Posts Tagged appraisal business

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Residential Appraisals and Airbnb Income?

Appraising Airbnb Properties

By Ann O'Rourke on September 8, 2023 / appraisal business, appraisal how to, Economic analysis, Reviews / Leave a comment

Tags: appraisal business, appraisal how to

Problems When Appraising Airbnb & VRBO Properties

by Richard Hagar, SRA

Excerpts: Residential appraisers are being asked to appraise these properties, along with their elevated income, as “typical” residential properties. These requests involve homes in numerous vacation spots ranging from Sedona, San Diego, Montana, Lake Tahoe, to Miami, New York, Seattle, New England, and every vacation spot in between.

Appraisers are being told by their AMC clients and loan officers to appraise these as residential properties. They are told it’s fine to use the total yearly income and “simply divide by 12” to produce a monthly income that can be used to value these places using a Gross Rent Multiplier (GRM). But is it really that simple? Short answer—no. Long answer—it’s complicated.

First of all, the value of an STR has three major components:

1) the real estate,

2) personal property, and

3) the business.

The business side includes replacing worn out or damaged furniture, window coverings, bedspreads, towels, the property’s internet listings, credit card processing, weekly cleaning, and daily management decisions involved with running the STR business. On top of that, what if the credit card is stolen and the last party animal damaged the house or fell off the deck and wants to sue the owner for a defective deck railing? STRs are far more than real estate; they include a business also known as a “growing concern” or intangible property.

To read more, click here

My comments: If you want to know more, before (or after) accepting an Airbnb appraisal, definitely read this article. The article is one of the best I have read, and includes many of the AMC, USPAP, GSE, etc. issues. The article has a link to Richard’s webinar on the topic. I have known Richard Hagar for many years. He is one of my go-to appraisers for these types of issues. He is an excellent teacher. Taking his classes is definitely worth the time.

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Every unusual home has appraisal comps

Appraising Unusual Properties

By Ann O'Rourke on September 1, 2023 / adjustments, appraisal business, Bad lenders, bias / Leave a comment

Tags: adjustments, appraisal business

Appraising Odd Properties: What’s the Weirdest Property You’ve Appraised Recently?

McKissock Survey

Excerpts: As a professional appraiser, you’ll likely encounter some strange properties from time to time. Odd properties tend to be challenging yet rewarding in terms of the fee. To gain insight into these types of assignments, we asked our appraisal community, “What’s the weirdest property you’ve appraised recently?” Thank you to the many respondents who shared stories about the most unique and complex properties they’ve come across lately!

Most of them fall into these categories:

Challenging and complex properties
Unique property types
Properties with atypical characteristics
Historic properties
Rural properties
Non-compliant properties

“A yurt, a space dome, and a two-story single-wide mobile home. This was two single-wide mobile homes stacked on top of each other with a spiral staircase that was encased in semi tractor trailer chemlite panels. The stories behind them are lengthy.”

“It was a house on three lots. It has been added on to over the years. The GLA is 3200sf and there are two separate basements with a total 1100sf. There are funky angles, two kitchens next to each other divided by a wall. It was only 3 bedroom, but had 3.1 bathrooms. It had 3 family rooms on the GLA. Lots of weird spaces.”

“A custom-built art school built by artist named Solonevich that is used as a single-family dwelling. Every couple feet was a random angle. Nearly impossible to measure accurately.”

To see more examples, Click Here

My comments: I was inspired by this post and included two unusual homes in this newsletter. The one below with a jail is a good example! Down the page is a $1 listing.

If the appraisal is for lending purposes, be sure to find out if it is “lendable” before spending much time on it. Lenders and CU/AVMs, like nice newer tract homes.

Whenever two appraisers meet, there is never a lack of conversational topics! This one is very popular! Be sure to get a higher fee, of course. These properties are an excellent learning experience. If your business is slow, now is a good time to do the “tough ones.”

Highest and best use are often the issues that are the most tricky for me, especially if you have to consider non 1-4 unit uses. HBU is a regular issue for the older commercial and mixed-use properties I appraise.

