NAR: Appraisal License Equivalency Credit for RE Agents?

NAR Urges Appraisal Foundation To Establish Equivalency Credit for Education and Experience

Excerpts: The AQB previously considered the option of allowing parallel professional non-appraisal experience. In a July 9, 2015, Concept Paper – Alternate Track to the Experience Requirements in the Real Property Appraiser Qualification Criteria, the AQB asked: “Are there practical alternatives for some (or all) of the appraisal experience requirements to include non-appraisal experience?”

The National Association of REALTORS® believes there are alternatives to some of the experience requirements that the AQB should consider.

NAR sent a letter to the Appraisal urging the Appraisal Foundation (TAF) to review the experience and education of workers in parallel professions and consider it for potential credit to satisfy the accreditation requirements of appraiser licensing.

Excerpts from the letter:

… including, but not limited to, experience in real estate market analysis and real estate brokerage, including:

• Evaluating and pricing residential real estate

• Counseling buyers, sellers, owners, and tenants on inspections and remediations, improvements, and the appraisal process

• Counseling buyers, sellers, owners, and tenants about listing and offering prices, and market rent

• Completing broker price opinions and Competitive Market Analyses

• Completing Evaluations in compliance with the Interagency Appraisal and Evaluation Guidelines

• Compliance with Fair Housing laws, rules, and regulations

• Compliance with the Equal Credit Opportunity Act

To read the letter (PDF), click here

My comments: Real estate agents and brokers are salespersons. They provide CMAs, etc., which can relate to valuation. I don’t know if Realtors can be re-trained to see value rather than price. I speak with a lot of Realtors and many are not oriented the same as appraisers.

Over the years, I observed that successful real estate agents seldom switched to the much less profitable appraisal side. Persons who started in sales but were not very good sometimes went into appraising.

On the other side, appraisal provides excellent experience for real estate agents. I know some successful agents who were trained as appraisers and appraised for awhile. There are also agents/brokers who are licensed appraisers and do both. Appraisers with real estate sales experience know real estate from the “inside” by interacting with buyers and sellers. Appraisers are real estate reporters.

Does NAR want to allow some appraisal experience and education instead of 100% sales experience and more than one appraisal class for a broker’s license? What about a salesperson license?

I have been a licensed real estate broker since 1986. I got it mostly for MLS access and have only done one sale, representing the buyer. At that time, no sales experience was required for a broker’s license, only a 4-year degree. I am familiar with the current experience requirements for a broker’s license. Can appraisal experience count for some of these experience requirements? It should go both ways.

NAR Appraisal Survey 2022

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 George Harrison passed, Appraisal business, marketingunusual homes, mortgage origination stats, etc.

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Fire Island’s NY Legendary Pyramid House for sale at $6.5M

Built in 1961 (renovated in 2006 by architect Hal Hayes), 3 bedrooms, 2 baths, 2100 sq.ft. Sold 4/1/2013 for $998,000

Excerpts: The centerpiece is the great room with its soaring ceiling and wall of glass (living room, kitchen and dining) overlooking the dunes (Fire Island National Seashore), the ocean and the bay. Beneath, the enormous primary suite (dressing room, large bathroom and private study) looks out to the dunes on one side and the pool deck on the other.

Across the pool deck are 2 guest cabana bedrooms and a bathroom in between, all in the shape of pyramids. Cooling ocean breezes flow day and night in this sophisticated, relaxed compound. Multiple decks and work areas in the home offer privacy and convenience and graceful separation of space.

To read more and see lots of interesting photos click here 

My comments: I love the 4 pyramid cabanas!

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George R. Harrison, Ph.D. passed November 28, 2022

Funeral services were held on December 1, 2022. George was 85 years old.

We miss him.

(Photo: George is on the right side, front. Having a good time!) 

