Posts Tagged appraisal business

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Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

FHA Handbook 4000.1 Appraisal Changes

By Ann O'Rourke on January 27, 2023 / AMCs, appraisal business, bias, FHA, non-lender appraisals / 1 Comment

Tags: AMC, appraisal business, bias, FHA, non-lender appraisals

FHA Handbook 4000.1 Appraisal Changes

By Dan Bradley

Excerpts: On January 18, 2023, HUD issued an announcement regarding revisions made to Handbook 4000.1. According to the announcement, the revisions included “enhancements and revisions to existing guidelines and various technical edits.”

The most significant of these revisions was the elimination of the requirement to include the 1004MC form as an attachment to the appraisal report.

Changes to the Handbook also include several other minor, but nevertheless meaningful, edits and clarifications to FHA appraisal requirements, including:

Under “Attic Observation Requirements,” a clarification was made regarding the appraiser’s obligation to “safely” access the attic. The language requiring a minimum “head and shoulders” access into the attic was deleted.

Under “Crawl Space Observation Requirements,” significant revisions were made, including removal of a bullet point list of MPR/MPS criteria for the crawl space. Also, language requiring a minimum “head and shoulders” access into the crawl space was deleted.

The changes outlined in the Handbook may be implemented immediately but must be implemented for FHA cases assigned on or after April 18, 2023.

To read more, click here

My comments: Many thanks to McKissock for telling us what we need to know. Includes a link to the “redline” version of 4000.1 so you can skip over most of it. Scroll down to “Updates, Revisions, Notifications” to get the redline versions.

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Top Ten Reasons Why It Is Great to be an Appraiser!

By Ann O'Rourke on January 20, 2023 / AMCs, appraisal business, forecast, humor, real estate market / Leave a comment

Tags: AMC, appraisal business, forecast, humor

Top Ten Reasons Why It Is Great to be an Appraiser!

10. Dazzle your friends with your knowledge of external obsolescence.

9. The wonderful world of rats, bats, and spiders.

8. Be a part of the profession blamed for the collapse of the savings and loan industry.

7. See places in people’s houses that usually require a search warrant to access.

6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.

5. Chance to really irritate annoying real estate salespeople.

4. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.

3. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway.

2. See that some people really do hang those black velveteen pictures of Elvis on their living room walls.

1. Be one of a handful of people who know that USPAP is not a medical term.

Many thanks to reader Joe Ibach, MAI, for this great list! He doesn’t know the source…seems like it is one of those email/send/resends now floating around the Internet!

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1-12-17 Newz .New scam: owners pose as renters, 21 day turn times

Appraiser Scam – Be Careful!

By Ann O'Rourke on January 13, 2023 / appraisal business, Fannie, non-lender appraisals, real estate market / 1 Comment

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

Appraiser Scam – Be Careful!

Posted Jan 5 on National Appraisers Forum. This was also posted in the 100% Appraisers group on FaceBook as happening to others.

“Last week, I received a text from “Master Chief Robert Roy” requesting an appraisal for a cash purchase. I thought it was odd that he was addressing himself by his rank as I do work for the VA and no service member has ever done that in my experience. Also my daughter’s boyfriend, a West Point graduate, was visiting at the time and he also thought it was odd too. I looked him up on line and saw that he was a Navy Seal and a public speaker. I addressed him as Sir in our texts out of respect.“

“He requested that I inspect the property 1/5/2023 as the inspector would be there at the same time. My fee was $775 however sent me a $1950 cashier’s check via Fed Ex the next day. He stated that his assistant mistakenly included the inspector’s fee and would I please pay the inspector the $1175 balance. (That seemed high for an inspector….) “

One of the responses:

“Sorry this happened to you. I posted about this about a month ago. Same guy. Because it seemed so odd, I didn’t respond to him and instead called the listing agent directly. He said I was the 4th female appraiser to call him about this in 24 hours. He had reported it all to the police. I never responded to the dude, as it is obviously a scam or worse. When I researched the name he was using, I found that person to be deceased. “

My comments: When appraisers are very slow, it is very hard to turn down an appraisal. Savvy scammers may know about this. Beware!!

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

VA Required to Encourage Hybrid Appraisals

By Ann O'Rourke on December 30, 2022 / appraisal business, bad appraisers, forecast, hybrid appraisals, non-lender appraisals, va / Leave a comment

Tags: appraisal business, Bad appraiser, non-lender appraisals, va

VA Required to Encourage Hybrids – Senate Passes HR 7735

By Dave Towne December 21, 2022

Excerpts: The U.S. Senate has announced the passage of HR 7735, the Improving Access to the VA Home Loan Benefit Act of 2022.

Under the terms of HR 7735, sponsored by Sen. Dan Sullivan and Rep. Mike Bost, the VA will be required to:
- Issue certification requirements for appraisers;
- Execute minimum property requirements;
- Review the process for selecting and reviewing comparable sales;
- Implement quality control processes;
- Establish the Assisted Appraisal Processing Program; and
- Establish the use of waivers or other alternatives to existing appraisal processes.
This is not yet ‘law,’ but likely will be in the not too distant future. Has passed House and Senate. Needs Biden’s signature.

To read more, click here

My comments: Read the appraisers’ comments. The law is not surprising. The mortgage industry has been wanting this for a long time. I still recommend VA to appraisers as they are the only mortgage organization that wants to help the borrower instead of making as much money as possible

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Fannie New Appraisal Form Modernization

Appraisal Risk and Modernization

By Ann O'Rourke on December 16, 2022 / appraisal business, Fannie, real estate market / Leave a comment

Tags: appraisal business, Fannie, real estate market

Industry Insider Insight on Risk and Modernization

Excerpts: The Collateral Risk Network (CRN) met in Sarasota on December 6th to discuss a variety of issues ranging from appraisal turn times to Fannie Mae’s economic outlook for 2023. Bill Rayburn gave a rousing and lively explanation of exactly what quality means in valuation at a recent meeting. Lenders want a compliant document that allows the loan package to be sold as quickly as possible, while investors want an appraisal that allows for securitization or resale to another downstream buyer.

Appraisers were encouraged to provide convenience as one aspect of quality. His figures show there is a holding cost of $200 per day on an unclosed loan and this hinges on the appraisal which is the last thing in the critical path to closing. He suggested we redefine quality to include a time element.

Joe Minnich, a condo risk consultant, spoke on how loans secured by an individual unit in a condominium project have greater risk than found in typical SFR lending. Lenders must address the various layers of risk to ensure that the loan is of saleable quality and the likelihood the borrower can/will repay the loan.

To read more, click here

My comments: Bill Rayburn, Chairman, and CEO at mTrade, is an excellent speaker and very savvy. I have known him for many years. FYI, CRN (Collateral Risk Network) was set up for AMCs and lenders. It was “closed” to appraisers for a while but is open now. Worth attending.

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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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NAR Appraisal Survey 2022

NAR: Appraisal License Equivalency Credit for RE Agents?

By Ann O'Rourke on December 2, 2022 / appraisal business, appraisal classes, marketing / Leave a comment

Tags: appraisal business, appraisal classes, marketing

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.

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Appraisal Neighborhood Analysis

Appraisers and Local Market Analysis

By Ann O'Rourke on October 21, 2022 / ADUs, appraisal business, E&O, humor, real estate market / Leave a comment

Tags: ADU, appraisal business, Fannie, liability, real estate market, RETIREMENT

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.

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

NAR Appraisal Survey 2022

By Ann O'Rourke on October 7, 2022 / appraisal business, Bad lenders, Fannie, real estate market / Leave a comment

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

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.

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