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Appraiser Salaries

By Ann O'Rourke on August 25, 2023 / appraisal business, humor, non-lender appraisals / Leave a comment

Tags: appraisal business, humor, non-lender appraisals

What’s the Average Real Estate Appraiser Salary?

Excerpts: On average, appraisers earn $102,620 a year. However… the average appraiser salary varies significantly across license levels.

Trainee appraisers earn an average annual income of about $53K. Licensed appraisers earn approximately $89K per year. Certified residential appraisers earn more than $101K annually. And certified general appraisers earn the most, making approximately $145K per year.

Like with many professions, the more time you put in, the more your hard work pays off. Average earnings tend to increase the longer an appraiser is in the profession, with the greatest jump being from 0-2 years of experience to 2-5 years of experience. Appraisers who have put in 16+ years in the appraisal industry tend to make the most ($118K), while those who have less than 2 years of experience earn the least ($43K).

To read more and see the charts, click here

My comments: Mckissock results are from their own survey of appraisers. I have seen this type information before, but mostly from contacting companies, recruiters or government databases. Most res appraisers are fee appraisers, but this lets you know the relative income levels based on various factors.

If you’re thinking about upgrading your license, this illustrates the income levels. For example, I do both commercial and residential appraisals, a significant positive factor in my income. When one is slow, I do more work in the other. Of course, if you are only licensed you should upgrade ASAP.

Relatively few residential appraisers have salaried jobs, but they are available at lenders, AMCs, assessors, etc.

My first appraisal job at a county assessor’s office in 1975 paid $900 per month. I would have never become an appraiser without a salaried job. Also, due to “affirmative action” at that time, women were hired for the first time as appraisers at assessor’s offices and lenders. An appraiser I know was hired by FHA as an appraiser trainee. She was previously a secretary. There were few women at my appraisal classes.

Until the early 1990s, when lenders outsourced appraisals to fee appraisers, most res appraisers had staff lender jobs.

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Apps for Appraisers

By Ann O'Rourke on August 18, 2023 / appraisal business, appraisal forms, data, Fannie Forms, Freddie, non-lender appraisals, real estate market / Leave a comment

Tags: appraisal business, Fannie, Fannie forms, future, non-lender appraisals, real estate market

7 Must-Have Apps for Appraisers

By: McKissock

Excerpts:

1. Dragon Anywhere

Dragon Anywhere is a dictation and speech-to-text app that allows you to create, edit, and share documents from your mobile device. This professional-grade dictation service could save you tons of time on typing reports and taking notes in the field. The company boasts a 99% accuracy rate as well as powerful voice editing capabilities. Dragon is very well-liked among appraisal professionals, making it number one on our list of must-have apps for appraisers.

6. Genius Scan

This app gets a lot of love from appraisers. Genius Scan makes it easy to scan, upload, and share documents using your mobile devices. It can even scan handwriting and convert it into text. This tool is excellent for making copies of tax records, floor plans, etc. Over 200 million users and thousands of small businesses are currently using Genius Scan. This app could be a lifesaver for your workfile creation.

To read about the other 5 apps, click here

My comments: Worth checking out. When business is slow is an excellent time to look for new apps, learn how to use your MLS and forms software, etc. etc. Dragon has been around a long time and is popular with commercial appraisers.

Fannie: Words and Phrases in Appraisals

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ChatGPT for Appraisers

By Ann O'Rourke on August 13, 2023 / appraisal business, appraisal how to, bias, liability / Leave a comment

Tags: appraisal, appraisal business, appraisal how to, bias, liability

ChatGPT: Valuable Tool or a Replacement for Real Estate Appraisers?

by Dustin Harris, The Appraiser Coach

Excerpts: ChatGPT: A Game-Changer for Appraisal Work

For those who have embraced it, ChatGPT has been transforming multiple aspects of appraisal work, such as:

Appraisal Work:

Writing narrative
Market analysis
Market-specific information
Descriptions of adjustments
Terminology
ResearchMarketing:
Creating lists
Writing emails and messages to current and potential clients
Crafting blogs
Strategizing networking and relationship development
Writing presentations for ‘lunch and learn’ events with real estate agents
Crafting the perfect apology letter when you upset a key loan officer in your small town
To read lots more, click here
My comments: Many thanks to Dustin for writing this article! I have not had time to use it, but have been reading and watching demos about how it can be used for appraisers for awhile. It definitely can be very useful, as Dustin explains. It can be tricky at first to use, but Dustin explains it.