To read more and add your comments and personal stories, plus see photos and a Tribute Memorial video on his Memorial Page, click here 

Appraiser eLearning Briefing 11.28.22 (10 minute video) Remembering George Harrison. Sharing their memories of George are Hal Humphries (Appraiser eLearning Partner) and Teresa Walker (NAA Administrator), and Bryan Reynolds (Appraiser eLearning)  To watch the video, click here

George had a Ph.D. in Economics from Pacific Western University, Univ of Texas @ Arlington & University of Texas @ Austin, and a Bachelor in Economics from the University of Texas at Austin. After graduation he worked for USAA in Real Estate Development.

George founded Columbia Institute and was its president, from 1992 to 2018, a school for continuing education of Real Estate Appraisers. Courses were taught in many states. In the early 90’s, he spent time in Moscow and Bulgaria training appraisers, as well as hosting some of them here. The Columbia Institute was acquired by Corelogic in 2016 and ceased operation in May 2022. To read more click here 

George was a founding member of the National Association of Appraisers (NAA). He served on the Board of Directors, was a President, and was an Emeritus Member.

For more information on NAA click here  NAA Facebook page click here  Add your comments.

The first Appraisal Summit was co-hosted by Appraisal Today and The Columbia Institute. There were 109 attendees. It continues to run annually and is hosted by NAA and Appraiser eLearning.To read more click here 

The Appraisal Update Podcast 11.29.22 – Thank You, Dr. George Harrison (13 minutes). Bryan Reynolds’ very personal comments on George, including how he helped Bryan get started teaching appraisers. To watch the video, click here

Personal comments from Teresa Walker, who worked with George for many years

I don’t even know where to start. I looked on Facebook a few minutes before turning off my phone for 8 days. I saw that my mentor, boss, and father figure, George Harrison, had passed away. I quickly sent out emails to everyone I could think of to let them know and I turned off the phone.

I remember meeting George Harrison shortly after I moved to San Antonio in 2001. He remembered me from Valuation 2000. There were 3,000 people at that meeting. He told me I wouldn’t let the person in front of him attend a session because they didn’t have their badge, and I made them walk back to their room (1/4 mile in the MGM) to get it. That sounds like me. Anyone familiar with the appraisal industry knows that 95 percent of the people that were there were probably older white men. There were only a few African American women attending appraisal conferences at that time, so I was probably easy to spot and remember.

He nurtured me, mentored me, and made me think I could do the impossible. All the things he encouraged me to do, I’m doing now. He would get mad at me and punish me like a parent, and we would get through it. Running a national association, managing multiple state associations were his ideas…not mine. When I went to work with him at Columbia, I was working 2 hours a day. That led to a full-time consulting job for 6 years. After we started NAA and the Appraisal Summit and I started to manage ATA (Association of Texas Appraisers), I had to cut back my hours with Columbia. Who would have thought that those entities would be what they are today!

If we didn’t travel together to attend conferences, he would give me a big hug like he hadn’t seen me in years (when in fact, it had only been a day or so). 😊

Thank you, George, for all you did for me and this profession that you loved so much. You will be missed.

My personal comments: George called me before the first Appraisal Summit on December 9-11, 2009. I did not know who he was. The same day, I found out a lot about George. I was impressed with his qualifications and agreed to help him with the Summit as a co-host. I did my Appraisal Today National Conference from 2001 to 2006 and learned a lot about doing national appraisal conferences. Doing a national appraisal conference during the 2008 crash was risky but very much needed by appraisers. Many thanks to George.

I will never forget George’s wide smile. He was a very nice, kind person and definitely One Of The Good Guys. George was dedicated to teaching appraisers.

The image below was created by Teresa Walker.

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2022 year-end tax planning for appraisers.

It’s still possible to save on your 2022 taxes!

Excerpts:

Your most important decision this year is if you expect your total taxable income (personal and business) in 2023 to go up, stable, or down from 2022.

If next year you expect it to be lower, make many purchases, donations, etc., before year-end. Also, defer 2022 income until 2023.

If you expect your 2023 income to be higher than 2022, consider deferring purchases, donations, etc., as you will need them more in 2023.

If you expect no change in income for the next year or are not sure, you can make year-end purchases and some or all of your other deductions. I do them just in case my income may be lower in 2023.

