Is Appraisal Obsolete?
By George Dell
Excerpts: You’d think client/user expectation would follow wise professional leadership. Hah!
Innovation and leadership in knowledge and education has declined. The profession and its key organizations have long lost their default position. Pride in designations are diminished. Replaced by licensing, outdated appraisal processes, echoed education, and octopus-like regulation. These are built upon subjective, belief-based ‘credibility’ standards. Each of these re-reinforce what clients want and expect. Why?
USPAP (Uniform Standards of Professional Appraisal Practice) is edited every two or three years. New updates may simply undo prior updates. Chugga chugga.
Appraisers are required to repeat the same education and repurchase the USPAP book every two years, even when changes take place over a three-year period. And pay fees for the privilege. “Automated valuations,” “evaluations,” and “waivered” ways do not have such taxes and ‘regulatory guidance.’ This creates a market advantage for the lesser-quality product!
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My comment: I agree, unfortunately. I love the use of “octopus”: very descriptive
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Appraisers Share Their Top Professional Goals for 2022
Excerpt: Achieve a better work-life balance (39%)
Work-life balance will be a top priority for many appraisers in 2022. Indeed, as we move toward a post-pandemic world, it seems to be top of mind for many people across all professions. If you are looking to spend more time working on passion projects or being with family next year, you may want to focus on streamlining your workflow to free up time.
Maintain my current business (18%)
A significant number of appraisers said their main focus will be to maintain their current business in 2022, rather than growing it or making other changes. Are you happy with the way things are going and simply want to maintain the status quo this year?
To read more, click here
My comment: Not surprising that work-life balance is number 1. Let’s hope business stays strong for appraisers! We can always Just Say No, or get rid of bad clients when we are busy. AMCs and lenders are desperate for appraisers.
Meet The Texas-Born Italian Princess Who’s Selling A $532 Million Roman Villa With A Caravaggio Ceiling
Excerpts: Villa Aurora, as it is widely known, sits near the highest point within Rome’s Aurelian Walls, near where some historians believe Julius Caesar hosted Cleopatra at one of his homes. The 32,000-square foot villa and surrounding garden are all that’s left of a once 86.9-acre estate owned by the Ludovisi family since 1621. In 1885, most of the property was redeveloped into smaller lots to create Via Veneto, one of the world’s most glamorous streets.
The most expensive home in the world is a real buy one get one: Snag a priceless painting, receive a fixer-upper free. That’s the story with Villa Aurora anyway, which is priced at an eye-popping $532 million not for its plethora of amenities or top-of-the-line appliances, but for its artworks.
The approximately 30,000-square-foot mansion is the site of the only Caravaggio ceiling fresco in existence—that alone is worth an estimated $350 million. The six-floor home contains numerous other valuable works, including rooms with frescoes by Guercino and a statue in the driveway that’s attributed to Michelangelo. The catch, of course, is that the 500-year-old villa is showing its age. The current owner, Princess Rita Boncompagni Ludovisi, spent years restoring the place, but millions still need to be spent on renovating the old home. Who knows, while you’re at it you may even discover another priceless painting hidden somewhere in the walls. (From the Robb Report – second two paragraphs)
To read more (very interesting story about the Princess) and see an interesting video down the page (that starts with an ad and lots of great photos, click here
My comment: WoW, as compared with any villas in the U.S.!! Personal property??Getting too many ad-only emails?
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Some of the ANSI questions answered in the Monthly Appraisal Today Newsletter, starting with the February 1, 2022 issue
- Sloping ceilings. How to measure. Why 5 ft. was selected.
- Stairs. What to include for two+ story homes (both levels, not just one level). Stairs to attic and basement – tricky.
- Difference between ANSI Finished Square Footage and finished area not conforming to ANSI, such as below grade.
- ANSI Required Declarations in your Statement of Finished Square Footage (samples).
- Difference between GLA (Fannie) and Finished Square Footage (ANSI).
- USPAP and ANSI
My comments: I have no idea why I never noticed or thought about why, during my 45 years of appraising houses, there were no widely adopted home measurement standards done by appraisers, for appraisals! BOMA has six ANSI standards for commercial properties, starting 50 years ago, which I have used for commercial appraisals.
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ANSI Resources Update
7-hour class, 45-minute video of the 2021 changes, recorded webinars on their Youtube channel
Podcast: Episode 97 The Appraisal Update Are You Upset, Happy, or Downright Mad? 1/10/22 https://appraiserelearning.com/the-appraisal-update-podcast/
4 hour live ANSI zoom class. January 27 and 24, Feb. 9 and 24.
Free Webinar with Fannie’s Chief Appraiser, Lyle Radke: January 28 8 AM Central time www.Youtube.com search for appraiser learning.
Note: appraiserelearning has been offering ANSI classes for a while.