I recently had to renew my California Driver’s license, as I am over 70 and had to do a written exam and eye test. I had difficulty setting up an appointment and clicked on “Chatbot”. It was much friendlier than any other Chat support I have used. I recognized the use of software similar to ChatGPT.

Fannie: Words and Phrases in Appraisals

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The Future of Residential Lender Appraisers

The End of Lender Appraisals?

By Ann O'Rourke on August 4, 2023 / appraisal business, bias, real estate market, USPAP / Leave a comment

Tags: appraisal business, Fannie, real estate market, USPAP

The End of Home Appraisals?

By Jeremy Bagott, MAI

Excerpts: In his 1946 essay “Politics and the English Language,” the late British novelist, essayist and critic George Orwell examined the connection between political orthodoxies and the debasement of the English language. In a truly Orwellian move, mortgage giant Freddie Mac recently announced its intent to censor an arbitrary collection of words such as “desirable,” “safe,” “well-kept,” “student” and “crime” when they appear, in any context, in the hundreds of thousands of appraisal reports it relies on in mortgage underwriting. It would be hard to make this up.

As with all banned words, Freddie’s list will lead to the need to ban additional words over time as appraisers, expunging the word “desirable,” will find synonyms when analyzing market reaction to the views of two homes or to the cul-de-sac location of a home versus the midblock location of a comparable. When discussing how market participants view side-by-side school districts, appraisers will figure out they can use synonyms like “advantageous,” “preferable,” or “beneficial” instead. Soon, these words, too, will need to be banned. In a college town, the banned word “students” will become “matriculants,” a word that will likewise need to be banned.

The attack on the protected speech of independent appraisers erodes their ability to describe how the properties they appraise relate to the preferences of market participants. The censorship is part of a march toward what appraiser and podcaster Phil Crawford has coined “universal basic home value” – a utopian vision among idealogues in which government technocrats dictate the supposed value of a property using algorithms and machine learning. The censorship began with Fannie Mae, and has now predictably spread to Freddie Mac.

To read more plus appraiser comments, click here

My comment: Worth reading. Lots more AMC/lender appraisal correction requests. Last week’s email had a discussion of the “words” which got a lot of clicks by appraisers wanting more information.

Fannie: Words and Phrases in Appraisals

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Value of a Pool for Homes?

By Ann O'Rourke on July 21, 2023 / adjustments, Freddie, non-lender appraisals, real estate market / Leave a comment

Tags: adjustments, appraisal business, real estate market

The value of a pool for Homes?

July 18, 2023 By Ryan Lundquist

Excerpts:

Some areas have more pools than others

Real estate is about location. That’s what we always hear. And, it’s true. Homes in different locations and price points tend to have different amenities, and that includes pools. Keep in mind the presence of a pool could be about lot size also – not just the price range.

More pools at higher prices

Here’s a look at the percentage of homes sold with pools by price range in a few local counties. In short, the higher the price, the greater chance of having 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.

NOTE: Does your market look similar?

Adjustments for pools

Last but not least, let’s remember there is no such thing as a one-size-fits-all adjustment for a built-in pool because the value of a pool is going to depend on quality, condition, and even age. But it’s also about location because some price ranges and areas simply expect a pool to be present. In contrast, pools hardly exist in some locations, so it’s less of a factor because buyers don’t expect a pool. Ultimately, let’s look to the comps for the answers. What are buyers willing to pay? The ideal is to find similar homes with and without pools to help us understand that.