There are many 2022 tax changes due primarily to expired 2021 pandemic laws and 2022 high inflation. I strongly recommend getting an experienced CPA or enrolled agent to do your 2022 taxes. For example, there are different business mileage rates for the first 6 months and last 6 months of 2022.

I have been writing these annual articles for many years. These are definitely these are most complicated and confusing tax changes I have seen.

To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you save money on your 2022 income taxes, it is worth the subscription price!

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Which is MOST important for building strong appraisal-client relationships?

McKissock Survey

Top earners in the real estate appraisal profession are those who consistently bring in new clients. If you’re looking to earn more referrals and repeat business, a great place to start is by fostering good relationships with your appraisal customers. To help you out, we asked our appraisal community,

The top two answers were “clear communication” and “credible results.” Survey respondents identified these two things as being the most essential for establishing and growing strong appraiser-client relationships. The other available answer choices were “competitive fees,” “quick turnaround times,” and “detailed report”; however, zero respondents selected those as being the most important.

Clear communication

Comments from those who selected “clear communication” as their answer choice included the following:

“Open communication between all parties involved in the appraisal process is the key to giving lenders the most credible results.”

“Clear communication is essential to establishing the scope of work, if there are any other clients involved. Investigate by asking specific questions pertaining to the property such as improvements, what and how long ago, permitted work, HOA, municipalities, etc. to be able to provide credible results for the final report.”

To read more, click here

My comments: Worth reading. See the origination forecast below. I have seen this same communication recommendation many times, both from clients and savvy appraisers.

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Famous Kellogg Doolittle estate in Joshua Tree California

10 acre site. 3 bedrooms, 3 baths, 7,357 sq.ft. 

It is one of the most exclusive homes in the world, and is available for the first time as an Airbnb Luxe exclusive. ($7,357 per night)

Created over 25 years, Kellogg Doolittle in Joshua Tree National Park is a marvel of the organic architecture movement. A residence that is so “one-of-a-kind,” nearly every element, inside and out, is handcrafted by architect Ken Kellogg and Master Craftsman John Vugrin.

Kellogg, a former protege of Frank Lloyd Wright, has taken organic architecture to new levels with this outstanding house. The Kellogg-Doolittle House contains no straight lines or rectangular spaces.

Instead, the house forms around 26-winged piers composed of organic material built quietly into the natural landscape: the kitchen and living room stretch softly around an unmoved, million-year-old rock formation, while the glass panels peek into a sprawl of sunrise and sunset views.

To read more and see many photos, click here

My comments: Very interesting, including the photos! I love rocks. Took a geology class my last semester in college and would have changed majors, but it took too many more classes to graduate.

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MBA Revises Originations Forecast Downward For 2023

Now predicts lenders will originate $1.98 trillion overall in mortgages in 2023, down 12% from 2022 and down 3.5% from its October forecast. 

Nov. 29, 2022

Excerpts: Next year will be an even slower year for home purchase and refinance loan originations than previously expected, according to an updated forecast from the Mortgage Bankers Association (MBA).

The reduced forecast for the year includes a 5.5% decline in purchase originations to $1.49 billion and a 27.4% decline in refinances to $484 million. Both totals also were revised downward — by 2.7% and 5.7%, respectively — from its October projections.

The MBA’s latest forecast now represents a dramatic revision from its forecast issued a year ago. In that forecast, it said it expected $1.85 trillion in purchase loans and $676 billion in refinances.

The MBA also lowered its fourth-quarter forecast for this year for overall originations $398 billion, 2.9% lower than its forecast in October. The revised amount is also 60% lower from 2021. The forecast for 2022 was also revised downward to $2.24 trillion, a 49% drop from its 2021 peak of $4.44 trillion.

Includes a link to a table with mortgage origination history and forecasts.

To read more, click here

My comments: No one really knows what will happen as it is affected by the Fed’s rate changes. My motto: Plan for the Worst. Hope for the Best!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.mba.org Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW 7 AM to noon, Pacific time.

