recently, and many people believe the price per sq ft of the house should simply extend to the ADU. This post isn’t targeted at any one person, but I have a different perspective that I’d like to share.

Comps

When we look at comps with an ADU, do we see a value that resembles anywhere close to what the ADU equation above suggests? In other words, if the house was worth $800,000 and we added a 750 sq ft ADU, would that really add $200,000 in value? Or would a 400 sq ft ADU on a $450,000 house really add $163,640 in value?

What do the comps say? That’s the question we ask about solar panels, a kitchen remodel, a new driveway, or a house with an ADU. I find looking to the comps can sound like a very frustrating solution, but the focus is really simple. What are buyers willing to pay? That’s always the question.

Closing thoughts

I realize there are situations where the appraised value of an ADU legitimately comes in too low, and there is no excusing that. So, just as I recommend caution in using an arbitrary math formula, appraisers need to be careful to not just pick a number that doesn’t make any sense when we think about data and the income being produced by the ADU.

All I’m saying is the ideal is to scour comps, do our best to discover value, and support the value in whatever credible way we can. And my concern is if listings are priced without consideration of comps or data, it could result in properties not selling and/or appraisal issues in the future. Know what I’m saying?

To read more, including over 40 comments, Click Here

My comments: Read the article. Good examples, tables and graphs, but too long to put in this newsletter.

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FHA Appraisal ROV Q&As

By on October 18, 2024   /   ADUs, AMCs, Fannie, FHA, liability, Mortgage interest rates, ROVs, UAD   /   Leave a comment
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Newz: FHA ROVs, Avoiding Court, ADUs and Sq.Ft.

October 18, 2024

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

  • Avoiding Court: A Common Sentiment Among Appraisers By Claudia Gaglione, Esq.,
  • FHA Q&A on ROV Policy
  • One of America’s Biggest Homes Hits the Market for $195 Million
  • UAD/URAR Threat, Opportunity, Confusion, Part 2 By George Dell, MAI, SRA
  • Why didn’t the appraiser add the ADU in the square footage? By Ryan Lundquist
  • Choosing the Right Appraisal Management Companies (AMCs): A Guide for Appraisers
  • Mortgage applications decreased 17.0 percent from one week earlier
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    Appraisal Business Tips 
    Humor for Appraisers

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Q’s and A’s Now Available from Appraisal Review and ROV Industry Briefing Webinar

FHA INFO 2024-70

October 10, 2024

FHA Posts Appraisal Review and Reconsideration of Value Policy

Questions and Answers from Industry Briefing Webinar

Today, the Federal Housing Administration (FHA) posted a questions and answers document that addresses inquiries received from stakeholders regarding FHA’s Mortgagee Letter (ML) 2024-07, Appraisal Review and Reconsideration of Value (ROV), announced in FHA INFO 2024-24 on May 1, 2024.

To prepare mortgagees and other stakeholders for the implementation of the ROV policy, FHA hosted a live webinar on August 8, 2024. During this webinar, FHA subject matter experts briefed participants on the ROV policy and processes and addressed questions submitted prior to and during the webinar. Due to time constraints, not all questions were answered during the webinar; therefore, today’s FHA INFO includes a summary of the questions addressed during the webinar as well as those that were not.

Mortgagees are reminded that while the provisions outlined in ML 2024-07 may be implemented immediately, they must be implemented for FHA case numbers assigned on or after October 31, 2024, as announced in ML 2024-16. Additionally, the technology updates announced in FHA INFO 2024-43, will also be available in FHA Connection (FHAC) beginning October 31, 2024.

The questions and answers and recording of the ROV webinar are available for viewing on HUD’s Single Family Housing Archived Webinars web page.

To read the full Q&As (PDF), Click Here

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Strange Properties Appraisers Have Seen

By on October 27, 2023   /   adjustments, ADUs, appraisal business   /   Leave a comment
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Strange Encounters in Property Appraisal

By: McKissock

Excerpts: Property appraisal is not typically thought of as a “dangerous” profession per se. However, you may encounter some strange—or even spooky—properties from time to time. Recently we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” While some appraisers discussed atypical and challenging properties, others shared stories of strange encounters ranging from surprising to creepy to downright scary.

We’ve organized the strange and spooky properties described by our survey participants into the following categories:

  •  Vacant and secluded homes
  •   Spooky historic properties
  •   Properties in horrible condition
  •   Other surprising and strange site visits

“Vacant house that neighbors told me had not been occupied for almost 3 years. They were concerned that the electric was still on and could pose a danger as you could hear an electrical buzzing sound. Once I entered the house, the sound was evident and I looked for the source, probably a light fixture with a bad ballast or short-circuit. However what I found was a massive wasp nest that was approx 4′-5′ tall in one of the bedrooms.

When I opened the door, it clearly agitated them and I got out quickly and advised the lender to send in an exterminator ASAP. They were far too aggressive for me to even snap a photo. The AMC rep wanted to know if I could simply hit the nest with a can of wasp spray! Is this the actuality of ‘walking into a hornet’s nest’?”

To read more, click here

My comments: We have all encountered strange homes. I worked for an assessor’s office for 5 years in my first appraisal job. I appraised everything in a specific geographic area. I saw a lot of weird homes, especially in the more rural hillside areas. Lenders would have never loaned on them!

An appraiser I have known for many years saw a ghost in a haunted B&B he stayed in when traveling in Montana. He is about the last person you would think who saw an apparition of a woman. The owner and other visitors had seen her also.

Haunted House Appraisal Adjustments

Appraisal Business Tips 

Humor for Appraisers

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NOTE: Please scroll down to read the other topics in this long blog post, appraisers with increased income, ADUs in California can be Condos , unusual homes, mortgage origination and more!

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Appraisers and Local Market Analysis

By on October 21, 2022   /   ADUs, appraisal business, E&O, humor, real estate market   /   Leave a comment
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Appraisers and Local Market Analysis

By Woody Fincham, SRA, AI-RRS, ASA

Excerpts: Social media and the mainstream media make a mess of these markets even in the best of times. They do not have the bandwidth to cover local markets. When you are in a metropolitan statistical area like Charlottesville and Waynesboro/Staunton you get some reporting from the local news. Still, if it is not driven to get online clicks from hyperbole it usually is not worth reporting. National data simply does not apply to the local real estate market and the closest large markets are Richmond and Washington DC. Neither are not great metrics for what our local markets are doing.

I think everyone has heard the old saying, “You can’t see the forest for the trees.” And that is true. We are in the middle of a market transition and exactly how it is transitioning is extremely hard to predict. The best market analysis is always retrospective, as they say, “Hindsight is 20/20.” Until we get past this period over the next few months it may be hard to say definitively what is exactly happening. As an appraiser, it is super important to understand how to gather and analyze relative data.

So, what metrics are worth watching?

  • Inventory levels
  • Absorption rates and marketing times
  • Actual days on market (DOM)…

To read more and see the graphs, click here

My comments: Read this article, including the case study. See if there are data types and graphs you can use in your appraisals. Your clients count on you to let them know the market today, not in the past. Of course, I agree with this. Appraisers have the most valuable data and analyses in a changing market: listings, pendings, price changes, etc.

Appraisal Neighborhood Analysis

Appraisal Business Tips 

Humor for Appraisers

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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 retirement, liability, ADUs, appraiser cartoon,  real estate market, Appraisal business, unusual homes, mortgage origination stats, etc.

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