To read more and see Ryan’s tables and graphs on pools, click here

My comments: I live in an island city with a “Mediterranean” climate located on San Francisco Bay, which means some fog and moderate temperatures. This week, the highest temperature will be under 70 degrees. About 10-15 miles away, east of the hills, the climate is totally different, with very hot summers. The current high temperature there is about 100 degrees.

Where I live, very few homes have pools. After 35 years of appraising here, the value effect is none. Often, the MLS mentions that the sellers will fill in the pool, but I don’t know if that has ever happened. In dramatic contrast, when I first started appraising “over the hill”, 10-15 miles away where there are many subdivisions, I noticed that in certain neighborhoods, a pool was almost mandatory. I used comps with pools for any homes with and without pools to see any adjustment.

If you are not in an area where this is clear, making pool adjustments can be tough without adequate comps. I have appraised a few homes with pools in areas with few pools. It was tricky.

Pools can be a significant hazard, especially for children. Also, maintenance and heating is a hassle.

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Lenders Not Using AMCs for Appraisals

By Ann O'Rourke on July 1, 2023 / appraisal, appraisal business, Fannie Forms / Leave a comment

Tags: appraisal, appraisal business, Fannie forms

Lenders Not Using AMCs for Appraisals

By: McKissock June 23, 2023

Excerpts: Some appraisers seek alternate ways to find work outside of appraisal management companies (AMCs). One strategy is to pursue opportunities to be engaged directly by financial institutions and banks by being included on their fee panel. To help you get started, we asked our appraisal community, “What advice can you offer on how to identify financial institutions and banks that engage appraisers directly, without involving AMCs?” Here’s what they said.

Below are helpful tips on how to find financial institutions and banks that engage appraisers directly on fee panels. In a nutshell, our survey respondents recommended that you should:

Look for small, local banks and lenders.
Network to build relationships.
Join the Mercury Network.
Simply ask around!

To read more, click here

My comments: Short and worth reading. When I started fee appraising in 1986, my first client was a small local bank with a few nearby branches. After AMCs took over, the bank continued to do their own appraisal management. Their volume went up and down with mortgage rates, but they always had some appraisals to fee out. Even today, their regular fee appraisers get some work.

Fannie: Words and Phrases in Appraisals

By Ann O'Rourke on June 16, 2023 / appraisal business, Fannie, non-lender appraisals, ROVs / Leave a comment

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

What Fannie Says Effective June 29, 2023

Say This, Not That: Words and Phrases to Replace in Your Appraisal Reports

By McKissock

As part of our contributor series, Julie Molendorp Floyd gives tips on how to use more objective language in your appraisal reports ahead of the new Loan Collateral Advisor (LCA) alert messages that will take effect June 29, 2023.

Excerpts: Following that thought process, our appraisal language has simply got to change to reflect current times. In addition, our lenders and GSE’s are implementing tools and programs to identify when “Certain prohibited, subjective or potentially biased words or phrases are included in appraisal reports.”

(Freddie Mac Announcement: “Loan Collateral Advisor: Starting June 29 New Messages Alert Users to Certain Unacceptable Appraisal Practices,” April 28, 2023)

To read, click here

So, if we have the technology and tools to present our conclusions in clearer, fact-based ways, let’s get ahead of the program and make the changes proactively.

None of us enjoy completing revision requests. They take time, effort, and ultimately do not contribute to our bottom line. However, revision requests are part of an appraiser’s life. How can you go about crafting your appraisal report to avoid a revision request for “problematic language” or “unsupported conclusions”? Let’s dive into some words or phrases that should not be included in your appraisal reports and uncover ways to convey your meaning in a compliant, credible way.

Topics:

Moving toward fact-based language
Words and phrases to replace in your reports
Samples:
Say This Not That:
Within 10 blocks of shopping areas — Convenient to shopping areas
Conforms to current market trends — Traditional
Primary bedroom, ensuite — Master Bedroom

To read more, click here

My comments: If you do lender appraisals, read this post.

Changes in names is nothing new for appraisers. Since FHA, etc stopped redlining since the 1970s, appraisers have been asked to avoid certain words. Now Fannie’s computers will let lenders know.

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