My comments: Rates are going up. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications decreased 0.8 percent from one week earlier

Mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 25, 2022. This week’s results include an adjustment for the observance of the Thanksgiving holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 33 percent compared with the previous week. The Refinance Index decreased 13 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 31 percent compared with the previous week and was 41 percent lower than the same week one year ago.

“Mortgage rates declined again last week, following bond yields lower. The 30-year fixed mortgage rate decreased to 6.49 percent and has now fallen 57 basis points over the past four weeks. Additionally, mortgage rates for most other loan types declined,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The economy here and abroad is weakening, which should lead to slower inflation and allow the Fed to slow the pace of rate hikes. Purchase activity increased slightly after adjusting for the Thanksgiving holiday, but the decline in rates was still not enough to bring back refinance activity. Refinance applications fell another 13 percent, and the refinance share of applications was at 26 percent. Both measures were at their lowest levels since 2000.”

The refinance share of mortgage activity decreased to 26.1 percent of total applications from 28.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 9.0 percent of total applications.

The FHA share of total applications decreased to 12.2 percent from 13.4 percent the week prior. The VA share of total applications increased to 11.2 percent from 10.5 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.49 percent from 6.67 percent, with points remaining at 0.68 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200) increased to 6.35 percent from 6.30 percent, with points decreasing to 0.61 from 0.74 (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 decreased to 6.57 percent from 6.66 percent, with points increasing to 1.14 from 1.01 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.02 percent from 6.08 percent, with points decreasing to 0.69 from 0.70 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.48 percent from 5.78 percent, with points increasing to 0.89 from 0.73 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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.

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com 

www.appraisaltoday.com

 

Appraisers and Local Market Analysis

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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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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NAR Appraisal Survey 2022

NAR Appraisal Survey 2022

Excerpts from NAR Report (link below):

In May 2022, NAR Research conducted a survey of all 9,700 appraiser members and 50,000 randomly-selected non-appraiser members.

54% of appraisers report that appraisal management companies (AMCs) have been among the greatest challenges in their businesses in the past year; 30% cite expanding regulations.

The typical appraiser reports a 40-mile radius in which they conduct appraisals. 68% report practicing within a radius of 20–59 miles.

Virtually all appraiser respondents (97 percent) have conducted an in-person appraisal, and 79 percent have done so by desktop/drive-by appraisal. Eleven percent cite evaluations (non-appraisal opinions of value). The eight percent who cite other valuation methods most often explained that they use a hybrid approach or mostly an exterior appraisal.

Two-thirds of appraisers (66 percent) are asked monthly or more often to conduct appraisals outside of the geographic area or the property type in which they feel their expertise is. Close to one-third conduct an appraisal outside their area of expertise on a weekly basis. Twenty-three percent of appraisers report never having to conduct an appraisal outside of their geographic area or area of expertise.

Appraisers are significantly more likely than other members to say that the most competent are not being selected most of the time (22 percent vs. nine percent) or at all (16 percent vs. six percent) and much less likely to say they are being selected most of the time (12 percent vs. 23 percent).

A few comments:

  • “Appraisal Management Companies are destroying our profession.”
  • “Appraisers are the “truth tellers” in this process. While agents can “puff” we cannot! If a property is listed at $315k, with an offer of $345k, do not harass the appraiser when the appraisal comes in at list!! If it had a market value of $345k, it would have listed at $345k!”
  • “AMCs are a significant issue for not only appraisers but for the consumer. They bid out each appraisal to maximize their profit, usually harming turn times and passing on costs to the appraiser and to the borrower.”

To read the report, click here

My comments: Read the PDF report. Easy to read with good graphics, similar to the graphic above. Since it was done in May, it focuses on appraiser shortages and delays, mostly from the non-appraiser respondents.

It has both appraiser and non-appraiser survey questions, which is a bit tricky to read. Some of the questions are relevant today, such as AMCs. Other questions are not as relevant, such as fees, as the appraisal market in many areas is not as strong as in May when the survey was done.

How much appraisers travel was interesting. I only work in my island city, 1 mile by 3.5 miles. I hate leaving the Island! Island mentality, I guess ;> I used to work in a much larger area, of course.

What is the farthest you have traveled to complete an appraisal and still be considered geographically competent?