New 125-page ANSI book by Hamp Thomas, Measuring Square Footage with ANSI 2021: Home Measurement Textbook $29.95 paperback. To purchase the book at Amazon, search for Hamp Thomas ansi book. Well written with good images to help you understand. Hamp Thomas, “Mr. ANSI”, started writing about it in 2006-2007. He has been teaching ANSI for a long time.
Purchase the ANSI standards online, “Square Footage – Method for Calculating: ANSI Z765 2021” for $25. The Standards are only 3 pages, with additional explanatory information on the other pages. Their online ordering problems have been fixed. www.homeinnovation.com and click on Bookstore in the upper right. It is a bit expensive and copyrighted, but you should have a copy of the original document, not just what someone chats online about what it says.
Coming soon (hopefully)
Appraisal Institute 4 hour online class: Getting approval is in process and hope to have the offering available online in February.
Fannie may be having training in February. I’m still waiting for any information.
ANSI Z765-2021 and Appraisers: Two Primary Issues, In My Opinion
The Standards are only three pages long, with few changes made since 1996 when The National Association of Home Builders set it up. Very few changes over the years. There is resistance to any changes to keep it easy to understand. The 13 members of the Consensus Committee include five appraisers. The standards do not address many appraisal issues.
- There are no measurement standards for finished square footage that do not conform to ANSI Z765-2021 requirements, such as finished basements. Fannie says to put it on a separate line on forms. Very confusing. Three, or more, appraisers measuring the same house could have different Square Footage for non-conforming sq. ft.
- Why don’t appraisers have their own Appraisal ANSI done by the Appraisal Foundation? AF has a “collaborative effort with the Royal Institution of Chartered Surveyors and their International Property Measurement Standards which seek to standardize measurement standards globally”. “Up until last month, Fannie Mae did not require that an appraiser follow a specific measurement standard.” The IPMS standard for detached dwellings, included in the Residential Building Standards, is difficult to use as it is mixed in with apartment buildings, with limited floor plan drawings.
Rustic Rules! Take a Look at the 10 Most Popular Log Cabins of 2021
Take a break and scroll through them. Very different!
Excerpt: Something about this time of year makes most of us dream of cozying up by the fire in a woodsy cabin away from the madding world. And after the last 21 months (and counting) that we’ve had, that fantasy isn’t limited to wintertime.
How do we know? Well, in 2021, throngs of you perused all the log cabins to hit the market. We counted up the clicks and found the 10 most popular retreats on Realtor.com®. Located all over the country, many are extremely modest, while others stretch the true definition of a cabin.
Throw another log on the fire, and scroll down to see which charming abodes cracked the list. Perhaps you’ll be inspired to consider cabin life in 2022.
To read more, click here
My comment: I have never appraised a log cabin, but have seen a lot of them in movies
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. I have been following this data since 1993. For more information or get a FREE sample issue go to https://www.appraisaltoday.com/products.htm or send an email to firstname.lastname@example.org . Or call 800-839-0227, MTW 7 AM to noon, Pacific time.
Mortgage applications increased 1.4 percent from one week earlier
WASHINGTON, D.C. (January 12, 2022) – Mortgage applications increased 1.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 7, 2022. The previous week’s results included an adjustment for the holidays.
The Market Composite Index, a measure of mortgage loan application volume, increased 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 46 percent compared with the previous week. The Refinance Index decreased 0.1 percent from the previous week and was 50 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 51 percent compared with the previous week and was 17 percent lower than the same week one year ago.
“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher. The 30-year fixed rate hit 3.52 percent, its highest level since March 2020. Rates at these levels are quickly closing the door on refinance opportunities for many borrowers. Although refinance activity changed little over the week, applications remained at their lowest level in over a month, and conventional refinance applications were at their lowest level since January 2020,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9 percent, and VA applications increasing more than 5 percent. MBA expects solid growth in purchase activity this year, as demographic drivers and the strong economy support housing demand. However, the strength in growth will be dependent on housing inventory growing more rapidly to meet demand.”
The refinance share of mortgage activity decreased to 64.1 percent of total applications from 65.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 3.1 percent of total applications.
The FHA share of total applications increased to 9.9 percent from 9.2 percent the week prior. The VA share of total applications increased to 11.4 percent from 11.3 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 ($647,200 or less) increased to 3.52 percent from 3.33 percent, with points decreasing to 0.45 from 0.48 (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 $647,200) increased to 3.42 percent from 3.31 percent, with points decreasing to 0.36 from 0.38 (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 3.50 percent from 3.40 percent, with points increasing to 0.45 from 0.42 (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 2.73 percent from 2.60 percent, with points increasing to 0.35 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 3.03 percent from 2.45 percent, with points decreasing to 0.20 from 0.33 (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.