Appraisal Business Tips 

Humor for Appraisers

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Appraisal in Changing Markets

Sellers Chasing the ball down the road in real estate

By Ryan Lundquist

Excerpts: Commentary from a (Ryan) appraisal: Here is a bit of commentary in one of my recent appraisal reports. This is only part of what I say because I’m a man who needs a few paragraphs. One box just isn’t enough.

“At the least we ought to describe the market as showing a downward seasonal shift, though it’s possible we can call this a downward cycle if the trend persists over time. For now, it is most reasonable to categorize the market as having growing uncertainty and blatantly inflamed downward seasonal price declines compared to a normal seasonal trend. At the least, properties are clearly selling for less than they did several months ago. The regional median price has ticked down about 7% since May, which is $45,000. This doesn’t mean every property is worth $45,000 less, but it’s been clear buyers have been resisting paying higher prices.”

Okay, one last thing about size: During the beginning of the pandemic there was a blatant spike in home size due to a greater focus on larger homes at higher prices. This spike basically peaked one year ago as size has started to normalize. Now let’s keep watching to see what happens to size. Will we see smaller homes more often as first-time buyers flood the market? Will we see fewer sales at the highest prices? To be determined.

To read more, click here

My comments: Scroll down the page for more comments from Ryan. Markets are changing in many areas, but are complicated by price range, size, etc. I remember the easy days of market condition adjustments 1% per month up or down, for example, to apply to all detached home appraisals. Ryan has been writing about the ups and downs of his market for a long time. Maybe you can use some of his ideas, graphs, and/or explanations in your appraisals.

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Navigating a Changing Market

by Isaac Peck, Editor

Excerpts: … senior leaders at AMCs, lenders and the GSEs have noted that slower appraisal volume will favor those appraisers who can stay in communication with their clients and provide faster turn times. “During the heyday of 3 percent interest rates, it was acceptable for appraisers to take three to four weeks to complete an appraisal and forget to update the client. Now that volume has declined to normal levels, those appraisers who aren’t providing good customer service may see their businesses suffer,” remarked a senior executive at a major bank.

At the end of the day, (Ryan) Lundquist says his goal is to report what is happening in the market right now—accurately and without sensationalism. “I’m constantly changing what I say in my appraisals, and I’m very careful of boilerplate and canned statements. A quick change in interest rates has led to a quick change in the market. My appraisals talk about more stable prices in my area but also about uncertainty regarding the future. Pending volume is softening, available listings are skyrocketing, and it is taking longer to sell—but there are still stats that suggest there is heavy competition for certain homes. It changes by the week. There’s no easy way to quickly do this, it takes effort. There’s no such thing as being a market expert without putting in the time to be an expert,” argues Lundquist.

To read more, click here  

My comments:  This article uses AEI data, graphs, and reports from June. Some are out of date in September. I follow AEI (American Enterprise Institute), which has excellent data and reports. For more info on AEI, click here 

The MBA data, loan application volume (see below) is the future of appraisal volume. Using recent September data, loan applications are below the levels in 2019 and still dropping. I have a graph of this every month in my paid monthly newsletter. Loan applications went up this week but are still below 2019 levels.

The upcoming October issue of the monthly Appraisal Today has an article, “Which are your best current and former AMC/lender clients? What do they want?” The Big Three: Turn Time/Quality/Fee. I discuss what lenders want and how to provide better service and get more business. Number 1 for lenders (AMCs’ clients) has always been turn time.

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 VA changes, Driving vs. office time, unusual homes, mortgage origination stats, etc.

 

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Appraisers: What should you have in your car?

Appraisers: What should you have in your car?

Excerpt: Here are a few items:

  • Screwdriver: A screwdriver has many uses. You can use it to take the cover off a crawl space entry panel, check wooden structural members for rot or insect damage, remove an electrical outlet cover to check for insulation in the walls, etc.
  • Voltage detector: To determine whether wires are live.
  • Ice pick: To check for termites or wood rot.
  • Magnet: To determine whether old pipes are made of iron or lead.
  • Mace or pepper spray: To defend yourself, especially if you’re appraising REO and foreclosure properties.
  • Bug spray: To protect yourself from mosquito bites, ticks, etc.
  • Spare clothes and footwear: Including an extra coat or jacket, hat, and boots—especially if you work in rural areas.

To read more, click here

My comments: Good tips! I definitely need to add some of the items to my car, especially dog repellent, which is not on the list. I have been bitten by dogs. I left the homes and contacted the lender. Don’t know if they got their loan and did not care. Once two large Dobermann dogs broke down a trailer door. I barely got into my car in time.

This was originally posted on McKissock’s Appraisal Blog, but that link was not working.

Appraisers – The Past and The Future

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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 AMCs, appraisal business, real estate market, unusual homes, mortgage origination stats, etc.

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Reconsideration of Value and Appraisers

How to Respond to ROV Requests: Updated Guidance

By Greg Stephens, SRA, AI-RRS

Excerpts: Suggested protocols for responding to Reconsideration of Value requests

When you receive an ROV request, some recommended steps to take include:

1. Maintain USPAP compliance – Confirm the ROV request came from your client, either directly or through the client’s AMC, acting as an agent for the client, or other party designated as an agent by the client. The importance of this cannot be overstated. Appraisers are still required to comply with USPAP when responding to an ROV request, including the confidential nature of assignment results.

2. Identify ROV content to determine next steps – take the time to analyze the content of the ROV to determine what specifically is being requested of you (the appraiser) and what level of information will be needed to respond to the requestor of the ROV. This is an opportune time to maintain a professional demeanor and not react to an ROV request as if it is an affront to your competency or experience. After receiving an ROV request, send an acknowledgement of receipt and advise the client that the ROV request will be analyzed and responded to in a timely manner.

To read more, click here

Click here to listen to Tim Andersen, MAI’s podcast, “Reconsiderations of Value: Satan’s Own Seed, Right?” (Podcast 9.5 minutes) on ROVs, included in a 12-21 issue of this newsletter, so it may look familiar to you.

My comments: ROVs are a PITA for many appraisers. Very well written and practical. Greg Stephens is a very experienced appraiser and reviewer. He worked in management positions for several large AMCs.

Reconsideration of Appraised Value

Appraisal Business Tips 

Humor for Appraisers

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Cost Approach – When to Use in Appraisals

Fannie Mae and the Cost Approach

Excerpt: We often receive questions from appraisers regarding Fannie Mae and the cost approach. For example: “I’m appraising a property and have been instructed to comply with Fannie Mae guidelines. I understand that Fannie Mae requires the sales comparison approach, but what if there aren’t enough good comps? Can I use the cost approach as the primary method of valuation?”

Answer: No!

In order to comply with Fannie Mae guidelines, the sales comparison approach must be the primary method used to determine the value. In fact, Fannie Mae will not purchase a mortgage on a property if the cost approach is the primary or only method of valuation used.

Quite simply, if there isn’t enough data for the appraiser to develop a reliable opinion of value by the sales comparison approach, the mortgage will not be marketable to Fannie Mae.

However…

To read more, click here

My comment: I included this article plus the one below, which both address the Cost Approach’s common appraisal questions.

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The Cost Approach: An Underutilized Approach to Value

Excerpt: In residential appraising, the cost approach and the income approach have in many cases become less utilized in favor of sole reliance on the sales comparison approach.

There are occasions when the income approach can be the primary indicator of value for residential properties, such as developments with a high percentage of homes owned by investors.

The fact that Fannie Mae won’t accept reports that rely solely on the cost approach, with a few rare exceptions, doesn’t mean that approach can’t be the primary indicator of value. It just means Fannie Mae won’t buy that loan.

To read more, click here 

My comments: I started with an assessor’s office in the 1970s. At that time, my county was changing from only using the Cost Approach for decades to a sales-based approach. I never liked to use only the Cost Approach when I started doing fee appraisals.

In my area, there are very few land sales. There has not been one for over 20 years in my city. Depreciation is always iffy when appraising Victorian homes built before 1915.

But, I always use the Cost Approach for new construction to determine the financial feasibility of custom homes. I use a few land sales from other cities. If the new proposed home is on a vacant parcel, I go back to when the parcel was purchased, sometimes many years ago, and do a market condition adjustment.

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So Many Appraisal Cost Approach Questions

Appraisal Business Tips 

Humor for Appraisers

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Appraisal Reviews – The Good and The Bad

What to Do When Your Appraisal Is Under Review

Excerpt: Topics:

  • Remember that reviewers are on your side
  • Look out for these common points of contention
  • “The number one mistake is that the appraiser did not include the lender’s specific report requirements,” Nakashima confirms. “Often, the appraiser will not read the lender’s requirements—and if those requirements are not in the report, it cannot be delivered, or the lender will send it back.
  •  Avoid future revision requests

“You can’t avoid the report being reviewed, but you can avoid revision requests,” he says. “Check your report for common mistakes. Review the specific lender requirements and make sure you covered all the bases. When you can’t meet a requirement, include a comment that explains why not.”

To read more, click here

My comments: Worth reading if you do lender appraisals. Some good tips for reviewing your non-lender appraisals. I have never had any reviews for my non-lender appraisals similar to the reviews above. When I did lender res appraisals for direct lenders before 2005, I was usually only contacted if I had a typo: address, no value, etc.

Review appraiser liability

Appraisal Business Tips 

Humor for Appraisers

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Appraisers: How to Spend Less Time on Email

Appraisers: How to spend less time on Email

Excerpts: Many appraisers report that they’d like to spend less time on email. The task of providing status emails eats up time in the workday and tends to be more complex and time-consuming than typing a quick email reply. Status requests from AMCs typically require you to log in to their system and go through the process of updating the order status on their website. Simple enough, but if you are doing this several times a day for multiple orders, it interrupts your workflow and decreases your productivity.

2. Only check email twice a day, at designated times

Set aside two short time windows for email (15 or 30 minutes each). Do not read or reply to emails outside of those time windows. For the rest of the day, turn off email notifications on your phone, etc., so that incoming emails won’t interrupt your work. You can add a note to your email signature letting people know that they can reach you by phone if they need to get in touch on an urgent matter.

To read all 7 ways, click here

My comments: I regularly write about managing your emails in my monthly newsletter, including getting to Inbox Zero. This blog post is the best I have ever read, as it is specifically for practicing appraisers.

How to Manage Your Email

Appraisal Business Tips 

Humor for Appraisers

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VA Approves Desktops and Exterior-Only Appraisals

VA Approves Desktops and Exterior-Only Appraisals

Excerpts from the Summary: On August 1, 2022, the Veterans Affairs released Circular 26-22-13 announcing new procedures for alternative valuation methods, effective immediately.

“The use of a Desktop Appraisal may allow an appraiser from outside the market area, but with appropriate credentials for the jurisdiction of the property, to complete the assignment when no local VA fee panel appraiser is available.”

“Appraisal Assignment Waterfall. With consideration for the high demand for appraisal services and limited availability of appraisers in certain local market areas, VA is providing lenders, servicers, and appraisers with a procedural waterfall that clarifies acceptable valuation methods when certain conditions exist. Lenders and appraisers can also refer to Exhibit A for more information. VA continues to explore opportunities for expanding the use of Exterior-only Appraisals and Desktop Appraisals and will update this procedural waterfall, as appropriate.”

To read the full blog post, click here

The summary and Circular are in the blog post.

To read more about the May 2022 proposal to eliminate the fee panel, click here 

I wrote about the VA in my July 8 email newsletter. To read it, click here

My comments: The big push to cut down on appraisal turn times because of the appraisal shortage is Very Old News since mortgage volume has plummeted. I always recommend VA as the best lender client for appraisers. I wrote about it in the past and interviewed VA employees, appraisers on the VA panel, and appraisers who did not want to do VA appraisals in my paid monthly newsletter.

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Where VA loans are soaring. Are you doing VA appraisals?

Appraisal Business Tips 

Humor for Appraisers

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